Transcript Document

The Role & Powers of the Office of the
Director of Corporate Enforcement
Presentation to the
Dublin City University MBA Association
Corporate Governance Seminar
23rd February 2002
Ian Drennan
Corporate Compliance Manager, ODCE
Presentation Overview
• Background to the establishment of the ODCE
• Role & Powers of the ODCE
• Steps Company Directors Can Take To Improve
Compliance
Background to the
Establishment of the ODCE
• Increased public concern arising from a number of alleged
instances of corporate malpractice e.g. McCracken
(Ansbacher (Cayman) Ltd. etc.), Moriarty, Flood, NIB etc.
• Working Group on Company Law Compliance &
Enforcement (1998)
• DIRT Investigation (1999) and resultant reports
Working Group on Company
Law Compliance & Enforcement
• Established by Government and Chaired by Mr. Michael McDowell
SC AG
• Government’s decision to establish the Group was influenced by the
emergence of strong indications of abuses of company law and the
need to allay public concerns
• Membership comprised representatives from Government Departments
& Agencies, the business community and the legal and accountancy
professions
Report of the Working Group
• The Working Group, which reported in November 1998,
found, inter alia, that:
• Irish company law has been characterised by a culture of noncompliance
• enforcement of the law in relation to non-registration offences has
been very rare and wholly unpredictable
• those tempted to commit serious breaches have had little reason to
fear detection
How Change
Has Been Effected
• Two Companies Acts enacted in 1999 (dealing with, inter
alia, examinerships and audit exemptions)
• Review Group on Auditing, Chaired by Senator Joe
O’Toole, established post DIRT (reported in 2000)
• Enactment of the Company Law Enforcement Act, 2001
Company Law Enforcement
Act, 2001
 Enforcement of filing obligations remains with the Registrar of
Companies
 Company Law Review Group established, on a statutory basis, in
recognition of the need for a modern company law regime
 Office of Director of Corporate Enforcement established to deal
with Companies Acts in general
 Other measures introduced to streamline enforcement
Office of the Director
of Corporate Enforcement
• Director: Mr. Paul Appleby
• Staff of approximately 40 comprising legal and accounting
professionals, members of An Garda Síochana and
administrative staff
• Budget of approximately €3.7m per annum
Role and Powers of the ODCE
• Under the provisions of the Corporate Enforcement Act,
2001, the role of the ODCE is twofold i.e.
• a Compliance role, and;
• an Enforcement role
Compliance Role
• The ODCE will encourage compliance with the Companies
Acts through:
• The delivery of public presentations
• Pursuing information strategies through the electronic and printed
media e.g. Consultation Papers (2 issued to date)
• Decision Notices
• Engaging with relevant professional and represenative bodies
• Other initiatives as appropriate
Enforcement Role
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Company investigations
Breaches of the Companies Acts
Restriction
Disqualification
Unliquidated insolvent companies and companies in
liquidation
• Supervision of liquidators and receivers
• Other measures
Company Investigations
The Director may:
 conduct a preliminary examination of a company’s books and records
for the purposes of establishing whether breaches have taken place
 appoint an Inspector directly to establish the beneficial ownership and
control of a company’s shares/debentures
 apply to the High Court for the appointment of an Inspector to conduct
a wide-ranging inquiry
Breaches of the Acts
• Where breaches of the Companies Acts are detected, the
Director can:
 Impose a fine in respect of summary offences. (Where the fine is paid
and the default remedied within 21 days of notification, no
prosecution will ensue)
 Initiate a summary prosecution
 Refer the case to the DPP for decision
Restriction
• The Company Law Enforcement Act, 2001 requires the
liquidators of insolvent companies to apply to the Court for
the restriction of directors, unless exempted from doing so
by the Director
• The Director may also apply to the Court for restriction
orders e.g. against directors of unliquidated insolvent
companies
Disqualification
• The Director can seek a disqualification order from the
Court where:
 a person is guilty of three or more defaults in relation to Companies
Acts requirements
 where a person is guilty of two or more offences of failing to keep
proper books (new)
 a director of an insolvent company fails to file all annual returns due
and the company is subsequently struck off
Unliquidated Insolvent Companies
and Companies in Liquidation
In such cases, the Director can seek:
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a Court order to inspect books
to have Court examine directors, officers etc
a Court order to search for and acquire property, etc.
an arrest warrant
a Court assessment of damages
an Asset-Freezing Order
Other Measures
• Corporate Enforcement Act, 2001 introduced the mandatory
reporting of suspected breaches of company law by auditors,
liquidators and professional bodies
• Penalty provisions have been increased (maximum fines have been
increased to €1,900 (£1,500) and prison terms to 5 years)
• Director is responsible for the regulation of undischarged bankrupts
acting as company directors
• The Director may also seek other Court orders/injunctions
Steps Directors Can Take
• Ensure that general filing obligations are satisfied e.g.
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Annual return
Change in directors/secretary
Change of registered office
Increase in nominal/issued share capital
Registration of mortgages/charges
Steps Directors Can Take
• Ensure that the following are maintained, kept up to date
and are readily available for inspection:
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Minutes
Register of directors and secretary
Register of directors’/secretary’s interests
Directors’ service contracts
Register of members
Register of debenture holders
Steps Directors Can Take
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Hold regular Board meetings
Maintain proper books and records
Regularly prepare and review management accounts
Ensure that delegatees are properly supervised
Seek professional advice where necessary
Hold an AGM when required
Circulate members with signed financial statements and audit report in
advance of AGM
• Hold EGMs where the circumstances require
Conclusion
Immediate priorities of the ODCE are to:
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prepare Company Law Compliance Statements (ongoing)
expand the ODCE Website (http://www.odce.ie)
further develop the ODCE Role
enforce suspected Companies Acts breaches
End