3 Posts , Viewing posts 1 to 3
COMPANY LAW - NO DEAL BREXIT
It is hard to know how many people actively care or even believe anything one hears about Brexit at this stage. However, as the prospect of a No Deal Brexit edges ever closer to reality companies are left with no choice but to care.
Two things to consider in the event of a No Deal are outlined below.
Companies incorporated in Ireland must have a minimum of one Director resident in the European Economic Area (EEA). The EEA is an International Agreement that extends the EU single market to
non-EU member parties including Liechtenstein, Iceland and Norway.
Currently, a number of companies rely on having a Director resident in the UK to fulfil the above requirement. Clearly, if or when a No Deal occurs than those companies will no longer have an EEA Director and must have an alternative plan in place. Companies are left with pretty much two choices as they can either:
(a) appoint a new Director who is resident within the EEA; or
(b) take out a Bond with appropriate Insurers.
Companies incorporated in the UK and registered in Ireland as an “External Company” will also face changes in the event of a No Deal. Such companies would have registered as an External Company on the basis that they either trade or have a place of business in the State.
In the event of a No Deal then companies incorporated in the UK and registered in this State as an External Company will have to start filing Annual Returns in Ireland under non-EEA country legislation, refer to Sections 1304 to 1306 Companies Act 2014. Given the paucity of filing requirements on External Companies anyway one must assume that this will be a change easily overlooked.
Enjoy your summer holidays Brexit awaits!
Since the New Year KomSec Limited has experienced a sustained level of increased queries from UK based organisations with interests in Ireland, looking for advice on the choices available to them post-Brexit - Branch Registration or Company Incorporation.
Branch Registration – of interest to some as once registered a Branch has fairly basic statutory filings. Also, Branches file the same financial statements as those filed in the country of origin (i.e. country where company registering Branch was incorporated).
Downside for some is an unease at having to appoint an Authorised Person (resident in the State) representing the Branch where he/she can have as much control over the Branch as any Company Director.
Company Incorporation – of interest as once incorporated the company only needs to either have one individual Director resident anywhere within the EEA or a Bond (S.137 Companies Act 2014). Companies can apply for exemption from the residency rule/Bond on the grounds that the company has “a real and continuous link with one or more economic activities being carried on in the State”. This statement must be supported by the Irish Revenue Commissioners stating it has reasonable grounds to believe the company has such a link.
Downside for some is that once set up the company has a life of its own requiring it to make regular annual filings throughout its corporate history, including preparing and filing financial statements specific to the Irish company.
Which option is ultimately selected will most likely be driven by tax advice. To date, KomSec Limited has found client interest split fairly evenly between both types of entities. To explore options available for your specific organisation contact KomSec Limited directly.
The momentum for Corporate Ireland to prepare for Brexit is finally gaining traction.
Hard or soft exit is not particularly relevant at this point. For now, corporate Ireland should have a schedule of events noting person responsible for reviewing/implementing, and deadline for completion. Some of the areas are outlined below.
- Auditor registration status – in event of a no deal Brexit Auditors based in the UK will no longer meet the eligibility criteria for approval as EU statutory auditors. This means they will no longer be:
(a) entitled to hold audit appointments for Irish companies;
(b) sign audit reports; and
(c) eligible for inclusion on the Irish audit register.
This is something that should be put on your company’s Risk Register. Failure to have an appropriate Auditor in place in time will impact on the signing,
adoption, and filing of Financial Statements.
- Brexit NI – do not forget Northern Ireland will be included in the UK Brexit from the European Union. This seems to be a common problem for a number of companies probably because both jurisdictions are on one island.
- Data Protection – once the UK leaves the EU it will become a “third country” and must be treated as one would any other non-EU state. This will have an immediate impact on the transfer of data between Ireland, and the UK, e.g. companies with inter-company loans, payroll operations, access to group intranets, transfer of public data, etc.
There will be no “transition” period for data protection, it will be effective immediately.
- Director residency – in the event the UK leaves EU without a deal in place companies which have only UK resident director(s) will be required to comply with S.137 Companies Act 2014, i.e. they must have either:
(a) director resident within the EEA; or
(b) bond with appropriate insurers for minimum of two years; or
(c) exemption on the grounds the company has a “real and continuous link with one or more economic activities being carried on in the State”.
This means that companies currently relying on a director resident in the UK (as resident within the EEA) will have to re-consider its options.
- Legislation – the Government started debate on the Omnibus Bill on 25.02.2019. The Bill covers a variety of areas including health (reimbursement & medical care), finance (taxation), transport (sea & bus travel), legal (extradition & immigration).
- Licences – companies must review all licences, accreditations, authorisations, etc, to ensure they remain in force or, are applied for, to ensure compliance following Brexit.
- Revenue – consider logistics of import, export, movement of goods on the island of Ireland. Levying, collecting and payment appropriate customs duties, VAT, taxes, etc. Payroll could be a hidden bump, e.g. staff working in Ireland subject to UK contract or, staff working in Ireland but, payroll managed in UK/NI.
While ultimately the shape of Brexit may still be unknown, what is known is that Corporate Ireland can no longer adopt a wait and see approach. Action must be taken – now.
- All Categories
- Company Law
- Latest News
- Annual Returns
- Anti-Corruption Legislation
- Beneficial Ownership (1)
- March 2020 (2)
- February 2020 (3)
- October 2019 (1)
- August 2019 (1)
- June 2019 (1)
- April 2019 (1)
- March 2019 (1)
- February 2019 (1)
- January 2019 (1)
- November 2018 (3)
- October 2018 (1)
- September 2018 (2)
- August 2018 (1)
- July 2018 (1)
- May 2018 (2)
- View older Posts (48)