King’s Inns, Dublin
19 October 2023
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Good morning, everyone - it is a privilege to be here with you today, at this the Corporate Enforcement Authority’s (CEA) inaugural conference.
Thank you, Ian (Drennan), for your introduction and warm welcome.
I want to start by thanking Ian and all the team at the Authority for inviting me here today to address you.
I would also like to acknowledge Fallon (Judge), her team and all the Directors and staff of the CEA for their work in designing and delivering today’s conference under Ian’s stewardship.
Today’s conference represents a landmark for the CEA and will be the first of many to come, I hope.
Establishment of the Corporate Enforcement Authority
Looking back, 6 years ago, in October 2017, Government first adopted a package of measures to enhance Ireland’s corporate, economic, and regulatory framework.
One of those measures was the establishment of the Corporate Enforcement Authority as a new and independent agency.
An agency endowed with more autonomy and flexibility to adapt to the challenges of investigation and prosecution of increasingly complex breaches of company law.
Through a strong period of determined leadership under Ian, the CEA was established on the 7th of July last year.
Now we can confidently say that Ireland, through the CEA, has an established architecture by which to regulate company law in an autonomous and agile manner.
This ensures better regulation for companies in Ireland and supports the enterprise base to grow and prosper.
But it also further strengthens Ireland’s global reputation as a top tier country in which to do business - underpinned by a strong company law enforcement framework.
Future of CEA
In just 15 months since establishment the CEA has firmly positioned itself as a highly knowledgeable, professional, and ambitious organisation that yields significant value for stakeholders.
Today’s stellar panel of expert speakers demonstrates the importance of the organisation and the significance of the conference.
And most importantly, all of you here today have taken time out of your busy day to come and attend in person – that is those of you lucky enough to get a ticket for today’s fully subscribed event!
But the journey for the CEA continues.
And I remain as committed as ever to tackling ‘so-called white-collar crime’ and working with the CEA.
Resourcing the CEA is of paramount importance so it can competently tackle breaches of company law.
I was delighted to announce as part of Budget 2024 a further 12% increase in the CEA’s budget.
Staffing levels have also doubled as talent and expertise continues to grow in the organisation.
This funding increase will allow the CEA to hire additional staff and augment its digital capabilities with a key focus to increase its advocacy work creating increased awareness of rights, duties, and obligations under company law.
Importance of company law and regulation
I cannot emphasise enough the importance of a well-functioning regulatory environment which is an essential foundation for a productive and competitive economy.
Having a strong regulatory and enforcement network, one which protects consumers, facilitates entrepreneurship, and contributes to Ireland’s reputation as a good place to do business, has always been a priority.
A fit for purpose company law framework is a crucial part of doing business in Ireland. It provides business certainty, enables entrepreneurs to take appropriate risks, supports the growth of enterprises, and assists in job creation.
The Companies Act 2014 facilitates entrepreneurial activity primarily through the provision of separate corporate legal personality and limited liability, thereby limiting personal exposure to financial risk.
In return for these privileges, company law set down a framework within which:
- companies and their directors are expected to operate
- reporting and transparency requirements must be complied with
- protections are afforded to shareholders, creditors and the wider public and
- sanctions are provided for in respect of certain non-compliance
Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2023
Company law is dynamic and having established a world-class company law code in the Companies Act 2014 we endeavour to regularly review it.
We have engaged with many stakeholders and thank you to those of you who participated in our public consultation. I have listened to those views and taken them into consideration in the preparation of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill.
Our priority has been to focus on practical, pro-enterprise reforms which will maintain Ireland's standing as a reputable place to do business which underlies our current economic success.
I have set out the Bill to include provisions on four areas of company law:
- corporate governance
- company law enforcement and supervision
- company law administration and
- corporate insolvency including the regulation of receivers
Corporate governance - virtual meetings
The pandemic forced us to adopt new behaviours to allow us to continue to do business and it certainly accelerated our digital ambitions.
We all appreciate a little more, the opportunities we get to come together in person at events such as today’s conference.
But I think you would all agree that we need to work in a more agile manner than before that allows for a hybrid model – combining face to face and technology.
And so, aligned to that I am now proposing to build on legislation introduced during the pandemic to provide, on a permanent basis for the option to hold fully virtual or hybrid meetings.
Company law enforcement and supervision
Now moving to corporate enforcement.
A well-stocked enforcement toolbox is vital to ensuring the CEA can meet the challenges it faces in its investigation and prosecution of alleged breaches of company law.
The Bill will bring forward proposals that will assist the CEA in carrying out its statutory functions.
Audit exemption regime
From speaking to the businesses sector up and down the country, the importance of the audit exemption to small and micro business is clear.
Before I discuss any proposed changes, I want to first highlight the importance of on-time filing of annual returns as an aspect of company law.
The availability of timely financial information provides significant protection for stakeholders including company member, employees and third parties doing business with the company.
However, I am very cognisant that the loss of audit exemption can have a significant impact on small and micro-sized companies.
Which is why I am bringing forward a proposal to change the current legislation, which is to introduce a two-step, graduated regime.
Where a small or micro company is late in filing its annual return, it will not automatically lose its audit exemption. Rather, it will incur a late filing fee.
If, however, within 5 years of the first late filing, the company is again late in making its returns, then the company will incur a late filing fee and will be required to submit audited accounts for the subsequent two-year period.
Under the area of corporate insolvency, you will be aware that the Companies Act underpins Ireland’s robust and flexible corporate recovery and insolvency framework.
It provides a clear restructuring framework for companies and the rights of employees.
The State’s corporate rescue toolkit was further expanded with the introduction of the Small Companies Administrative Rescue Process (SCARP).
My Department is continuing to monitor the insolvency environment and will continue to develop and adapt to ensure our corporate insolvency regime remains flexible and sophisticated.
Deriving, in part, from the feedback we received on the public consultation, the new Bill will provide for amendments to improve the operation of SCARP.
Forthcoming Directive - Corporate Social Responsibility Directive - CSRD
As you will be aware there is a vital need for all of us on an individual and a collective basis to step up and address the global climate crisis.
The current Programme for Government sets out how important the coming years are to address the climate change and biodiversity crisis facing Ireland and the world.
Ambitious climate action goals have been set at international level, such as in the Paris Agreement, at EU level, in particular in the EU Green Deal and nationally through the Climate Action and Low Carbon Development Act.
A key role in the coming years will be in the context of the global reframing of corporate reporting to include sustainability reporting.
My Department is leading on the transposition of the Corporate Sustainability Reporting Directive which is the EU’s response to this reframing.
The Corporate Sustainability Reporting Directive will play a significant role in addressing risks posed by climate change to financial systems and in channelling future investments and consumption towards companies that have a clear sustainability focus.
Companies in scope of the Directive will be required to report annually in their directors’ report on environmental, social and governance and human rights matters according to robust and comprehensive EU mandatory reporting standards.
In acknowledgement of the climate crisis we face, company law is being reshaped to put sustainability reporting on a level footing with financial reporting. To that end, my Department is keen to ensure that the regulatory systems in place for sustainability reporting are equal to that of the financial reporting regime.
It is clear that shareholders, investors, and the public’s expectations have risen on what companies should be doing in the ESG arena. Those that act to cut their impact will thrive. When transposed the directive will provide a framework for companies to develop strategic plans that will embed environmental, social and governance matters into the heart of their operations.
As is the case with financial reporting, the responsibility for sustainability reporting will lie with the directors of a company. Directors will be required to exercise reasonable care, skill and diligence when singing off on a companies’ sustainability disclosures.
I am aware that the new rules for sustainability reporting may be challenging at the outset. However, every worthwhile transition is challenging and my Department are working to ensure that we consistently deliver a clear, and coherent message on how to prepare for this transition.
I would encourage all of you to take time to deepen your own knowledge, that of your clients and of your Board and acquire the necessary skills in preparation of the introduction of the reporting requirements.
We are all aware of the complex global challenges we face, and how we require leadership from all stakeholders, to ensure Ireland’s future competitiveness, sustainability, and growth.
I want Ireland to continue to be a best-in-class global business hub supported by strong corporate regulatory compliance so that our enterprise economy can flourish.
Thank you again to Ian and all the team in the CEA for inviting me and putting together this excellent programme. I hope that you will gain great insight and knowledge from today’s speakers and that the presentations foster further discussion.
Go raibh míle maith agaibh go léir.