FOR RELEASE NO EARLIER THAN 12 NOON ON 3 JUNE 2005

PRESS STATEMENT

ODCE Annual Report for 2004

“We will be pursuing more disqualifications in the future” – Director of Corporate Enforcement

In publishing his Office’s Annual Report for 2004 today (Friday, 3 June 2005), Mr Paul Appleby, the Director of Corporate Enforcement, indicated that the year had been a successful one in compliance and enforcement terms. The highlights in 2004 included:

  • 66 convictions were obtained for company law offences, more than a 50% increase on the 43 recorded for 2003;
  • two offences were successfully prosecuted by the ODCE for the first time (fraudulent trading and acting as a director while restricted and in breach of the statutory conditions);
  • three company directors were disqualified. One of the disqualifications was for failing to submit annual returns resulting in the company being struck off the Register of Companies. This was the first time that this provision had been used;
  • 217 directors were restricted, some 200 of those arising from the work of liquidators and the ODCE in relation to insolvent companies;
  • the development of Revised Guidance on Directors’ Compliance Statements. This was a year long project which involved extensive work in partnership with business, professional and State interests and the general public;
  • some 60 presentations given to business, professional, voluntary and State organisations in support of the Office’s advocacy work in compliance;
  • the continuing success of the ODCE’s website as an information resource for compliance and enforcement. Visits increased 54% in 2004 to almost 117,000 compared with about 76,000 and 42,000 in 2003 and 2002 respectively.

In an accompanying statement, Mr Appleby said:

“Our work on the enforcement front continues to achieve results, and in reviewing our recent successes, I have decided that we should give more emphasis to the sanction of disqualification in our future work. Having secured three disqualifications last year, we are hoping to increase that figure substantially in 2005. Certainly, it is my intention to achieve a substantial increase this year in the number of proceedings leading to possible disqualification.

With over 500 directors now restricted, we are tracking the individuals involved to ensure that where they continue to act as company directors, the companies in question are sufficiently capitalised in accordance with law[1]. We secured our first conviction and disqualification late last year against an individual who failed to adhere to the conditions of his restriction, and we have secured a further two convictions and disqualifications this year. We have recently identified a further 10 directors in apparent default, and these are now being pursued.

We will intensify later this year our roll out of disqualification applications against the directors of insolvent companies struck off the Register of Companies for failing to file annual returns. Following last year’s initial success, we have secured six further disqualifications so far this year. In a few weeks’ time, we will write to the directors of some 100 further companies, in an attempt to identify suitable cases for enforcement action.

I have been concerned for some time that the Register of Disqualified Persons in the Companies Registration Office (CRO) is incomplete. At present, it contains some 20 names, and about half of them derive directly from ODCE action in the recent past. However, the law also provides that persons convicted on indictment of any indictable offence in relation to a company or of any indictable offence involving fraud or dishonesty is also disqualified. Yet these have not been notified to the CRO and included on the Register as a matter of practice.

I am pleased to say that following contact in recent weeks with senior management in the Courts Service, Court Registrars throughout the country are now engaged in identifying the eligible individuals who are deemed to have been disqualified as a result of a recent conviction on indictment. When notified to and recorded on the CRO register, this should see at least 1,000 names added to the Register of Disqualified Persons over the coming months. I wish to record my appreciation to the management and staff of the Courts Service in particular for supporting my Office and the CRO in regularising this situation.

These initiatives should enhance transparency in the business sector by making available to the market information on potential credit risks and misconduct. My Office will be glad to receive information suggesting that disqualified or restricted persons are continuing to act as company directors in breach of the law.”

Office of the Director of Corporate Enforcement

3 June 2005

ENDS/

EDITOR’S NOTE

The Office of the Director of Corporate Enforcement (ODCE) is responsible for:

  • encouraging compliance with the Companies Acts; and
  • bringing to account those who disregard their obligations under company law.

The ODCE’s Annual Report for 2004 contains a number of highlights, including:

Detection of Suspected Corporate Misconduct

  • an increase in auditor reporting of suspected indictable company law offences to 1,568 in 2004 (up from 1,488 in 2003);
  • an increase in public complaints to 341 in 2004 (up from 307 in 2003);
  • the conclusion of Memoranda of Understanding on the sharing of confidential information between the ODCE and the Irish Stock Exchange and between the ODCE and the Revenue Commissioners;
  • the publication of the High Court Inspectors’ Report on National Irish Bank Ltd. and National Irish Bank Financial Services Ltd.

Company Law Enforcement Actions

  • 66 convictions were obtained for company law offences (up from 43 in 2003). Appendix 3.3 on pages 56 to 58 of the Report contains the associated details;
  • two offences were successfully prosecuted by the ODCE for the first time (fraudulent trading and acting as a director while restricted and in breach of the statutory conditions);
  • three company directors were disqualified (up from one in 2003). One of the disqualifications was for failing to submit annual returns resulting in the insolvent company being struck off the Register of Companies. This was the first time that this provision had been used;

Company Insolvency

  • 992 reports on the affairs of insolvent companies in liquidation were received from liquidators (up from 651 in 2003);
  • 357 decisions of full relief[2] were granted on liquidators’ first reports (up from 294 in 2003);
  • 217 directors were restricted by the High Court (up from 153 in 2003). Appendix 4.2.3 on pages 80 to 86 of the Report contains the associated details;

Company Law Compliance

  • the development and publication of Revised Guidance on Directors’ Compliance Statements in partnership with business, professional and State interests and the general public;
  • some 60 presentations given to business, professional, voluntary and State organisations in support of the Office’s advocacy work in compliance;
  • the welcome improvement in the company law compliance environment;

Quality Customer Services

  • the publication of seven Reports, Consultation Papers and Information Notices on ODCE activity and company law developments;
  • the continuing success of the ODCE’s website as a company law information resource. Visits increased to almost 117,000 (up from about 76,000 in 2003), while downloads reached over 59,000 (up from 26,400 approximately in 2003).

Special Features

The Report also contains a few special features on company law developments, viz:

  • the satisfactory rectification of company law defaults without recourse to legal action (see Illustrations 2.2.1, 2.2.2 and 2.2.3 on pages 12 to 14 of the Report);
  • the importance for Irish/EU Insolvency Law of the liquidation of Eurofood IFSC Ltd. (In Voluntary Liquidation) (see Illustration 4.1 on page 26 of the Report);
  • the publication of an International Research Report on ‘The Regulation of Phoenix Companies’ which was undertaken by the ODCE on behalf of the International Association of Insolvency Regulators and its members (see page 31 of the Report for further information).

A copy of the Report may be downloaded from the ODCE website at or may be requested at .

Press queries in relation to the ODCE’s Annual Report for 2004 may be addressed to Paul Appleby at (01) 8585820 or Kevin Prendergast at (01) 8585844.

Office of the Director of Corporate Enforcement

3 June 2005

[1] In the case of a private company, a minimum called up share capital of €63,487 is required. In the case of a public limited company, the corresponding figure is €317,435. In each case, the called up share capital must be fully paid for in cash.

[2] Full relief was granted in cases where the ODCE was satisfied, on the basis of information provided by the liquidator or otherwise, that all of the directors of the insolvent company had satisfactorily demonstrated that they had acted honestly and responsibly in the conduct of the company’s affairs. The effect of each of these decisions was that the liquidator was relieved from the statutory obligation to apply to the High Court to restrict all of the company’s directors.