The CRO reported recently that one in 12 submissions are being rejected for mismatched identification of directors. If not addressed, this could have serious implications for the directors and the company.
Since 11 June 2023, when filing certain forms with the Companies Registration Office (“CRO”), company directors are required to provide their personal public service (“PPS”) number. This is intended to improve the accuracy of the CRO’s records and help tackle fraud.
Those filings include the following forms:
- Form A1 – Application to incorporate new companies
- Form B1 – Annual return submissions
- Notice of a change of director or secretary (B10 or B69)
Why are changes being implemented?
The PPS number will be used for identity verification to ensure that the company director is alive and is a natural person.
The identity verification of directors should help in improving the integrity of the information held by the CRO. The changes are aimed to reduce duplications of individuals on the CRO database and to combat the incorporation or continuation of fraudulent companies.
Is it working?
The CRO reports that its online vetting system is rejecting about 100 submissions each day. One sample taken towards the end of September revealed that 145 of 1,799 forms – that is 8% – were returned by the online system because of mismatches in data.
Most returns were due to a failure to match a director’s name with a PPSN. This could be due to a mismatch between birth dates (or no birth date returned) or discrepancies between the name used on the return and that registered for PPS purposes.
For example, if the name used to register for PPS purposes is David Jones, then this is what must appear on the relevant CRO form, not Dave Jones, Davy Jones or D R Jones even if one of those others is the name used for business or socially.
What are the consequences of non-compliance?
If any person fails to comply with this requirement, he or she shall be guilty of a category four offence which can result in the imposition of a fine of €5,000.
It will also mean a company cannot complete its filings and could suffer late filing penalties and possible loss of audit exemption.
What is required?
The PPS number of directors should be included on the relevant form at the time of their submission to the CRO.
The CRO will verify the director’s first name, surname, date of birth and PPS number submitted electronically with the data held by the Department of Social Protection (“DSP”). In order for there to be a match between the two sets of data, the first name and surname submitted to the CRO must exactly match the names associated with that PPS number in DSP’s database.
Where a match is not possible the form submitted to the CRO may be rejected. Such rejections could lead to late filing penalties, delays in meeting the Annual Return filing dates and possible loss of audit exemption.
Once the validation is complete, the PPS number details will be converted to an irreversible hashed/encrypted format and stored securely, so that future filings may be matched to individuals already listed on the CRO system. The PPS number will not be visible on the CRO system.
What happens if a director does not have a PPS number?
If a director does not have an Irish PPS number, then they must apply for a Verified Identity Number (“VIN”), by means of a Form VIF – Declaration as to Verification of Identity.
The Form VIF must state the name, date of birth, nationality and address of the director and it must be sworn in the presence of a notary in the home country of the director. Digital or electronic signatures cannot be accepted on the VIF.
Once the Form VIF has been processed successfully, a VIN will be issued by the CRO to the director and the presenter of the VIF. The VIN must then be used for all future CRO filings for any company to which that director is appointed.
If a director does not have a PPS number but has previously been issued with an RBO number for filings made with the Central Registrar of Beneficial Owners, then the director can use their RBO number as their VIN for CRO filings. Neither VIN nor RBO numbers will not be visible on the CRO system.
What are the next steps?
To ensure your company will be able to complete its filings, it is important to start gathering the relevant information. Ask directors to confirm their PPS numbers and their details held with the DSP so that this can be compared with the information held at the CRO.
Checking that the name and date of birth shown on their PPS are the same as those on the filing is an important step.
Where a company has overseas officers, it will be worthwhile seeking their RBO number or commencing the process to obtain a VIN as soon as possible.
DHKN’s Corporate Governance & Compliance team works with companies and directors to ensure they meet all statutory filing requirements on time and are structured for success.
For an informal discussion with our experts about how we can help your business match your ambition, contact me at firstname.lastname@example.org