All Irish companies must have at least one European Economic Area (EEA) director or it will be in breach of the Companies Act 2014 and could face fines and penalties.
So due to Brexit from January 2021 action will be required by Irish companies that have only UK resident directors.
These companies must implement one of the following three options:
- Appoint another director who is a resident in the European Economic Area (EEA) or
- Put in place a Section 137 Bond or
- Provide a real and continuous link to the State.
Pursuant to Section 141 Companies Act 2014, a person is resident in the State at a particular time (the relevant time) if – he or she is present in the State at
- any one time or several times in the period of 12 months preceding the relevant time (the immediate 12 month period) for a period in the aggregate amounting to 183 days or more,
- any one time or several times –
- in the immediate 12 month period, and
- the period of 12 months preceding the immediate 12 month period (the previous 12 month period),
for a period (being a period comprising in the aggregate the number of days on which the person is present in the State in the immediate 12 month period and the number of days on which the person is present in the state in the previous 12 month period) in the aggregate amounting to 280 days or more, or that time is in a year of assessment (within the meaning of the Taxes Consolidation Act 1997), in respect of which the person has made an election under Section 819(3) of that Act.
The European Economic Area member States are:
Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden.
2. Section 137 Bond
A non-EEA resident director bond contracted with an insurance company insures the company for €25,000 to cover:
- Any fine imposed on the company in respect of offences under the Companies Act 2014.
- A fine for failure to supply certain information to the Revenue Commissioners
- Any penalty which the company has been held liable to pay under S1071 or S1073 Taxes Consolidation Act 1997.
- Any expenses incurred in recovering the fines and penalties mentioned above.
The bond covers a period of 2 years and must be in place at the time of incorporation or upon the removal of the EEA resident director of the company. The bond basically is akin to an insurance policy for unpaid taxes or fines.
An application is made to the Revenue Commissioners for a link certificate under Section 140 Companies Act 2014.
A company has a real and continuous link with an economic activity that is being carried on in the State of one or more of the following conditions are satisfied by it:
- 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;
- The company carries on a trade in the State;
- The company is a subsidiary or a holding company of a company or other body corporate that satisfies either or both of the conditions specified in paragraph (a) and (b)
- The company is a subsidiary of a company, another subsidiary of which satisfies either or both of the conditions specified paragraph (a) and (b).
If the Revenue Commissioners are of the opinion that a company in respect of which a certificate has been granted has ceased to have a real or continuous link with any economic activity being carried on in the State they may advise the CRO who can revoke the certificate