Thinking of setting up an Irish Company as a result of Brexit?

If you are a UK resident you may have an issue with the Irish/EU Resident Director requirements for setting up an Irish Company.

Bond as alternative to resident EEA Director

Section 137 of the Companies Act 2014 states that an Irish registered company is required to have at least one director resident in the European Economic Area (EEA). The EEA consists of all 27 member states of the EU as well as Iceland, Liechtenstein and Norway. Section 137 (2) offers the alternative of taking up a Bond to the value of €25,000 in place of the Resident EEA Director.

What is the background to the Bond?

Sections 42 to 45 of the Companies (Amendment) (No2) Act 1999 were introduced as part of the “package of measures” to inhibit the use of what were known as Irish Non-Resident Companies. (INRC’s) These companies achieved tax free status in Ireland by virtue of trading and being controlled and managed outside the State. As they did not conduct any activity here their economic contribution was virtually nil. It was also felt that their existence promoted the Republic of Ireland as an “Offshore” jurisdiction. The requirement for a resident Director meant that Irish companies would now have somebody in the State accountable for it’s actions, even if it did not actually trade here. This presented a number of problems for investors located outside the State, Northern Ireland for example, who wished to register companies and conduct business here.

An exemption was required which would allow investors bringing genuine economic benefit, while at the same time dissuading previous users of INRC’s. Accordingly, the Bond was introduced. This legislation was subsequently amended in July 2009 whereby an Irish registered company was required to have at least one of its Directors resident within the EEA rather than in the Irish State.

What is the purpose of the Bond?

The Bond exempts companies registered in the Republic of Ireland from the requirement to have a Director who is resident in the EEA.

How will the Bond be used?

The Bond will be used to pay:

• Any fine imposed on the Company in respect of offences under the Companies Acts 2014 e.g. failure
• to file Annual Returns and Audited Accounts on time.
• A fine for failure to supply certain information to the Revenue Commissioners - namely the
• information required on the Form CRO 11F
• Any penalty which the company has been held liable to pay under S1071 or S1073 of the Taxes
• Consolidation Act 1997
• Any expenses incurred in recovering the fines and penalties mentioned above

For more information please contact George Skelton on 053 9170507