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| New Code Means Large Fines | Ban on Debt Judgments | Bribes: Bad for Business | Bankruptcy Penalty Halved |
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NEW CODE MEANS LARGE FINES |
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Under new guidelines issued by the Central Bank of Ireland and the Financial Regulator, financial institutions could face fines of up to €5 million for breaching a new Corporate Governance Code. The Corporate Governance
Code came into effect from 1 January 2011 and applies to Irish banks, building societies and most insurance companies and reinsurance companies. Financial institutions have until 30 June 2011 to implement the extensive changes required by the code, but they have until 31 December 2011 to deal with any changes required to board composition.
The Corporate Governance Code incorporates severe and wide-ranging penalties for companies who do not comply. Corporate bodies could face fines of up to €5 million and individuals responsible within a firm could face fines of up to €500,000. Part of the new code requires board members to meet at least quarterly, and board members of major institutions must meet in at least eleven calendar months of any year. This rule applies to non-executive directors also. The code also requires financial institutions to implement a considerable amount of documentation including a well-defined organisational structure, formal letter of appointment for directors, and an annual formal review of the board and board members. |
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BAN ON DEBT JUDGMENTS |
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The Courts Service of Ireland has banned public access to most debt judgments after an internal review found there was no legal basis for making the information available. The decision will deprive business people of important information about the financial history of anyone they are dealing with, such as whether a debt has ever been registered against the person.
Traditionally, information about debt judgments was available to the public through inspection of ‘cause books’ within circuit and district courts. This information was collected by a non-profit company, Irish Judgments, and sold to commercial publications such as Stubbs Gazette. Credit unions and other lenders, as well as government departments, relied on this information in their business dealings.
The Courts Service said the decision was taken following a review which found that there was no provision in legislation or in court rules for a general right of access to cause books. There is still public access as required by law to the Register of Judgments in the High Court offices. This allows access to registered judgments to personal callers to the office in the Four Courts, for an €11 fee. |
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| BRIBES: BAD FOR BUSINESS |
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The OECD Bribery Convention was ratified by the UK in 1998; however, it will not take legal effect in the UK until April 2011. This Act will apply to all Irish Companies and Partnerships operating a business or ‘part of a business’ in the UK. It is therefore imperative that businesses with a presence in the UK become familiar with this new legislation. The main offences under the Act are as follows:
1) The general offences of paying or receiving a bribe.
2) The bribery of foreign officials.
3) The failure of commercial organisations to prevent bribery.
Where it can be proven that a person ‘associated’ with a company bribes another to gain business or advantage for the company then that company can be held liable. The only defence for a company in this position is to show that the company had adequate procedures in place to prevent bribery. Guidelines on an ‘anti-corruption’ policy will be published by the UK government in April 2011.
Under the terms of the new Act, an individual or company may be prosecuted regardless of where the act or omission which constituted the offence took place. The Act will increase the maximum jail term for bribery by an individual from 7 years to 10 years. A company convicted of failing to prevent bribery could receive an unlimited fine. |
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BANKRUPTCY PENALTY HALVED |
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Under plans unveiled in the Civil Law (Miscellaneous Provisions) Bill, business people who are declared bankrupt will be back in business after just 6 years. The provision, outlined in the Bill, will halve the length of time that a person remains in bankruptcy. This is the first step in the overhaul of the Personal Insolvency Law, with further changes being proposed in the Law Reform Commission Report, which was published in December 2010. |
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| These are intended as a general guide to the subject matter, it should not be used as a basis for descisions. For this purpose advice should be obtained which takes into account all the client's circumstances. Every effort has been made to ensure the accuracy of the information. In view of its purpose the reader will appreciate that we are unable to accept liability for any errors or omissions which may arise. |
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