Section 137 Non-EEA Resident Directors Bond
The Bond acts like an insurance policy for unpaid taxes or fines
In the Companies Act 2014 under section 137, it states that there is a requirement for at least one Director of an Irish company to be resident in a Member State of the EEA. If this condition is not fulfilled, then a bond must be required.
While the UK has been treated as a member of the EEA during the period of transition, this will cease on 1 January 2021. This will affect UK companies and individuals that have a registered company in Ireland using a UK resident director. As of 1 January 2021, they will be without an EEA resident director.
In the event where a company does not have an EEA resident director, they can use a Non-resident Director bond. This is often referred to as a Surety Bond or Insurance bond. You are not required to have an EEA resident director if you have a Non-resident Director bond. The bond must be in place for a two-year period. It must be to the value of €25,000. The requirement concerns residency rather than nationality or citizenship, for example, a company director holding an Irish passport but residing outside of the EEA would not satisfy the requirement.
This bond provides that in the event of a failure by the Irish company to pay:
A sum of money becomes payable under the bond to cover the whole or part of the company’s liability in respect to this fine or penalty.
If you do not have a Section 137 Bond in place it is a criminal offence not to have at least one EEA-resident director of an Irish-registered company.
The company and every officer of the company who is in default may be prosecuted in this regard.
The Registrar of Companies is empowered to bring proceedings before the Dublin Metropolitan District Court for breach of the requirement to have an EEA-resident director
For new companies, the bond must be effective from the date of incorporation. The CRO will require the Bond number before they complete the incorporation.
The effective date of the bond may not exceed four working days prior to the date of the
company’s incorporation, exclusive of the incorporation date.
The words “Bond Enclosed” must be written on the accompanying envelope and the relevant box on the cover page of Form A1 must be ticked.
When a bond is being filed for an existing company:
In some situations, the Irish company may be able to show it has a real and continuous link with activities being carried out in the state. The company may not require an EEA resident Director or a Section 137 Bond.
To get this certificate, the company will need to show Revenue (Irish tax authority) that:
An example could be a company that is a shop, restaurant or even a creche. Even if these companies have only Non-EEA resident Directors, a strong case can be made that these businesses have a real and continuous link in Ireland.
A nominee Director has the very same responsibilities as any other Director in the company. They are still legally required to act in the best interest of the company.
This service can be attractive to companies who need to fulfil the criteria of having an EEA-resident Director in order to incorporate or maintain a company in Ireland.
A nominee Director is more expensive then a Section 137 Bond. In most cases, the Section 137 Bond is a better option for the company shareholders.
A S.137 bond generally takes up to 10 working days to process from the date we receive the signed proposal form by a company director and secretary.
It is important to note that the S.137 Bond proposal form states that the company understands and accepts its obligations to both the Revenue Commissioners and the Registrar of Companies. It also contains a statement that the company will indemnify the Bond provider in the event of any claim.
As a specialist Corporate services provider in Ireland we can help you with any of the above services:
The €25000 amount you pay for the S.137 Bond is valid for 2 years.
It is basically the insured money of €25000 to the government. But it does not cover all the late filing penalties. For example, if you are late in filing your annual returns to the CRO, you will lose your audit exemption on your accounts and you may end up paying additional fines of up to €1200. These amounts are not covered in bond insurance. SO, it is advisable to file your annual returns on time. Contact us to take care of your Annual Returns and tax services.
Typically, in the 2 years, the company has the chance to find an EU resident director. The bond fees are not refundable.
Non-resident directors can either take salary or dividends from an Irish limited company. Basically, there are two options for Directors to pay themselves and the one you choose can depend on your personal situation. There are different tax rules for each type and speaking to our accountants who can understand your company can help you decide how you should pay non-resident Directors.
LEE JONES, FLUOROCHEM
"Working with Nathan Trust for our Irish company setup has been a positive experience. They helped us with everything, company setup, VAT registration and help with opening a Bank of Ireland bank account. Very responsive and great to deal with and they will continue to help us with accounting and bookkeeping in Ireland. Nathan Trust and Ireland are great options for any UK company looking to continue trading in the EU."
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