Institute of Chartered Secretaries and Administrators

1. Institute of Chartered Secretaries and Administrators Annual Conference 2005 12 October 2005

2. Company Law Regulation - ODCE What’s on the ODCE’s Agenda? Paul Appleby Director of Corporate Enforcement

3. Outline of Presentation • ODCE’s Goals/Results • Compliance • Detection • Enforcement • Insolvency • Concluding Comments

4. ODCE Goals • Encouraging Improved Compliance • Uncovering Suspected Breaches • Prosecuting Detected Offences • Sanctioning Improper Conduct affecting Insolvent Companies • Quality Customer Services

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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)

12. 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

13. 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

14. 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

15. 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

16. Thank You Further Information is available from www. odce. ie