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Whilst the full effect and consequences of ‘Brexit’ on the Irish economy have yet to be ascertained, it is clear that, in the event of the UK leaving the European Union (EU) without a deal in place, there will be company law issues arising which will require consideration by Irish companies.
Non – EEA Director
A key issue in this context will be the requirement under Section 137 of the Companies Act 2014 whereby every Irish company is obliged to have at least one director who is resident in the European Economic Area (EEA) which is defined as comprising all EU member states plus Norway, Lichtenstein and Iceland.
Irish companies that have historically been meeting this requirement by having a UK resident director in place, should note that they will no longer be operating in compliance with Irish company law after 29th March 2019. The consequences of this non-compliance will give rise to a Category 4 offence carrying a maximum fine of €5,000. This situation may also present difficulties in filing an Annual Return in the Companies Registration Office (CRO) which must be filed in good time each year to avoid late filing penalties arising and importantly to avoid loss of audit exemption for preparation of financial statements in situations where the company was previously eligible to claim this.
What options are available?
A company finding itself in this position could first look at replacing its’ UK resident director with a director from another EEA state or alternatively appointing an additional EEA resident director to the board. However, in the event where this is not possible, there are two other options that may be available to a company.
The decision to grant the certificate rests solely with the Revenue Commissioners. Once the certificate is obtained, it must be filed with the CRO together with a Form B67 signed by a director and the company secretary. The exemption from the requirement to have an EEA resident director under Section 137 would then apply from the date of issue of the certificate by Revenue.
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