During its first six months of operations, the CEA has:

• launched its new brand, website and social media channels,
• published information and guidance on a range of topical matters,
• welcomed both An Taoiseach, Leo Varadkar TD, and Minister of State, Dara Calleary TD, to its offices,
• engaged in a recruitment campaign aimed at enhancing the CEA’s investigative and enforcement capabilities.

The CEA’s work comes from a range of sources, including:

• mandatory reports, e.g., from liquidators and auditors,
• complaints from members of the public, from ‘workers’ under the Protected Disclosures Act 2014, from other statutory enforcement/regulatory bodies, and from investigations that we open on our own initiative.

As a specialist agency, the CEA’s staff complement includes forensic accountants, lawyers and digital forensics professionals. CEA officers also include seconded members of An Garda Síochána.

The CEA operates under a strict regime of confidentiality and is prohibited from disclosing material obtained in the performance of its functions that has not otherwise come to the attention of the public. There are statutory exceptions to this principle in order to facilitate information sharing with other statutory enforcement and regulatory bodies.

Where a company’s auditor has reasonable grounds for believing that an indictable offence under the 2014 Act may have been committed by the company or its officers or agents, that auditor is obliged to report the matter to the CEA forthwith. The CEA’s predecessor saw a significant increase in the number of indictable reports received in 2021 (131) compared to 2020 (75), with reports concerning entity financial statements being the predominant source of reports in both years. The CEA also notes an uptick in reports concerning failure to maintain proper accounting records between both years.

The CEA receives liquidators’ reports, concerning both creditors’ voluntary and court ordered liquidations under section 682 of the 2014 Act and, therefore, has an insight into the level of liquidations occurring and their characteristics. It is fair to say that the significant increase in the number of liquidations that has long been predicted as a consequence of Covid-19 has not yet crystalised. However, there is a gradual increase in the number of insolvencies, and it is anticipated that the gradual withdrawal of supports from both Government and the Revenue Commissioners may see this increase further.

The CEA is actively engaged in the investigation and prosecution of criminal breaches of the 2014 Act, with a number of cases pending before the criminal courts.

In addition to serious breaches of company law, such as fraudulent trading, where offences under other legislation (e.g., Criminal Justice legislation) are suspected as a result of evidence gathered during the course of an investigation, the CEA also recommends the prosecution of other, non-company law, offences to the DPP – for example, theft, deception and money laundering.

Of relevance to practitioners will be a recently concluded case prosecuted by the CEA concerning the unauthorised and unlawful use of an Auditor Registration Number in the submission of annual returns to the Companies Registration Office.

The accused in that case entered a plea of guilty to only one count of providing false information contrary to section 876 of the 2014 Act and subsequently pleaded guilty to a further six counts of the same offence. The accused received a two-year suspended sentence and was ordered to pay €30,000 in compensation.

Preventive Restructuring Directive

EU Directive 2019/1023, known as the Preventive Restructuring Directive (‘PRD’) was transposed into Irish law by the European Union (Preventive Restructuring) Regulations 2022 (‘the Regulations’) with effect from 27 July 2022. The purpose of the PRD is to ensure that, across the EU, there are restructuring frameworks in place to assist viable business that are in financial difficulty to continue to operate.

The CEA has recently published an Early Warning Tools and Restructuring Framework document, as foreseen by Article 3 of the PRD. For the purpose of assisting company directors:

• the early warning tools element of the document seeks to identify, in a clear and accessible manner, the principal indicators that a company may be in financial difficulty, and
• where those circumstances arise, the restructuring framework element of the document points company directors towards the various mechanisms that are now in place to assist companiesthat are experiencing financial difficulties.

The Regulations also require company directors to have regard to certain matters where the company is unable, or is unlikely to be able, to pay its debts as they fall due. These include obligations to have regard to:

• the interests of the creditors (the duty to have regard to the interests of creditors restates an existing common law position in this regard),
• the need to take steps to avoid insolvency, and
• the need to avoid deliberate or grossly negligent conduct that threatens the viability of the business of the company.

The Companies (Rescue Process for Small and Micro Companies) Act 2021, created a process known widely as ‘SCARP’. This process has been available since December 2021 and provides for the benefits of rescue and restructuring being made available to small and micro companies who are ultimately viable but are experiencing financial difficulties. One of the key features of the process is the appointment of a Process Adviser who prepares a report to assess the viability of the company and submit proposals regarding the rescue plan. Process Advisers have an obligation to report to the CEA where it appears to them that any past or present officer, or any member of the company, has been guilty of an offence in relation to the company. Process Advisers are also obliged to provide the CEA with certain information (section 558 ZR).

Protected disclosures

The CEA is a ‘prescribed person’ under section 7 of the Protected Disclosures Act 2014 to whom reports can be made concerning matters relevant to the CEA’s functions. Protected disclosures legislation has recently been amended and the categories of persons who may make a disclosure that is protected under the legislation have been extended. These now include shareholders of a company, volunteers and persons working in companies as interns.

The CEA facilitates the making of both written and oral protected disclosures. It is notable in this context that one of the largest investigations conducted recently by the CEA’s predecessor, culminating in the appointment of Inspectors by the High Court, commenced through the making of a protected disclosure.

Sanctions

The CEA has received enquiries concerning the operation of the EU sanctions regime, in particular in the context of sanctions against Russia arising from its invasion of Ukraine and the suite of sanctions that followed that invasion. The CEA received queries concerning the operation of Trust or Company Service Providers and the provision of audit services to Irish owned companies with significant Russian business interests. The CEA has published an information note in this regard, emphasising the importance of complying with audit obligations, and the potential consequences for them if their obligations are not complied with.

Covid-19

Last December the ‘interim period’, as provided for by the Companies (Miscellaneous Provisions) (Covid-19) Act 2020, was further extended to 31 December 2023. That Act made several temporary amendments to the 2014 Act to address issues arising as a result of Covid-19, including temporary provision in respect of increasing the threshold at which a company is deemed unable to pay its debts to €50,000. The Act also permits the holding of AGMs and general meetings by electronic means. The rationale of the continuation of these important amendments is to “provide additional breathing space and continuity for businesses to the end of 2023”.

Further information on the CEA, its publications and activities can be obtained from its website (cea.gov.ie) and from its social media channels on LinkedIn and Twitter. In particular, and in order to assist company directors and secretaries in discharging of their duties and responsibilities, and to inform company members, shareholders and creditors as to their rights under company law, the CEA has published a range of information and guidance booklets.