Ten most common corporate governance sins

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• Ten most common corporate governance sins
• And how to avoid them
• CIMA Dublin District Branch
• Kevin Prendergast
• Corporate Compliance Manager, ODCE.

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Company law isnt rocket science

• There are no hidden surprises
• Most matters can be addressed simply
• The worst thing you can do is ignore an issue

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Corporate Governance Sins

• Dont keep accounts
• Breach of the law
• Most prosecuted offence for directors
• No idea if making a profit or loss as a business
• If leads to insolvency, a separate offence
• Could lead to personal liability in insolvency

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Corporate Governance Sins

• Borrow money from your company
• This is a criminal offence
• Your auditor has to report it
• Easier to prosecute since 2009
• Can be resolved without money having to be paid

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Corporate Governance Sins

• Dont file your financial statements on time
• Fees and penalties
• Loss of audit exemption for two years
• Risk of strike-off

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Corporate Governance Sins

• Fight with your fellow directors
• Board meetings may not take place
• AGMs may not take place
• Financial statements may not be signed or filed
• Must be resolved in High Court, public and
  expensive

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Corporate Governance Sins

• Dont have meetings
• No opportunity to take strategic look at the
  business
• No opportunity to raise issues
• No record of key decisions taken by the company

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Corporate Governance Sins

• Dont keep minutes
• Criminal offence
• No official record of decisions
• No proof if legal disputes between directors
• No defence if facing civil proceedings

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Corporate Governance Sins

• Get struck off the register
• Lose limited liability
• Question mark over legality of contracts
• May be committing an offence
• 12 months to get re-registered with CRO
• Thereafter wait for a High Court hearing

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Corporate Governance Sins

• Dont deal with financial difficulties
• If put into liquidation, liquidator will review
  at least last 12 months of trading
• Directors may face restriction or even
  disqualification proceedings
• Directors may be made personally liable for some
  or all of the debts

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Corporate Governance Sins

• Dont have a strategy and business plan
• Business will lack direction
• Management and staff will have no guide to their
  work
• No awareness of or plan for opportunities and
  threats

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Corporate Governance Sins

• Leave it to the accountant
• The legal obligations rest with directors
• Accountants cannot face company law criminal
  actions
• Your accountant can advise

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What can accountants do?

• Put systems in place to ensure basic
  responsibilities are complied with
• Check agenda items for meeting to ensure they
  include corporate governance /compliance matters
• Keep directors informed of new developments

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Systems for filing requirements

• Annually (on ARD)
• Financial statements
• Audit report unless exempt
• B1 Annual return
• When necessary
• Change in directors/registered office
• Change in Memo and Articles
• Register of a charge against company

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Current position on Irish Corporate Governance

• At all levels of business, corporate governance
  is a key topic
• For quoted companies, the Corporate Governance
  Code has expanded requirements of Chairmen and
  Audit Committees

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Current position on Irish Corporate Governance

• The public sector has its own Code issued by the
  Department of Finance
• The not for profit sector is developing its own
  three tier code
• A code for SMEs is also available

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Current position on Irish Corporate Governance

• Internationally
• OECD Code on Corporate Governance
• At EU Level
• Recent directives on corporate governance
  disclosures for quoted companies
• Proposals on wider corporate governance Directives

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Current position on Irish Corporate Governance

• Nationally
• The Companies Bill will have major changes for
  ordinary private companies
• Single director companies
• Decisions by signature rather than meeting
• Reduced formal structures for corporate
  governance
• This may not always be for the best

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