Jurys Ballsbridge Hotel
9 March 2005

• Directors’ Compliance Statements
• Other Compliance Work
• Detected Non-Compliance
• Enforcement Activity
• Supervision of Insolvent Companies
• Other Matters

• ODCE Consultation Paper/Draft Guidance issued
• 36 Submissions received and considered
• ODCE Submission sent to Ministers on start date and scope of the obligation in November 2004
• ODCE Revised Guidance issued, December 2004
• Support of CCAB-I, IBEC, IFSRA, IoD, Revenue

Main Issues addressed in Revised Guidance
• Affected Companies
• ‘Relevant Obligations’
• Directors’ Reporting
• Terminology
• Developing Procedures
• Effectiveness Review
• Audit Committee Role
• Offences/Sanctions
• Financial Services Area

• Issues yet to be determined by Ministers
– Form and Date of Commencement (likely to apply for financial years starting on or after a date in the latter half of 2005)
– Company Exemptions (may include companies in the financial services area)
• Decisions likely shortly

• Some 70 presentations to various interests
• Articles/papers on issues of concern
• Press Statements on ODCE developments
• Large number of public enquiries
• Thousands of ODCE publications distributed
• Further Guidance planned in 2005, e.g., on Audit
Committees and Management Companies

• Approach here is to ensure that:
– Those required to report indictable offences to us do so
– Those permitted to report to us exercise that discretion
• Remind auditors in default of their mandatory duty
• Information-sharing Memoranda of Understanding signed in 2004 with the Irish Stock Exchange and the Revenue Commissioners

• About 1,950 new Auditor/Public/Other Reports
• Some 20 offences types came to notice
• Annual return defaults dominated again
• Excessive directors’ transactions also prominent
• New reported defaults relating to the acquisition or disposal of interests in company shares, etc.

• Company Investigations
– Publication of NIB/NIBFS Inspectors’ Report in 2004
– Other investigations completed and ongoing
– Legal action under active consideration in a number of these cases
– Scope for expansion of this work in 2005

• Tiered Approach to Enforcement
– Will usually decline to enforce civil matters
– Will leave single annual return defaults to the CRO
– May accept voluntary rectification
– May warn of sanctions in the event of further default
– May seek High Court Order to remedy ongoing default
– Will take enforcement action in priority cases

• General Objectives
– Extend the number of prosecuted offences
– Continue to focus on cases involving wilful misconduct and/or adverse market effects
– Pursue a balanced mix of resource-intensive and more routine cases
– Continue to secure a high level of Court success

• Some 24 ODCE cases were concluded in 2004
– 67 charges resulted in convictions (+54% on 2003)
– 36 charges were taken into account, thought proven etc
– 3 disqualifications
– 2 restrictions
– 1 compliance order
• 16 cases were before the Courts at year-end
• 1 case awaiting a decision from the DPP

• Purpose is to Protect Creditor, etc. Interests
• 38 Convictions in 15 cases in 2004
• Range of Companies/Directors convicted to date
– International and Domestic Businesses
• Auditors’ Evidence Usually Persuasive
• Court unconvinced by Liquidator Evidence

• Purpose is to Protect Company Stakeholders
• Acting as Directors while not permitted in 2004
– Undischarged Bankrupts (1 conviction/disqualification)
– Disqualified Persons (ODCE involved in relief application)
– Restricted Persons (1 conviction/disqualification)
– Restricted Persons (ODCE involved in relief application)
• Acting as Liquidators while not permitted
– Company Officer/Related Persons (1 case initiated)

• Acting as Auditors while not permitted in 2004
• Unqualified Persons (19 Convictions)
– Those with little or no accounting qualifications
– Those who may be accountants but are not auditors
• Disqualified Persons (Probation Act applied)
– Auditors who had acted as directors of the company

• Other Cases Concluded in 2004
– Provision of false information to the CRO
– Failure to file annual returns
– Failure by a director to cooperate with a liquidator
– Fraudulent trading in an insolvent company
– Acting irresponsibly as a director of insolvent company
– Failure to file annual returns resulting in its dissolution
– Failure by liquidator to report on an insolvent company

• Initial ODCE actions focused on liquidator reports
• Wish to identify suitable cases for disqualification
• New approach includes UICs/dissolved companies sourced from the CRO strike-off list and Revenue
– director of UIC restricted based on unpaid judgement
– directors of dissolved company disqualified/restricted
– further cases in the pipeline

Initial Liquidator Reports 2003
Cases Determined
Full Relief
No Relief
Relief ‘at this time’
Partial Relief/Other Decisions
560
52%
36%
6%
6%
2004
529
67%
18%
10%
5%

• Restriction of Directors
– 270 directors restricted in 2004
– about 500 directors now stand restricted
– we are actively identifying directors not complying
– all those prosecuted were convicted/disqualified to date
• Liquidators not reporting/seeking restriction
– we are actively pursuing these

• EU Cross-Border Insolvency Regulation
• Failure of Eurofood IFSC Ltd. (and Parmalat SpA)
• Italian and Irish Courts disagree on jurisdiction
• Fundamental principle of company law at stake
• ODCE participated in High/Supreme Court cases
• ODCE has made observations to European Court

• Focus on keeping ODCE website up-to-date
• Continues to attract favourable comment
• Visits increased to 116,000 in 2004 from 75,000 and 42,000 in 2003 and 2002 respectively
• Technical improvements will be made in 2005

• ODCE led international research report on
Phoenix Companies
• Positive ODCE Market Research Results in 2004
– improved compliance environment
– appreciation of ODCE’s educational activity
– recognition that enforcement not yet at full potential
– will undertake further research in 2005/2006

• Directors, etc. now more accountable
• Auditor’s independent role reinforced
• Errant and unscrupulous Directors face ODCE
Inquiry/Court action
• Creditors’ Situation has improved
• Better Information Disclosures to Market
• Reinforcing Good Practice in other areas

Further Information is available from www. odce. ie