New Irish Companies Act enhances CEA enforcement powers

Lisa Carty, commercial litigation expert at Pinsent Masons, was commenting after the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 was signed into law.

The majority - 64 out of 90 - of the Act’s provisions have come into force with effect from 3 December, following the commencement of S.I. No. 639/2024 Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 (Commencement) Order 2024).

The CEA was established on 7 July 2022, replacing the Office of the Director of Corporate Enforcement as a new corporate watchdog. It has enhanced powers and resources to enforce and promote compliance with Irish company law. In particular, the CEA is responsible for investigating suspected violations of the Companies Act 2014 (the 2014 Act) and prosecuting identified breaches. Additionally, it refers serious matters to the Director of Public Prosecutions (DPP) for prosecution on indictment. The CEA also supervises the activities of liquidators and receivers in the performance of their duties under the 2014 Act.

Carty said: “The expansion of the CEA’s powers under the Act coincides with additional funding provided to the CEA in the 2025 Budget for the recruitment of extra specialist staff. These steps signal very clear endorsement of the work of the CEA and the importance of the integrity of Irish companies and their officers.”

Among the additional powers include further powers of oversight and enhanced ability of the CEA to intervene where individuals who are subject to restriction, disqualification or bankruptcy apply to the courts for permission to return to the management of a company.

The Act also requires the CEA to be named as a notice party in any proceedings where an undischarged bankrupt applies to court for permission to act as a company director or secretary or to participate in the management of the company. These amendments give the CEA the opportunity to object to such applications and receive particulars of any court decisions in this regard.

The CEA is empowered to take possession of potentially privileged material. In such circumstances, the CEA must apply to court for a determination as to whether documents it has seized in fact contain legally privileged material. Under the new Act, the period within which the CEA must make this application to court has been expanded from seven to fourteen days.

The Irish courts recently ordered disclosure of a large volume of documents over which privilege had been claimed by a company under investigation. The Supreme Court recently dismissed an appeal against a decision by the courts that 1,123 documents seized by the CEA were not privileged.

Carty said: “This extension in the time period for the CEA to make an application accounts for cases where large volumes of documents are being seized and to allow the CEA additional time within which to make any necessary application to the court. Companies should expect challenge to claims of privilege over documents that have been seized so all claims of privilege should be carefully considered.”

The Act creates a new Category 2 offence where a person obstructs, interferes with, or impedes an officer or staff member of the CEA exercising their statutory powers or duties under the 2014 Act. This offence is aimed at protecting the CEA’s staff in carrying out their work and captures a broad range of conduct.

The Act also provides for the CEA to have greater visibility of records of illegal conduct by company officers. For example, the CEA must be provided with the prescribed particulars of a director’s restriction or disqualification within 28 days of the court order in respect of such restriction or disqualification. In addition, the CEA will be notified of any court application seeking relief from a restriction or disqualification order.

Where it emerges during the winding-up of a company that a past or present officer or member of the company has seemingly committed an offence, the liquidator must now report the matter to the CEA “forthwith”. This aligns with the existing requirement to notify the DPP forthwith of such circumstances.

Where the auditors of a company gain information of a possible Category 1 or 2 offence, the auditor must notify the CEA. The Act also empowers the CEA to compel the auditors to provide exact copies of relevant documents in their possession, where previously the officers to the CEA had to attend the auditor’s office to make their own copies.

Additionally, the Act extends the list of statutory bodies with which the CEA can share otherwise confidential information and disclose company documents, to include the Registrar of Beneficial Ownership; the Registrar of Friendly Societies; the Charities Regulatory Authority; the Competition and Consumer Protection Commission; the Data Protection Commission; the Insolvency Service of Ireland; Office of the Protected Disclosures Commissioner; and the Criminal Assets Bureau.

The list of authorities that may provide information to the CEA in relation to the commission of an offence of non-compliance with the 2014 Act has been expanded to include the Registrar of Beneficial Ownership, Charities Regulator, Minister for Social Protection, Pensions Authority, Financial Services and Pensions Ombudsman, Data Protection Commission, and Protected Disclosures Commissioner.