By Sinéad Floody ACG, 3rd April 2023 (Updated 8th May 2023)
The Companies (Corporate Enforcement Authority) Act 2021, what is expected?
The Act brought in some key changes to company law in Ireland, the main one being the establishment of the Corporate Enforcement Authority in place of the Office of the Director of Corporate Enforcement, however, another change that this act introduced was the requirement for all directors in Ireland to state their PPS numbers (or equivalent) on certain Companies Registration Office (CRO) forms.
What is the new PPS number requirement and what is involved?
This new requirement, from 11th June 2023, demands all directors in Ireland to input their Personal Public Service Number (PPSN or PPS number) on certain CRO forms. However, with thousands of directors of Irish companies being non-resident in Ireland, many of them may not have a PPS number, and so requiring them to register for PPS numbers all at once could overwhelm the Department of Social Protection, causing huge delays. To avoid this, the CRO has introduced its own identification number to be used in place of a PPS number called an Identified Person Number or ‘IPN’.
The CRO has coined the application form for an IPN a ‘VIF’ or ‘Verification of Identity for CRO and RBO’. Using this method will help with reducing the pressure on the Department of Social Protection and is available to apply for directly from the CRO.
The requirement for a PPS number or IPN is identical to the current requirements within the Register of Beneficial Ownership (RBO). Currently, the RBO either requires a PPS number or an RBO number to register a beneficial owner on their system. The RBO number can be used as an IPN as both numbers are interchangeable and will soon be merged into one when the requirement goes live in the coming weeks.
What changes can company directors expect?
Company directors who do not currently hold a PPS number or an RBO number can expect some delays when making certain filings with the CRO. The CRO will require a PPS/RBO/IPN number on all A1s, B1s, B10s, and B69 forms.
In the case of an individual intending to register their first Irish company, who does not have a PPS number, they will need to go through the VIF process to obtain an IPN in advance of submitting their A1 to incorporate a company. This will delay the incorporation of their company as it adds an extra step to the incorporation process. The CRO is currently taking 6 working days to incorporate a company and this wait time is expected to increase when the new requirement goes live.
Before a B1 annual return can be submitted to CRO, all directors must either hold a PPS number, RBO number, or IPN, and the particulars contained on the B1 must match the Department of Social Protection records as mentioned earlier. For directors who do not currently hold a PPS number or an RBO number, the VIF process to obtain an IPN will be required before the submission of the annual return, adding a delay due to this extra step. Where a PPS number is not matching the Department of Social Protection, the B1 will be returned to the presenter and the data subject will need to confirm their details with the Department of Social Protection, again causing delays to the filing of this form.
In the case of a B10 appointing an incoming director, akin to the A1, the director must have either a PPS number or an RBO number, or else they will need to go through the VIF process to obtain an IPN in advance of submitting the B10. This will delay their official appointment to the company as it adds an extra step and again, the PPS number particulars will need to match those held by the Department of Social Protection.
In the case of a B10 amending the details of a current director, resigning an outgoing director, or registering the passing of a director, the same rules apply in that the person must have a PPS number, RBO number, or IPN before filing the B10.
Where an individual wishes to resign themselves forcefully from a company on a B69 form, they will need to hold a PPS number, RBO number, or IPN before making this filing, so this could result in delays in the CRO recording their official resignation from the company.
Another way this new requirement could delay matters is where a PPS number or an existing RBO number has conflicting particulars and an example of this could be that the PPS number registered with the Department of Social Protection has a director’s name down as Patrick O’Connor. However, Patrick has been called Kevin his whole life and registered all his companies under Kevin O’Connor. This will be a problem as the PPS number will not match the information held on CRO. This could cause issues when filing the above-mentioned forms.
The CRO has advised that they will be taking a common-sense approach to compare information on the PPS number and their system and they stated recently that they will allow a margin of error of up to 20%. This means that if Patrick O’Connor registered his companies under the name Pat O’Connor, the CRO should pass this as a match. However, the names Kevin and Patrick are completely different and the CRO would conclude that they clash in this instance and disallow a filing to be made.
We have cause to believe that the reason for the CRO’s go-live date being deferred is due to the introduction of a field for an alternate name which could solve the issues noted above. This will be very helpful to PPSN holders, with other names (like the example above of Kevin and Patrick) so we hope this will go ahead.
What are the benefits of this new requirement?
The benefit of this requirement is to protect the identity of directors. In 2020, The Irish Independent reported on hundreds of companies that were set up through the CRO using stolen identities. At present, it is simple for anyone to extract sensitive data from the CRO to steal someone’s identity. For example, if you download an A1, B10, or B1 form, you will be able to view a director’s name, address, date of birth, nationality, occupation, and in most cases, signature. Publishing information such as this makes it very easy to replicate and set up a company under someone else’s name. This new requirement ensures that no director can be appointed to the CRO without essentially identifying themselves using their PPS number or their IPN . The number when used will not be visible to the public and will be stored in a hashed manner by the CRO.
Identity validation checks – what exactly does this involve?
When a director registers for a PPS number with the Department of Social Protection, they are required to prove their identity and where they reside. When an RBO number is obtained, a BEN2 form is completed which includes a list of particulars such as name, address, date of birth, and residential address. The BEN2 is then certified in a manner dependent on where in the world the person is. If the person is in Ireland, they can have a commissioner for oaths or another person capable of making statutory declarations, certify the BEN2 form for them, but if they are outside Ireland, a registered notary is required to certify the information on the BEN2 form. The BEN2 form is then submitted to the RBO and the RBO issue the number upon receipt. The VIF process to obtain an IPN mirrors the BEN2 process and will replace it when the new requirement goes live in the coming weeks.
When a PPS number is provided to the CRO on a form, the CRO will run it through a system that checks it against the Department of Social Protection’s records for a match. Once a match is found, the filing can be submitted. When an IPN or RBO number is provided, the CRO will check against their records held to ensure a match to allow the submission.
What does this mean for directors of Irish companies?
We have not been advised how this will affect directors in terms of their company now being linked to their PPS number. However, from a practical perspective, if a director is taking a salary, it is most likely they already have a PPS number to pay tax on that salary so Revenue would already be aware of the link between the PPS holder and the company.
Will the PPS number be protected from documents accessible to the public?
Yes. Your PPS number (or IPN) will only be visible to the filer/presenter of the form that you are submitting so you must use a corporate services provider that has robust privacy and GDPR policies in place, as well as secure IT systems to protect your information. The public will not see your PPS number on any form and CRO employees will only see a hashed version of the PPS.
How to prepare for this new requirement
The best way to prepare for this new requirement is by confirming whether you have either a PPS number or an RBO number at present. If you do not have either of these, you can go ahead and register for a PPS number now which can take up to 8 weeks, or else you can wait for the CRO to bring in their new process for obtaining an IPN in the coming days, which by design will be issued faster than a PPS number.
If you do have an RBO number, make sure you have it to hand so it’s ready for your company secretary or corporate services provider when it comes to any filings that need to be made. If you have a PPS number and you are not sure if your particulars held by the Department of Social Protection match that of the CRO, now is the time to ensure these are a match.
In summary, we urge you to make sure you are prepared for this requirement that now has an official go-live date of 11th June 2023. Failing to prepare for this could have grave consequences such as companies being incorporated late, which could result in missed deals or contracts, or annual return deadlines being missed which results in large fines and loss of audit exemption for two years. Please contact us if you have any questions. Our Corporate Services Manager Sinead Floody has worked closely with the CRO on this new requirement and will be able to answer your questions.
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.