EEA Resident Directors and branches of external UK companies post Brexit

Important date to note – 31 December 2020

The transitionary provisions which have been in place since 31 January 2020 (when the UK left the European Union) shall expire on 31 December 2020. If no agreement is reached between the UK and the European Union before this expiration date, UK directors will no longer be EEA resident. Therefore, Irish companies which no longer have EEA resident directors as a result will be required to implement one of the following options to ensure compliance with the Companies Act 2014:-

1. Appoint another director who is resident in the European Economic Area (EEA);
2. Comply with section 137 Companies Act 2014 which is explained further below; or
3. Obtain a Certificate from the Registrar of Companies that the company has a real and continuous link with an economic activity within the State – this option will require approval from Revenue.

Section 137 Non-EEA Resident Director Bond

Section 137 of the Companies Act 2014 (the ‘Act’), states that where an Irish company does not have at least one director who is resident in the EEA, a Bond must be put in place. The Bond must be in the prescribed form and in force to the value of €25,000, which insurance may be utilised by the Registrar of Companies and the Revenue Commissioners to claim unpaid taxes, penalties and fines owed by the company. It must have a minimum period of validity of two years commencing no earlier than the occurrence of the event giving rise to the requirement for the Bond. At the expiry of the two year period the company must renew the Bond for a further two years, appoint an EEA resident director or make an application to dispense with the requirement, as outlined below.

Alternative to a Section 137 Bond – Companies having real and continuous link with economic activity in State

A section 137 Bond can be avoided if the company manages to establish a real and continuous link with an economic activity that is being carried on in the State.

In order to obtain a certificate that it has such a link, the company will have to satisfy the Revenue Commissioners that one or more of the following conditions are satisfied by the Company:-

(1) the affairs of the company are managed by one or more persons from a place of business established in the State and that person or those persons is or are authorised by the company to act on its behalf;
(2) the company carries on a trade in the State;
(3) the company is a subsidiary or a holding company of a company or another body corporate that satisfies either or both of the conditions specified in paragraphs (1) and (2) above;
(4) the company is a subsidiary of a company, another subsidiary of which satisfies either or both of the conditions specified in paragraphs (1) and (2) above.

How to apply for an exemption

An application is submitted to the Revenue Commissioners seeking a statement that the Revenue Commissioners have reasonable grounds to believe that the company has a real and continuous link with one or more economic activities being carried on in the State. A statement to that effect from the Revenue Commissioners together with a form B67 is then submitted to the Companies Registration Office. Once the form B67 is registered and a certificate is granted the applicant company may trade in Ireland without an EEA resident director or a section 137 Bond.

Irish Branch of a UK external company

If you have an Irish branch of a UK external company registered with the CRO then you will not be required to re-register upon the expiration of the transition period. However, such a company will be subject to non-EEA company regulations in accordance with the Act.

Please contact our company secretarial manager, Maeve Walsh on mwalsh@reddycharlton.ie or call 01 661 9500 if you have any queries or require any assistance in relation to the above.