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 by a 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.iewww.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