Institute of Chartered Secretaries and Administrators

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

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

3. 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

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

5. 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

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

7. 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

8. 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

9. 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

10. 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.

11. 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

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

13. 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

14. Insolvent Companies (2) Volumes 2002 2003 so far Liquidator Reports 579 575 Cases Determined 4 503 Full Relief 4 262 (52%) Partial Relief - 22 (4.4%) Relief at this time - 31 (6.2%) No Relief - 182 (36%)

15. 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)

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

17. 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

18. 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

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

20. 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

21. 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

22. 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