ODCE reports rise in breaches of Companies Act

A record €46,000 in fines was imposed on businesses last year for breaches of the Companies Act, according to the annual report of the Office of the Director of Corporate Enforcement (ODCE).

Overall, there were 32 convictions, 20 disqualifications and one restriction imposed during 2008, compared to 28 convictions and 14 disqualifications obtained in 2007.

A total of 820 new cases of alleged breaches of the Companies Acts came to the attention of the ODCE last year, a 22 per cent increase on the 674 new cases which emerged during 2007.

The ODCE attributed the rise to a higher number of public complaints, mandatory reporting by auditors and an increase in the ODCE's own detections.

Some 781 cases were closed last year while another 75 were referred for investigation of possible legal action by the Office.

Last year, the ODCE secured 32 convictions against 13 individuals and companies for breaching various offences under the Companies Acts. A significant feature of 2008 was the first conviction of a company director fork nowingly using company assets for personal purposes in breach of the legal restrictions on the giving of loans to directors.

In 2008, auditors reported 161 cases to the Office where directors had used company funds contrary to the provisions contained in the Companies Acts. This represented a 19 per cent increase on the 135 reports received in 2007. In addition, the loan amounts in question grew to €134 million last year, a fourfold increase on the €33.7 million reported by auditors in 2007.

The ODCE said there was a high incidence of loans taken by directors from companies operating in the construction and property development sectors.

Overall, the Office cautioned 423 directors during the year over loans during 2008,according to the annual report.

Last year, 68 companies were found to have improperly availed of audit exemption, improperly filed abridged financial statements and/or filed financial statements which contained an inadequate audit opinion.

There was a 42 per cent increase to 406 in the number of initial liquidator reports received by the ODCE last year, a figure which is expected to double this year, according to the Office. Last year, The Office also determined 352 initial liquidator reports, a 22 per cent rise on the 2007 outturn.

2008 was notable for the first conviction of a company director for knowingly using company assets in breach of the legal restrictions on the giving of loans to directors; and for the first case of a company director being handed down a custodial sentence which was not suspended by the Court.