by Cian Clinch , Ciara O'Brien July-27-2022 in Commercial & Business, Corporate Governance, Corporate, EU, Competition and Regulatory Law, Regulatory & Administrative Law
Introduction
On 6 July 2022 the Companies (Corporate Enforcement Authority) Act 2021 (“the Act”) came into effect, with the establishment of a new Corporate Enforcement Authority (CEA). This step has been noted by many as a watershed moment in confronting economic and white-collar crime in Ireland. The CEA has not wasted any time and on 8 July arrested a director following an investigation into the filing of false B1 Annual Returns. He faces three charges of providing false information contrary to s.876 of the Companies Act 2014. This matter came before the Dublin District Court the same day and the director was remanded in custody.
Functions of the CEA
The functions of the Office of the Director of Corporate Enforcement (ODCE) have been incorporated into the CEA. However, while the ODCE was previously under the Department of Enterprise, Trade and Employment, the CEA is a completely independent statutory agency with greater powers and an increased budget. The CEA is required to:
- encourage compliance with the Companies Act 2014;
- investigate suspected offences under the Companies Act, and suspected incidences of non-compliance with the Companies Act;
- prosecute offences by way of summary proceedings;
- refer cases to the Director of Public Prosecution (DPP);
- supervise the activities of liquidators and receivers.
Structure of the CEA
While the ODCE was led by one Director, the Act provides that the CEA will have no more than 3 full-time “members”, one of whom will be the outgoing Director of the ODCE, appointed for a period of 5 years, renewable for another 5 years. In addition to this, there is provision under the Act for secondment of Gardai to the CEA, and recruitment of specialists such as legal, accounting and digital forensic professionals. This increase in staff is expected to bolster the CEA efforts to investigate and take enforcement actions for breaches of company law.
Sanctions
Under s 944AB of the Act, the following sanctions can be imposed on directors, by way of Court Order:
- A direction to cease the conduct, and abstain from repeating the conduct;
- A direction prohibiting the director from performing functions in auditing, or public interest entities, for a maximum of 3 years;
- A fine, up to €100,000 to be paid to the CEA.
The CEA have also been empowered to publish particulars of sanctions imposed, the conduct that led to the sanctions, as well as details of relevant directors. This information will be published on the CEA website and can only be anonymised in a number of limited circumstances. This type of “name and shame” strategy will certainly focus the mind to ensure a company’s affairs are in order.
The CEA in their press statement have advised that they will also create an advocacy programme to provide information, guidance and resources to directors and other parties to assist compliance with Company law.
Conclusion
The creation of the CEA is a noteworthy step to tackle economic and white-collar crime in Ireland. This marks a new era in terms of enforcement and prosecution in this area and it will be interesting to see what impact the CEA will have in the coming months and years.
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About the Authors
Cian Clinch
Cian is a partner in the Commercial & Business team at Hayes solicitors. He predominantly specialises in commercial litigation and dispute resolution and has acted for a variety of companies and financial institutions in contract, debt, insolvency, restructuring and recovery matters.
Ciara O'Brien
Ciara is a solicitor in the Commercial and Business team at Hayes solicitors. She advises on a wide range of commercial, regulatory and contractual issues. Ciara also practices general litigation and dispute resolution with a specific interest in defamation and intellectual property matters.