By Sinéad Floody, 16th March 2022 (Updated 19th May 2022)
It has long been expected that the CRO will one day require Personal Public Service (PPS) numbers on their forms to verify the identity of individuals acting as directors of Irish companies. The director identification requirement is now imminent as the bill that gives this requirement legal footing was enacted in December 2021. The Companies (Corporate Enforcement Authority) Act 2021 commenced on 22nd December 2021 however the section that brings about the requirement of PPS numbers on CRO documents is yet to be commenced due to the technological changes that are needed by the CRO to implement this new requirement.
The CRO is currently reviewing its strategy with regards to the changes it needs to make on its current software platform, CORE, to allow for it to request director PPS numbers on its forms. In the case of a director who does not have a PPS number, a ‘CRO number’ will be applied for, similar to that of the procedure for the Register of Beneficial Ownership (RBO) filing, whereby the beneficial owner can apply for an ‘RBO number’ to use if they do not have a PPS.
The Impact of this new requirement
For directors of Irish companies, this means their involvement with corporate bodies will be linked to their PPS, providing a greater deal of transparency for government bodies as the PPS number is linked to many government functions such as the RBO, Revenue and Social Welfare among others. Additionally, the requirement of a PPS number will inhibit the occurrence of identity theft in Ireland, where company filings are concerned. It was recently reported by the Independent.ie that over a hundred fraudulent companies were set up using the identities of several innocent people, whose personal information was taken from the public register of companies. The use of a PPS number will make the theft of personal information more difficult as the PPS number is and will remain out of the public domain.
Section 25(e) of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 nominates Trust and Company Service Providers, such as Company Bureau, as ‘Designated Persons’. Other types of Designated Persons consist of accountants, solicitors, art dealers, casinos, among others. Designated Persons have a legal obligation under this Act to verify the identity of their customers. The point of this legal obligation is to deter those who intend to launder money or finance terrorism through their Irish company. The CRO are not considered a Designated Person, so have never before had the legal obligation to verify the identity of any of its customers, which has led to the abuse of their system by criminals who set up fraudulent companies.
When obtained, the PPS number or CRO number will verify the identity of their customers and as such, the CRO will contribute to the effort that Designated Persons are making to combat money laundering and terrorist financing. The PPS number is linked to the Department of Social Welfare and the CRO will be able to check the PPS number against the particulars of that person, such as the name and date of birth, ensuring a match.
This new requirement will also help the CRO to enforce the rule under Section 142 of the Companies Act 2014 that any one person can have a maximum of 25 live directorships at one time. Some individuals are getting around this rule by using alternate names, for example, Patrick/Paddy, Robert/Bob etc., and the PPS number will rule out these variances. This will be the first time that the CRO will verify its customers since its establishment, and the change is welcomed.
As a director, it will be normal for you to have some privacy concerns when providing your PPS number to the CRO directly or to 3rd parties such as Company Bureau. Firstly, the CRO plan to redact the PPS number from all forms, by placing hashes over the numbers and letter(s). No publicly accessible form or document will display your PPS number. When using Company Bureau, remember that we are fully GDPR compliant, and our teams undertake high quality data protection training as well as our state-of-the-art cloud-based systems that keep our data and our clients’ data secure.
PPS number versus CRO number
As mentioned earlier in the blog, where a director does not have a PPS number, a CRO number can be applied for which will mimic the process of the RBO number provided by the Register of Beneficial Ownership. The current process to obtain an RBO number is that a BEN2 form is completed with the particulars of the individual contained therein and the form is sworn by a notary if outside the State. Most people in Ireland have a PPS number, however, there may be instances where directors of Irish companies, who are resident abroad, for example, do not have PPS numbers. The CRO number could be an attractive alternative, however, the benefit of having a PPS number when it comes to signing forms is unparalleled.
When a PPS number is in place, the individual can apply for a ROS certificate. A ROS certificate is a unique digital certificate issued by Revenue that the holder of a PPS number can use to sign many CRO forms in a fully electronic manner. Currently, the CRO does not accept DocuSign or other forms of electronic signature and requires all forms to be signed by hand and uploaded to the CORE portal. The ROS certificate is the only form of electronic signature that the CRO will accept and can only be obtained where an individual has a PPS number. For this reason, Company Bureau recommends that all directors of Irish companies who do not currently hold a PPS number, arrange for one now in advance of the rush that will be created when they become a legal requirement for CRO forms.
The CRO number will require human intervention as the CRO team will need to review the BEN2 equivalent and verify the information before assigning a CRO number. This will cause significant work for the CRO office when it comes to peak filing time such as November every year. This will also delay the incorporation of companies that currently take 2-4 working days as the CRO number process will need to be done in advance of an A1 form being prepared.
Getting ahead of the rush
Although the CRO has not announced the exact date when the CORE portal will be ready to support this new requirement, our company secretarial team foresee that this will be in place in the next 12 months. Having a PPS number in place well in advance of the requirement also means that there will be nothing in the way of filing your annual return. It is likely that Revenue will be inundated with PPS number applications when this goes live and the CRO will equally be inundated with applications for CRO numbers, especially when we arrive at peak filing season in late Quarter 3 of the year. If your PPS number or CRO number is delayed due to a rush of applications and in turn, you cannot file your annual return, your company will lose audit exemption for two years and incur daily late filing fees which is a costly burden on small companies.
It is also worth noting if you are a proprietary director of an Irish company (meaning you are a director who owns 15% or more of the ordinary shares in the company), you are legally obliged to register for a PPS number and required to file a self-assessed tax return each year in your capacity as a proprietary director.
Currently, the turnaround time for PPS numbers is 8-12 weeks and Revenue are not experiencing a backlog at present. The wait time for a PPS number increased to 20 weeks when the RBO portal went live in November 2019, and we expect the same surge to happen when the PPS requirement under The Companies (Corporate Enforcement Authority) Act 2021 commences so we cannot urge you enough to get your PPS applications in sooner rather than later to avoid costly consequences.
The Registrar of Companies, Maureen O’Sullivan, advised at a recent conference that 10% of directors on Irish companies are not resident in Ireland and for that reason, most likely do not have a PPS number. This will create quite a rush (for either a PPS number or a CRO number) when the requirement goes live. As for the 90% of directors on Irish companies that are likely to have a PPS number, they should ensure that the details held by the Department of Employment Affairs and Social Protection match the details that the CRO holds for them. For example, if an individual’s DEASP records has their maiden name, but the CRO has the person’s married name, when the PPS number is used on CRO forms, the information may clash and the filing may not be possible.
The Registrar also advised that the CRO is currently working on a system to verify PPS numbers against the DEASP records in real-time, something not currently possible on the RBO system. Maureen also noted that she expects this new requirement to be in place by early 2023 and the biggest challenge is setting up the system.
Summary of the benefits
The benefits of this upcoming change are as follows;
- The risk of Identify theft will decrease
- The CRO will assist Designated Persons in the company director identification and verification
- Greater transparency across government bodies will be achieved, enhancing Ireland’s charm to foreign investors
- The possibility of getting ahead of the rush by arranging a PPS number now
- The option to use a digital signature in the form of a ROS certificate where a PPS number has been obtained
Company Bureau is delighted to offer a PPS Number Service. You can order a director PPS number from us now by filling in our short online form. Alternatively, you can contact us or call +353(0)1 6461625 and a member of our team would be happy to assist you.
Disclaimer This article is for guidance purposes only. It does not constitute legal or professional advice. No liability is accepted by Company Bureau for any action taken or not taken in reliance on the information set out in this article. Professional or legal advice should be obtained before taking or refraining from any action as a result of this article. Any and all information is subject to change.