Thursday Network Group Seminar, Conrad Hotel, 12 March 2002

1. Thursday Network Group Seminar, Conrad Hotel, 12 March 2002 “Compliance – Building Business on a Solid Foundation” Paul Appleby Director of Corporate Enforcement

2. Outline of Presentation • The Compliance Deficit • Achieving a Compliance Culture • Knowledge of Compliance Requirements • Proper Reporting Arrangements • Effective Enforcement • Closing Comments

3. The Compliance Deficit (1) • Where? Recent examples include: • Crime • Taxation • Planning • Waste • Inadequate legislation (and enforcement) (and resources)

4. The Compliance Deficit (2) • “Irish company law has been characterised bya culture of non-compliance…” • “Enforcement of the law in relation to non-registration offences has been very rare and wholly unpredictable…” • (Offenders) “have little reason to fear detection or prosecution…” • “…the sound of the enforcer’s footsteps on the beat is simply never heard…” - McDowell Working Group Report (1998)

5. The Compliance Deficit (3) Why Bother with Compliance? • Our Reputation as a Place to do Business • Our Need to have an Ordered Society • Our Need to minimise Business Risks • Our Need for Sound Competitive Enterprise • Protection of Business and Government Revenue

6. The Compliance Deficit (4) Approach of the McDowell Group • Codify and Simplify Company Law • Extend/Improve Enforcement Measures • Establish a Dedicated Enforcement Office • Maintain the Companies Registration Office Role

7. Achieving a Compliance Culture (1) Corrective Measures by Government • Two Companies Acts (1999) • Auditing Review Group (2000) • Company Law Enforcement Act (2001) • Establishment of the ODCE (2001) • Company Law Review Group Report (2002)

8. Achieving a Compliance Culture (2) Timetable for Commencement of Act • Many Provisions in Effect, including: • Company Investigations • Company Law Prosecutions • Restrictions and Disqualifications • A number of CRO Enforcement Measures • Outstanding Provisions include: • Winding up and Insolvency (possibly May)

9. Achieving a Compliance Culture (3) • What guidance did the McDowell Group give? • “…to make non-compliance more bothersome than compliance…” • What guidance does the Enforcement Act offer? • “to encourage compliance with the Companies Acts”

10. Achieving a Compliance Culture (4) Key Elements of ODCE Strategy • Provide Informative Non-Technical Material on People’s Legal Obligations under Company Law • Help People to articulate their Concerns about Suspected Company Law Malpractice • Bring to Account those who breach the Law

11. Knowledge of Compliance Requirements(1) • Presentations/Meetings • Consultation Papers/Decision Notices • Information Notes • Companies, Directors, Creditors, Auditors, etc. • Company Law Enforcement Act 2001 • Company “Life Event” Guidance (planned)

12. Knowledge of Compliance Requirements (2) • Source of Compliance Information • ODCE website at www.odce.ie • Other ODCE Services • Record of Enforcement Actions • Company “Life Event” Markers (planned) • Complaint, Consultation, etc. Services

13. Proper Reporting Arrangements (1) • Auditors • Failure to keep Proper Books of Account • Other Indictable Offences (new provision) • Professional Bodies • Indictable Offences by Members (new) • Liquidators • Directors’ Conduct in Insolvent Companies (new) • Criminal Offences by Directors/Members

14. Proper Reporting Arrangements (2) • Voluntary Reporting also welcome • Complaint Form • Confidentiality • Information Gateways • Other Possible Initiatives

15. Effective Enforcement (1) • Fact-finding Company Investigations • Detected Breaches of the Acts • Seek to impose an administrative fine • Initiate a summary prosecution • Refer the case to the DPP for decision

16. Effective Enforcement (2) • Restriction of Company Directors • Disqualification of Company Officers • Companies in Liquidation • Unliquidated Insolvent Companies • Other Associated Areas

17. Effective Enforcement (3) ODCE Resources • Annual Budget of €3.7 million • 20 administrative staff • 10 staff with legal/accounting qualifications • 7 Gardai

18. Closing Comments (1) What Directors Can Do • Maintain Basic Company Documents • Registers of Members, Directors and Secretary • Register of Directors’/Secretary’s interests • Register of Debenture Holders • Directors’ Service Contracts • Minute Books

19. Closing Comments (2) What Directors Can Do • Comply with Operational Obligations • Keep proper books of account • Hold the annual general meeting (AGM) • Circulate to members before every AGM a signed copy of the balance sheet, profit and loss account, directors’ and auditor’s report • Hold an extraordinary general meeting when circumstances require

20. Closing Comments (3) What Directors Can Do • Satisfy general CRO filing obligations • Change in constitution of company • Change in registered office • Change of directors/secretary • Increase in Nominal/Issued Capital • Annual Return • Mortgages and Charges

21. Closing Comments (4) Elements of a Compliant Environment • Simplified Legislation/Regulation • Accessible Compliance Information • Good Reporting of Non-Compliance • Effective Enforcement Arrangements