Requirement to have an EEA-Resident Director
Under the Companies Act 2014 (the Act) a company registered in Ireland is required to have at least one director who is resident in a member state of the European Economic Area (EEA). This requirement does not apply where the company:
- has a statutory bond (Bond) in place which acts as a guarantee in the event the company is unable to pay a fine or charge resulting from breaches of the Act or tax legislation; or
- has obtained a certificate from the Registrar of Companies stating that the company has a real and continuous link with one or more economic activities that are being carried on in the State (Certificate).
If the UK leaves the EU without a deal it will no longer be a member of the EEA. As a result, Irish companies relying on a UK-resident director as their EEA-resident director will need to take action to ensure that they continue to comply with this requirement by doing one of the following:
- appointing another EEA-resident director
- putting a Bond in place
- obtaining a Certificate from the Registrar of Companies
It is a criminal offence for an Irish registered company not to have at least one EEA-resident director unless it satisfies one of the exemption requirements.
Cross-Border Mergers
A legal framework for cross-border mergers between two or more limited liability companies within the EEA was brought into EU law by Directive 2005/56/EC (the Directive). Since May 2008 the Directive, as transposed by Irish and UK implementing legislation, has enabled mergers between Irish and UK companies through a prescribed procedure which involves obtaining authorisation by the High Court in Ireland and the High Court in the UK.
In October 2018 the UK government published draft legislation which would revoke the UK implementing legislation in the event the UK leaves the EU without a withdrawal agreement and transition period in place. This would mean that on exit day there would no longer be a legal framework in the UK to facilitate cross-border mergers. In Ireland, as the Irish legislation only applies to mergers between an Irish company and at least one EEA-registered company, it will not be possible for the High Court in Ireland to sanction a merger of a UK company into an Irish company.
While in any case it will still be possible to effect a cross-border merger by way of a traditional business transfer whereby all of the assets and liabilities of the transferor company are acquired by the acquiring company, this method would not have the benefits of the procedure under the Directive, which involves the automatic transfer of assets and liabilities and the dissolution of the transferor company without going into liquidation.
Irish Subsidiaries of EEA Holding Companies: Exemption from Filing Statutory Accounts
Where an Irish registered company is a subsidiary undertaking of a holding undertaking established in an EEA Member State, the company can, instead of filing its own accounts, file the consolidated accounts of the holding undertaking which are drawn up and audited in accordance with the Seventh Council Directive or in accordance with IFRS and audited in accordance with Article 37 of the Seventh Council Directive. To avail of this exemption, the company's shareholders must consent and there must be in force, in respect of the relevant financial year, an irrevocable guarantee by the holding undertaking of all amounts shown as liabilities in the statutory financial statements of the company in respect of that financial year.
If the UK ceases to be a member of the EEA, it will no longer be possible for Irish subsidiaries of UK holding companies to avail of this exemption and such companies will be required, under the Act, to annex their statutory financial statements to their annual return for the relevant financial year.
