Board composition of Irish companies post-Brexit

With less than a few weeks to go before the end of the Brexit transition period, it is of vital importance that UK businesses operating an Irish registered company, are readily prepared for any changes that may affect their compliance with the Companies Act 2014 (the "Act"), following the UK's exit from the EU.

An Irish-registered company must have at least one director that is resident within the European Economic Area ("EEA"). A full list of the countries within the EEA is available here. An Irish registered company that currently relies upon a UK-resident director to satisfy the requirements of the Act will need to consider alternative ways to satisfy this requirement, post-Brexit.

There are a number of options that Irish-registered companies can choose to satisfy the EEA-resident director requirement:

• appoint an EEA-resident director to the board;

• lodge a €25,000 Bond with the Irish Registrar of Companies (a "Bond"); or

• obtain a Section 140 Certificate.

Appointing a new EEA-Resident director

Before appointing an additional director to the board, consideration should be given to the company's constitution to confirm that the appointment does not exceed the maximum number of directors permitted under the constitution and to confirm whether the constitution contains any unique provisions around the manner of appointment of directors. The proposed new director must consent to their appointment. The appointment should also be formally approved by the board by convening a meeting of the board at which a resolution is passed approving the appointment, or alternatively, by passing a written resolution of the directors.

Within fourteen days of the effective date of the appointment, the company is required to file a form B10 in the Companies Registration Office (the "CRO"). The form B10 must be filed electronically via the CRO's online system, CORE, and the originally signed certification pages to the form B10 must be delivered to the CRO. Following the appointment of a director to the board of a company, the company must update its register of directors and secretaries and its register of disclosable interests. In addition, the letterhead of the company should be updated to note the particulars of the new director.

Bond

An Irish registered company is not required to have an EEA resident director where the company holds a Bond, in the prescribed manner, in force to the value of €25,000, and which provides that amounts will be payable under the bond in the event of any failure by the company to pay any fines or penalties imposed on it in accordance with the Act or the Taxes Consolidation Act 1997. It should be noted that the Bond will need to be renewed by the company every two years.

Section 140 Certificate

Alternatively, in accordance with the provisions of the Act, a company may submit an application to the Irish registrar of companies (the "Registrar") requesting that the Registrar grant the company with a certificate stating that the company has a real and continuous link with one or more economic activities currently being carried on within the state, and, exempting it from the requirement to have an EEA-resident director (a "Section 140 Certificate").

A company making an application for a Section 140 Certificate is required to provide a statement from the Revenue Commissioners confirming that they have reasonable grounds to believe that the company has such a real and continuous link with one or more economic activities that is being carried out in the State. One of the significant benefits of the Section 140 Certificate is that unlike a Bond, once the certificate is in place it does not need to be renewed.

For further information, please contact our corporate services team.