Approval likely for company law enforcement office

The establishment of a company law enforcement office is likely to be approved by the Cabinet when it meets today.

The establishment of such an office is part of a twofold strategy recommended in a report on company law commissioned as a result of recent business scandals.

The report, prepared by the Company Law Compliance and Enforcement Working Group, chaired by Mr Michael McDowell SC, will be published "within the next week or so", the Tanaiste, Ms Harney, said yesterday.

Speaking at a national conference on company law in Limerick, Ms Harney said a review of the enforcement of company law was prompted by a number of factors. These were: the low compliance rate for companies filing annual returns; the company law inquiries arising from the McCracken tribunal and the NIB scandal; the CountyGlen and Bula Resources scandals; and the issue of the regulation of the accountancy profession.

She said the breaches of the Companies Acts can be categorised as relating to disclosure, accounting deficiencies, and the lack or delayed completion of registers.

The first part of the dual strategy concerns the Registrar of Companies. The compliance rate for filing annual returns was only 13 per cent in 1997 and the position did not much improve during 1998, Ms Harney said. "Indeed, it is a matter of disquiet that a number of significant companies listed on the Stock Exchange are considerably remiss in making statutory returns to the Companies Office."

Ms Harney said it was "no secret that the company law working group found that the majority of company law offences have never been the subject of prosecutions apart from those instigated by the Registrar of Companies in relation to companies failing to file annual returns".

The implementation of a new IT system in the Companies Registration Office continues to have a significant effect on the compliance rate, Ms Harney said. In the first half of this year 1,800 companies will be prosecuted by the Registrar for non-filing of returns, she said.

Separately, Ms Harney has directed prosecutions where breaches of the Companies Acts have come to light. These included breaches concerning the holding of annual general meetings, maintaining a register of members, and necessary qualifications for appointment as an auditor. Prosecutions are being considered in cases involving failure to change a company's name, inspections of minute books, and the misuse of the word "limited".

The Companies (Amendment) Bill 1999 will provide for the removal of the statutory audit requirement for companies whose turnover is under £100,000 and meet other thresholds for a small company under the Companies Acts. The requirement to file returns will continue for such companies, Ms Harney said.

A new, more straightforward system for striking non-compliant companies off the registrar will be introduced, and creditors will be permitted to pursue restoration procedures at Circuit Court level.

The main provisions of the Bill will be concerned with examinership, audit and Irish-registered non-resident companies, Ms Harney said. She expects to publish the Bill shortly.