The Office of the Director of Corporate Enforcement (ODCE) recently published its Review of 2008, a precursor to the Annual Report which usually appears later in the year. The highlights of the Review are as follows:
- Company law breaches
There were 820 new cases of alleged breaches of the Companies Acts in 2008, a 22% rise on the 2007 figures. The vast majority of these cases were rectified voluntarily by the companies in question, with only 75 cases being referred for possible legal enforcement action. The ODCE have consistently said that their preference is to handle company law breaches by administrative means, when appropriate and possible. As such, this is to be welcomed and the 2008 figures are encouraging.
- Directors' loans
The Director of Corporate Enforcement, Paul Appleby, has made no secret of the fact that excessive company loans to directors are the subject of on-going focus and concern to the ODCE. This is in line with its policy of protecting company stakeholders and shareholders.
The Review shows that in 2008, auditors reported 161 cases where directors had used company funds contrary to the Companies Acts, which represents a 19% increase on 2007. Of interest, however, is that the loan amounts grew significantly, to €134 million, up from €33.7 million reported in 2007. The ODCE states that the bulk of these irregularities were rectified by the companies in question, with 43 cases remaining unresolved at the year end.
- Enforcement action – books of account and auditors
The ODCE has focussed its attention on two particular areas of company law in recent years, namely, books of account and auditors. Again, this is in line with the policy of protecting company stakeholders and shareholders. The Review highlighted that in 2008, many companies and their directors failed to maintain books of account which correctly recorded and explained company transactions. Several prosecutions and convictions against directors were obtained by the ODCE during the year. One auditor was convicted on five charges of acting while unqualified.
There are no major surprises in the 2008 Review, with the main target areas being company loans to directors, maintaining proper books of account and proper qualification of auditors. Voluntary rectification is common with the bulk of company law breaches being handled administratively.