Section 137 of the Companies Act 2014 sets a requirement for every company registered in the Republic of Ireland to have at least one director who is resident in the European Economic Area (EEA).

The EEA comprises the 27 EU countries plus Iceland, Liechtenstein, and Norway. The requirement for an EEA-resident director is not just a formality; it is a legal obligation that carries significant consequences if not met.

Alternatives to having an EEA resident director.

For companies that cannot appoint an EEA-resident director, there are two main alternatives:

Section 137 Bond: Usually issued through an insurance company, the bond is a financial instrument which exempts companies registered in the Republic of Ireland from the requirement to have a Director who is resident in the EEA.

The bond covers the company to the amount of €25,000 and is used to pay fines and penalties should they occur, including fines imposed on the Company in respect of offences under the Companies Acts 2014 and any penalties and fines which the company has been held liable to pay under S1071 or S1073 of the Taxes Consolidation Act 1997.

Application to show Economic Link: Companies can apply to the Irish Revenue Commissioners for an exemption based on having a “real and continuous economic link with the State.”

This exemption is granted on a case-by-case basis and requires substantial evidence of the company’s economic activities within Ireland.

Legal Implications of Non-Compliance

It should be noted that it is a criminal offence not to have at least one EEA resident Director, a Section 137 Bond or a current Section 140 certificate (Real and Continuous Link) in place. Non- compliance of Section 137 of the Companies Act 2014 shall mean the company concerned or any officer of the company who is in default shall be guilty of a Category 4 offence, (a summary offence only, punishable by the imposition of a Class A fine – fine not exceeding €5,000)

Failing to have an EEA-resident director (or one of the alternatives) is also one of the 127 “indictable” offences that auditors are required to report to the Irish Corporate Enforcement Authority.

How can CFI help?

Whether opting for a Section 137 Bond or applying for an exemption, CFI can assist your company to meet it’s legal obligations.

For more information on both options, please download our factsheets:

Section 137 Bond Economic Link