The Companies (Corporate Enforcement Authority) Act 2021 (the Act) has been heralded as “a watershed moment in Ireland’s strategic approach towards addressing economic and white-collar crime”.
Commenced with effect from 6 July 2022, the Act introduced some highly anticipated structural reform and, more particularly, the established the new independent statutory body, the Corporate Enforcement Authority (the CEA). As outlined in our previous article, the CEA will replace the Office of the Director of Corporate Enforcement (ODCE) and assumes the ODCE’s powers and functions in the investigation and enforcement of company law offences.
Corporate Enforcement Authority
The CEA will operate under a commission structure, similar to the Competition and Consumer Protection Commission (CCPC), and the current functions of the ODCE will be transferred to CEA with no substantial change. These functions include encouraging compliance with company law, investigating and tackling suspected breaches of company law and alleged criminal activity in the areas of fraudulent trading prior to insolvency, prosecuting summary offences, referring indictable offences to the DPP and performing certain supervisory functions in relation to liquidators and receivers.
However, the key difference between the CEA and the ODCE is the CEA’s establishment as an independent body, as opposed to an office in the Department of Enterprise, Trade and Employment, which will ensure that the CEA has greater autonomy than the ODCE. In particular, the CEA will have autonomy to recruit its own staff with necessary specialist expertise (for example, in the areas of financial forensics and data analytics) which will facilitate the CEA to better tackle more complex enforcement cases. The Act also provides that members of An Garda Síochána may be seconded to the CEA.
It is also expected that the CEA will be granted additional powers in the future. Proposed additional powers include, the power to conduct surveillance, to obtain search warrants, to compel the provision of passwords for electronic devices and to permit CEA officials to attend suspect interviews.
The greater autonomy of the CEA will be backed by increased personnel and a bigger budgetary allowance. The Government has committed to increasing the CEA’s staffing numbers by nearly 50%, increasing its budget by circa €1m and increasing the number of in-house Gardai from 8 to 16.
Speaking following the establishment of the CEA, the Tánaiste, Leo Varadkar commented: “We’re giving it real teeth, making sure it has the autonomy and resources to thoroughly investigate suspected wrongdoing, such as fraudulent trading and larger, more complex company law breaches.”
Does it have ‘real teeth’?
The Government's commitment to greater staffing and budget is certainly a welcome development but the Act does not grant the CEA any significant new investigative powers which were not already available to the ODCE. It appears that the Government intends to have the CEA replace the ODCE in the first instance and then provide the CEA with an enhanced suite of powers by separate legislative enactments at a later date. The issue with this approach is the concern that these additional powers for the CEA may never come to fruition.
While further reform is expected, the establishment of the CEA is an important step in Ireland’s fight against threats to our economy brought on by white-collar crime and it is hoped that the establishment of the CEA will reassure the international market that Ireland is a safe-haven to carry out business.
We will continue to monitor developments with respect to the CEA and update you on further developments. In the meantime, if you would like any further information on the above topic, please contact a member of our Corporate Department.