Ian Drennan, CEO of the Corporate Enforcement Authority, outlines the State agency’s plans and priorities for 2024 and beyond

Collaboration between State regulators, statutory bodies and professional membership organisations, such as Chartered Accountants Ireland, is set to deepen as Government efforts to crack down on white collar crime and corporate corruption continue in the years ahead.

“There is very significant work ongoing at State level seeking to further enhance Ireland’s capacity to tackle economic crime,” Ian Drennan, Chief Executive of the Corporate Enforcement Authority (CEA), explains.

“The Advisory Council against Economic Crime and Corruption is developing a national strategy and the CEA is heavily involved in the formulation of that draft strategy for consideration by Government.”

Dealing with economic crime into the future and ensuring that Ireland is “at the vanguard” of the highest standards in business regulation will require a significant level of State collaboration with the private sector and bodies such as Chartered Accountants Ireland, Drennan says.

Corporate Enforcement Authority

The CEA was established in July 2022 with the commencement of the Companies (Corporate Enforcement Authority) Act 2021, replacing the Office of the Director of Corporate Enforcement.

Leo Varadkar, who was then Tánaiste and Minister for Enterprise, Trade and Employment, said the new agency would have “real teeth” with the autonomy and resources needed to thoroughly investigate suspected wrongdoing, such as fraudulent trading and more complex company law breaches.

The Act invested the CEA with the autonomy to appoint its own staff and structure itself to meet evolving demands in the future. 

The CEA’s budget has been increased by 30 percent and its approved civilian staff complement by 14 additional officers. The Government has also increased the number of members of An Garda Síochána seconded to the CEA from seven to 16. 

“This increased level of resourcing gives us capacity to deal with a greater caseload of suspected non-compliance with company law, be it civil or criminal in nature,” Drennan says.

“The investigations that we conduct can be document-heavy and complex, with indications of wrongdoing regularly involving suspected serious offences under company law as well as crossing over into other codes of legislation, such as theft, fraud and money laundering,” Drennan explains.

“One of the strengths of the CEA is its multi-disciplinary structure. In addition to having at our disposal both accounting and legal professionals, the Gardaí embedded within the organisation bring with them the full suite of powers that they enjoy as sworn police officers. 

“This means that, when we are conducting investigations, they can apply to the District Court for warrants under other codes of legislation where the need arises. As a consequence of this organisational capability, it is commonplace for us at this stage to submit files to the Office of the Director of Public Prosecutions with recommendations for charges under both company law and other legislation.”

Scope and remit

The CEA’s remit spans investigation, prosecution and supervision of the corporate insolvency process as well as advocacy. 

“While we investigate potential breaches of company law, that is only one side of the equation. We also place great importance on promoting compliance with company law, which we seek to do by providing accessible guidance to company directors and through our outreach activities,” Drennan explains. 

The “vast majority” of companies will never have any kind of direct engagement with the CEA, he adds.

“Most company directors are trying to do the right thing; we know that. They have a raft of challenges to deal with at the moment – high interest rates, inflation, rising energy costs and tight labour markets.

“They must manage a wide range of legal and regulatory obligations, ranging from tax and health and safety to company law. In our experience, most company directors try to meet those obligations on an ongoing basis and to a high standard.”

It is important that the CEA acts in a proportionate and resource-efficient manner and that the enforcement action chosen is commensurate with the underlying issues, Drennan adds. 

“Where appropriate, we try to resolve issues of non-compliance on an administrative basis and without recourse to statutory powers. In other instances, that approach will not be appropriate and a more formal, or robust, approach will be warranted,” he says.

The CEA also provides guidance to assist company directors in discharging their responsibilities under company law in what Drennan terms a “relatively non-technical and easy-to-understand forum”.

“Prevention is better than cure and, in that context, the CEA’s website hosts a range of information and guidance materials that seek to assist company directors in understanding their duties and obligations and shareholders, creditors and the wider public in understanding their rights,” he says.

“It is much more cost-effective from our perspective to assist people in complying with the law in the first instance.”

Company law amendments

Drennan welcomes the recent publication of the General Scheme of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 by Minister of State for Trade Promotion, Digital and Company Regulation, Dara Calleary, TD.

Announcing its publication on 15 March, Calleary said the Act would introduce “practical, pro-enterprise” reforms in support of a competitive economy while also maintaining a robust company law framework. 

Amendments proposed in the Bill include allowing companies and industrial and provident societies to hold virtual general meetings when the current COVID-related interim legislation expires at the end of the year.

It also proposes removing the automatic loss of the audit exemption in respect of the first instance of late filing with the Companies Registration Office by small and micro companies.

Drennan particularly welcomes proposals to create new offences regarding the obstruction and intimidation of CEA officials. 

“These proposals send out the very clear signal that obstructing or threatening a CEA officer will not be tolerated and that anyone who does so risks facing a lengthy term of imprisonment,” he says.

“Balance is important. Company law is crucial, but it must support business as well as safeguarding responsible ways of doing business.

“Company directors can forget to file an annual return; they can forget to hold an AGM. These oversights can be rectified relatively easily.  

“Their interaction with us in these instances could amount to just one or two letters to close the whole thing out. Generally speaking, the more co-operation we get, the more positive our disposition; the more people are willing to work with us, the less painful the exercise will be.”

Beyond correspondence, the “next level up” in the CEA’s enforcement activity tends to involve civil enforcement, Drennan explains.

“Our remit extends to the close to 300,000 businesses registered in Ireland. We deal with everything from ‘mom and pop’ operations, SMEs, charities and not-for-profits, all the way up to companies whose securities are publicly listed,” he says.

Civil enforcement can involve director restrictions and disqualifications, as well as court applications for the purpose of seeking orders compelling companies, directors and other relevant parties, such as liquidators, to comply with their statutory obligations as regards restrictions and disqualifications.

“We receive approximately 700 liquidators’ reports every year, so the process that flows from those reports, which includes scrutinising director behaviour and offering undertakings, accounts for a sizeable portion of our work,” Drennan says. 

“Where directors choose to accept undertakings, they can avoid going to the High Court with the time and financial outlay that tends to involve.

“Beyond this, the most invasive work we do involves investigations into serious suspected wrongdoing.” 

This work tends to be complex, protracted in nature and frequently involves litigation, Drennan says. 

The CEA has significant enforcement powers, including scope to issue directions, to enter and search premises under warrant, to arrest (a power conferred upon CEA officers who are also members of An Garda Síochána), and to bring summary criminal prosecutions in the CEA’s own name as well as to refer files to the DPP.

“This is the part of our work that might involve a knock on the door at 6am but this is not, thankfully, required in the vast majority of cases we deal with,” Drennan says.

Complaints, reports and referrals

The CEA receives hundreds of complaints from members of the public each year as well as statutory reports from auditors and liquidators and statutory referrals from other State bodies, such as the CRO, the Revenue Commissioners, An Garda Síochána and the Central Bank of Ireland.

“We also open investigations on our own initiative – as a result of media reports or our own analyses, for example,” says Drennan.

Emerging trends

The number of liquidator reports the CEA is responding to has risen markedly in 2024. 
“They dropped during COVID because of businesses being closed and debt warehousing. Now, they are returning to pre-COVID levels, which in turn is driving up the numbers of restrictions and disqualifications,” says Drennan.  

“At the same time, the Companies Registration Office has recommenced the involuntary strike-off of non-compliant companies deferred during COVID.  

“A subset of these entities fall within our enforcement remit where directors have simply ‘walked away’ from insolvent companies owing debts rather than putting them into liquidation.

“Those directors face the likelihood of being disqualified from acting as company directors, as that is not an appropriate or responsible manner in which to behave.”

Looking to the future, Drennan concludes: “Our vision for the future is to continue to build the CEA’s presence, to continue to enhance operational capability, and to assist the vast majority of directors who are trying to do the right things by continuing to provide high quality, and accessible, information and guidance resources. 

“By doing this and working with other stakeholders in the public and private sectors, the objective is to enhance Ireland’s reputation as a safe and well-regulated economy in which to do business and create employment.”