Approval given for new office on company law

The Government has approved the establishment of a Director of Corporate Enforcement, designed to end the "culture of non-compliance" with company law.

The Tanaiste and Minister for Enterprise, Trade and Employment, Ms Harney, launched the report of the working group on company law and enforcement yesterday, saying that it was important for social cohesion that the law was seen to be enforced.

The new director will have a staff of about 30 people, in addition to seven garda members seconded to the office. Its overall function will be to ensure the enforceability of company law, much of which has been largely ignored in the business world.

According to the report, company law has been characterised by "a culture of non-compliance" and a situation where, in 1997, only 13 per cent of companies filed annual returns on time.

As part of the overhaul of procedures, a statutory review group will be established and the Companies Office will have the power to impose on-the-spot fines for summary offences. That office expects to have a new regime of compliance in place by next year, Mr Paul Farrell, the registrar, said.

Official inquiries were not a satisfactory way of regulating company activity, Ms Harney said. The level of non-compliance was evidenced by the widespread failure to comply with the Companies Office "basic requirement" to register annual returns. Very few statutory offences were prosecuted and the fines were small, she said.

"Corporate government is particularly important in a successful economy," she said.

The new office will be an independent authority with wide-ranging powers under a revised Companies Act. Department officials said yesterday a companies' law review group would be established and the recommendation to update the law every two years would be followed. The office will be established at a cost of about £2 million and will have annual running costs of £2.5 million.

The working group's chairman, Mr Michael McDowell SC, said the Government was going further with the new director's powers by taking over the Department's power to initiate investigations.

The obligatations on companies were not draconian but compliance was important for business confidence and for the State's reputation.

"Enforcement of company law has nothing in it by way of an anti-enterprise ring about it. Any company that cannot comply with it is likely to run into difficulties themselves," he said. Under the new legislative regime, the Minister for Enterprise, Trade and Employment will no longer have a prosecution role for company law offences but will retain the power to appoint an inspector to investigate a company's affairs. The Fine Gael spokeswoman for justice, Ms Nora Owen, welcomed the Minister's announcement, saying it was clear the adherence to Company Law by many companies was honoured more in the breach than in the observance.