Irish Companies for non-EEA Residents

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Who should read this?

This article is written for non-EEA residents who want to establish an Irish company without appointing an EEA-resident director. It's also useful for corporate service providers who assist clients with Irish company formations.

Key Takeaways

Irish companies must have at least one EEA-resident director or secure a Section 137 Bond of €25,000
The Bond costs approximately €1,600 for a two-year period
The application process is fully digital via DocuSign and takes 7-10 working days
The Bond provides €25,000 coverage for company fines, penalties, and related recovery expenses
Non-compliance with the EEA director requirement can result in prosecution
The Bond must be renewed every two years to maintain compliance
Alternative options include appointing an EEA-resident director or claiming the "real and continuous link" exemption

Understanding the Section 137 Bond Requirement

Irish company law requires that at least one director of an Irish registered company be resident in the European Economic Area (EEA) at all times.

The EEA comprises the EU member states plus Iceland, Norway, and Liechtenstein. This requirement can present a challenge for entrepreneurs and businesses from outside the EEA who wish to establish an Irish company.

Fortunately, Section 137(1) of the Irish Companies Act 2014 provides an alternative solution: the Section 137 Bond. This bond effectively exempts Irish companies from the EEA-resident director requirement, making it possible for non-EEA residents to establish and operate Irish companies without appointing an EEA-resident director.

What is a Section 137 Bond?

A Section 137 Bond is basically an insurance policy taken out in favour of the Irish Revenue Commissioners. The bond provides coverage of €25,000 and serves as financial security to ensure compliance with Irish company and tax laws.

The bond specifically covers:

Fines imposed on the company for offences under the Companies Act 2014, such as failure to file Annual Returns and Financial Statements on time
Penalties for failing to provide required information to the Revenue Commissioners, particularly information required on Form CRO 11F
Any penalties the company becomes liable for under Irish tax legislation
Expenses incurred in recovering these fines and penalties

Cost and Duration of the Bond

The total premium for a Section 137 Bond is approximately €1,600, which typically includes:

The insurance premium
Government levies
A processing fee from the insurer (often around €200)

This premium covers a two-year period with a limit of indemnity of €25,000. It's important to note that the bond must be renewed every two years at the same cost to maintain compliance with the Companies Act.

The Application Process

The application process for a Section 137 Bond has been traditionally tedious and paper based. Open Forest has solved this with our insurance company partner. Here's what you need to know:

Digital Application

The application is completed entirely online using DocuSign, eliminating the need for wet signatures or physical documents. This makes the process accessible for applicants regardless of their location.

Required Participants

The application requires the involvement of three parties:

The person completing the application form
A director approving the application
Another director or company secretary also approving the application (Open Forest can be appointed as your company secretary through our incorporation process.

Timeline

Once the completed application form and premium payment are received, the bond typically takes 5-7 working days to process. Many service providers can expedite this process when necessary.

Information Required

To initiate the application, you'll need to go through our incorporation process on our website and we will consult with you about the bond. We will know that you need one based on the addresses of the stakeholders.

Alternatives to the Section 137 Bond

While the Section 137 Bond is a straightforward solution, there are alternatives worth considering:

Appointing an EEA-Resident Director

The most direct alternative is to appoint at least one director who is resident in the EEA. This eliminates the need for the bond entirely. There are professional services firms out there that will provide non-executive directors but they can cost around €4,000 per year. Note that only individuals can be directors or Irish companies, rather than another company acting as director.

The "Real and Continuous Link" Exemption

Companies can also apply for an exemption from the bond requirement by demonstrating a "real and continuous link" with one or more economic activities in Ireland. This requires obtaining a certificate from the Revenue Commissioners confirming this link.

Compliance Considerations

Non-compliance with the EEA-resident director requirement or failure to secure a Section 137 Bond can result in serious consequences, including prosecution of the company and its officers. It's essential to address this requirement either by appointing an EEA-resident director or by securing and maintaining a valid Section 137 Bond.

Conclusion

The Section 137 Bond provides a practical (but somewhat expensive) solution for non-EEA residents who wish to establish and operate Irish companies without appointing an EEA-resident director. The process is straightforward and fully digital, making it accessible regardless of your location.

By understanding the requirements and process for securing a Section 137 Bond, non-EEA entrepreneurs and businesses can confidently establish their presence in Ireland, taking advantage of the country's favourable business environment while remaining fully compliant with Irish company law.

Frequently Asked Questions (FAQs)

Can I operate an Irish company without any EEA-resident directors?

Yes, you can operate an Irish company without EEA-resident directors by putting in place a Section 137 Bond of €25,000 or by obtaining a certificate confirming a "real and continuous link" with economic activities in Ireland.

How long does the Section 137 Bond remain valid?

The Section 137 Bond is valid for two years. After this period, it must be renewed to maintain compliance with the Companies Act requirement regarding EEA-resident directors.

Can the requirement for a Section 137 Bond be waived?

The requirement can be waived if the company appoints at least one EEA-resident director or if it obtains a certificate from the Revenue Commissioners confirming a "real and continuous link" with economic activities in Ireland.

What happens if my company doesn't comply with the EEA-resident director requirement?

Non-compliance can result in prosecution of the company and its officers. It's essential to either appoint an EEA-resident director or secure a Section 137 Bond to ensure compliance.

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