The Companies (Corporate Enforcement Authority) Bill 2021 (Bill) is currently progressing through the Houses of the Oireachtas. The Bill proposes that a new statutory independent agency with increased resources to investigate and prosecute white collar crime, known as the Corporate Enforcement Authority (CEA), will replace and perform the actions previously performed by the Office of the Director of Corporate Enforcement (ODCE). The legislation has been a priority of the government for some time. Minister Troy, at the second stage reading of the Bill, indicated his intention to have the CEA established at the earliest opportunity.
The Bill’s origins lie in a 2017 government announcement of a suite of measures to tackle white-collar crime. Measures included the need to address shortcomings highlighted by Judge John Aylmer concerning the investigative process undertaken by the ODCE when presiding over a 2017 Circuit Court case involving alleged Companies Acts breaches (DPP v Fitzpatrick). A central action was to establish the ODCE as a statutory agency to provide greater autonomy.
Whilst the primary function of the Bill is to establish the CEA as an independent agency, the Bill provides for certain technical amendments to the Companies Act 2014 including provisions relating to shares and share capital, corporate governance and restriction of directors.
The Bill proposes that the functions held by the ODCE will be transferred to the CEA. The proposed functions for the CEA include those already performed by the Director of Corporate Enforcement (Director) under section 949 of the Companies Act 2014 (CA 2014):
- Encouraging compliance with the 2014 Companies Act;
- Investigating suspected offences and non-compliance with the 2014 Companies Act;
- Prosecution of offences by way of summary proceedings;
- Referring indictable offences to the DPP; and
- Supervisory role over the activity of liquidators and receivers.
Significantly, the Bill provides that the CEA can regulate its own procedures.
Under the existing structure, the Director is a corporation sole, who is assisted in the performance of his functions by officers. Under the Bill, the CEA will have a commission structure, with between one and three full-time Members, to be determined by the Minister of State at the Department of Enterprise, Trade and Employment (Minister). The Bill currently provides that the person who is the Director immediately before the establishment of the CEA, shall be a Member of the CEA.
Where the CEA consists of more than one member, the Minister must appoint one of the members to be the chairperson. The chairperson will have a casting vote in the event of any tied vote in decisions taken by the CEA. The chairperson will also manage and control the staff, administration, and business of the CEA.
Currently, recruitment to the ODCE is managed through the Department of Enterprise, Trade and Employment. The Bill purports to give the CEA more autonomy to appoint its own staff and to recruit additional specialist staff as it may determine. This flexibility around staffing is intended to equip the CEA to adapt to its evolving workload.
A significant feature of the Bill is the re-enactment of section 951 of the CA 2014, providing for the secondment of members of the Garda Síochána to the CEA. Under the Bill, the number of Gardaí assigned to the CEA will increase from seven to 16. The government regards this as a significant feature of the Bill in combatting white collar crime, allowing Gardaí to lead on criminal investigations, and alleviating the issues identified by Judge John Aylmer in the investigative process.
The Bill exempts members and officers of the CEA from liability for damages for anything done, purported to be done or omitted to be done in the performance of their functions. The exemption will not apply where the act or omission was done in bad faith, re-enacting section 953 of the CA 2014.
With the increase in autonomy proposed under the Bill, the accountability of the CEA will be important. The Bill requires the chairperson to give evidence to the Committee of Public Accounts, when requested, regarding the efficiency of the authority in the use of its resources; and the systems, procedures and practices employed by the CEA.
The CEA will also be obliged to prepare an annual report (Report) for the Minister on its activities each year. The Report must be delivered within four months after the end of a financial year. The Report will be laid before the Oireachtas and published on the CEA’s website.
The CEA is also required to prepare a Strategy Statement shortly after establishment and every three years after that, setting out key objectives, strategies and use of resources of the CEA. The Strategy Statement must be submitted to the Minister and laid before the Oireachtas. The Strategy Statement will also be published on the CEA website.
The Bill will be supported with an increased ODCE budget of 20% or €1m to €6.057m, in anticipation of the establishment of the CEA. This funding increase, together with the autonomy to recruit additional staff with specialist skills, including accounting, information technology experts and members of An Garda Síochána, illustrates the government’s willingness to ensure the CEA is equipped to investigate complex company law breaches.
The Bill is priority legislation for the government. As it continues to progress through the Oireachtas, each provision of the Bill will be subject to scrutiny, possible change, and refinement. We will monitor the Bill’s progress and keep you apprised of developments.
Contributed by Joanne Ryan