Brexit: Some Implications Under Irish Company Law – Ireland

EEA Resident Director Requirement

Under the Irish Companies Act 2014 (“2014 Act”), Irish registered companies are, subject to certain exceptions, required to have at least one director who is an EEA resident. It will be necessary therefore for companies that are relying on a UK resident director to satisfy this requirement to consider appointing an EEA resident director or to avail of one of the other exemptions, namely by:

• Taking out an insurance bond to the value of €25,000 which provides cover in the event of non-payment of fines imposed on the company for offences under the 2014 Act and certain tax laws;
• Applying for a certificate to confirm that it has “a real and continuous link with economic activity” in Ireland. This entails an Irish Revenue Commissioners confirmation and meeting one or more of the following criteria:
  i. 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;
  ii. the company carries on a trade in the State; or
  iii. the company is a subsidiary or a holding company of a company that satisfies either or both of the above conditions.

The most straightforward option is for Irish companies in this situation to replace their current UK resident director with a director resident in an alternative EEA jurisdiction.

Financial Statements

The 2014 Act provides that, where a company is a subsidiary undertaking of an undertaking that is established under the laws of an EEA state, it may be exempt from the requirement to file financial statements along with its annual return with the Irish Companies Registration Office (“CRO”), subject to certain conditions. To avail of this exemption, the holding undertaking must provide an irrevocable guarantee of the subsidiary’s commitments and liabilities in its statutory financial statements for that financial year. Where the exemption applies, the company may instead file the consolidated accounts of its holding undertaking.

When the UK departs the EU, an Irish subsidiary will no longer be able to file consolidated financial statements if its holding company is registered in the UK and will be required to consider other options to protect financially sensitive information or otherwise avoid filing its own financial statements.

In addition, a company is only permitted to change its financial year end date once every five years. This limitation does not apply where the company is a subsidiary undertaking or holding undertaking of another EEA undertaking if the new financial year end date specified coincides with that of the other EEA undertaking. Following Brexit, this option to align financial year ends across a group will no longer be available where there is a UK company in the chain of ownership.

UK companies who have registered a branch in Ireland as a branch of an EEA company will, following Brexit, be treated as non-EEA companies and will be subject to the modified financial statements (and other) filing requirements applicable to non-EEA companies with Irish branches in Ireland.

Brexit may also have implications for auditors as UK audit firms may not retain automatic audit rights in Ireland if there is a no deal.

Our Insights

As a leading global service provider and with extensive experience working with a range of clients located in and conducting business in the EU, the Maples Group has unique insights into the practicalities of planning for a post-Brexit environment. The Maples Group continues to be at the forefront of industry developments, taking a proactive approach to working with clients to address the wide range of issues that this new paradigm may present while providing a comprehensive suite of solutions to ensure compliance.