What happens if the UK leaves the European Union without a deal in place?
If the UK leaves the European Union without any deal in place, companies which have only UK resident directors will be required to comply with section 137 Companies Act 2014.
This is the requirement to have at least one European Economic Area (EEA) resident Director.
Therefore, a company finding its self in this situation with either have to acquire a bond to a value of €25,000 or apply for and be granted a Section 140 Certificate from the Registrar of Companies.
Bond where company has no EEA-resident director - Section 137
The company will need to acquire a bond to the value of €25,000. This bond will be payable if the company fails to pay whole or part of a fine/penalty imposed on the company in respect of an offence under the Companies Act 2014 or under the Taxes Consolidation Act 1997.
A sum of money becomes payable under the bond in discharge of the whole or part of the company’s liability in respect of any such fine or penalty.
The bond 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. The surety under the bond must be a bank, building society, insurance company or credit institution.
For further details download Leaflet 17.
Section 140 Certificate
If a company can prove it “has a real and continuous link with one or more economic activities that are being carried out in the state” and apply for and be granted the Section 140 Certificate from the Registrar of Companies they will be exempted from the requirement to have an at least one EEA resident director from the date of the certificate, as long as the certificate remains in force.
To obtain a certificate that it has such a link, the company will have to satisfy to the Revenue Commissioners one or more of the following conditions:
Application for a section 140 certificate is made to the CRO on Form B67. This application must be accompanied by a statement from Revenue, made within two months of the date of the application to the CRO, that it has reasonable grounds to believe that the company has such a link.
UK external company branch registered with the CRO
If the UK leaves the European Union without any deal in place, the company will not have to re-register. The external company will now be subject to filing annual returns with the CRO under the non-EEA country legislation. However, Section 1304 Companies Act 2014 applies in relation to the submission of any changes in the company’s information. Sections 1305/1306 Companies Act 2014 applies with regards to the annual returns.
If you require any further details on the implications of Brexit for Irish Companies with only UK Resident Directors or in relation to our audit and accounting services please contact Deirdre McDermott OSK Audit on 01 439 4200.
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