Kevin Prendergast the Corporate Compliance Manager of ODCE provides a detailed review of the Office of the Director of Corporate Enforcement’s current and future focus as well as recent changes in Company Law, developments in Auditor Regulation and the forthcoming Companies Reform and Consolidation Act.

1. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
In Association with:-
Online CPD for Accountants &
Professional Advisors
Review by the Office of the
Director of Corporate
Enforcement (ODCE)
Presenter:
Kevin Prendergast, ODCE
CPDStore.com
Unit 3, South Court, Block D, Iveagh Court,
Wexford Road Business Park, 5 – 8 Harcourt Road,
Carlow. Dublin 2.
059 9183888 01 4110000
www.OmniPro.ie www.CPDStore.com

2. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Review by the Office of the Director of
Corporate Enforcement
Supporting Documentation Index
Contents Page
Slide Set 1 – 21
Back Up Summary Paper 22 – 23

3. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Review by the ODCE
Practising Accountants Seminar
Kevin Prendergast
Corporate Compliance Manager, ODCE.
OmniPro Education & Training Page 1 of 21

4. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Company Law and Directors’
Duties
• What Duties?
– Maintenance of Books and Records
• Company registers
• Companies Registration Office
– Disclosures
• Directors’ details
• Company information, websites and emails
Company Law and Directors’
Duties
– Accounts and Audit
• Proper books of account
• Sign off of accounts
• Accounts audited
– Board Meetings
• No specific legal requirement, but good practice
requirement
• Minutes are legal evidence
OmniPro Education & Training Page 2 of 21

5. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Company Law and Directors’
Duties
– AGM’s/ EGM’s
AGM s/ EGM s
• Notice requirements
• Rules in Articles and law
• Ensure valid
– Annual Returns
• Submitted on time
• False information
Company Law and Directors’
Duties
• Special Rules on Transactions with Directors
– Loans/guarantees/security to Directors
– Significant Transactions with Directors (or related
parties)
– Disclosures
OmniPro Education & Training Page 3 of 21

6. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Company Law and Directors’
Duties
• Dealing with insolvency
g y
– Criminal Offences
• Liquidator must report pre liquidation offences
• Post Liquidation Offences
– director must co-operate with Liquidator
• Fraudulent Trading
• Failure to keep proper books & records leading to the
insolvency of the company
Company Law and Directors’
Duties
– Civil actions
• Restriction
– Dishonest or irresponsible
– 5 year order
– Minimum paid in share capital, private company €63,487, plc
€317,435
– Company limited by guarantee cannot be capitalised
• Personal liability
– Fraudulent or reckless trading
OmniPro Education & Training Page 4 of 21

7. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Company Law and Directors’
Duties
• Fiduciary Duties
– Act in good faith and in company’s interest
– Be open and transparent
– Act with due care, skill and diligence
• Duties owed to company, members, creditors,
p y, , ,
employees.
Recent expansion of duties
• Courts have expanded duties of non-executive
directors
– Re:Tralee Beef & Lamb
– Re: Mitek Holdings
• Common law duties apply to non-execs
• Depends on nature of involvement
• Case by case basis
OmniPro Education & Training Page 5 of 21

8. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Mandatory audit reporting
• Directors’ Loan infringements (s.31 et seq CA
Directors (s 31
1990)
• Failure to keep proper books (s.202 CA 1990)
• False Statements to auditors (s.197 CA 1990)
Legal actions
• Impacted by resources diverted to Anglo
p y g
• Eight criminal convictions in two cases in 2010
• One disqualification
• 17 other cases before the courts
OmniPro Education & Training Page 6 of 21

9. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Reporting Company Law Offences
• No change in the law but additional guidance on what
offences an auditor may be expected to uncover
– Financial assistance for the purchase of shares
– Fraudulent trading
– Non-holding of an EGM
– Wilfully providing false information in return, report or
certificate
– Illegal loans to directors
Reporting Company Law Offences
– Officers’ notification of interest in company
– False statements to auditors
– Failure to keep proper books
– Wilfully providing false information under the Acts
– Destruction/mutilation of books
– False statements relating to audit exemption
– One director resident in EEA
OmniPro Education & Training Page 7 of 21

10. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Criminal Justice Act 2011
• Introduces offence of failing to report certain
company law offences
– Financial assistance for share purchase
– Fraudulent trading
– Liquidation related offences
– False returns, reports, etc.
Criminal Justice Act 2011
– False statements to auditors
– Failure to keep proper books
– Furnishing false information
– Destruction/mutilation of documents
– False statements relating to audit exemption
– False statements in prospectus
– Insider dealing/market manipulation
– Breaches of Transparency Directive
OmniPro Education & Training Page 8 of 21

11. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Criminal Justice Act 2011
• Any person who has information
• Fails to disclose without reasonable cause
• Prevent the commission of an offence
• Securing apprehension, prosecution or conviction
• Penalties
– Up to €5,000 fine on summary prosecution
– Fine plus up to five years imprisonment on indictment
Unqualified auditors
• CRO identified an issue
– Unqualified auditors signing off audit reports
– Unqualified auditors using qualified auditors’ names
• Some 40% of our enforcement cases
• CRO audit register
OmniPro Education & Training Page 9 of 21

12. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Insolvency
• Large numbers of insolvencies continue
• Liquidator makes a report to our office within 6
months
• Last two years have received c.1,300 reports
p
p.a.
• In 2007, 286 reports
Insolvency
• Unless relieved takes restriction proceedings in
relieved,
H Ct
• Relief in c85% of cases
• 156 directors restricted in 2010
• Total restricted at year end stood at 589
OmniPro Education & Training Page 10 of 21

13. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Insolvency
• No indication of increased misbehaviour as
such
– “good” companies suffering
• Courts have identified issues
– Use of fiduciary taxes as working capital
y g p
– “form of fraud”
Insolvency
• Civil action under s.160 2(h) CA 1990 to
s 160
disqualify certain directors of insolvent
companies
• Companies struck off with debts owing
• Usually 10/12 cases p annum
U y per
• Directors may pay debts or re-register company
OmniPro Education & Training Page 11 of 21

14. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Updated offences
Companies (Amendment) Act 2009
• Major change in illegal directors’ loans offence
– Previously had to show “knowing and wilful
default”
– Now the existence of the loan itself is an offence
– Insufficient or absent disclosure is also an offence
Focus on particular offences
• Requirement for the directors to disclose any interest in
a contract or proposed contract at a meeting of the
directors (s.194 Companies Act 1963)
• Requirement for the company to keep a register of
contracts with directors (s.194 (5))
• ODCE now have right to access the register
• Normal disclosure rules now apply to banks also (with
some minor exceptions)
OmniPro Education & Training Page 12 of 21

15. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Expansion of ODCE powers
• Expansion of rights with regard to seized
information
• Seizable and non-seizable information can be
taken if not practical to separate
• Privileged and non-privileged information can
g p g
be seized subject to review
8th Directive
• Signed into law 22 May 2010
• Major changes for audit qualification, registration,
transparency and regulation
• Audit register updated and made more useable
• IAASA have a more direct role in auditor oversight
• Audit committee requirement for PIE’s
• Refer to guidance from IAASA at www.iaasa.ie
OmniPro Education & Training Page 13 of 21

16. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Consolidated Companies Bill
• Pillar A (Parts 1 15) published on DJEI website
1-15)
• Remainder in mid 2012
• Bill to go through Houses and then a minimum
6 month grace period before main
implementation
p
Splitting Company Law into two
Pillars
• Pillar A – is exclusively concerned with the
private company limited by shares (CLS),
• Under the new Bill, a CLS will be endowed
with the capacity of a natural legal person – full
p y g p
and unlimited capacity.
OmniPro Education & Training Page 14 of 21

17. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Splitting Company Law into two
Pillars
• Pillar B – provides the variation for other
company types, such as:-
– Public Limited Company,
– Investment Company,
– Designated Activity Company, (such as MUD’s)
etc…
Incorporation and Registration
• A new process - A single document
constitution
• replacing the current two documents of
Memorandum and A ti l of A
M d d Articles f Association
i ti
for CLS.
OmniPro Education & Training Page 15 of 21

18. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Capacity of a private company
• The private company limited by shares (CLS)
will now have the legal capacity of a natural
person;
• The doctrine of “ultra vires”will be defunct
Validation
 New validation procedures for certain transactions
subject to verification of solvency, e.g. financial
assistance, loans to directors, etc;
 The new validation process will have built in
safeguards for both creditors and shareholders
(special resolution with statutory declaration);
OmniPro Education & Training Page 16 of 21

19. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Corporate Governance - Directors
 Directors – prohibition of corporate directors is retained;
 the introduction of a new age restriction for Directors (18
years)
 Proposal to allow private limited companies have ONE
director, separate secretary
 Common law fiduciary duties of directors codified – e.g. act
y g
in good faith, avoid conflict of interest.
Insolvency Regulation
• New Bill includes Insolvency regulation
– CAI currently have a consultation paper out on this
topic
• Additional option for restriction
– Non-cooperation with liquidator
• ODCE will be able to wind up a company if it is
in the public interest
OmniPro Education & Training Page 17 of 21

20. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
OFFENCES
• Offences:
- Criminal offences categorised into four
branches;
- The language has been standardised and
the offences have been graded
Penalties
• CATEGORY 1 OFFENCE:
On Summary conviction to a fine not exceeding
€5,000 and/or up to 12 months imprisonment or both;
On indictment conviction to a fine not exceeding
€500,000 and/or up to 10 years imprisonment or both.
OmniPro Education & Training Page 18 of 21

21. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Penalties
• CATEGORY 2 OFFENCE:
On Summary conviction to a fine not
exceeding €5,000 and/or up to 12 months
imprisonment or both;
On indictment conviction to a fine not
exceeding €50 000 and/or up to 5 years
di €50,000 d/ t
imprisonment or both.
Penalties
• CATEGORY 3 OFFENCE:
On Summary conviction to a fine not
exceeding €5,000 and/or up to 6 months
imprisonment or both;
• CATEGORY 4 OFFENCE
On Summary conviction t a fi not exceeding
O S i ti to fine t di
€5,000
38
OmniPro Education & Training Page 19 of 21

22. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Offences - Criminal
• Category 1 & 2 offences
Are the more serious offences and are capable
of prosecution on indictment in the Circuit
Court before a Judge & Jury.
• Category 3 & 4 offences – less serious
C g y
offences are prosecutable summarily.
Daily Default Fines
• The Bill proposes a daily default fine for
continued contravention;
• The fines vary from €50 for Category 3 & 4
summary convention, up to
• €1,000 for Category 1 & 2 original convention.
, C g y g
OmniPro Education & Training Page 20 of 21

23. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Corporate Healthcheck for company directors
• Where is the registered • When was your last meeting
office of the company? of directors?
• Are your website and • When was your last
emails compliant? AGM/EGM?
AG / G ?
• Are you a properly
appointed director? • What is your annual return
date (ARD)?
• What books and records do
you have? • Are you taking advantage
• Who maintains your of your power as a director?
accounts, and where?
, • Are you in financial
y
• Have your books ever been trouble?
audited?
Question & Answers
Thank You
Follow O C on
ODCE
OmniPro Education & Training Page 21 of 21

24. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
Review by the ODCE
Company law continues to move and develop all the time, with an eye on the
future Companies Bill due in the Oireachtas by the end of next year.
The ODCE issues guidance on the main developments where they have broad
application, including all primary Companies legislation. In addition to this
legislation, EU law has been implemented by way of local Directive. Again,
where these have broad application ODCE has issued guidance.
More recently, the new Criminal Justice Act has increased the investigative
powers available in respect of a range of serious offences, including a number
under company law.
A link to all company law, from all sources, is available on the ODCE website
under Company Law and You.
The ODCE is also continuing its enforcement work, with a focus on insolvency
and related matters. The huge increase in liquidations is putting pressure on the
Office to deal with the number of mandatory reports by Liquidators under
section 56, Company Law Enforcement Act 2001.
Our criminal work has of necessity been affected by the allocation of resources
to the Anglo investigation, but we are continuing to prosecute cases where we
deem it appropriate. In 2011 we have had a number of prosecutions in respect of
unqualified auditors, as well as failure to keep proper books.
The Office also continues to progress some long-running disqualification cases.
Cases related to the report of High Court Inspectors into National Irish Bank, as

25. A Personalised CPD Certificate of Completion will be forwarded to you upon completion of this course. These notes do not serve as proof of completion alone.
well as an ongoing case against the directors of Bovale Developments arising
from the Flood/Mahon Tribunal, continue to make their way through the High
and Supreme Courts. Our Enforcement Unit also has a small number of
significant cases which may result in criminal prosecution in due course.
Again further information on this is available on the ODCE website.
The new Companies Bill includes some radical reforms of company law for
small business. These include:
 The removal of the memorandum and articles of association
 A new minimum requirement for only one director, and separate
company secretary
 More flexibility with paper only meetings
 A new standard validation process for certain procedures
 Regulation of insolvency
The ODCE will be letting the public know in good time about these
developments. The Department of Jobs, Enterprise and Innovation are also a
good source of information from their website, www.djei.ie.