Companies Report 2005

Foreword

2005 was a year of substantial change to the regulatory framework within which companies operate in Ireland. Much of the law in relation to Market Abuse and Prospectuses was repealed and replaced by new provisions made through both primary and secondary law. The Investment Funds, Companies and Miscellaneous Provisions Act 2005, amongst other things, put in place enabling provisions to allow for the EU Directives dealing with Market Abuse and Prospectuses to be transposed by Regulations.

The Investment Funds Act also made some very welcome changes for the Funds Industry in Ireland. It provided for a new investment vehicle - the non-UCITS CCF - to complement the existing portfolio of investment vehicles available to investors in Ireland. It also provided for segregated liability and cross investment for investment companies to allow for greater investor protection and choice. These changes have made Ireland a more attractive location for the establishment of investment funds, thereby increasing our competitiveness in the area.

2005 also saw major changes for the accounting and auditing profession with the adoption of EU requirements relating to International Financial Reporting Standards (IFRS). While initially adapting to these changes may pose challenges for the profession and industry, ultimately we will reap the benefits of compliance with converged standards in terms of our international reputation.

Much work was undertaken in 2005 to facilitate the establishment on a statutory basis of the Irish Auditing and Accountancy Supervisory Authority (IAASA) which is now empowered to discharge a wide range of functions under the Companies (Auditing and Accounting) Act, 2003. I am confident that this new Authority through its independent professional expertise, significant powers and active supervision of the regulation and governing of the auditing and accounting profession will ensure that the regulatory structures governing auditors and accountants in Ireland will promote high standards of practice.

The Company Law Review Group (CLRG) continued its sterling effort in working towards preparing a draft Scheme of Bill to modernise and consolidate company law. Full details of the Group's activities for the year are reported separately but I would like to specifically acknowledge the work of the Group in relation to the Directors Compliance Statement during 2005. The provision which was included in the Companies (Auditing and Accounting) Act 2003 has lead to much debate prior to and after enactment. I believe the CLRG has now come up with a workable compromise provision which strikes a good balance between corporate responsibility and the costs associated with compliance.

The Office of the Director of Corporate Enforcement (ODCE) and the Companies Registration Office (CRO) continued their respective enforcement roles throughout2005. As required by law, the Director's annual report is published and laid before the Houses separately although we have included in the present report a summary of the highlights from that report this year. In addition, the Registrar of Companies has for the first time produced and published on the CRO website a report of activities for the year although he is not required by law to produce a separate report. Again for completeness we have included a summary of the highlights here with the full report available on the CRO website.

Finally, to refer to the ongoing review of the Companies Report itself. My officials initiated a consultation process with the key stakeholders which itself has lead to some improvements in terms of the format and content of the report. This year we have made clearer the distinction between the work of my Department and the work of the Agencies and Bodies. In an effort to limit duplication of the extensive nature of material reported to the Oireachtas we have opted to include summaries of reports from Agencies and Bodies where the full reports are laid separately. In addition, we have included summaries of the main role and responsibilities of the Agencies and Bodies in the company law arena. In the context of the growing number of specialised regulatory agencies it is becoming increasingly important to clarify, when we can, their respective roles.

You will notice some other more minor changes to the layout and format of the report but the review process continues and over the next couple of years I hope further finetuning will lead to the production of an even more satisfactory document. The changes we have made are a step in the direction of developing the report into a more useful policy tool for monitoring and assessing progress towards broader and more strategic corporate governance goals.

This report is submitted in accordance with section 392 of the Companies Act 1963 which requires the Minister to "cause a general annual report of matters within this Act to be prepared and laid before both Houses of the Oireachtas". A deadline of "not later than 7 months after the end of the calendar year to which the report relates" was added in 2001 by the Company Law Enforcement Act of that year (section 99).

Michael Ahern

Minister for Trade and Commerce