A Section 137 bond is the most common solution for Irish companies where no director is resident in an EEA state. This guide explains the requirement and how to comply.
What Is the Section 137 Requirement?
Under Section 137 of the Companies Act 2014, all Irish companies must have at least one director who is resident in an EEA state.
Section 137(1): “One, at least, of the directors for the time being of a company shall be a person who is resident in an EEA state.”
The European Economic Area (EEA) includes all EU member states, plus Iceland, Liechtenstein and Norway.
What Happens If You Don’t Have an EEA-Resident Director?
A company without an EEA-resident director is in breach of Section 137, a Category 4 offence. This summary offence can lead to:
- A Class A fine (up to €5,000) for the company and its officers
- Potential involuntary strike-off
- Inability to file statutory returns
The Solution: The Section 137 Bond (Surety Bond)
Where no EEA-resident director can be appointed, the company can instead put in place a Surety Bond.
Section 137(2) allows exemption from the EEA-resident director rule if a €25,000 bond is held, covering specific liabilities.
What Does the Section 137 Bond Cover?
The bond guarantees payment (up to €25,000) for:
- Fines under the Companies Act 2014, prosecuted by the Registrar of Companies
- Fines under Section 1078 of the Taxes Consolidation Act 1997
- Penalties under Sections 1071 or 1073 of the Taxes Consolidation Act 1997
This is not an insurance policy—it’s a financial guarantee that allows the State to recover unpaid fines or taxes if the company leaves the jurisdiction.
Key Bond Details:
- Bond Value: €25,000
- Duration: Minimum of 2 years
- Start Date: Must align with the relevant event (e.g., date of incorporation or change in director residency)
Types of Bond Applications:
1. Non-Registered Company Application (at Incorporation)
- Effective from date of incorporation
- Tick the S.137 bond box on Form A1 to avoid delays
- Bond must be dated no more than 4 working days before incorporation (excluding the incorporation date)
2. Registered Company Application (Post-Incorporation)
Used when a company changes to having no EEA-resident director, e.g.:
- A director changes residency to a non-EEA address
- A B10 must be submitted detailing the change
- The bond must be dated to coincide with the change in residency
- TIP: Reference the B10 submission number in your CRO note
Brexit Note:
If a UK-based director is now non-EEA, a bond dated 01/01/2021 must be submitted and a B10 filed.
How to Apply for a Section 137 Bond
- Complete an application with a recognised bond provider
- Include:
- Company and officer details
- Presenter’s information
- Required bond start date
- Submit via wet ink or electronic signature, as required by the bond issuer
- Once issued, the original sealed bond must be submitted to the CRO
Important:
The bond is only considered effective once registered with the CRO. Failure to do so leaves the company in breach of Section 137.
Is There an Alternative to the Section 137 Bond?
Yes — the Real and Continuous Link Exemption.
If a company can prove that it:
- Has a person working from an Irish location managing the business, or
- Carries on genuine trading activity in the State
…it may apply for a Real and Continuous Link certificate from the CRO. Once granted, this certificate exempts the company from needing an EEA-resident director, as long as it remains valid.
This exemption was previously known as the Section 140 certificate.
Need Help with Section 137 Compliance?
Our Company Secretarial team can assist with:
- Section 137 Bond applications
- Real and Continuous Link exemptions
- Director changes and B10 submissions
- Incorporations requiring special compliance
Contact us today
