The government has published the Companies (Corporate Enforcement Authority) Bill 2021 ("the Bill"). This provides for the establishment of the Office of the Director of Corporate Enforcement as a statutory, stand-alone agency called the Corporate Enforcement Authority ("CEA") with increased autonomy and resources to respond to white collar crime in Ireland. The Bill has been drafted on the basis of a General Scheme approved by Government in December 2018 and links to our previous briefings on the General Scheme can be found below.
The proposed establishment of the CEA demonstrates continuing governmental momentum to implement the recommendations of the Hamilton Report Group (a link to our briefing on this report is also contained below). Under the Bill the existing functions of the Office of the Director of Corporate Enforcement ("ODCE") will transfer to the CEA. Similar to the role of the ODCE, the Bill contemplates the CEA tackling allegations of breaches of company law and investigating alleged criminal activity in the areas of fraudulent trading prior to insolvency, among other matters. The CEA will have a mandate to investigate a greater volume of cases, and to target more complex types of offences, and to secure more convictions for corruption and white collar crime. The Bill provides for it to be given wide investigative powers to help it achieve its aims.
In a recent press release here, Ian Drennan, Director of Corporate Enforcement, commented that the approval of the Bill marks "a watershed moment in Ireland's strategic approach towards addressing economic and white collar crime." The government has publicly committed to invest in the CEA, including by assigning 14 additional staff to it and increasing its permanent complement of members of An Garda Siochana from 7 to 16. Assuming this can be achieved, the CEA's headcount will be nearly 50% above existing levels in the ODCE. This is to be welcomed and should go some way to address the recommendations in the Hamiliton Report that "the new Corporate Enforcement Authority should be suitably resourced to enable it to meet its mandate and to realise its full potential." The CEA must prepare a strategy statement as soon as possible after its establishment, detailing its key objectives and output for the following three years (and renew it every three years subsequently). This should assist in focussing minds and resources on key themes and priorities, and deliver a level of transparency and accountability.
It is also worth noting that the Bill endeavours to address, by way of technical amendments, some of the anomalies found in the Companies Act 2014. Some of these amendments, which closely reflect those contained in the General Scheme, give effect to certain previous recommendations of the Company Law Review Group in this regard. Among the changes proposed are amendments and clarifications relating to the share capital of companies and to their corporate governance.
Some of the share capital changes proposed in Part 3 of the Bill include:
- restoration of the use of the share premium account for various purposes;
- clarification relating to three-party share for undertaking and share for share transactions;
- confirmation that unlimited companies do not require reserves to acquire their own shares; and
- clarification on the post-merger treatment of merging/dividing companies' shares acquired by a successor company (for example, in the case of a downstream merger).
Provisions in relation to corporate governance and other miscellaneous amendments can be found in Parts 4 and 5 respectively. These include an additional ground for applications to court for director restriction where that director has not met certain requirements in the course of a company becoming insolvent.
The 'fixes' to various technical glitches under the Companies Act 2014 will be welcomed by advisors and companies alike.
The Bill, once introduced to the Dail when it resumes, is expected to move quickly through the Houses of the Oireachtas and it is hoped that it will be enacted during the Autumn session.
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