The government has today announced the establishment of the much-anticipated Corporate Enforcement Authority ("CEA") which is expected to swiftly ratchet up the investigation and prosecution of corporate crime in Ireland.
The establishment of this new, independent statutory body was provided for in the Companies (Corporate Enforcement Authority) Act 2021 (the "CEA Act") which was signed into law by the President on 22 December 2021 and has been awaiting commencement by Ministerial Order. Links to our previous articles on the CEA and the changes being introduced by the CEA Act can be found here and here. We have also been tracking the progress of the CEA Act in the Matheson Horizon Tracker which can be accessed here.
The government announcement indicates that the orders providing for the commencement of the CEA Act were signed by the Tánaiste and Minister for Enterprise, Trade and Development, Leo Varadkar, on 5th July and 6th July 2022 although, at the time of writing, they have not yet been published.
The CEA will assume the powers and functions of the former Office of the Director of Corporate Enforcement ("ODCE"), including investigating and tackling breaches of company law and alleged criminal activity in the areas of fraudulent trading prior to insolvency, and other matters. Whilst it will be similar in structure in the short-term, moving forward as an independent agency the CEA will have much greater control over its own recruitment, enabling it to source the specialist members of staff regarded as necessary to enable it to tackle more complex enforcement cases. It is also expected to be granted additional powers in the future. It will be chaired by the former Director of Corporate Enforcement, Mr. Ian Drennan, who will now be known as the Chief Executive Officer of the CEA and the CEA Act provides for up to two additional commissioners to be appointed.
The establishment of the CEA demonstrates continuing governmental momentum to implement the recommendations of the Hamilton Report1 Group – a cross-government plan to tackle economic crime and corruption in Ireland which was published in December 2020. That report highlighted that the ODCE was insufficiently resourced to tackle more significant and increasingly complex cases of fraud and economic crime. A link to our previous briefing on the report can be found here.
In today's press release, the Tanaiste commented: "Today is a really important day for corporate enforcement in Ireland. The Corporate Enforcement Authority is now officially established. We're giving it real teeth, making sure it has the autonomy and resources to thoroughly investigate suspected wrongdoing, such as fraudulent trading and larger, more complex company law breaches...I am confident that the extra staff and additional funding will ensure that the new Authority can really make a different and meet the differing and evolving demands of its remit, which includes investigation, prosecution, supervision and advocacy."
The government has committed to increasing staffing numbers by 50%, increasing the budget by c. €1 million and doubling the number of in-house Gardaí (who will have powers of arrest) to 16. The CEA will also have the power to prosecute suspected offences on a summary basis.
Mr James Hamilton, who authored the Hamilton report, has also recently been appointed as chair of a new government Advisory Council against Economic Crime and Corruption (the "Council") recommended by the report. Thirteen members from across the government and six ordinary members will complete the Council, whose remit will be to develop a multi-annual strategy and action plan to combat economic crime and corruption. The Council will consult with other international agencies and bodies to ensure best-practice and will propose enhanced co-operation with the private sector. That strategy and action plan will ultimately be presented to the Minster for Justice for approval and implementation by the Government. It is reported that the CEA will be a member of both the Council and the Economic Crime and Corruption Forum which has also been established by the government.
Taken together, these developments mark a significant change to the regulatory landscape in Ireland. The CEA will have a suite of investigation and enforcement powers at its disposal, and will undoubtedly be eager to utilise those powers and the additional resourcing with immediate effect.
In addition, it is also worth noting that the CEA Act endeavours to address, by way of technical amendments, some of the anomalies found in the Companies Act 2014. Among the changes proposed are amendments and clarifications relating to the share capital of companies and to their corporate governance. The 'fixes' to various technical glitches under the Companies Act 2014 will be welcomed by advisors and companies alike.
In a previous press release discussing the CEA Act changes, the Justice Minster Helen McEntee referred to the importance of Ireland as a significant global centre for financial services and that "corruption and white collar crime damages our economy, breeds cynicism in our society and is a threat to our international reputation". The establishment and "arming" of the CEA will undoubtedly reassure international companies of Ireland's ability and resolve to ensure it remains a safe and efficient place to do business.
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