Dáil Éireann debate -
Thursday, 28 Nov 1985

Vol. 362 No. 3

Companies (Amendment) Bill, 1985: (Second Stage) (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Durkan

I refer to the Minister's speech with regard to subsidiaries of main companies and would like to draw attention to the following:

Disclosure of this sort is not new to us here. Section 158 of the 1963 Act already contains such provisions, although these are limited to the named, registered office and the nature of the business. Associated company is defined in the Bill generally speaking as one in which the investing company has a more than 20 per cent interest.

It is obvious that the amount of information which was necessary to be disclosed under the 1963 Act was insufficient to protect the rights of those dealing with the companies concerned. That is one of the reasons for some of the problems arising.

I regard the Bill as a constructive response to a problem which has been in need of attention for quite some time. We are merely responding to an EC directive, as has happened in other cases and one would like to see this legislative assembly initiate legislation rather than respond to EC directives. One would hope that would be the case in relation to other aspects in connection with company law. This is, nonetheless, a worth-while response which it is hoped will remove the circumstances leading to the problems which have arisen with regard to a number of companies here, over the past five or six years in particular. It will give reasonable guarantees to those trading with such companies or employed by them and at the same time give a reasonable guarantee to the State that all liabilities to the State will be discharged in a proper fashion as and when they arise, not allowing a situation to develop in which accumulated liabilities eventually send a company to the wall.

I hope this Bill will resolve that problem and that we will not have pension funds, PAYE or PRSI payments withheld, as has taken place. Perhaps this happened because of companies' desiring to stay in business or because of their inability to continue to trade if they discharge their liabilities. However, that is very unfair to other companies who are trading and are expected — in fact, forced — to fulfil their obligations as and when they become liable. This should have the effect of treating everybody equally.

Tomás Mac Giolla

I shall be relatively brief because I have only one basic point to make about this Bill, which is, that it is totally inadequate. The need for legislation such as this has existed for a long time. Trade unions have always been looking for more information from companies for the benefit of the workers, particularly in wage negotiations, but also in relation to the direction the company is taking. Workers in a company are often worried about whether the company is doing the right thing, making the right product for the right market. They often know before management that a business is in trouble. Trade unions have always felt that workers are entitled to certain information in this regard and that has been sought in many countries over many years.

This directive has been with us for five years now. The deadline for its implementation was 1980. It was not introduced until the Government were forced to do so by congress.

The need for legislation such as this has been referred to by other Deputies in relation to pay negotiations by workers, particularly in recent years when companies have been pleading inability to pay which apparently is now their right. But they do not have to prove this inability to pay to their workforce by producing full accounts. Under the terms of this directive they will be required to do so, and proof of inability to pay will be rendered more difficult. The other aspect referred to by Deputy Durkan is that the Revenue Commissioners would like a lot more information about companies, particularly in view of what has been happening more frequently in recent years. Deductions from employees are being withheld by companies, used for some other purposes, not paid over to the State, which is not disclosed until the company suddenly goes bust, disappears, leaving both Government and workers high and dry. In such cases workers not only lose their jobs; they do not have pensions; they receive statutory redundancy only.

In a number of cases they do not even have rights to benefits because of the company's refusal to pay over PRSI and they are left in most desperate straits. Thousands of workers have been left in that situation. One could imagine what would happen if farmers were evicted as they were in the 1880s, and put on the side of the road with nothing. That has been happening to thousands of workers in recent years with little outcry about it. Many companies who have done this have gone into liquidation. In many cases the directors then appear with a new company they have already established elsewhere, as is their entitlement and right under the current laws, and proceed to do the same thing again. Unfortunately the company law we were promised two years ago by the then Minister, Deputy Cluskey, has not yet appeared on the horizon. This company legislation should have been introduced together with this Bill.

The need for this Bill has been well established. It has gone through all the processes in the EC — the Council of Ministers, Commission, Parliament, whatever. Most countries in Western Europe have accepted and are operating this legislation. When eventually the Government decided to introduce legislation here it was thought they might specify the maximum rather than the minimum legislation. Throughout every clause of this Bill it is the minimum disclosure of information that is being allowed to companies, not at all the amount of information which would be required for the purposes stated.

With regard to exclusions, the Bill excludes banks and financial institutions completely on the pretext that this will arise under some other specific directive in the future. Such specific directive is unlikely to emerge in the immediate future and quite likely never will emerge. The end result of the provisions of this Bill will be that banks and financial institutions — the very institutions who should furnish the maximum of information — will be excluded totally. They are exempt from this directive and do not have to disclose the information required under its provisions.

The other exemption applies to EC-based subsidiaries. It is most extraordinary that EC-based subsidiaries should be excluded from the provisions of this Bill, remembering that EC-based subsidiaries are subsidiaries of all British companies, some long established here which are now exempt. Many of such subsidiaries are making very large profits and sending them to their parent companies abroad, as are the American-based subsidiaries — earning their profits here with full authority to send them all back home. These are companies in respect of which it would be very important for us to obtain the maximum information, to ensure that they make returns and that we know their profits and so on. Of course many of these EC-based subsidiary companies — call them foreign-based companies, if you wish — have received IDA grants.

For instance, during 1984, 92 overseas firms were approved for grant-aid by the IDA, 30 such projects being based in Europe. This means we give them public funds but, at the same time, we decide that they do not have to disclose any information to us about what they do with those funds, what profits they make or where they send those profits. We are talking about black holes: is it £500 million; could it be £600 million? We do not know how much. But mythical figures are produced because we do not have statistics or information. Now we are passing a Bill and we decide that we do not want this information from these companies and they are exempt from the provisions of the Bill.

The other exemption is in relation to small and medium sized companies. When one has finished with EC-based subsidiaries and small and medium sized companies one is left with very little, with nothing to worry about. Certainly Deputy Flynn who expresed an awful lot of worries about the provisions of this Bill need not worry in the slightest because they will not affect any of the problems about which he was complaining. Small and medium sized companies need to produce abridged accounts only. A small company means one with under 50 employees, assets not greater than £1,250,000 and turnover not greater than £2.5 million. To all intents and purposes they do not have to give any information. They need only produce a very abridged set of accounts, which is in no way the disclosure of information that is required. The information required by the Revenue Commissioners, the Government, the Central Statistics Office, the trade union movement, the workforce and the ICTU will still be missing.

It is estimated that 80 per cent of all manufacturing companies in Ireland employ fewer than 50 people, yet many of these small companies also receive IDA grants. A total of 2,600 small companies were grant-aided by the IDA in 1984 and they cater for approximately 29,000 people. Those 29,000 employees will not be entitled to any information from these grant-aided companies which received public funds. They are not required to account to the public or to the workforce for those public funds.

It is estimated that there are about 75,000 companies in the country. That is a mythical figure because nobody knows the exact number. A few years ago the Revenue Commissioners had a special unit seeking out companies and they discovered 5,000 companies that they never knew existed.

Only the large companies will be required to give a full disclosure of information under this Bill. The ICTU estimate that only 268 public and private companies have a turnover in excess of £10 million and of these approximately 137 employ more than 250 employees. In other words, fewer than 150 Irish companies will be obliged to publish full accounts, but about 40 per cent of these 150 are already public companies and therefore obliged to give full disclosure. This Bill will affect fewer than 100 companies and force them to disclose full information. The end result will be that about 6 per cent of the workforce will have a right to full financial information in regard to their company as a result of this Bill. The other 94 per cent of the workforce will not benefit from this Bill because they will not get full disclosure of information. The medium-sized companies will give certain disclosure of information, smaller companies will give less and the vast majority of companies will give no information at all under the terms of this Bill. That is basically the only point I want to make. It is a complex and technical Bill but it will not be of any great benefit to the vast majority of workers or to the Government and the Revenue Commissioners.

The companies who are really causing all the problems will not be reached by this Bill. They are the fly-by-night operators who are withholding due revenue from the State, not only the tax which they themselves should pay but the tax which they are deducting from their employees. They are withholding all this money, putting it in their own pockets, setting up new companies and starting up again. They will continue to behave in this way.

The Workers' Party will be opposing the terms of this Bill and proposing amendments to it. I hope that many other Deputies will also do this to ensure that the Bill will do what we had hoped, namely, bring us up to date and into the 21st century and give the type of information which the workforce in a company are as much entitled to as any shareholder or director because they are participants in the company. Participation is becoming the criterion and old 19th century ideas are being cast out, but we are still retaining them here. It is time we recognised the value of every employee to his industry and his right to have information as to his future, whether the company are doing well or badly. People sometimes do not realise they are about to lose their jobs until the gates of a factory are actually closed. Recently a chap at home having his dinner before going on the 3 o'clock shift heard on the news at 1.30 that Mostek in Blanchardstown had been closed down. He went out and found the gates locked before 3 o'clock. That sort of thing should not happen. Workers are entitled to information about how their company are doing and how their future stands.

We will be proposing amendments on Committee Stage in regard to the exemptions of financial institutions, banks and EC-based subsidiaries, as well as the exemptions in regard to small and medium-sized companies. We believe all these companies should disclose information and we will be putting down amendments on these lines.

Mr. Prendergast

While I welcome the stated intention of the Bill, it is largely a cosmetic exercise, a masquerade and a fraud. It is an insult to the workers and the trade union movement. Deputy Mac Giolla appealed to Deputies to act in accordance with their convictions. This Bill is five years too late. It should have come in with the EC directive. The party now in Opposition were in Government at the time and did nothing about this Bill. I have no great hopes that any Government dominated by commercial interests will really do anything worth while on behalf of the workers when it comes to the disclosure of information.

Unlike most of the contributions to this debate, I write my own speeches. I have painful personal experience as a trade union official of the type of blackguardism which is going on. Real legislation is needed to correct it.

I might begin, a Leas-Cheann Comhairle, by referring to your own town of Nenagh where the workers in Castle Brand were robbed and plundered of their legitimate rights by a company which failed to give proper information. Workers who had served the company for years were robbed and defrauded of their entitlements. There is no point in using a euphemism. The purpose of this Bill, brought in under the Vredling 4th EC Directive, was to stop that kind of blackguardism. I am sorry to say that this Bill will not cater for that because it is a cobbled together version of what should have been done. It is trying to defeat the purpose of the Vredling Directive. When that directive was put before the European Parliament in Brussels, Fianna Fáil and Fine Gael Deputies voted to block it. The only Irish Deputies who voted for it were the Labour Party representatives in Brussels. Let that go clearly on the record so that the workers will know the true situation.

I can give practical examples of what is needed. Around 1975-76, I was the representative of the ITGWU at Shannon Airport and we dealt with a multi-national company there manufacturing capacitors. When the 16th national wage agreement was due they refused to pay 200 little girls their entitlements under the agreement. They paid three fitters the money involved but they gave it, mar dhea, for commissioning machinery. They paid the exact amount specified in the agreement but they did not call it that. Under the terms of the national wage agreement, contrary to what Deputy Mac Giolla said — apparently he is not clear about the matter — there was a provision that where a company pleaded inability to pay, the Government or the Labour Court could appoint an assessor to examine the books of the company, not just of the subsidiary here, which was deliberately cooking the books to show a loss perhaps when it suited them, but of the parent company which could be raking in profits, huge by international standards. In one case, Butteknit, a textile company, refused to pay a wage increase on the grounds that it was paying more than anybody else. However, when the assessor went to London and examined the profits of the parent company the Labour Court directed the company here to pay the increases.

I now wish to refer to Callans International, the company which refused to pay the national wage agreement to 200 girls and refused to disclose information to the workers. In America they had contracts from the government for space technology and offshore marine and oil developments and yet they could not pay 200 girls here. When we took them to the Labour Court they brought in what is recognised as the outstanding legal company in this country to try to beat us although we had nobody but ourselves. When we won the case, they pulled out of the country and the State had to pay the girls the redundancy money which was due to them. Why did all this happen? Because of a decision that was taken that year in America during the so-called recession that, as a matter of policy, they were not paying any increases to their American employees and we suffered as a result. The workers, who are the most important unlisted asset in any balance sheet, can be dismissed and thrown out of their jobs. They may include fathers of families who have invested their lives in a company and given loyal service for 30 or 40 years. A group of directors of the parent company somewhere abroad, who would not even know where Ireland is, can take a decision to dump the workers here.

I was listening to Deputies on this side of the House this morning and it made me sick to hear them talking about confidentiality. Indeed, Deputy Flynn on the other side of the House was on about the same thing. He was saying that we should not expect companies to tell us too much because it might interfere with confidentiality. People who speak in this House should know what they are talking about. The concept of worker participation or codetermination began in Germany after World War II and it is a matter of record that breaches of confidentiality were never an issue at that level. If there are any breaches of confidentiality it is not the ordinary workers who make them. Some of the apologists here who stood up for the companies might be familiar with the phrase "industrial espionage". It is the people at the top who have access to secret information and who sell it to other companies. It makes me sick to hear people here advocating that we should not ask Irish companies to disclose their business. We are asking fewer than 150 companies out of a total of 75,000 to disclose this information. The whole thing is a joke.

Small companies are exempted under one section of the Bill. In Clare two years ago one man closed a company on a Tuesday morning and on the following Friday he declared in a local hotel that he and his wife were setting up a new company. The accountant asked him how he could do that if he was in financial trouble but he was told to mind his own business. That is the way they can give a "Harvey Smith" to the law here. Big companies in this country who enjoy tax exemptions are setting up cosmetic small front companies and creaming off millions of pounds of profits which are all going back to America or other countries. It is a device for tax evasion. We saw where a company secretary won her case about four or five years ago when it came before the Employment Appeals Tribunal. She had been dismissed by a small company because she would not sign a false document. She knew that there was a fiddle operating in the company. This is the kind of blackguardism which this legislation should be designed to stop but unfortunately will not in my view.

I could name companies who run up deliberate, artificial expense accounts in hotels in Ireland where they have special arrangements and they claim these as hidden expenses. One company were caught by the American Government and had to pay £1 million as a result. That is not generally known but it happened. When I look for a claim for my workers from a company in a business that can well afford to pay, a world brand name, they tell me they cannot afford to pay. I tried to get them to bring in a pension scheme but they said they could not afford to do that either. We asked to see the balance sheet but they said they never disclose it. In my own city, 200 Atari workers, good, loyal, skilled and trained, heard on the news that they had all lost their jobs. That happened about this time last year and I am sure that Deputies recall it. Telesis and other international consultants have pointed out that we are over-generous in our treatment of foreign companies. I want to put it on the record, as a trade union official, lest my words be distorted and twisted to use against me that foreign companies are very welcome here because they give us good technical expertise, but the major benefit they conferred on the country was to bring some kind of sanity into what were primitive industrial relations in the sixties.

I do not wish to bore the House but I wish to quote recommendations made by the Joint Committee on Commercial State-sponsored Bodies in relation to the disclosure of knowledge and information to workers. There is a gimmick in this Bill in that subsidiaries need not disclose information. We saw what happened in this House when moneys were voted for Irish Shipping when there was no need because the directors of that company withheld important information until September 1982. There was no need for the ships in question to be built. What happened on that occasion need not have occurred if the workers had been given access to the necessary information. The committee in their report made the following recommendation:

Every commercial State-sponsored body be obliged to give prior notice in writing to its sponsoring Minister with regard to (a) the signing of agreements which would have the effect of creating significant off balance sheet liabilities;

What was going on in the company and in the subsidiaries was not reported in the main balance sheet and was kept from workers. In the case of semi-State bodies it was hidden from the taxpayers. In that committee we have a responsibility to taxpayers and in that connection I refer to Irish workers because they are the only people who are paying any decent kind of taxes. They pay 87p out of every pound collected by the State in income tax. We also recommended the signing of other major agreements and the establishment of substantial or potentially substantial joint ventures and subsidiary companies. We said that details of significant off balance sheet liabilities which, inter alia, would include leasing, guarantees and other commitments should be incorporated in the annual reports of the bodies in question.

Under existing legislation a worker or his representative can go to his company to see if his deductions in respect of PRSI and PAYE are stopped but in law there is no obligation on the company to disclose if the money has been forwarded to the State. I wish to quote from the first report of the Joint Committee on Commercial State-Sponsored Bodies dealing with Óstlanna Iompair Éireann to give an example of what can happen. Paragraph 23 states as follows:

Towards the end of 1981 the Department of Transport became aware that the Revenue Commissioners were about to take legal proceedings against the company for the non-payment of PRSI and PAYE. The Joint Committee was informed in evidence that the Minister asked the Revenue Commissioners to consider withholding proceedings as the whole question of Ó.I.É and its future was under review.* At the end of 1982 payments due for VAT, PAYE/PRSI amounted to £1.93m. It is a matter of concern to the Joint Committee that this situation was allowed to develop and that employees' deductions were not paid over to the Revenue Commissioners. Furthermore, employees whose entitlements could have been infringed were not informed of the situation. The Social Welfare (Collection of Employment Contributions by the Collector-General) Regulations, 1979 (S.I. No. 77 of 1979) entitle an employee to inspect his employer's record with regard to contributions payable by him or he may obtain a statement of such record from his employer once in every period of three months. The regulations do not, however, require the employer to disclose to the employee whether deducted contributions have been paid over to the Revenue Commissioners. The Joint Committee recommends that where P.A.Y.E. and P.R.S.I. payments to the Revenue Commissioners are overdue for a period in excess of three months employees be informed of the position.

* See Evidence (Question 75).

That was an excellent recommendation from the committee I had the honour to chair but I do not see any such provision in this Bill. The non-payment of PRSI and PAYE contributions is going on to a large degree. Sometimes it is used to blackmail workers. On occasions I have gone to companies and told them they should hand over the money but the employers have tried to blackmail the workers, telling them that the company would be closed. They objected to handing over not only PRSI and PAYE payments but also union contributions to the union head offices. We said in the committee that the same position would have to apply to the public as well as to the private sector.

I drew to the attention of the Taoiseach the fact that at the moment most of the semi-State bodies are far in arrears in producing their annual accounts so that when they get to this House they are historical data and are almost useless. It was the opinion of the joint committee that it would be more appropriate to monitor the analysis of variances of actual performance to budget. That is what this House should watch in regard to semi-State bodies. In the case of Irish Shipping they hid the real decay and malaise of the company by selling off ships. The first obligation of any company that is intent on staying in business is to examine the quality of profits on an ongoing basis. Otherwise it cannot stay in business. The committee made the following comment:

This monitoring would have provided for a more forward looking management style through financial planning. The Joint Committee recommends that the company be obliged to prepare half-yearly interim accounts (which would be made available to the Joint Committee) and that where significant variances arise in relation to budget the Minister be notified in writing.

As we know, some semi-State companies spent money without even telling the Minister or this House, as if money had gone out of fashion. I hope that the work of the committee will correct that situation and make those companies realise that they have an obligation under this Bill to disclose full information to the workers about what is going on. If a company were to get into trouble in the semi-State sector the Department should consider appointing independent assessors as has been done in the private sector heretofore.

It is part of the Joint Programme for Government drawn up nearly three years ago that changes in company law would be introduced to control abuses then prevalent through which individuals could establish companies of limited liability and could then welsh on their obligations to their workers and to the Exchequer while remaining free from any personal liability.

In today's Irish Times there is an interesting report of a statement by the Arch-bishop of Dublin, Dr. McNamara. He spoke of the part-time use by Catholics of their consciences. He was speaking generally on the debate on divorce. It might be useful for us to pause and reflect on this. This kind of advice might also be given more often to Irish accountants who by their skill and knowledge and training help companies to evade and avoid the obligation to pay their legal financial dues to the State. I do not like to see accountants being allowed to put their consciences aside on a part-time basis.

When I was growing up it used to be said that it was no sin to withhold taxes because, we were told, it was only a distributive sin: By the time, say, £30,000 was spread throughout the people of the country, when it came to my fraction it was one-thousandth of a penny. I wonder if theology has been up-dated in that regard because the accountants' profession can put their hands on their hearts and say that under the law as it exists they can help companies in the way I have suggested.

The theology current when I was growing up was that if I intended to commit sin, to defraud, that was the sin. That sort of advice seems to have gone out of fashion. When it comes to companies withholding information from workers and from the State I should like some competent theologian to step in and give the benefit of his considered views.

I should like to point out that the only political party in Ireland with any real intent in this regard are the Labour Party. The Minister for Industry, Trade, Commerce and Tourism is listening to me. There is nothing personal in what I have to say. This Bill is almost a sham and a fraud. It is an insult to the workers of the country. I know it. I live with the workers and I have seen the blackguardism that goes on in companies in regard to Irish workers who pay their taxes but are thrown out of their jobs, and we are doing almost nothing to remedy it. If I level this criticism at my own side of the House, I do so in the full knowledge that we have the right to dissent without penalty on this side of the House — we will not be put out of the party for doing that.

When I hear the spurious, counterfeit criticism from some of the speakers here today on the other side who know as much about this legislation as a pig would about a bank holiday, I suggest that they should remember that when they were in Government they did not do anything, and their representatives in Brussels voted against changes in company law. I hope the workers of Ireland when they read the reports of this debate — unfortunately most workers regard as gospel what they read in the newspapers — will know about the charade that is going on and who is their real protector in this matter. I refer to a resolution agreed at the annual conference of the Labour Party here last May. It reads:

The Labour Party recognises the importance of the EC Fourth Directive on company law and its implications for the provision of greater levels of information disclosures by companies to their workforces and for curbing the use of limited liability, and will press for its immediate and total statutory implementation.

The conference demanded that there would be full disclosure of all relevant information by companies, private and public. I am a trade union official and I am prepared to argue with anybody that, if we are pretending that this Bill will do the job, the workers should be told that it is not. In my view he would have been better off not to have introduced legislation which does not go the full way on this disclosure of information. Under section 2 of the Bill the financial institutions are exempt from the main provisions of the Bill. There is a very crude colloquialism in Limerick, "You can chalk it down" and certainly it appears that these financial institutions will not have to disclose this information to their employees.

Mr. J. Bruton

The banking institutions are not exempt. Deputies have been making comments about the Bill to suggest it is less far-reaching than it is. I think the Deputy is partly misinformed about what he is saying.

Mr. Prendergast

I will accept with the utmost grace the Minister's correction if I am wrong. There was a carpenter in Jerusalem once who said: "By their deeds you shall know them". When I see real protection coming from this Bill for Irish workers, not a fraud or a masquerade, I will accept that the intention is good. I hope the Minister appreciates that——

Mr. J. Bruton

The Deputy is taking a very exaggerated view, in my opinion based on a misreading of the Bill.

Mr. Prendergast

All my life, all my conscious actions have been devoted to the Irish workers. That is my commitment and I make no apologies for it. That is why I came into politics. I serve the trade union movement, and that only. That is the overriding consideration in my life. I see here legislation which does not meet the obligations imposed on the rest of Europe. I feel very sore about it. In January 1974 I negotiated the redundancy settlements for the Pan-Am staff at Shannon Airport. I negotiated the redundancy terms which were then the most generous that could be got but we were able to do this through the AFLCIO people in America. Equally, we were told at that time that under EC law, the level of compensation would be so generous to the pilots or anyone else who might be made redundant, that they could live for the rest of their lives in the Algarve. All I am talking about is a harmonisation of the law. Why should our people be exempt? Companies coming in here are very welcome. Like other peoples, we are good at hanging on to clichès. The word "multinational" is used by some as if it represents an evil influence. We have examples of very bad multinationals. There are examples of multinationals now who are playing international monetary economic policies with energy matters in this country. The workers in those employments know what their managements are about, that they are trying to play off our Government against people in Puerto Rico and Spain.

An Leas-Cheann Comhairle

Perhaps the Deputy would return from Puerto Rico to the Bill.

Mr. Prendergast

I am speaking about the disclosure of information and surely that is relevant to the Bill. There are other multinationals and in fairness to those it should be said that we have some of the finest examples of the best and fairest multinationals in the world. Some of these are operating in the mid-west region and I am not saying this for any political gain. It is an objective and true statement as the records of those companies will verify.

I should like a commitment from someone on the Fianna Fáil side. Like the man at the town pump, they are very decent before an election. The Leader of their party, or someone representing him, met spokesmen from the trade union movement and were handed a list of requirements. The response was that there would be no problem in fulfilling the requirements. I hope that the Opposition will be equally forthcoming if they are returned to power at the next general election, that they will give a definite, unambiguous and unequivocal commitment to Irish workers as to that party's intentions. I would not wish to hear from Fianna Fáil any weasel phrases or clauses such as, "it is intended" or "we understand". Let us tell the workers what we intend doing for them on this issue and stop the pious claptrap that Fianna Fáil are doling out while in Opposition.

Mr. M. Ahern

I thought for a time that I was attending a religious instruction class. However, Deputy Prendergast's points of view are true to his philosophy which is a Labour philosophy. According to the Deputy every detail about a company should be disclosed to the public. I would not subscribe totally to those views because there are reasons, especially in the case of private proprietor, limited companies, which in some cases may consist of a father and a son, for full disclosure not being made to competitors particularly, but I shall return to that later.

Deputy Mac Giolla took the view that one would expect a member of his party to take. His basic argument was that only very few companies would come within the provision of full disclosure. I would not know how accurate were the numbers he quoted but on the matter of companies qualifying for the smaller or medium category, he used one of the qualifying conditions as a premise for his argument while the Bill provides that two conditions will be required in order to qualify for definition within those categories. Deputy Mac Giolla decided apparently that to refer to those two conditions would not help him in sustaining his argument. Instead, he used arguments which he must have known were not 100 per cent accurate but which would be likely to make good headlines in the papers tomorrow.

Under the 1963 Act every limited company, regardless of their size, are obliged to comply with certain criteria in the preparation of accounts. Since 1963, but especially in the seventies and eighties, many standard statements of accounting practices have come into use and are accepted in the accountancy profession as being binding, though not legally binding. If these are not complied with there is a requirement normally that a note be attached to the accounts indicating the reason for that failure. There have been some changes in the legislation since 1963 and a fair amount of disclosure is required now so far as limited liability companies are concerned.

The larger limited companies and public companies have had to disclose a good deal down through the years. I find that many of the enlightened companies realise that it is to their benefit to give information to their workers, information that would not be released for general public consumption but which would be good from the point of view of the management-worker relationship within a company. Companies should give information to workers because, as has been pointed out in detail by Deputy Prendergast, there have been many examples of companies who have been deducting from employees' subscriptions in respect of pensions, union fees and so on but who were not passing the moneys to the appropriate authorities. A scandalous case that I recall in this respect was the case of Óstlanna Iompair Éireann, a semi-State body who failed to pay over PAYE and PRSI moneys on behalf of their employees. The company were taken to court on that account.

Deductions made by companies from their employees should be noted in the company accounts and in addition there should be provision to ensure that representatives of the workers or of the Government can go in and examine a company's books in order to ensure that these funds are handed over instead of cases of default not being detected until such time as the company might go into liquidation at which point extreme difficulty and hardship would be caused to the workers.

It is desirable that controls be imposed on management to some extent and this Bill may help in that regard. There have been a number of failures in businesses which have cast doubts on the ability of the managements concerned in terms of responsibility for companies. Companies whose managements were, for one reason or another, inadequate, were able to go unnoticed because they did not prepare their accounts within the required times or submit annual returns to the Companies Registration Office. They dodged the issue all along the line but when the crunch came it was found generally that the managements were not capable of running the businesses. We should have legislation which will force them to prepare and submit accounts, as we have in this Bill. That will give not just the management but the financial institutions, the employees, and the creditors an idea of the direction in which the company are travelling. This will be for the better of the country as a whole.

Deputy Mac Giolla did not speak about this Bill because he was not interested in it, but the Minister spoke about a domestic Bill. Two years ago Deputy Cluskey spoke about introducing a companies Bill which would be of great importance because it was to catch the rogue directors, the individuals we all know exist, who set up a company, who will not pay their creditors, who will not make their PAYE-PRSI payments and who will employ people who are on the dole. They will not pay their ESB bills and so on, but admittedly they will pay their insurance in case the business goes on fire and they will get a good lump sum as a result.

Mr. J. Bruton

It will not be payable to the company.

Mr. M. Ahern

I know, but it will be payable to the wife of one of the directors in a personal capacity. This is the Bill we were looking for. I have no doubt the Minister has read the draft of the Bill Deputy Cluskey prepared before he left office, and that the Minister will be bringing it into this House one of these days. It is this type of individual, the rogue director, who is giving the majority of companies a bad name. The management of many of these small companies work very hard and want to contribute to the welfare of their employees.

This is an important Bill especially as it relates to small companies. There are thousands of individuals who have set up one man operations. Maybe a husband and wife are directors of a limited company. They formed a company because they were told it would get them out of a lot of trouble if things went wrong. In normal cases it would get them out of paying their creditors but it will not get them out of trouble with the banks because, as we all know, the banks are looking for personal guarantees for everything. No matter how secure a person is the banks are looking for personal guarantees. Limited liability, as it was known years ago, has gone out the door. The workers and the creditors are usually the people who suffer when a company go out of business.

I do not see what this Bill can do for the person who has to take on extra expense to provide the information requested under this Bill. I can see many limited companies giving up their limited liability status and going back to the sole trader position. If, for example, a small builder gives the information sought in the Bill and this is available for public consumption, a slightly larger builder will be able to read his balance sheet and deduce that he is in a better financial position than his neighbour and can tender for, say, houses or schools and win the contract by undercutting. Supplying this information could force small firms out of business. I understand that the Minister is tied by the EC directive but it is just as well to point out what can happen to some of the small companies if they keep their limited company status and supply the information needed under this Bill.

Under this Bill charitable and religious companies are not required to comply with the terms of the Bill. I wonder why? It is probably because they are not trading as such and are not ordinary run of the mill companies, but it is important that the people who make donations know what is happening to this money. We have heard of examples of fraud and money disappearing from charitable organisations in this country. It would not be any harm if legislation was introduced to ensure that these organisations account to the general public for the money they receive.

Mr. J. Bruton

The problem is that if we try to do as the Deputy suggests, will we have religious organisations dodging accounts? The Deputy can see the difficult territory we get into here. I think what the Deputy is saying is that this is worth looking into, but there are problems of definition.

Mr. M. Ahern

I thought I would make a comment on this——

Mr. J. Bruton

I will look at it between now and Committee Stage.

Mr. M. Ahern

Section 8 provides certain exemptions from full disclosure requirements in the case of small and medium sized private limited companies. This section sets out the criteria to be used for determining whether a company. by virtue of its size, qualifies for the reliefs in question. The criteria used are based on the level of a company's balance sheet total, gross assets, the amount of turnover, and the number of employees. This section will change what is the normal procedure in preparing accounts where there are fixed assets and current assets. Current assets include stock in transit and stock on hand. On the other side of the coin there are the creditors.

Debate adjourned.

The Dáil adjourned at 5 p.m. until 10.30 a.m. on Friday, 29 November 1985.