The Companies Registration Office (CRO) will introduce a measure to validate the identity of directors to improve the accuracy and integrity of company information held on the Register of Companies and reduce the risk of identity theft. Salvador Nash and Ronan Rock of our Legal Services team explore the issues below.

The Companies (Corporate Enforcement Authority) Act, 2021 is due to be commenced into law later this year and will introduce a requirement for directors of Irish-registered companies to file details of their personal public service number (PPSN) with the CRO.

Current filing system open to abuse

The CRO exists to provide members of the public with access to information on companies, their owners, directors, and financial results.

It has a stated policy of not seeking to impose unnecessary administrative burdens on companies and has in recent years sought to modernise and simplify its system for filing documents. Incorporating a company and details of director changes can now be submitted online directly to the CRO without identity validation checks or a requirement for a statutory declaration to be sworn in the presence of a solicitor or notary public.

Notwithstanding the recent filing improvements and greater accessibility afforded by online filing, the CRO has faced criticism for the deficiency of checks it performs on information filed with that office. A series of newspaper investigations identified multiple instances of companies being registered using bogus addresses, director details and, in some cases, individuals being appointed to companies without their permission (resulting in a complaint to the Director of Corporate Enforcement). Such instances highlight that the CRO’s current filing system is open to abuse by facilitating, with relative ease, the formation of companies without adequate verification or validation processes.

Additionally, there is some evidence that CRO hold multiple director profiles for the same individual due to different variants of an individual’s name, residential address or date of birth being used on company filings, perhaps when filings are made by different service providers. This can make it difficult to identify an individual’s current directorships or to track through past directorships to determine the trading status and history of such companies.

New filing requirement

Once commenced into law, the legislative changes will require directors to file details of their PPSNs with the CRO when: -

  • incorporating a new company, or
  • being appointed as a director to an existing company, or
  • filing a company’s annual return on an annual basis.

The PPSNs will be used for validation purposes only and will not be available to the public.

The precise date for the introduction of these changes is unknown at present as they will require a reconfiguration of the CRO’s online filing portal to implement.

Once the online filing portal has been reconfigured, directors will be identified on the CRO filing system by reference to their PPSN rather than by reference to their name, address, or date of birth.

Overall, the changes are to be welcomed and it is hoped that they will eliminate the deficiencies in the current filing system, reduce incidents of identity theft and make it more difficult to set up and administer companies using fake or bogus details. The changes should also assist the CRO in enforcing 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, it will be necessary to apply for a filing number.

While precise details of how to obtain a filing number have yet to be announced, it is thought that the process will be similar to the procedure for obtaining a RBO Transaction Number under the Beneficial Ownership of Corporates legislation.

This entails such directors confirming their identity in the presence of a notary abroad and signing a Declaration. The Declaration is then furnished to the CRO who issue a filing number. 

Commentary

While the changes are to be welcomed, there are likely to be significant teething problems along the way. Possible examples include: -

  • Inconsistencies between PPSN and details already filed in the CRO – It may be the case that CRO filings such as annual returns, Forms B10 (change of directors) and incorporation documents will not be accepted for filing if the particulars under which the PPSN is registered are not the same as those already provided to the CRO (e.g. PPSN issued under an individual’s birth name but CRO record an individual’s “known name” or discrepancies relating to date of birth on CRO record and on PPSN records).
  • Delayed Company Formations – There may be delays in forming a company if a proposed director does not have a PPSN as it will be necessary to apply and obtain a filing number in advance of submitting the company formation documents. A new company may need to be incorporated using directors with PPSNs as the first directors and appointing additional directors post incorporation once filing numbers have been issued for those individuals who do not have a PPSN.
  • Annual Returns Late Filing Penalties and Possible Loss of Audit Exemption - It will be necessary to file details of PPSNs and filing numbers for all directors on the annual return. If there are delays in obtaining a filing number, or the CRO filing system does not recognise the PPSN provided, the delays incurred in rectifying could result in a company being late in filing its annual return, thereby incurring late filing penalties and a possible loss of audit exemption.
  • Delayed filing of Forms B10 (appointment of directors) - If an appointee does not have a PPSN or was previously issued with a filing number, delays may be experienced in completing the filings to appoint additional directors with a corresponding delay in updating bank mandates etc.
  • Increased costs – There may be costs involved for individuals confirming their identity abroad to obtain a filing number.

Next steps

Companies should start the process of compiling details of PPSNs for their directors 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 name and details under which the PPSN is registered.

Companies should also establish whether any of their directors should apply for a PPSN or a filing number where any director does not have a PPSN.

Get in touch

If you have any queries about filing director profiles, please contact our team below. We'd be delighted to hear from you.

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