22 Dec 2017 | 10.44 am
Guest Blog: Claire Lord, Mason Hayes & Curran
Four key changes in strengthening corporate governance framework
22 Dec 2017 | 10.44 am
Government initiatives to update Ireland’s corruption and anti-bribery laws have important implications for companies and directors, writes Claire Lord (pictured) of Mason Hayes & Curran
The government’s ‘White Collar Crime’ package announced in November 2017 identifies a number of initiatives for further strengthening the corporate governance framework. The most tangible and immediate changes will be seen in the following areas.
Modernisation of Corruption and Anti-Bribery Laws
The government has proposed to achieve this modernisation by bringing the Criminal Justice (Corruption Offences) Bill 2017 into force. If enacted in 2018, the Bill will amend or repeal the existing seven Acts dealing with bribery and corruption and will also introduce new penalties and new offences.
A noteworthy change proposed by the Bill relates to the criminal liability of companies. The Bill states that a body corporate will be presumed to be guilty of an offence where certain representatives engage in corrupt activities on its behalf with the intention of obtaining or retaining business or to gain an advantage. This could potentially affect Irish companies operating anywhere in the world, and activities in Ireland of non-Irish companies.
A company can defend any proceedings brought against it by proving that it took all reasonable steps and exercised all due diligence to avoid the commission of the offence. Therefore, to be able to rely on this defence, companies need to have suitable policies and procedures in place to combat the use of bribery and corrupt practices in the conduct of their business.
Enhancing Audit Quality and Oversight
In April 2014, the Council of the European Union adopted a legislative package for audit reform, with the aim of improving audit quality and restoring investor confidence. The Audit Directive impacts all audits to some degree. The Audit Regulation imposes specific requirements on the statutory audits of Public Interest Entities, such as listed companies, credit institutions and insurance bodies.
Both the measures have mandatory and optional provisions, and a statutory instrument was introduced in 2016 to transpose into Irish law some of the additional provisions. The Companies (Statutory Audits) Bill 2017 now proposes to elevate the statutory instrument to primary legislation and enact some of the additional options, to ensure that there is a single coherent body of legislation. This is expected to be enacted in Q2 of 2018.
Beneficial Ownership Register
The European Union Beneficial Ownership Regulations came into force in November 2016. Non-listed Irish companies and other corporations must hold accurate and current information on their beneficial owners in their own register. The next step will require filing this information with a central beneficial ownership register. The launch of the Central Register is expected in Q1 of 2018.
In April 2017, the European Council announced that it had adopted a directive to amend the existing Shareholder Rights Directive. The directive must be enacted by member states by June 2019 and is intended to encourage transparent and active engagement by shareholders of listed companies. A public consultation is expected in 2018, with transposition expected in Q2 of 2019.
The ‘White Collar Crime’ package aims to strengthen corporate governance and encourage Irish companies to be run in an accountable and legally compliant manner. For Irish corporates, key actions to take now include carrying out an assessment of any bribery and corruption risks they may be exposed to, and putting in place appropriate anti-bribery and corruption policies.