From PO Boxes to PPSNs – Director Identity Overhaul

• Ireland

• Corporate secretarial services

05-08-2022

The recent commencement of the Companies (Corporate Enforcement Authority) Act 2021 (the "CEA Act") will eventually require directors of Irish companies to file details of their personal public service number (“PPSN”) with the Companies Registration Office (the “CRO”).

The objective is to validate the identity of directors to improve the accuracy and integrity of company information held on the Register of Companies and to reduce fraud and identity theft, in efforts to assist the recently established Corporate Enforcement Authority in cracking down on corporate white collar crime in Ireland.

Improvements but at a cost

The CRO’s filing system has seen a marked improvement in recent years and, whilst the improvements have invariably decreased the administrative burden on companies and service providers alike, criticism for the deficiency of the CRO’s identity checks has come to the fore. A number of instances have arisen where companies have registered spurious addresses, incorrect director details and even occurrences whereby individuals have been appointed to companies without their knowledge or consent. Such instances have highlighted the inadequacies of the CRO’s verification process and its vulnerability to misuse or abuse.

Additionally, it is ostensibly evident that the CRO holds multiple director profiles for the same individual due to different variants of an individual’s details being used on company filings and therefore, a mop up is in the making.

Strive for identity perfection

When the relevant provision of the CEA Act is commenced, directors will be required to provide their PPSNs in:

(a) Any application to incorporate a company of which he or she is proposed as director;

(b) Any annual return by a company of which he or she is a director; and

(c) Any notice of change of director (or particulars) by a company of which he or she is a director.

The precise date for the change is unknown at present as a reconfiguration of the CRO’s online filing portal will be required. Once in place, directors will be identified by their PPSN rather than their name, address or date of birth. The PPSNs will be used for validation purposes only and the CRO plans to redact the PPSNs from all forms available to the public.

While these changes may increase the administrative burden, it is expected that the changes will ultimately eliminate the deficiencies in the current filing system, reduce incidents of identity theft and make it more difficult to set up companies using false details.

The changes should also assist the CRO in identifying breaches of company law and in overseeing other company law requirements such as enforcing the maximum number of Irish directorships that an individual can hold.

What if a director does not have a PPSN?

In cases where a director does not have a PPSN (for example, they are not Irish tax resident), it will be necessary to apply for a ‘CRO filing number’ in lieu of a PPSN. The details of this are yet to be confirmed but it is thought that the process will replicate that which is used to identify beneficial owners without PPSNs.

Teething Problems

As with the introduction of most new systems, it is likely that there will be some teething problems such as:

• CRO filings not being accepted if particulars don’t match;

• Delays in forming a company if proposed director(s) need to obtain a CRO filing number in advance of submitting company formation documents;

• Late filing penalties as a result of delays in obtaining a PPSN or CRO filing number; and

• Costs to individuals based abroad in obtaining a CRO filing number.

These points should be borne in mind and, where possible, steps should be taken to address or prevent the issues at the earliest opportunity.

Next steps

We advise companies to start compiling their directors’ PPSNs and conduct a review of director information currently held on CRO records to identify any cases of inconsistencies between the information held on CRO records and the details under which the PPSN is registered.

Our highly skilled company secretarial team can provide assistance and advice on this and on all aspects of company law and corporate governance and we will also continue to keep you abreast of changes and updates in company law that may affect your company.

For further information, please contact a member of our team.

Aidan Rafferty, Company Secretary - AidanRafferty@eversheds-sutherland.ie