Using a Company Subsidiary as an Only Representative

“In many cases, non-EU manufacturers of chemicals are using their subsidiaries to fulfil REACH responsibilities on behalf of their EU importing customers. They are as a result appointed as an only representative (OR).

supp-resized-6001Under REACH, a legal person established outside the EU, who manufactures a substance, formulates a mixture or produces an article, can appoint an OR to carry out the required registration of the imported substance (such as, in a mixture or in an article) into the EU [Article 8(1)) of REACH].

The OR can be for example, a subsidiary within a company group or an external consulting company. But no matter who the OR is, they are legally responsible for fulfilling the obligations as set out in REACH Article 8.

The REACH Regulation states that the OR must have sufficient background in the practical handling of substances and the information related to them, to be able to fulfil its obligations. However, in many cases, this condition is not met and the OR might not even be aware of all the responsibilities the role requires.

In the event of an inspection by the national authorities, it is often too late to correct the mistakes made earlier without sanctions. If the substance covered by the OR agreement has not been duly registered, the inspection may result in a suspension of import, based on REACH Article 5 (no data, no market) and the applicable national rules governing REACH enforcement.

Enforcement

In the frame of the REACH En-Force 3 enforcement project, ORs showed the highest non-compliance rate (25%) compared to importers (15%) and manufacturers (7%). ORs are often non-compliant because of missing registrations, but also by breaching Article 8 of REACH regarding the duties of ORs, such as importer record keeping.

And as the inspection rate of ORs has been relatively low, they were the focus area in the second phase of the REACH En-Force 3 project. The results have not been published yet but it has been announced that the next major enforcement project will focus on restrictions.

OR responsibilities

An OR has many responsibilities; for legal clarity, there should be a written OR agreement in place, which clearly states the responsibilities of both the OR and the non-EU company. Key responsibilities of the OR include importer volume collection, pre-registration and registration of chemicals on time, keeping track of REACH updates and following the substance information exchange fora (Sief) communication in case of updates from the lead registrant.

The OR also needs to be available for third party requests and knowledgeable enough to handle various inquiries. This is why a multi-disciplinary team of specialists is needed, covering not only chemistry, but also legal know-how. IT skills are also very relevant as it has become best practice to have an IT system to manage the import volume collection and maintenance. Volume collection is often a key challenge for ORs.

For example, indirect supply chains can be very difficult to track. It is also important to protect confidential business information of the non-EU manufacturer and other actors in the import supply chain, such as formulators and distributors.

In subsidiary OR companies, there is often only a small team of people or even just one person to take care of the various responsibilities. This might also be a big risk for non-EU companies, as its business into the region might have to be interrupted if the OR doesn’t deal with everything. It is important to remember that REACH responsibilities do not end with registration.

Therefore, the OR has to be ready to carry out updates quickly. They also need to be able to respond to changes to the REACH Regulation and new data requirements and be able to predict the consequences of these for the non-EU manufacturer.

Choosing the right OR

It is important for a non-EU company to check regularly with its OR on how its responsibilities are being fulfilled.

If you never hear anything from your OR, there is a high risk that they are not doing their job. Before a company selects an OR, it should check the capabilities and systems they have in place. It is also possible to change the OR to secure the business and ensure compliance in the EU. It is also possible to use a subsidiary company as the OR, but outsource the actual work to external specialists, as far as it cannot be reliably performed in-house.It is always advised to determine the most safe, but also time- and cost-effective way to handle REACH obligations.

The main benefit of using a subsidiary as an OR is to retain more control, even if a consultant helps to take care of the actual work. For some non-EU companies it might also be important that their company can be recognised from the name of the registrant, as the disseminated name is that of the OR. It might be beneficial to use a subsidiary with a name that can be connected to the non-EU company.
The subsidiary company should also know the chemicals the company is working with, so the transfer of information is easier.

The main benefits of using a consultant as an OR is that there will most probably be fewer worries for the non-EU manufacturer as the legal responsibility of REACH lie with them. The agreement may of course still shift some of the responsibilities to the manufacturer. It is also the consultant who will be inspected if there are enforcement issues. Consultants can have long and varied experience of REACH issues, which can diminish the need for outside help.
However, both a subsidiary and a consultant OR are heavily relying on information coming from the non-EU company, so it is vital there is good communication between them.”


Source:

Article from Sini Suomela, project manager, REACHLaw
https://chemicalwatch.com/37266/using-a-company-subsidiary-as-an-or

Cet article n’engage que son auteur/ This article is the sole responsibility of the author

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