Enforcement Authority
ODCE I
The Office of the Director of Corporate Enforcement (“ODCE”) was established in 2001. It has been replaced by the Corporate Enforcement Authority.The Authority is a body corporate with the name contained in the constitution, having perpetual succession and a common seal. As a legal person, the Authority has perpetual succession, property rights, and can sue in its name or be sued.
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 CEA had 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 had 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 could 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
Companies (Corporate Enforcement Authority) Act 2021
The Corporate Enforcement Authority, replaces, and performs the functions previously performed by, the Director of Corporate Enforcement. The name is An tÚdarás um Fhorfheidhmiú Corparáideach and, in English language, the Corporate Enforcement Authority.
The functions of the Authority include
- encouraging compliance with the Companies Act 2014,
- investigation of suspected offences and non-compliance with the Act,
- enforcement and prosecution of offences by way of summary proceedings, and the discretion to refer cases to the Director of Public Prosecutions where the Authority has reasonable grounds for believing that an indictable offence under the Companies Act 2014 has been committed.
The Authority shall exercise, in so far as it considers it necessary or appropriate, a supervisory role over the activity of liquidators and receivers in discharge of their functions under the Companies Act 2014. The Authority is to perform such other functions in respect of any matters to which the Companies Act 2014 relates as the Minister considers appropriate and may, by order, confer on the Authority.
The Authority acts as a member of the Irish Auditing and Accounting Supervisory Authority (IAASA). The Authority may do everything necessary or expedient to enable it to perform its functions and exercise its powers and for its independence in the performance of its functions.
Make up of Commission
The Authority is a commission, with between 1 and 3 full-time Members, as may be determined by the Minister for Enterprise, Trade and Employment. The appointment of a Member of the Authority by the Minister is on the recommendation of the Public Appointments Service (PAS). The appointment shall be on a full-time basis for a period not exceeding 5 years from the date of appointment.
The PAS shall ensure that a person is recommended for appointment only if PAS is satisfied that the person has the qualifications, experience and skills necessary to enable the Authority to effectively perform its functions. Aa member whose term of office expires may be reappointed to the Authority by the Minister for one further period not exceeding 5 years from the date of reappointment.
Where there is more than one Member of the Authority, the Minister for Enterprise, Trade and Employment shall appoint one of the Members to be chairperson. It provides that an additional allowance may be paid by the Authority to the chairperson as the Minister may, with the consent of the Minister for Public Expenditure and Reform, determine.
The chairperson shall have a casting vote in the event of a tied vote in the case of decisions to be taken by the Authority. Where the Authority consists of one Member, the chairperson shall be construed as a reference to that Member.
The Authority has the power to appoint its own staff and to determine the grades and number in each grade subject to Ministerial approvals.
CEA & Information
The disclosure by the Authority of information, books or documents relating to a company that have been obtained under statutory powers is permitted without the consent of the company, if in the opinion of the Authority publication or disclosure is required. Disclosure of information by the Authority is permitted for the purposes of the performance of a function or functions by another competent authority. Nothing prohibits disclosure for the performance by the Authority of a function or functions of the Authority.
There is provision for the disclosure of information to any member of the Garda Síochána if that information, in the opinion of the Authority, may relate to the commission of an offence other than an offence under this Act.
There is provision for the reporting to the Corporate Enforcement Authority of information relating to offences under the Companies Act 2014, which has been gathered by the Competition and Consumer Protection Commission Authority, members of the Garda Síochána, officers of the Revenue Commissioners, the Irish Takeover Panel, the Registrar of Companies, and the Registrar of Friendly Societies and such other authority or person as may be prescribed.
There is provision for disclosure of information, which in the opinion of the Authority or other relevant person relates to the commission of an offence or noncompliance otherwise with the Companies Act 2014 or with the duties and obligations to which companies and their officers are subject. It covers information that could materially assist the Authority or an officer of the Authority in investigating whether an offence or non-compliance under this Act has been committed.
An officer of the Revenue Commissioners may be prescribed to give evidence relating to taxpayer information in connection with any proceedings initiated under the Companies Act 2014.
Enforcement
The CEA 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 CEA 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 CEA 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 CEA 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 CEA will generally take legal action, only if the misconduct is deliberate, reckless persistent or serious.
The CEA 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 CEA 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 CEA 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 CEA 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 CEA 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 CEA 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 CEA 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 CEA investigation or to interfere with documents, conceal, falsify, destroy or dispose of documents.
If the CEA 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 CEA may apply to the court for a search warrant to enter and search premises. A designated officer of the CEA 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 CEA 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 CEA 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 CEA 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 CEA 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 CEA 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 CEA 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.
Public Interest Companies Powers
There are additional powers and responsibilities relating to certain directors, described as relevant directors. They are director or former directors of a company whose shares are traded publically, a credit institution (usually a bank), insurance company and entities designated by Member States as public-interest entities, for instance undertakings that are of significant public relevance because of the nature of their business, their size or the number of their employees;
The Corporate Enforcement Authority is to investigate a relevant director having received information from the IAASA. The Authority may impose a sanction where a director has contributed to a breach by a statutory auditor or audit firm. An appeal to the court may be made against such a decision within 3 months. Information on the sanction imposed will be given by the Authority to IAASA. Civil or criminal proceedings can still apply to a director subject to sanction.
Sanctions
The Corporate Enforcement Authority may direct a director to cease conduct that has given rise to a breach; ban from performing functions in audit firms or public interest entities; or pay a monetary sanction.
The Corporate Enforcement Authority in imposing a sanction on a director is to consider a range of circumstances such as gravity and duration of the breach; degree of responsibility; financial position; level of co-operation with IAASA or the Authority and previous sanctions imposed.
The Corporate Enforcement Authority and a director may enter into an agreement to resolve the matters breached by the director. The agreement may be entered into
- where no investigation of conduct has taken place,
- after an investigation has commenced but not completed or
- the investigation has been undertaken and sanctions have been determined.
The terms of the agreement may include imposition of sanctions on the relevant director. The terms of the agreement are binding on the Authority and the relevant director concerned. Where the terms are not upheld by the director, the Authority may apply to the court to compel compliance.
Details of the breach/sanction on a relevant director is published on the website of the Corporate Enforcement Authority, where the court has confirmed the decision or imposed a different sanction. Information on the status or outcome of an appeal may also be published. The Authority shall publish information on an anonymous basis due to issues of (i) proportionality, (ii) impact on financial markets stability, and (iii) ongoing criminal investigation. Information in relation to subsection
Most details remain on the Authority’s website for at least 5 years. The Authority shall give particulars of the sanction imposed to IAASA.
The Corporate Enforcement Authority may not impose on a director a monetary sanction that would make them bankrupt. Only one monetary sanction may be imposed where more than 2 breaches of the same conduct have occurred.
A relevant director’s breach attracts a monetary sanction by the Corporate Enforcement Authority, and it is also an offence under the law of the State, no punishment/ prosecution under law shall incur. Likewise, the Authority shall not impose a monetary sanction where the director has been charged for committing an offence under law.
In the circumstances of an appeal of a decision by the Corporate Enforcement Authority, the court may confirm, modify or annul the decision. The decision does not take effect until confirmed by the court on appeal by a director or application by the Authority. The court is free to make any order it wishes.
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