The Corporate Enforcement Authority (“CEA”) recently published its first annual report covering the 18-month period from July 2022 to 31 December 2023.
The report provides an excellent insight into the activities of the CEA, its approach to investigation and enforcement and case studies.
We have highlighted some of the key points from the report below.
Case Studies
The case studies provide an insight into the activities of the CEA and what types of offences and behaviour leads to prosecution.
- Graduated and Proportionate Approach to Non-Compliance
- Case Study 2, where CEA intervention ensured that the company’s members’ rights to attend an AGM were vindicated and that the company’s filing obligations were respected
- Case Study 3 where a company had incorrectly claimed audit exemption as well as an exemption from preparing consolidated group financial statements
- Case Study 4, where intervention resulted in the rectification of non-compliance with the provisions governing directors’ loans, which was reported by the auditor and other parties with the sums in question being substantial
- Case Study 7, where CEA intervention ensured compliance with the terms of a SCARP rescue plan.
- Use of Statutory Powers to bring about compliance
- Case Study 8, where in response to a complaint received, CEA pursued a course of action that involved the issuing of statutory demands and which ultimately led to the complainant’s rights being vindicated,
- Case Study 9, where through the initiation of High Court proceedings, CEA ensured that a liquidator complied with statutory filing obligations to the CEA.
- Criminal Enforcement
- Obtained and executed over 100 court orders for the purposes of compelling the production of documents, executed 5 search warrants, took over 200 witness statements, and made 12 arrests.
- Case Study 13 deals with the well-publicised litigation with the former CEO of the Football Association of Ireland
- Case Study 14, where CEA secured court orders restraining bank accounts containing several hundred thousand Euro in order that those funds could not be dissipated during the course of our investigation
- Two individuals were convicted of criminal offences on indictment, including former Console Director and Secretary, Ms. Patricia Kelly.
- The charging of Dr. Andrew Jordan and Mr. Christopher Goodey, former Chairman and Chief Executive Officer respectively of the National Association of General Practitioners (NAGP), with fraudulent trading and failing to keep adequate accounting records, and
- The sentencing of Mr. Ebenezer Oduntan to 7 years’ imprisonment having been convicted of 87 counts of theft, deception, and company law offences.
- Ensuring individual accountability
- Case Study 16, Mr. Simon Mulvany was disqualified for 6 years after the company was liquidated on foot of a petition to the High Court by Mr. Vlaminckx (second director of the Company and who was found to have acted honestly and responsibly) , on the grounds of the company being unable to pay its debts.
- Mulvany was found to have failed to maintain proper books and records of the company and to have manipulated entries to give the appearance that the company was solvent when it was not, therefore knowingly continuing to trade while insolvent. He was also found to have altered entries on the company’s bank statements to disguise fraudulent payments and receipts. Mr. Mulvany took loans from the company totalling more than €600,000 by falsifying invoices and the company’s books. Mr. Vlaminckx was unaware of these loans. Mr. Mulvany then sold machinery valued at €750,000, which was the property of a third party. Again, invoices and accounts entries were falsified. A further €250,000 was used by Mr. Mulvany for personal purposes.
- Case Study 17, Odessa Club and Restaurant Limited was incorporated in 2005 and was involuntary struck off the register in June 2019 for failing to file annual returns. The company’s sole director, Mr Donal O’Donoghue, was invited to provide evidence that, at the date of strike off, the company had no debts but failed to do so. Mr O’Donoghue accepted a disqualification undertaking and was disqualified for a 4-year period
Restriction & Disqualification of Directors
- 1021 Liquidators’ Reports were received (page 38 of the report contains a useful guide to the Liquidators Reporting Process)
- 80 directors were restricted – 85% by undertaking and 15% by the Court
- 17 directors disqualified – 71% by undertaking and 29% by the Court
- A further 10 directors were disqualified for allowing companies to be struck off the register for a failure to file the required returns with the CRO
- 91% Disqualification Undertakings Accepted
Complaints/Reports
- 454 Complaints received
- 10% Liquidation Issues, 9% Allegations of Fraud/Reckless Trading, 9% Address Issues, 8% Falsified Documents/CRO Filings, 8% AGM/EGM, 6% Register of Members
- 51 SCARP Reports
- 22 Protected Disclosures
- 55% No Further Actioned Deemed Necessary
- 41% Further Action Deemed Necessary
- 4% Assessment ongoing
- 27% related to Directors Duties and Responsibilities, 18% Fraud and 14% Non Holding of AGM
- 13 Examiners’’ Reports
- 239 Indictable Offence Reports
- 79% Big 4 Firms, 7% Mid-Tier & 14% Smaller Firms
- 82 reports relating to Sec 239 Directors Loans
- 56% No Change of Auditor, 38% Change of Auditor, 6% Previously Audit Exempt
- 454 Complaints received
Investigation
- 107 Court Orders
- 5 Search Warrants
- 213 Witness Statements
- 12 Arrests
Prosecution
- 12 Files submitted to the DPP
- 1 Sentence Reviewed
Information Notices
- 5 Information Notices issued
CEA’s Assessment of Potential Wrongdoings
Page 39 of the Report sets out the CEA approach to its assessment of potential wrongdoing.
Indications of wrongdoing received by the CEA are, with some exceptions, initially reviewed within the Civil Enforcement Directorate. Following initial assessment, a decision will be made as to the most appropriate means of dealing with a matter. That initial assessment can, for example, result in:
- the matter being closed, on the basis that it is not a company law matter or that the information provided does not indicate a breach of company law,
- a decision that the matter be further investigated i.e., in order to obtain additional information considered necessary in order to properly assess the issue(s),
- a warning issuing to the relevant company/directors,
- the matter being resolved to the CEA’s satisfaction, typically on foot of evidence to that effect having been provided by the company and/or its directors,
- a statutory direction issuing to address the underlying matter, for example, a statutory direction issuing to the directors of a company to convene an Annual General Meeting of the members/shareholders of the company,
- other statutory powers being exercised, for example, the power to inspect a company’s statutory registers, the matter being referred to a relevant third party (e.g., another State agency or relevant professional body) where the information suggests issues that come within the third party’s remit, and
- referral of the matter to the Criminal Enforcement Directorate.
NB: The content of this article is provided for information purposes only and does not constitute legal or other advice.
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