The OCDE

ODCE I

The Office of the Director of Corporate Enforcement (“ODCE”) was established in 2001.  It is staffed by members of An Garda Siochana, accountants, administrators and lawyers.  It was designed to improve compliance with company law. Formerly, the Department of Enterprise Trade and Employment was responsible for the enforcement of much company law.  The bulk of these functions were transferred to the ODCE.

In addition to investigating breaches and enforcing compliance with company law, the ODCE has wider company law functions. It encourages, promotes and assists compliance. It publishes accessible company law information in paper form and on-line. It assists in the improvement of company law by its involvement in various consultation processes in respect of company and associated areas of law.

The Office has functions in relation to the investigation and detection of breaches of company law and prosecutions.  It may impose civil sanctions without recourse to the court.  It has a role in relation to the supervision of liquidators and receivers.


ODCE II

The ODCE may detect non-compliance by a number of means.  This includes reports and notifications by auditors, liquidators, receivers, the CRO and the Stock Exchange. References may be made by the courts and reports are made by professional regulatory bodies in relation to the misconduct of receivers and liquidators.

The Competition and Consumer Protection Commission, Garda Siochana and Revenue Commissioners are authorised to make referrals.  Complaints of suspected infringements may be made by directors and shareholders and by members of the public.

The ODCE is independent of the Government and Department of Jobs, Enterprise and Innovation.  In common with other Stater bodies, it reports annually to the Minister in relation to the performance of its functions.  Its report is laid before both Houses of the Oireachtas.  The Director of Corporate Enforcement may be required to attend before a House of the Oireachtas to account for the performance of his functions.


2014 Act Reforms to ODCE I

The Office of the Director of Corporate Enforcement was continued in being by the Companies Act, 2014.  The Director is a corporation sole with perpetual succession.  Provision is made for the appointment of the Director for periods not exceeding five years, by the Minister for Jobs Enterprise and Innovation, with the consent of the Minister for Public Expenditure and Reform.

The Director holds office on such terms as the Minister, with the consent of the Minister for Public Expenditure determines.  The Director is a civil servant under the Civil Service Regulation Acts.  He shall hold no other office for which remuneration is payable.

The functions of the Director are

  • to encourage compliance with the Companies Acts;
  • investigate instances of suspected offences or noncompliance;
  • enforce the Companies Act by prosecution;
  • refer cases to the DPP;
  • exercise a supervisory role over the activity of liquidators and receivers; and
  • perform such other functions as the Minister considers appropriate.

2014 Reforms to ODCE II

The Director is accountable to the Minister.  There is provision for a superannuation scheme.  Members of Garda Síochána may be seconded to the Director’s office.  They remain under the general control of the Garda Commissioner.

The Director may delegate any of his functions to his officers.  Neither the Director, former Director nor officers are liable for damages for anything done or purported to be done or omitted to be done by them, in the performance of their functions under the Act, unless it is shown the act or omission was done in bad faith.

The Director is to prepare an annual report to the Minister regarding the activities of the office. The Minister must ensure that the report is laid before the Houses of the Oireachtas within six months of the end of the year to which it relates.

The Director shall provide to the Minister such information regarding the performance of its functions, as may be requested.  He shall account to the appropriate Committee of either House of the Oireachtas for the performance of his functions.

The Director is not obliged to provide the Minister with or answer questions where this would, in the Director’s opinion, be likely to prejudice any of his or her functions.

The Director is a member of the Supervisory Authority


Enforcement

The ODCE has powers to prosecute a range of offences under company law, summarily. Summary criminal prosecutions may be bought for non-minor offences.

Most serious offences requiring trial by jury may be referred to the DPP. The DPP is responsible for the prosecution of indictable (more serious trial by a jury) offences under the Companies Act.

Where there has been a default by a company in compliance with the Companies Acts, the ODCE may serve a notice requiring rectification of the default.  An application may be made to the court to compel compliance, if the company (or other entity) has failed to comply, following service of the notice.  The court may make an order which requires the company to make good the default. The court may issue and injunction or other order, directing the company to make good, a failure to comply with company law.

The ODCE has the power to impose civil sanctions. These are administrative fines, equivalent to “on the spot” fines, which are not made by order of a court. The ODCE may, where it believes that an offence has been committed, give notice setting out the offence and stating that the person addressed may within 21 days remedy the offence and make payment in a prescribed manner. In this event,  a prosecution will not be initiated.   The ODCE must believe on reasonable grounds that the person has committed an offence subject to prosecution.


Enforcement II

The ODCE will generally take legal action, only if the misconduct is deliberate, reckless persistent or serious.

The ODCE may issue cautions and warnings in respect of failures of compliance, which threaten legal proceedings in default of compliance. They give a notice which requires compliance.

A caution may be issued to the effect that a repeated default will be treated seriously and is likely to be the subject of a prosecution.  A warning letter threatens legal proceedings if there is default in compliance.

Where there has been a default by a company in compliance with the Companies Acts, the ODCE may serve a notice requiring rectification of the default.  An application may be made to the court to compel compliance, if the company (or other entity) has failed to comply, following service of the notice.  The court may make an order which requires the company to make good the default.


Investigative Powers I

The ODCE has considerable powers of investigation. It may direct certain bodies to produce books and documents, as it may specify.  This includes the company itself and third-parties.  Directions may be made to foreign companies and certain other entities.

Documents may be required to be produced, where the ODCE is of the opinion that certain circumstances exist.  This includes any one of the following:

  • that it is necessary for the consideration of the appointment of an inspector;
  • that the company’s affairs are or were conducted with the intent to defraud;
  • that the company’s affairs are or were conducted with a fraudulent purpose;
  • that the company’s affairs are or were conducted in an unfairly prejudicial manner;
  • that there has been an unfairly prejudicial act or omission;
  • that acts or omissions have been committed which are likely to be unlawful.

When the ODCE makes a direction to a company or third party to produce books or documents, the addressee is obliged to comply with its requirements. The obligation of the addressee is to produce such documents as may be required.  The notice must give a time limit for compliance and specify where they must be produced.


Investigative Powers II

Certain third parties can be required to produce books and documents.  These include third parties whom the ODCE believes to be in possession of relevant documents or related books and documents.

The production of documents may be resisted on the basis of legal privilege.

The ODCE may take copies of documents which it obtains.  It may require explanations of items in the documents.  Explanations can be required of third parties, directors, officers and employees. An explanation may be required of any apparent omission from the document.

It is an offence to fail to produce books or documents or to provide explanations when required.  It is an offence to provide any misleading explanation or statement, to interfere with an ODCE investigation or to interfere with documents, conceal, falsify, destroy or dispose of documents.

If the ODCE incurs expenditure in making investigations, the company the subject of the investigations can be made liable for those costs in certain circumstances.


Search and Seizure

The ODCE may apply to the court for a search warrant to enter and search premises.  A designated officer of the ODCE may enter and search.  In making the search, force may be used where necessary. Material information may be seized and retained by the designated officer.

Persons at the premises may be questioned and required to produce documents.  They may be required to give details of their name, address and to produce material information.

Information seized upon a search can be retained for the purpose of the investigation.  Computers and equivalent equipment and material may be seized and retained.  Access may be had to computers data, storage and retrieval systems.  The ODCE may require the computer to be operated, and persons may be required to retrieve information.  It may examine and analyse the information.

It is an offence to obstruct a designated officer in the execution of his functions or a warrant or to fail to comply with requirements to give details and produce material information.

Certain information obtained by the ODCE may be disclosed to other authorities such as the Department, Irish Auditing and Accounting Authority, the Financial Regulator and the Revenue Commissioners. Information may be given to a tribunal, professional organisation disciplinary bodies and the Competition and Consumer Protection Commission. Disclosures may be made to facilitate the investigation and prosecution of offences.


Inspector I

The Court may on application appoint an inspector to investigate the affairs and membership of a company.  This power has been used a number of times in the past by the Minister in investigating particular matters of public concern in relation to certain larger scale and state sector companies.

The application is made to Court to appoint an inspector.  The inspector carries out a report and reports to the Court. Applicants holding one-tenth of the company’s share capital or a hundred members or more, whichever is lower, may apply to have an inspector appointed.  The company itself, its directors or creditors may apply.  The Court requires security.

The ODCE can apply for the appointment of an inspector.  Formerly this power was vested in the Department of Enterprise and Employment.


Inspector II

There must be grounds for the appointment of an inspector.  The Court must be satisfied that

  • there are circumstances suggesting that the affairs have been conducted with the intent to defraud the creditors or others;
  • that the persons involved in the company have been guilty of fraud, breach of duty or have failed to give information which the members might reasonably expect;
  • that the company’s affairs have been conducted in a manner which is unfairly prejudicial to some of its members.

Inspectors may be appointed to investigate the ownership and management of companies.  This power has been invoked in a number of high-profile cases, where matters of public concern had been raised. Generally, the appointment must be necessary for the effective administration of company law, the discharge of statutory functions or in the public interest.

The inspector has powers to obtain information, investigate and report.  The court may give directions to the inspector with a view to ensuring that the inspection is carried out as quickly and inexpensively as possible.  Company officers (such as the directors) are obliged to produce documents and records to the inspector.  They may be summoned before the inspector to give all assistance that may reasonably be required.


Inspector’s Powers

The inspector has wide powers of access to the company’s books and documents. He may require them to be produced. A person can be required to attend and give all necessary assistance.

The inspector may examine persons on oath, either orally or in written form.  Failure to give honest answers is punishable as contempt of court.

The obligation to answer questions has been held to be compliant with the Constitution.  The evidence may not be used in proceedings for a criminal offence. It may be used in other legal proceedings, including a prosecution for perjury for a wrongful answer.

Inspectors can require directors to produce banking documents and bank accounts.  The failure to co-operate, including the failure to produce documents, attend or answer questions may be certified to the Court.  The Court may then enquire into the matter which may make such order as it sees fit.


Reports

There are two types of report.  There is a final report. There may also be an interim report, depending on circumstances.

The court must publish the report to the ODCE and may furnish it to other persons.

The court having considered the report may make orders including an order of its own motion to wind up the company or for remedying any damage suffered by a person whose interest has been adversely affected by the conduct of the company.  The ODCE may present a petition for winding-up consequent on a report.

Facts in a report are admissible in other civil proceedings as proof of their content unless the contrary is shown.

The applicant usually incurs the expenses.  However, the court may make directions which require that a particular person should be liable to pay the costs of the application and investigation.


Sharing Information

There are obligations of confidentiality in respect of information obtained in the performance of the functions of the office of the ODCE, which has not otherwise come to the attention of the public.  The information may be disclosed for the performance by the Director of its functions.  It may be disclosed to AnGarda Síochána if, in the opinion of the Director or an officer of the Director, it relates to the commission of an offence other than an offence under the Act.

Notwithstanding any other law, the Competition and Consumer Protection Commission; Garda Síochána; Revenue Commissioners; and Insolvency Service; Irish Takeover Panel; and such other authority as may be prescribed; may disclose to the Director or its officers, information that, in the opinion of the person disclosing it relates to the commission of an offence under the Act or non-compliance under the Act, with duties and obligations to which companies and their officers are subject.

The disclosure may also be made if the information could materially assist the ODCE in investigating whether an offence under the Act has been committed or whether there is any other non-compliance with the Act or with the duties and obligations to which companies and their officers are subject.  It may also be made where an application for a disqualification order of a particular person is contemplated.

An officer of the Revenue Commissioner may give evidence relating to taxpayer information in connection with any proceedings under the Companies Act.  The fact that particular circumstances have been invoked by an authority or other entity as the basis of disclosure does not prevent the Director or an officer of the Director using the information in relation to other circumstances which give rise to enforcement or offences under the Act.


References and Sources

Primary References

Companies Act 2014 S. 945 – S. 957 S. 778 – S.798, S.865- S. 878 (Irish Statute Book)

Companies Act 2014: An Annotation (2015) Conroy

Law of Companies 4th Ed.  (2016)  Ch.29    Courtney

Keane on Company Law 5th Ed. (2016) Ch. 2, 35 Hutchinson

Other Irish Sources

Tables of Origins & Destinations Companies Act 2014 (2016) Bloomsbury

Introduction to Irish Company Law    4th Ed. (2015) Callanan

Bloomsbury’s Guide to the Companies Act 2015      Courtney & Ors

Company Law in Ireland 2nd Ed. (2015) Thuillier

Pre-2014 Legislation Editions

Modern Irish Company Law   2nd Ed. (2001) Ellis

Cases & Materials Company Law 2nd Ed. (1998) Forde

Company Law 4th Ed. (2008)  Forde & Kennedy

Corporations & Partnerships in Ireland (2010) Lynch-Fannon & Cuddihy

Companies Acts 1963-2012   (2012)  MacCann & Courtney

Constitutional Rights of Companies   (2007)  O’Neill

Court Applications Under the Companies Act (2013) Samad

Shorter Guides

Company Law – Nutshell 3rd Ed. (2013) McConville

Questions & Answers on Company Law (2008)        McGrath, N & Murphy

Make That Grade Irish Company Law 5th Ed. (2015) Murphy

Company Law BELR Series (2015)   O’Mahony

UK Sources

Companies Act 2006 (UK) (Legilsation.gov.uk)

Statute books Blackstone’s statutes on company law (OUP)

Gower Principles of Modern Company Law 10th Ed. (2016) P. and S. Worthington

Company Law in Context 2nd Ed. (2012) D Kershaw

Company Law (9th Ed.) OUP (2016) J Lowry and A Dignam

Cases and Materials in Company law 11th Ed (2016) Sealy and Worthington

 

UK Practitioners Services

Tolley’s Company Law Handbook

Gore Browne on Companies

Palmer’s Company Law