Institute of Chartered Secretaries and Administrators Annual Conference

Institute of Chartered Secretaries and Administrators Annual Conference 2003 15 October 2003

“Over-Regulation – Fact or Fiction? ” The ODCE’s Developing Role Paul Appleby, Director

Outline of Presentation • • The ODCE’s Principal Goals ODCE Compliance Work ODCE Investigations Insolvent Companies Civil Proceedings by the ODCE Criminal Proceedings by the ODCE Concluding Comments

The ODCE’s Principal Goals • • Improving Company Law Compliance Uncovering Suspected Breaches Pursuing Detected Breaches Sanctioning Improper Conduct in Insolvent Companies • Providing Quality Services

ODCE Compliance Work (1) Publishing Accessible Information • Seven Information Books on Obligations/Duties • Scope of Auditor Mandatory Reporting Requirement • Liquidation-Related Functions of the ODCE • ODCE Strategy Statement and Annual Reports

ODCE Compliance Work (2) Promoting Compliance • • • Programme of Presentations, Articles, etc. Engaging with Business via Consultation Papers Website Development Media Queries Effective Enforcement

ODCE Compliance Work (3) Improving Company Related Provisions • Supporting the Company Law Review Group • Assisting the planned Irish Auditing and Accounting Supervisory Authority • Advising the Department of Enterprise Trade and Employment on Compliance/Enforcement Issues • Strengthening Professional Standards

ODCE Investigations (1) Auditor Reports of Suspected Indictable Offences Volumes: 400 in 2002; 1, 100 so far in 2003 Breaches: 75% relate to Filing/Similar Offences 15% are about Directors’ Loans 7% deal with Failing to hold EGMs 3% relate to Inadequate Books, etc. Actions: Filing Offences referred to the CRO Most of the rest are under investigation

ODCE Investigations (2) Public Complaints Volumes: 200 in 2002; 250 so far in 2003 Offences: 35% disclose no Company Law Issues 21% relate to Civil Matters/Debt Issues 15% are filing defaults 29% cover a range of issues Actions: Many closed, others being assessed

ODCE Investigations (3) Matters of Public Record • Tribunal of Inquiry/Inspector Reports • Media Disclosures • CRO Database Inter-Agency Co-operation • Garda Siochana • MOUs planned with Revenue, IFSRA, etc.

ODCE Investigations (4) Approaches to Investigation • Correspondence/Discussions • Seeking Original Documents • Taking of Statements Non-Legal Outcomes to Investigations • File Closure • Referral to Other Authorities • Warning Letter

ODCE Investigations (5) Legal Powers Used 2002 Search Warrants 5 Bankers’ Books 7 Arrests Detentions - 2003 so far 10 13 6 3

Insolvent Companies (1) Phased Commencement • 1 June 2002: insolvent companies to which a liquidator was newly appointed or was appointed on or after 1 July 2001 • 1 June 2003: insolvent companies to which a liquidator was appointed on or after 1 January 2000

Insolvent Companies (2) Volumes Liquidator Reports Cases Determined Full Relief Partial Relief at this time No Relief 2002 579 4 4 - 2003 so far 575 503 262 (52%) 22 (4. 4%) 31 (6. 2%) 182 (36%)

Insolvent Companies (3) • Some Section 56 Reports under criminal investigation • Notable Absence of Section 299 Reports • Unliquidated Insolvent Companies • Restricted/Disqualified Directors • Supervision of Liquidators (Demands for 20+ Companies in Liquidation)

Civil Proceedings (1) Civil Enforcement 2002 Compliance Order Disqualifications Property Seizure Seeking Information 2 Judicial Review 1 2003 so far 7 1 1 1

Civil Proceedings (2) Restriction Applications by Liquidators • Some 400 directors before the High Court to date Planned ODCE Restriction Applications • Directors of Unliquidated Insolvent Companies Planned ODCE Disqualification Applications • Directors of Struck-Off Companies and Others

Criminal Proceedings (1) Criminal Enforcement 2002 2003 so far Convictions: 20 40+ Offences: Failing to Keep Proper Books Falsification of Documents Undischarged Bankrupts Directors’ Loans Unqualified Auditor

Criminal Proceedings (2) Pipeline Cases (by type) • Directors’ Loans • Undischarged Bankrupts • Inadequate Books • Restricted Directors • Falsification of Documents • Trading while Dissolved • Disqualified Auditors • External Companies

Concluding Comments (1) Current Areas for ODCE Attention • • • Compliance Work is in continuing demand More Information on Misconduct needed Completion of Investigations a priority Liquidated/Dissolved/Abandoned Company Work Initiating and Completing Court Proceedings

Concluding Comments (2) Over-Regulation – Fact or Fiction? • Arguable Case that Companies Acts and other laws need to be streamlined and modernised • A Lax Enforcement Environment up to recently • Regulators, etc. are having to change the Culture • ODCE adopting a reasonable approach to its role • Do not believe that Over-Regulation applies in the manner in which we discharge our duties

Concluding Comments (3) Companies Acts Compliance Benefits • Enhancing Consumer Information/Welfare • Improving Integrity of Accounts • Reducing Tax Evasion • Lowering Risks for Creditors • Improving Business Reputation and Competitiveness