Enforcer expects legal challenge to powers

The Director of Corporate Enforcement, Mr Paul Appleby, expects the powers of his office to be challenged in the courts as those of the Criminal Assets Bureau have been.

Mr Appleby said he had not received notice from anyone that they intended taking such an action, but believed that it was inevitable given that the powers were new. He said the challenge for his office was to ensure it implemented the law in the fashion intended.

The office expects to receive 400 reports in the final quarter of this year, many of them from liquidators who are obliged to file reports to Mr Appleby's office by the end of this month.

The office was notified of about 470 "issues" during the first three quarters of the year, with 150 of these coming through the new reporting obligations on auditors. The balance came through public complaints.

By the end of the third quarter, 260 of the cases referred had been dealt with. Many were filing issues, which were passed on to the Companies Registration Office. There were 210 cases in hand at the end of the third quarter.

Most of the cases reported to Mr Appleby's office concerned the late filing of annual returns. Others, however, concerned the failure to keep proper books of account, and the breaching of the regulations regarding transactions between directors and companies.

Mr Appleby, in previously unreported comments to a risk management group conference, said he was surprised by the number of issues that had been brought to the attention of his office. He said a system for applying "on the spot" administrative fines for dealing with offenders would be introduced next year.

He added that because of the workload, his office would be selective in the cases it dealt with. "We are going to have to focus on achievable results and in so far as possible resolve matters outside the law and without taking legal action if we can."

One company being investigated in relation to the suspected failure to keep proper books of account is Bovale Developments Ltd, the building company that was severely criticised by the Flood Tribunal. Offices linked to the company were raided in recent weeks by Mr Appleby's staff.

Mr Appleby believes there is a major information deficit, particularly among directors of small companies, as to company law obligations. He plans an information initiative to attempt to bridge that gap.