Originally Section 58 of the Finance Act 1995 was introduced "to turn the spotlight on those using company formations for unacceptable purposes and encourage them in this way to take their affairs elsewhere". It attempted to do so with requirements that companies registered in Ireland supply certain details to the Revenue Commissioners such as the name and registered office of the company, its place of business, the nature of its business and the territory in which it is managed and controlled. These measures were felt to have been inadequate. Two measures have now been introduced to deal with the perceived problems associated with Irish registered non resident companies (IRNR's): the Companies (Amendment) (No. 2) Act, 1999 and the Finance Act 1999 which came into force on 25 March 1999.

COMPANY LAW PROVISIONS:

The Companies (Amendment) (No.2) Act, 1999 implemented the following measures:

* as a precondition for incorporation every application will be required to demonstrate that the proposed company intends to carry on an activity in Ireland.

* every company will be required to have an Irish-resident director or provide a bond to the value of IR£20,000 as surety in the event of the company failing to comply with certain company law and tax law requirements. This will apply to new companies, as a prerequisite to incorporation after a transitional period. However it will be provided that companies can subsequently be exempted from these requirements by the Registrar of Companies following consultation with the Irish Revenue Commissioners.

* the number of directorships that any one person can hold will be limited to 25 subject to certain exemptions. The aim of this provision is to curb the use of nominee directors as a means of disguising beneficial ownership.

* enhanced strike-off provisions will exist where companies:
(a) fail to make the statutory annual return to the Companies Registration Office
or
(b) fail to register with the Revenue Commissioners for tax purposes

* There will be enhanced notification to the Companies Registration Office where directors have resigned including strike-off provisions where the company appears to have no director.

* Further provisions will be introduced in relation to the requirement to appoint an Irish resident director or provide a bond to the value of €25,400. Where a company fails to pay any penalties for failure to supply information or file the company's tax return, these penalties may be recovered from an Irish resident director of the company. Where a company does not have an Irish resident company secretary or director, any such penalties will be recoverable from the €25,400 bond referred to above.

TAXATION PROVISIONS
The Finance Act 1999 introduced new taxation provisions for companies. These apply to new companies after 11 February 1999 and will apply to existing companies from 01 October 1999. Once a company is registered here in Ireland it will automatically be considered resident here for tax purposes. An exception to this rule is where the company or a related company is carrying on a trade in Ireland and either the company is ultimately controlled by residents of an EU Member state, and/or a tax treaty company or its related company is quoted on a recognised stock exchange. A company shall be treated as related to another company if one company is a 51% subsidiary of the other company or both companies are 51% subsidiaries of a third company. For those companies referred to in the exception above, tax residence will continue to based on where the company is managed and controlled.

NEW DISCLOSURE REQUIREMENTS:
The Finance Act 1999 also introduced additional enhancements of the disclosure requirements created by Section 58 of the Finance Act 1995.

Every company which is incorporated in the State or which commences a trade-, profession or business in the State shall, in every case within 30 days of:
a) the date on which it commences a trade, profession or business, wherever carried on.
b) the date at which there is a material change in information previously delivered by the company under this section, and
c) the giving of a notice of a company by a tax Inspector requiring a statement under this section;

shall deliver to the Revenue Commissioners a Statement in writing containing particulars of;
In the case of every company:
1.The name of the company
2.The address of the company's registered office
3.The address of the principal place of business
4.The name and address of the secretary of the company
5.The date of commencement of the trade, profession or business
6.The nature of the trade, profession or business
7.The date up to which accounts relating to the trade, profession or business will be made up, and
8.Such other information as the Revenue Commissioners consider necessary for the purposes of the Tax Acts

In the case of a company which is incorporated but not resident in the State:
1.The name of the territory in which the company is, by virtue of the law of that territory, resident for tax purposes,
2.Where the incorporation residence rule does not apply because the company, or a related company, is carrying on a trade in the State, the name and address of the company which carries on a trade in the State.
3.Where a company is regarded for the purposes of any arrangements as resident in a territory other than the State, the name and address of the individual who are the ultimate beneficial owners of the company

In the case of a company which is neither incorporated in the State nor resident in the State but carries on a trade, profession or business in the State:
1. The address of the company's principal place of business in the State
2. The name and address of the agent, manager, factor or other representative of the company, and
3. The date of commencement of the company's trade, profession or business in the State

For example, a company which is incorporated but not tax resident in the State will be required to identify the territory in which it is resident and to state whether the company or a related company is trading in the State or, if not, to identify the ultimate beneficial owners of the company.

The Act also enables the Revenue Commissioners to give the Registrar of Companies details of those companies which fail to comply with the Revenue information requirements so as to enable such companies to be struck-off the company register, if appropriate.

An examination of your corporate structure may be required in advance. For further details please direct your letters, fax or e-mail to us.