Dáil Éireann Debate, Tuesday - 2 November 2021
3. Deputy Maurice Quinlivan asked the Tánaiste and Minister for Enterprise, Trade and Employment his plans to strengthen the role of the Companies Registration Office, CRO, to deal with the increase in fake or bogus companies; and if he will make a statement on the matter. [53078/21]
View answerI ask this question on the back of an article written by John Mulligan, a journalist with the Irish Independent, in July. The article suggested that several bogus companies have been created across the State. The CRO advised that it had no role to play in verifying the details of these new companies. In my capacity as Chairman of the Joint Committee on Enterprise, Trade and Employment, I wrote to the Minister's Department regarding the CRO and seeking clarification on this issue. I was not happy with the response I received and, therefore, I ask the Minister to address the issue now.
Ireland has a reputation for being a well regulated and business-friendly country in which to establish and operate a business. Company law has an important role to play in that regard. At the end of 2020, there were more than 500,000 companies on the register of companies in Ireland and more than 600,000 business names on the register of business names. This resulted in more than 131,000 filings made with the CRO last year.
The office also maintains several other registers. These registers exist to provide transparency about corporate entities through their life cycle. They are examined by a wide range of stakeholders, including those who have a commercial interest, such as potential investors, professional advisers, financial institutions and suppliers. Other interested stakeholders include civil litigants and regulatory and enforcement authorities.
Company law is primarily concerned with providing the legislative framework for the structure and operation of companies incorporated in Ireland, whether domestic or foreign, and does not regulate or supervise the activities of the companies. Such activities are governed by other legislation including, for example, in the areas of consumer protection, competition, taxation, anti-money-laundering and fraud. Compliance matters in these areas come under the remit of other relevant statutory bodies.
The long-standing policy in respect of company incorporation has been to accept the bona fides of those filing documentation, subject to a completeness check, and to ensure that all the necessary documents have been provided and appropriately completed and signed. While it is not the role of the CRO to question the motivation for incorporating a company, the office is developing a risk-based approach to integrity checking of applications and it is following up on some issues that are arising. The provision of false information is a criminal offence under section 876 of the Companies Acts and when the CRO has concerns in this regard, such matters are referred to the Director of Corporate Enforcement.
I thank the Minister for his response but I am unclear as to the precise action he will take on the issue. I am sure he will agree that the establishment of fake firms in the State is not only a risk to consumers who could be defrauded by these companies, but is also a stain on our reputation internationally. Furthermore, I am sure he will agree that the maintenance of a good faith register of companies without due diligence in respect of important details such as who the directors are and whether the registered address is an actual existing premises is not the best way for the CRO to operate. I hope the Minister can outline the steps he can take to address the problems and the timeframe in which he expects the necessary changes to be made.
As regards fake or bogus companies, the position is that once a company has been incorporated, it is subject to the provisions of company law and other legislation. This includes filing obligations with the CRO when company circumstances change and the filing of annual returns. In addition, newly incorporated companies have reporting obligations to the Revenue Commissioners and under anti-money-laundering legislation are required to register certain information in respect of their beneficial owners with the central register of beneficial ownership of companies and industrial and provident societies, that is, the RBO. My officials closely monitor existing company law frameworks to ensure they remain fit for purpose and are responsive to emerging challenges. For example, the Companies (Corporate Enforcement Authority) Bill, which is currently before the Oireachtas, contains new provisions requiring directors to provide personal public service numbers to the CRO. We believe this is a significant enhancement of the current regime and will assist the office in verifying the authenticity of directors and companies.
As we become increasingly dependent on technology, the way consumers interact with businesses is changing rapidly. Although there are significant benefits to that, it does come with greater risk of fraud and, unfortunately, it seems that is what we are seeing at the moment. The fact that there is possibly a large number of bogus and fake companies must be addressed as a matter of urgency. I wrote to the Minister's Department in July regarding the issue but the response from the Department was pretty woeful. It previously insisted that the CRO relies on a good faith approach. It is clear that is easier for business and it is effective but it is also clear that it leaves the register open to serious abuse, which we are now seeing. We can clearly see what is happening in the context of a significant number of companies being registered. I refer to 100 companies that were registered to one address. One fake company registered using the address of the CRO itself. We need action on this issue. I appreciate that time is limited.
I am happy to follow up with the Minister later regarding how we can work together to end what seems to be a fairly widespread practice. We need to stamp it out.
I am aware that the Deputy wrote to the Secretary General of my Department about this issue. I believe she replied on 30 July, setting out a detailed response to some of the matters raised, particularly regarding 100 companies being registered at one address, and companies even being registered at the same building that the CRO is based in. I think the reply is robust, but that is not to say that we cannot improve things further.
I would like to restate that providing false information to the CRO is a criminal offence and can result in prosecution by the Director of Corporate Enforcement or the Director of Public Prosecutions. Arising from integrity checking undertaken by the CRO, concerns remain about 34 companies currently on the register. In addition, the CRO has not progressed the incorporation of a further 22 applications. In recent months the CRO has made six referrals to the Director of Corporate Enforcement arising from information provided in these cases.
