Prior to the Companies Act 2014 (‘Companies Act’) there were certain registration requirements for foreign companies that either had established a ‘branch’ or had ‘a place of business’ in the State. This twin requirement has now been abolished and under Part 21 of the Companies Act only external companies that establish a ‘branch’ in Ireland come within the provisions of the Companies Act and are required to register with the Companies Registration Office (the ‘CRO’).
Definition of an External Company
An ‘external company’ is defined, under section 1300(1) of the Companies Act as being either an EEA company or a non-EEA company, being a body corporate incorporated in an EEA state (other than the State) or in a non-EEA state respectively, but importantly in each case, whose members’ liability is limited. Therefore, to come within this statutory provision, the relevant foreign entity was required to have limited liability.
Section 80 of the Companies (Accounting) Act 2017, which, by ministerial order (the Companies (Accounting) Act 2017 (Commencement) Order 2018), came into operation on 09 June 2018, amends Section 1300 of the Companies Act 2014 and the statutory obligation to register now extends its application to external companies with unlimited liability, including partnerships and unincorporated bodies.
Establishment of a branch
The Companies Act defines a ‘branch’ by reference to its meaning pursuant to the ‘Branch Disclosure Directive’ (EU Council Directive No. 89/666/EEC). The specific term ‘branch’ is however not defined in this Directive and therefore its meaning must be determined by reference to decisions of the European Court of Justice where case law has outlined certain characteristics of a branch being an operation/business in the State:
- that is an extension of the foreign parent company;
- that has established a physical presence portraying that an ongoing or permanent connection with the particular premises from which it operates;
- whose business is conducted habitually, or with some degree of regularity from that premises; and
- with locally based management with authority to negotiate business and contract directly with third parties.
Where a ‘place of business’ is established in the State by an external company then for so long as it lacks the characteristics of a ‘branch’ there is no requirement for registration with the CRO and indeed unless and until it comes within the meaning of a ‘branch’ is not registerable.
Timing and effect of registration
Registration of a ‘branch’ must be undertaken within 30 days of its establishment (Forms F12 (EEA) or F13 (Non-EEA) ) and the external company is required to file annual financial statements in respect of the branch with the CRO (with differences in such requirements depending on whether it is an EEA or non-EAA external company).
The relevant external company is then also subject to certain provisions of the Companies Act such as the incapacity of a bankrupt to act as an officer of the external company, the registration of charges over property in the State, the provisions at Part 13 (investigations) and Part 14 (compliance and enforcement).
The Companies Act provides for disclosure requirements (on letter and forms) of certain details and status of the external company and the branch.
Section 1311 (1) of the Companies Act expressly provides that the duty to secure compliance by an external company with the obligations under the Companies Act lies not only with the company itself but also upon ‘..the one or more persons authorised by the external company to ensure compliance…’ (whose details are provided on registration) and it is made clear at Section 1311 (2) & (3) that the provisions contained at section 270 and 271 of the Companies Act (responsibilities/default of officers) extend and apply to external companies, its officers and the relevant authorised persons in respect of the branch.