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The complex nature of breaches of company law required an overhaul of the ODCE. Claire Lord of Mason Hayes & Curran charts the ongoing changes

In 2017, the trial DPP v Sean FitzPatrick, one of the largest and most complex investigations in the history of the Irish State, ended when Judge Aylmer directed the acquittal of the defendant on all charges. Judge Aylmer advised that this decision arose out of concerns for the investigative process undertaken by the Office of the Director of Corporate Enforcement (ODCE).

When the ODCE was established in 2001, the principal matter of company law non-compliance was a culture of failures by companies and their officers to meet their obligations relating to filing annual returns. The fact that 90% of companies are now compliant with filing their annual returns is clear evidence that the ODCE has succeeded in addressing the faults that it was originally established to police.

Complex Breaches

However, as demonstrated by the outcome of the FitzPatrick case, we now live in a time when there is a greater awareness of the need to prosecute serious company law breaches. The actions giving rise to those breaches are also becoming more complex. Therefore, our corporate watchdog needs to be equipped to deal with the new challenges it now faces.

These changes, to a great extent, have already been introduced. Following the FitzPatrick verdict, the Director of Corporate Enforcement made a number of changes to the ODCE to address the issues highlighted by Judge Aylmer. These changes focused on ensuring that personnel and processes were in place to allow potential breaches of company law to be properly investigated.

The ODCE now has a team of forensic accountants, a digital forensics specialist and a digital forensics laboratory. In addition, An Garda Síochána is assigned to the ODCE to lead all criminal prosecutions, and specialised training in the Garda Training College is provided to ODCE staff.

In Association with

Independent Agency

The government also published a package of measures in 2017 that included establishing the ODCE as an independent agency, better equipped to investigate and prosecute increasingly complex breaches of company law.

In December 2018, minister Heather Humphreys announced that cabinet had approved the establishment of this independent agency, which would be called the Corporate Enforcement Authority. The minister also confirmed that she had allocated an additional €1m to the ODCE in the 2019 budget to support its establishment. Legislation is needed to effect this change and government aims to achieve this via the Companies (Corporate Enforcement Authority) Bill 2018.

The Bill proposes to give the Corporate Enforcement Authority the same functions and powers that the Director of Corporate Enforcement has. In addition, the authority will also be afforded added flexibility to structure itself to meet the demands of its extensive remit, and appoint its own staff in order to preserve its independence.

The scheme also proposes to give the authority new investigative tools, most notably new search and entry powers, to enhance its ability to gather evidence that is held electronically.

We now live in a time when not only is there a greater awareness of the need to prosecute serious company law breaches for reasons that include protecting a company’s economy, but the nature of those breaches is becoming more complex. 

Therefore, our corporate watchdog needs to be equipped to deal with the challenges it now faces in encouraging greater compliance with company law and to thoroughly investigate suspected breaches of that law. 

The government’s commitment to the establishment of the Corporate Enforcement Authority and to ensuring that it will operate in line with international best practice must, therefore, be welcomed.

Claire Lord (pictured) is partner and Head of Corporate Governance & Compliance with Mason Hayes & Curran