Tuesday, March 19, 2019
In the event of a no-deal Brexit, with effect from 22 May (or depending on the outcome – 12 April) 2019 every Irish registered company which relies on a UK-resident director to meet the requirement under Section 137 of the Irish Companies Act 2014 (“s137”) for an EEA-resident director will need to take urgent action.
Under s137, a company registered in Ireland must have at least one director who is a resident in an EEA State or avail of one of the other options set out in s137 (see below).
The Companies Registration Office will have the power under Section 725(1)(a) of the Irish Companies Act 2014 to strike the company off the register if they believe the company to be in breach of s137. A further penalty for a breach of s137 is potentially a €5,000 fine for the company concerned, and also every officer of it. Aside from the penalties, a company being strike off listed can have negative practical implications. For example, all of its commercial contracts will be at risk of termination as a result of the listing for strike off or will terminate automatically on the occurrence of the strike off itself as the company will be dissolved.
If an Irish company does not have an EEA resident director post-Brexit, then the simplest solution may be to apply for an s137 Bond. This Bond acts as a guarantee in the event that the company is unable to pay a fine or charge resulting from a breach of company law or tax legislation in Ireland and it lasts for two years.
What are my company’s other options?
Every Irish registered company has three options under s137, one of which should be put in place in advance of, or as close to, 29 March as possible. The 3 options for compliance with s137 are as follows:
As 12 April / 22 May is fast approaching, taking out a Bond (option 1) may be a company’s best option at this stage, as an application to the Revenue Commissioners under option 2 is now no longer viable as Revenue have shut down the service ahead of Brexit.
Can we help?
If you have any queries, or would like to know more (including about putting a Bond in place), please contact our Head of Company Secretarial Patrick Butler.