Institute of Directors in Ireland Conference on Corporate Governance 29 November 2001

Role and Functions of the Director of Corporate Enforcement Paul Appleby, Director

Outline of Talk  Introduction – how did we get here?  DCE’s Role – what will I be doing?  Timetable – what functions start and when?  Concluding Comment – what lies ahead?

The Key Drivers of Change  Public discontent with poor business standards, e.g., McCracken Tribunal Report (1997)  Working Group Report on Company Law Compliance and Enforcement (1998)  DIRT Inquiry Report (1999)  Company Law Enforcement Bill (2000)  Enactment of the Bill (2001)

Company Law Enforcement Act  Enforcement of filing obligations stays with the Registrar of Companies  New Director of Corporate Enforcement will deal with Companies Acts in general  Measures to streamline enforcement  Need for modern company law regime recognised in establishment of Company Law Review Group

ODCE Role and Powers (1) Compliance Role  Public presentations  Information strategies  Printed media  Electronic media  Engaging with professional bodies  Other Initiatives

ODCE Role and Powers (2) Fact-finding company investigations  Apply to have High Court Inspector appointed to conduct wide-ranging company inquiry  Establish directly a person’s interest in company shares and debentures  Examine privately a company’s books and documents

ODCE Role and Powers (3) Detected Breaches of the Acts  Seek to impose an administrative fine  Initiate a summary prosecution  Refer the case to the DPP for decision

ODCE Role and Powers (4) Insolvent Companies  Seek Court order to inspect the books  Seek to have Court examine directors, etc.  Seek Court order to search for and acquire property, etc.  Seek arrest warrant  Seek Court assessment of damages  Seek Asset-Freezing Order

ODCE Role and Powers (5) Disqualification of Company Officers ODCE can directly seek Court order of disqualification if:  Persons guilty of three or more defaults in relation to Companies Acts requirements  Persons guilty of two or more offences of failing to keep proper books  Directors of insolvent company fail on request to file all annual returns due and company is then struck-off

ODCE Role and Powers (6) Restriction of Company Officers  Liquidators of insolvent companies must apply to Court to restrict directors, unless exempted by ODCE  ODCE can directly seek Court declaration of restriction  Companies with a restricted director must have paid up share capital of € 63.5K or € 317.4K

ODCE Role and Powers (7) Supervision of Liquidators and Receivers  Will obtain copy of notice of appointment of liquidator/receiver from the Registrar  May require production of his/her books  May seek explanations of conduct  Receiver will require to state if company is solvent at the close of the receivership

ODCE Role and Powers (8) Other Measures  Mandatory reporting of suspected breaches of company law by auditors, liquidators, professional bodies  Regulation of undischarged bankrupts acting as company directors  Seek other Court orders/injunctions to remedy defaults  Increase in penalty provisions

Commencement Timetable (1) 1 October, 2001 or earlier:  Part 1 of the Act (Preliminary and General)  Part 7 (Company Law Review Group)  Part 9 (Transactions involving Directors)  24 sections, most in Part 10 (Miscellaneous)

Commencement Timetable (2) 28 November 2001:  Part 2 (Director of Corporate Enforcement)  Part 3 (Investigations) – most sections  Part 8 (Auditors)  Part 10 (Miscellaneous) – c. four sections

Commencement Timetable (3) Early 2002  Part 4 (Restrictions and Disqualifications) – most sections  Part 5 (Winding up and Insolvency) – most sections  Most of the remaining sections, including those relevant to the Registrar of Companies

Concluding Comment (1) Resources  Annual budget of € 3.68 million  20 administrative staff  10 staff with legal, accounting, etc. qualifications  7 Gardai

Concluding Comment (2) Immediate Plans  Prepare Company Law Compliance Statements  Expand the ODCE Website  Roll out the new Enforcement Act Powers  Develop the ODCE Role  Enforce suspected Companies Acts breaches

Concluding Comment (3) Issue being addressed by Government  Reducing red tape.v. regulation Balances to be struck by the ODCE  Information.v. advice  Public.v. private interest  Independence.v. accessibility  Publicity.v. confidentiality  Compliance.v. enforcement

Institute of Directors in Ireland Conference on Corporate Governance 29 November 2001