Dublin Chamber of Commerce‘Bright and Early’ Briefing

24 April 2002

“Your Company and the Law”

Paul Appleby

Director of Corporate Enforcement

Outline of Presentation

What are the Responsibilities of Directors? ODCE – Why has it been established? ODCE Role – what is it doing? ODCE Services – what can we do for you? Where can you get company law information? Conclusion – where are we heading?

Directors’ Responsibilities (1)

The Company – a Separate Legal Person General Duties of Directors

Act in the Company’s (not Personal) Interest Act with Due Care, Skill and Diligence

Defined Legal Obligations/Constraints Disclosure Requirements

Directors’ Responsibilities (2)Company Documents to be kept,

updated and made available Register of Members Register of Directors and Secretary Register of Directors’/Secretary’s interests Register of debenture holders Directors’ Service Contracts Minute Books

Directors’ Responsibilities (3)

Basic Operational Obligations Keeping proper books of account Holding the annual general meeting (AGM) Circulating to members before every AGM a

signed copy of the balance sheet, profit and loss account, director's and auditor's report

Holding an extraordinary general meeting when circumstances require

Directors’ Responsibilities (4)

General 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

Bridging the Compliance Gap (1) “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)

Bridging the Compliance Gap (2)

Approach of the McDowell Group Codify and Simplify Company Law Extend/Improve Enforcement Measures Establish a Dedicated Enforcement Office Resource the Companies Registration

Office Role

Bridging the Compliance Gap (3)

Company Law Enforcement Act Enforcement of filing obligations stays with the

Registrar of Companies New Office of Corporate Enforcement will deal

with Companies Acts in general Measures to streamline enforcement Company Law Review Group is being set up on a

statutory basis

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 appoint High Court Inspector(s) to

conduct wide-ranging company inquiry Appoint Inspector directly to establish interest

in company shares/debentures Examine a company’s books/documents

Require production of the books Demand explanations

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)

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

Nominal value limits increased to £50K and £250K in private and public companies

ODCE Role and Powers (6)

Disqualification of Company Officers ODCE can directly seek Court order of

disqualification Specific criterion is a person guilty of two or

more offences of failing to keep proper books Another criterion is a person in persistent

default of the relevant requirements

ODCE Role and Powers (7)

Liquidations and Receiverships 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 to ODCE by auditors, liquidators, professional bodies

Regulation of undischarged bankrupts acting as company directors

Seek other Court orders/injunctions Increase in penalty provisions

Timetable for Commencement

Many Provisions in Effect, including: Company Law Prosecutions Restrictions and Disqualifications A number of CRO Enforcement Measures Company Investigations

Outstanding Provisions include: Winding up and Insolvency (possibly 1 June)

Compliance Information Service

Companies Company Directors Company Secretaries Members/Shareholders

Auditors Creditors Liquidators Receivers Examiners

General Information Service

Introduction to the ODCE Annual Reports Presentations/Statements Legislative Changes Information Request Facility

Complaints Facility

Complaints about Companies Act Breaches Auditor/Liquidator/Professional Body

Reports on Indictable Offences CRO Information

Failure to keep Proper Books

Information-Sharing Arrangements

Other ODCE Services

Consultation Service Registration Service Freedom of Information Service Feedback Service

Sources of Information (1)

www . basis. ie Company Law Employment Legislation Environmental Legislation Health and Safety Requirements Others

Sources of Information (2)

www. odce .ie About the ODCE ODCE Services ODCE Publications/Statements Legislation Court Decisions

Sources of Information (3)

Consultation Papers No. 1 - Duties and Powers of Directors, etc. No. 2 – Auditor Reports of Indictable Offences No. 3 – Insolvent Companies in Liquidation No. 4 – Unliquidated Insolvent Companies

Sources of Information (4)

Decision Notices On Consultation Papers On Exemptions from applying for Restriction

Court Decisions Prosecutions Company Investigations Restrictions/Disqualifications

Sources of Information (5)www. cro. ie

Information Doing Business with the CRO CRO Fees

Search Free Public Search Facility Registered Client Search Facility

Sources of Information (6)

www. clrg. org About the Company Law Review Group Text of the CLRG’s First Report (195 changes) Making Comments on the First Report CLRG’s Second Work Programme (7 areas) Submissions on the New Work Programme

Where are we heading? (1)

McDowell Working Group Report (1998) Two Companies Acts (1999) Auditing Review Group Report (2000) Company Law Enforcement Act (2001) Establishment of the ODCE (2001) Active Company Law Review Group (2000-2002) Publication of draft IAASA Bill Heads (2002)

Where are we heading? (2)

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

Where are we heading? (3)

Elements of a Compliant Environment Simplified Legislation/Regulation Accessible Compliance Information Good Reporting of Non-Compliance Effective Enforcement Arrangements

Where are we heading? (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