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Institute of Chartered Secretaries and Administrators
Annual Conference 2005
12 October 2005
Company Law Regulation - ODCE
What’s on the ODCE’s Agenda?
Paul Appleby
Director of Corporate Enforcement
Outline of Presentation
• ODCE’s Goals/Results• Compliance• Detection• Enforcement• Insolvency• Concluding Comments
ODCE Goals
• Encouraging Improved Compliance
• Uncovering Suspected Breaches
• Prosecuting Detected Offences
• Sanctioning Improper Conduct affecting Insolvent Companies
• Quality Customer Services
ODCE Highlights in 2004
• Revised Guidance on Directors’ Compliance Statements• Rectification of Unlawful Directors’ Loans • 66 Convictions of Companies, etc. (+53% on 2003)• 217 Directors Restricted (up from 193 in 2003)• Three Directors Disqualified following ODCE action• ODCE Website Visits increased by 54% to 117,000
Compliance Agenda in 2005
• Participated in Review by CLRG of Directors’ Compliance Statements Provision
• Notes on parts of the Companies Act 2005 published• New Exemption for Auditors Reporting Filing Defaults• Planned Guidance on new Duty for Reporting Auditors
to provide assistance to the ODCE• Planned Guidance on new Audit Committee Provisions• Future Conduct of Market Research on ODCE and
Compliance
Detection Agenda in 2005
• 438 auditor non-filing indictable reports in the first half of the year (357 in H1, 2004)
• 220 public complaints, etc. in H1 (167 in H1, 2004)• Work-through of directors’ transactions cases ongoing• Review of Restricted Directors to assess compliance
with High Court orders• Review of Directors disqualified abroad• New/existing company investigations ongoing
Enforcement Agenda in 2005
• About 50 ODCE proceedings will be initiated (41 in 2004)
• Aim for more balance between civil/criminal proceedings• More ODCE disqualifications (10 to date; 3 in 2004)• Some 40 more disqualification applications in Court or to
be initiated shortly• Some of these arise from recent company investigations
Enforcement Agenda in 2005
• Consequential drop in convictions will occur (20 to date)• Convictions to date in respect of:
– persons acting as auditors while disqualified; – restricted persons acting as directors in breach of law– failing to keep proper books of account– knowingly lodging a materially false return in the CRO
Enforcement Agenda in 2005
• Current Criminal Proceedings in train/in prospect also include:– undischarged bankrupts acting as directors– unlawful directors’ transactions– falsification of company books and their use– trading while dissolved
Enforcement Agenda for 2005• Section 160(1), 1990 provides that a person is disqualified
for five years if “convicted on indictment of any indictable offence in relation to a company, or involving fraud or dishonesty”
• However, the identity of those individuals were not recorded on the CRO Register of Disqualified Persons
• Following ODCE/CRO/Courts Service contacts, these ‘deemed disqualifications’ are now being notified by the Courts Service - 600 disqualified directors now registered (10 at end-2004)
Insolvency Agenda for 2005
• Assessment of a further 1,000 liquidator reports this year• In about one case in every six of new insolvent
liquidations, directors are having to defend High Court restriction proceedings taken by liquidators
• Some 200 directors will be restricted this year • We continue to pursue defaulting liquidators• We are now involved in examining applications by
directors for relief from restriction or disqualification
Insolvency Agenda for 2005• Disqualification of Directors of ‘Struck-off Companies’
– First successful test cases initiated in 2004– Eight directors disqualified this year to date– Another 100 cases have since been selected. These were widely
spread throughout the country and across economic sectors– Correspondence issued to the 200 directors involved recently– Some 22 directors from 11 of these companies face imminent
disqualification proceedings – Other directors have satisfied us that their struck-off company
had no debts or that its debts have been discharged– The remaining cases are under active consideration
Concluding Comments
• Our compliance work is designed to secure voluntary compliance by directors in the interests of good order
• Where a problem is detected, correspondence may be sufficient to resolve the alleged company law default
• Where sanctions are deemed appropriate, Court action is pursued at the civil or criminal level
• We seek to give effect to the balance of stakeholder duties and obligations in company law and to bring potential abuse to the Courts’ attention for possible sanction
Concluding Comments• Company Secretaries have an important role in
keeping their clients compliant
• We have produced a ‘Corporate Health Check’ – Ten Steps that Every Company Director should take to help secure their Compliance with Company Law
• Company Secretaries may wish to encourage their clients to fulfil these basic duties
Thank You
Further Information is available from
www. odce. ie