Vol. 538 No. 3
I move amendment No. 1:
In page 11, between lines 29 and 30, to insert the following:
"(b) to forward to the Competition Authority any information or evidence relating to possible breach of competition law which comes into the power or possession of the Director,”.
Lamentably, it seems the Tánaiste and Minister for Enterprise, Trade and Employment has deserted us again. It is a pity as I was looking forward to wrapping up this Bill tonight.
She is gone for a briefing with the Attorney General.
It is a pity, she is not present because my memory is that she took the spirit of this amendment on board and that it would be dealt with under section 17. For other reasons, I have not had an opportunity to examine it in that context but I am sure the Minister of State will remind me of the position. The net point remains the same, that is, that information that comes into the possession of the director should be transferred to the Competition Authority where a possible breach of competition law is involved. That met the approval of the Minister but for insertion at a different point in the Bill.
I support the principle of the amendment. It makes sense and is something we teased out on Committee Stage. One arm of the State will collect and collate information and will carry out investigations in relation to companies. All of us would agree that the Competition Authority needs to be given more resources than it is being given at present. It is acting with one hand tied behind its back. When the new position of Director of Corporate Enforcement is established, and if they come across instances where competition legislation is being broken or abused, that information should rightfully be furnished to the Competition Authority. It is ludicrous to have one State organisation carry out an investigation, while six months later another State body carries out a similar investigation. Even if the first one came across information, it could not furnish it to the other body – the Competition Authority. This amendment would ensure resources are better spent and that where breaches of the law take place, they are followed up and prosecutions are taken if necessary.
This amendment proposes that it should be a function of the Director of Corporate Enforcement to put forward information to the Competition Authority where that information relates to the possible breach of competition law. The Tánaiste agreed on Committee Stage that the Director of Corporate Enforcement should forward any such information that comes into his or her possession to the Competition Authority. Amendment No. 41 on Committee Stage provided for this by amending section 21 of the Companies Act, 1990. This amendment provided that information obtained by the Director of Corporate Enforcement under sections 19 or 20 of the 1990 Act may be disclosed for the purposes of the performance by the Competition Authority of any of its functions.
By virtue of section 17, any information that may be relevant to the Competition Authority, which is obtained by the director or his or her staff in the course of the performance of their official duties, may be disclosed to the authority. This is the appropriate way to provide for the transfer of relevant information by the director to the Competition Authority rather than make it a function of the director to do so which this amendment proposes.
When the Minister of State got to the critical sentence, I was either wandering or not listening as attentively as I should have been. Am I to understand that the Minister of State does not accept the amendment?
Correct.
I am puzzled by that because the Tánaiste and Minister for Enterprise, Trade and Employment indicated her intention on Committee Stage. Unfortunately, it has become a pattern among Ministers in that Department whereby on Committee Stage one is led to believe an amendment has been taken on board but when one gets to Report Stage, one finds the amendment does not materialise. I am quite sure the Tánaiste intended that it would materialise and that she was sincere in supporting the thrust of the amendment. I am very disappointed to find that there seems to have been a rethink on that.
I lost the key contribution of the Minister of State in terms of explaining the whys and wherefores but I have the reference from the Tánaiste who stated on Committee Stage that if I was agreeable, following consultation with the chief parliamentary counsel, she would be more than happy to bring forward an amendment to section 17 requiring the director to pass on information to the Competition Authority. Will the Minister of State clarify the position in that context because I find it difficult to understand what seems to be a complete reversal from Committee Stage?
We provided for this on Committee Stage under section 31(d). Amendment No. 41 amended section 21 of the Companies Act, 1990. This amendment provided that information obtained by the Director of Corporate Enforcement under sections 19 or 20 of the 1990 Act may be disclosed for the purposes of the performance by the Competition Authority of any of its functions. By virtue of section 17 of this Bill any information that may be relevant to the Competition Authority, which is obtained by the director or his or her staff in the course of the performance of their official duties, may be disclosed the authority. This is the appropriate way to do this. Section 31(c) is very clear. We are providing opportunity for information to be transferred. That is a change in the Bill which was made to section 31. We have fulfilled Deputy Rabbitte's wish for the transfer of information and we do not see any relevance to this amendment.
I am pleased the Minister of State has put all that on the record and I withdraw my amendment.
I move amendment No. 2:
In page 12, between lines 13 and 14, to insert the following:
"(3) Notwithstanding that he or she has been so seconded but without prejudice to subsections (3) and (4), a member of the Garda Síochána seconded to the office of the Director shall continue to be under the general direction and control of the Commissioner of the Garda Síochána.
(4) A member of the Garda Síochána so seconded shall continue to be vested with and may exercise or perform the powers or duties of a member of the Garda Síochána for purposes other than the purposes of this Act, as well as for the purposes of this Act.".
Section 12 relates to the functions of the Director of Corporate Enforcement. The existing subsection (4) empowers the Director of Corporate Enforcement to perform many of the functions assigned to the director through his or her officers and that in the performance of those functions, the officer will be subject to the directions of the director only. These amendments relate to the members of the Garda Síochána who will be seconded to the office of the Director of Corporate Enforcement to assist the director.
The amendments have two effects. First, the proposed new subsection (3) clarifies the power of the Director of Corporate Enforcement to give directions to seconded gardaí. The existing text could be so construed that in carrying out their duties while on secondment to the office of the Director of Corporate Enforcement, gardaí would only be subject to the directions and control of the director. It was not our intention to make the Director of Corporate Enforcement responsible for the assignment, career advancement, discipline or other personnel issues of a seconded garda as these functions should remain the responsibility of the Garda Commissioner. Seconded gardaí will be solely subject to the directions of the Director of Corporate Enforcement in the exercise of powers given to the director under this Bill. However, the general personnel function pertaining to those gardaí will continue to be a matter for the Garda authorities. Section 4 provides that members of the Garda Síochána seconded to the Office of the Director of Corporate Enforcement shall continue to exercise the powers available to them as gardaí, in addition to the powers they may exercise as officers of the director.
I proposed this amendment following discussions between my Department and the Garda authorities to clarify the powers of the Garda Síochána seconded to the Office of the Director of Corporate Enforcement. While it was always our intention that seconded gardaí would retain their normal powers while in secondment, this Bill did not specifically provide for this. Amendment No. 2 rectifies this and I ask Members to accept it.
This is an interesting ministerial amendment. I do not recall it having been signalled. Will the Minister of State indicate to the House if it has come from the Garda, which may have been unhappy about the circumstances that obtained prior to the insertion of section 2(3)? It is not clear where it says that "a member of the Garda Síochána seconded to the office of the Director shall continue to be under the general direction and control of the Commissioner of the Garda Síochána." It does not say, as the Minister has stated, that the Garda member shall be under the general direction and control of the Garda Commissioner in respect of personnel matters. In an investigation directed by the Director of Corporate Enforcement, from whom does a garda take instructions?
None of us in this House is particularly concerned about the career path of a garda or an extra clothing allowance being the responsibility of the commissioner. In terms of the functions of the director, when a garda is involved, does he have two masters? Is he responding to the director or the commissioner? It reminds me of a not-dissimilar situation that concerned the establishment of the Criminal Assets Bureau. It was the view in this case that the director might not be a member of the Garda Síochána. It was the subject of some discussion at the time. The Criminal Assets Bureau worked well, but the matter was resolved in favour of the garda being number one and Mr. Galvin being number two. I am curious about the origin of this section. From where did it come? When was it inserted? Am I wrong in saying I cannot recall it from Committee Stage?
The Deputy is wrong.
I stand corrected. Will the Minister elaborate on why I am wrong?
Deputy Rabbitte made a good point regarding the question to whom a garda will be answerable. It is important it is clarified. A garda would appear to be under the rule of the commissioner. Who will be the boss when the director has complete autonomy in his duties as an enforcer of the obligations of the Company Law Enforcement Act?
The Tánaiste signalled on Committee Stage that she intended to clarify this matter and bring forward an amendment so there would be no ambiguity pertaining to the role of gardaí as members of the Office of the Director of Corporate Enforcement – they would obviously be responsible to the Director of Corporate Enforcement while working for him or her. Regarding their personnel role and future promotion etc., they would also be subject to the control of the Garda Commissioner, whom they would be under at all times as members of the Garda Síochána. To ensure that they remain members of the Garda Síochána, we are clarifying in this amendment that those on secondment still remain members of the Garda Síochána with the full powers of that body while discharging their duties. The Garda authorities anticipate that in any future criminal proceedings brought by or on the instigation of the Director of Corporate Enforcement, gardaí seconded to the director's office will be subject to rigorous cross-examination as to the source of the legal powers exercised by them.
Difficulties might arise when a seconded garda, while carrying out his duties, finds himself relying on powers not vested in the Director of Corporate Enforcement, whether these be under the Criminal Justice Acts or other legislation. An example of this might include a case in which, while conducting a search of a premises under the Companies Acts, officers of the director encounter obstruction, assault or other unlawful activity requiring the arrest and detention of one or more persons under the Criminal Justice Acts or other legislation.
As the Bill does not specifically provide that seconded gardaí continue to be vested with their normal powers as members of the Garda Síochána, personnel could be unsure of their legal powers in a given situation. This amendment seeks to clarify these powers by specifying that a garda seconded to the Office of the Director of Corporate Enforcement can continue to exercise the powers and duties of a member of the Garda Síochána.
The wording in this amendment is consistent with the wording in section 8(8) of the Criminal Assets Bureau Act, 1996. In that Act, members of the Garda Síochána are seconded to the Criminal Assets Bureau and appointed as officers of the chief bureau officer. The bureau is a multi-disciplinary unit like the director's office, which requires seconded gardaí to exercise and perform the powers and duties of members of the Garda Síochána in addition to their specific powers and functions as officers of the Criminal Assets Bureau. I hope this clarifies matters so we can maximise the value of having members of the Garda Síochána seconded to the Office of the Director of Corporate Enforcement.
From what rank of the Garda Síochána will seconded members derive?
There will be various ranks involved. We expect to have an inspector, two sergeants and four gardaí.
I understand the thinking behind this amendment. I support it and the notion that gardaí might be seconded. However, the transcript of the Minister's remarks may be regurgitated down the years in the event of a dispute arising. I cannot see how subsection (3) provides for what the Minister intends it to provide. Notwithstanding that a garda has been so seconded, without prejudice to subsections (3) and (4), a member of the Garda Síochána seconded to the office of the director shall continue to be under the general direction and control of the Commissioner of the Garda Síochána. That seems to make it clear that the Garda Commissioner is number one. It invites the possibility that the Director of Corporate Enforcement may want a matter handled in a particular way and the Garda officer may want to handle it differently and will seek the support of the commissioner or the higher ranks of the Garda Síochána to do it in the way the Garda wants. I am not judging which is better or worse as one cannot make that judgment without being familiar with the terms of the case in question. Subsections (1) and (2) do not seem to make it clear that the director is pre-eminent in terms of the investigation. Is the Minister of State consciously putting on record that in terms of personnel matters, to use a generic term he used, the Garda Commissioner has the ultimate call because I doubt if that is the case? I cannot find in the section where it states this power will be delegated to the director. I have no objection to the principle behind it but such clarity does not seem to be there.
Under the Bill, members of the Garda Síochána, when carrying out an investigation, would act under the sole direction of the Director of Corporate Enforcement. They would carry out directions on the instructions of the Director of Corporate Enforcement and would act accordingly under this Bill once it becomes law. Gardaí would be seconded from the fraud bureau and a good working relationship between the Director of Corporate Enforcement and the Garda authorities is necessary to ensure the Bill will have the full force of successful implementation once it becomes law.
A garda is under the direction and control of the commissioner but would be under the specific direction of the director in relation to specific functions of the direction under section 12(4). In other words, once assigned, they would be under the control of the director, but as members of the Garda Síochána the commissioner is responsible for them, for their welfare and personnel matters. Their secondment to the Office of the Director of Corporate Enforcement would not debar them from applying for promotion in the Garda Síochána. As seconded members of the Garda Síochána to the Office of the Director of Corporate Enforcement, they would be entitled to anything from which members of the Garda Síochána would benefit.
I move amendment No. 3:
In page 13, line 9, after "provision" to insert "save where the court concerned so orders".
I do not intend to dwell overly long on this matter as we dealt with it on Committee Stage. The amendment caters for the possibility that there may be some cases where substitution of the director for the Minister might be appropriate. I instanced where a mandatory order is sought and the Minister no longer has power to deal with the matter. It is a net point. I do not want dwell on it. I would like to hear the Minister of State's reply.
This amendment relates to section 14 which provides for the transfer to the Director of Corporate Enforcement of certain functions currently performed by the Minister for Enterprise, Trade and Employment. Section 14(5) provides that notwithstanding the transfer of functions, legal proceedings in which the Minister is a defendant and which relate to a function transferred to the director shall continue in the name of the Minister and shall not be taken against the director. This is a standard provision which is intended to ensure that the director does not have to defend legal actions taken against the Minister arising from the performance by the Minister of functions subsequently transferred to the director.
This amendment proposes that the provision whereby the director would not be substituted for the Minister in respect of legal proceedings pending against the Minister should be subject to the power of the court hearing the proceedings to order otherwise. This would have the potential to leave the director in the position of having to defend decisions of the Minister taken before the establishment of the office of the director. This could place the director in an invidious position as a result and the amendment is, therefore, not acceptable.
Section 14(5) would not have the effect of preventing the court from making any order that it considered appropriate in respect of the functions or activities being carried out by the new director. This could be done without the court requiring to have the director substituted for the Minister as a defendant in the relevant proceedings which would be an inappropriate step to take.
Amendment No. 5 is an alternative to amendment No. 4 and they may be taken together by agreement.
I move amendment No. 4:
In page 13 to delete lines 18 to 22 and substitute the following:
"15.–Neither the Director nor any officer of the Director shall be liable in damages in respect of any thing done or omitted to be done in good faith by him or her in the performance or purported performance of a function under the Companies Acts or any other Act.".
Section 15 provides immunity from civil and criminal proceedings for the Director of Corporate Enforcement or an officer of the director in respect of anything done in good faith in the performance of the functions of the director. This provision for immunity was included on the basis that the director and his or her staff should receive protection from being held personally responsible for acts done in good faith in the course of the performance of their professional duties.
On Committee Stage concern was expressed that this provision went too far in protecting the director and his or her staff, particularly in so far as it provides for immunity from criminal prosecution. Taking the concerns of the select committee into consideration and having sought legal advice on the matter, I propose an amendment to section 15. The revised section no longer requires immunity from criminal prosecution. Instead it provides a form of indemnity against losses arising from civil actions taken against the director or his or her staff in respect of acts done in the course of their official duties. I have been advised that in the absence of strong policy grounds for a wide level of immunity this is the appropriate form of protection for the director and his or her staff, which will ensure that they can carry out their functions in the knowledge that they will not be liable in respect of civil actions taken against them in a personal capacity once they acted in good faith.
Amendment No. 5 proposes the deletion of section 15 in its entirety. I do not consider this appropriate in view of the provisions of the replacement section being inserted by this amendment. While I agree that criminal immunity would not be appropriate in respect of the director and his or her staff, a provision for civil indemnity is warranted and justified and I hope it meets the satisfaction of Deputy Rabbitte and other Members of the House.
This is a considerable improvement and it is right that the director and his staff ought to be indemnified. That was the argument I advanced on Committee Stage. To give a general immunity was too sweeping, more especially as it seemed to essentially consist of an exemption from the criminal law. This civil provision is entirely proper. I agree with the Minister of State that it is superior to excising the section which is proposed in my amendment, which has acted as a spur to release the creative juices in the Minister of State's Department which has come forward with an amendment which improves the Bill.
Amendments Nos. 7 and 8 are alternatives to amendment No. 6 and they may be taken together by agreement.
I move amendment No. 6:
In page 13, to delete lines 29 to 51, and in page 14, to delete lines 1 to 6, and substitute the following:
"(2) A report under subsection (1) shall include information in such form and about such matters as the Minister may direct but nothing in that or this subsection shall be construed as requiring the Director to include in such a report information the inclusion of which therein would, in the opinion of the Director, be likely to prejudice the performance by him or her of any of his or her functions.
(3) The Director shall furnish to the Minister such information about the performance of the Director's functions as the Minister may from time to time require (other than information the provision of which under this subsection would, in the opinion of the Director, be likely to prejudice the performance by him or her of any of his or her functions).
(4) When so requested, the Director shall account to an appropriately established Committee of either House of the Oireachtas for the performance of his or her functions but in discharging his or her duties under this subsection the Director shall not be required to furnish any information or answer any questions the furnishing or answering of which would, in the opinion of the Director, be likely to prejudice the performance by him or her of any of his or her functions.".
Section 16 deals with the reporting arrangements for the Director of Corporate Enforcement both to the Minister and to the Oireachtas generally. On Committee Stage the issues of independence and accountability of the director were debated and, in particular, the extent to which the director may provide information in relation to specific cases investigated by him or her in the course of meeting his or her reporting and accountability obligations. The select committee felt that the limitations on what the director could report to the Minister and to the Oireachtas generally were too severe. Accordingly, as the Tánaiste agreed, the wording of the section has been considered and a number of amendments are now proposed. The amendments will enable the Minister and the Oireachtas to request information from the director on the performance of his or her functions and other activities and the director must furnish the information requested unless in his or her opinion the performance of his or her functions would be prejudiced in any way. It is important that the question of whether particular information is to be disclosed should be a matter for the director who is in the best position to judge whether disclosure would prejudice an investigation or otherwise breach the confidentiality of information available to him or her.
The replacement of subsection (2) relates to the annual report that the director is required to provide to the Minister while the replacement of subsection (3) deals with periodical reports that may be requested by the Minister from time to time in relation to the performance by the director of his or her functions. In each case the Minister is empowered to require the director to provide certain information relating to the performance of the director's functions and the director is required to furnish the information requested. The exception is where the director believes that the provision of the information would prejudice the performance of those functions.
The replacement subsection (4) concerns the director's responsibility to account to the Oireachtas through an appropriately established committee for the performance of his or her functions. Members felt the published text of subsection (4) was too restrictive in terms of the director's discretion to disclose information to an Oireachtas committee. In the Bill, as published, subsection (4) precluded the director from divulging any information specific to matters investigated or prosecuted. One of the main concerns of the select committee was that Oireachtas Members might have access to less information on ongoing investigations than they have under the present arrangements. The proposed replacement subsection (4) will enable the Houses of the Oireachtas to question the director on the progress of any of his or her investigations without compromising the conduct of those investigations. These amendments improve section 16 and strike the right balance between accountability and operational independence.
Amendments Nos. 7 and 8, tabled by Deputy Naughten, provide for the provision by the director of progress reports on outstanding investigations both to the Minister and the Oireachtas. The revised subsections (3) and (4) contained in amendment No. 6 adequately cover this point. They will allow the director to furnish any information concerning ongoing investigations, including progress reports, subject to the proviso that the furnishing of the relevant information would not prejudice the investigations.
Members will also note that this amendment provides for the deletion of subsection (5) of section 16. That subsection provides for an amendment of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997. The effect of the amendment was to exempt the Director of Corporate Enforcement from the provisions of the compellability legislation. In the light of our proposed amendment of section 21 of the Companies Act, 1990, whereby information obtained by the Director of Corporate Enforcement under section 19 of that Act may be disclosed to a committee with powers under the compellability legislation, I no longer consider it appropriate that the director should be outside the scope of that Act. I propose, therefore, to delete subsection (5) of section 16 and trust this meets with the approval of the House.
I thank the Minister of State for tabling this amendment. It is a dramatic improvement of the legislation and returns some powers to this House. It is important not to continue on the course we have followed in the past in drafting legislation whereby we deny ourselves the ability to access information. The prime example is the National Roads Authority. The Minister of State and I are abused in our respective constituencies because we cannot get answers from the National Roads Authority. It is another quango. I hope there will be a change in the future and these bodies will become answerable to both this House and committees of the House. We had the same problem with the Director of Corporate Enforcement who refused to come before some of the committees. I hope this will not happen under future legislation.
I am delighted the Ceann Comhairle is present for this debate. He is the individual who will be responsible for interpreting this legislation following its enactment. Will the Minister of State clarify that on the enactment of this legislation we will no longer encounter the situation we have encountered many times in the past where parliamentary questions are ruled out of order because the Minister has no responsibility to the House in relation to the matter? Parliamentary questions are still a key tool for Members in eliciting information and it is clear from the proceedings in the tribunals of inquiry that the lack of answers to parliamentary questions and the lack of information provided for the House led to the establishment of those tribunals.
At the end of each subsection the following phrase is used: ". . . would, in the opinion of the Director, be likely to prejudice the performance by him or her of any of his or her functions". I question the use of the word "performance". In my amendments I used the phrase ". . . that any such report shall not prejudice the investigation". It could be the case that the Director of Corporate Enforcement by furnishing information to the House to the effect that he or she has not performed to the best of his or her ability, could damage his or her reputation in relation to the performance of his or her functions at a future date. It is important to clarify the position in this regard and what is meant by the use of the word "performance" as opposed to "investigation".
If, for example, information is sought by a Member of the House in a parliamentary question and a significant amount of time is required to compile the information requested, that would limit the performance of the office of the director because a member of staff would have to be assigned to compile the required data. Can the director refuse to furnish the Member and the House with that information because it would prejudice the performance of the office? That is the problem with using the word "performance" rather than "investigation". Nobody wants investigations to be prejudiced because of a request for information. That is not the case at present. Members can elicit a certain amount of information from the Tánaiste. We can see what progress is being made and question her about delays in pursuing cases without referring to specifics. I hope that will continue to be the case with regard to the director.
Subsection (4) provides that the director cannot be questioned by an Oireachtas committee about an investigation. Will the Minister confirm this? If so, it means that in the case of an investigation which was initiated two or three years prior to the director coming before the committee, the members of the committee cannot ask the director what progress has been made to date or the reason it has taken so long to get that far without a conclusion being reached. It is important that the director should be able to furnish such information to the committee and be answerable to it in that regard. It would not prejudice the investigation.
We are trying to achieve a balance where there will be accountability to the House to ensure the director fulfills his or her functions in a proper manner while not prejudicing a particular investigation that might be ongoing. Perhaps the Minister of State would clarify the issues I have raised.
I agree that the amendment is a significant streamlining of the Bill. However, I wish to focus on subsection (5) which is excised by the Minister of State's amendment. In his reply the Minister might remind me, in layman's English, of the connection between that and amendment No. 18 in respect of the compellability Act.
Subsections (4) and (5) stand alone. Does the constraint in subsection (4) govern subsection (5)? I am referring to the question of the director discharging his accountability function subject to it not impinging on confidentiality in terms of work he is undertaking. Does this govern subsection (5)? Subsection (5) is excised and means that, for example, all committees of the House would theoretically be in the same position as the Committee of Public Accounts. That committee was in the original legislation which falls with the excision of subsection (5). All committees of the House may now seek, under the compellability legislation, compellability powers if they go through the proper procedure, ending in the compellability sub-committee conferring the powers on the committee for a stated purpose.
Let us suppose the Committee on Justice, Equality, Defence and Women's Rights was investigating a particular matter, had jumped through all the hurdles in terms of the compellability Act and had received sanction to engage in such an inquiry with the power to send for persons, papers, documents, and to compel witnesses. Would any area of the director's investigation be sealed off from the committee? If it asked the director, who might coincidentally be looking at the same area of who might have information pertinent to the inquiry being engaged in by the committee, is there any area which would be ring fenced? I raise this in the context of, for example, subsection (4) which says the director has to discharge his accountability functions to a committee of the Oireachtas, provided it "shall not impinge on the obligation of confidentiality attendant on the performance of the functions of the Director and the Director shall not divulge any information specific to matters investigated or prosecuted by the Director or likely to prejudice any such investigation or prosecution". It is feasible that there could be a tribunal of inquiry sitting at the time a committee of the House was examining similar terrain. What will happen if the director is conducting an investigation while a similar investigation is being conducted by a committee of the House? Will the director be obliged to furnish information to the committee if it writes to him on an order for discovery of documents which the committee believes he has in his possession? What will happen if the committee requires the director to appear before it? What exactly is the extent of the constraints on him in complying with the order for discovery from the committee?
The job description is very similar to that of the DPP. The annual report of the DPP two years ago was the first such report published. Under this Bill the Minister may determine the type of information which the director can include in the annual report, but the Minister may not direct the inclusion of such information in the report as to derogate from the independence of the director, and perhaps the Minister will explain this.
The purpose of the Bill is to deal with non-compliance and the failure of companies to meet their obligations under the companies legislation. There are thousands of companies, with new ones being formed every week, and there is a significant task involved in policing them. The Companies' Registration Office deals with policing. What level of staff does the Minister think will be involved in minor non-compliance cases? The Garda Síochána will be involved in serious non-compliance cases.
The DPP must be exempted in order to protect the confidentiality of information, and the position of the director under this Bill seems similar. The DPP has not been to committees of this House too often. Perhaps the Minister will clarify if this appointment is similar in status to that of the DPP. I note the 1997 Act will apply, which also applies in the office of the DPP.
This amendment provides for the deletion of subsection (5) of section 16. That subsection provides for an amendment to the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997, to which I have already referred. The effect of the amendment is to exempt the Director of Corporate Enforcement from the provisions of that Act. In light of the proposed amendment to section 21 of the Companies Act, 1990, whereby information obtained by the Director of Corporate Enforcement under section (19) of that Act may be disclosed to a committee with powers under the compellability legislation, we no longer consider it appropriate that the director should be outside the scope of the compellability Act. In order to achieve that, I propose the deletion of section 16(5).
Under amendment No. 18 the director will be required to provide information to an Oireachtas investigative committee. Deleting subsection (5) means that the director must appear. If the information can be shown as required by the Oireachtas committee, he must provide that information. Nothing is ab initio or ring fenced. In other words, he must respond in terms of whatever is put to him. The Oireachtas will have power to call the director before a committee and to require him or her to account for the performance of his or her functions and that of his or her staff. He will be required to attend and answer such questions.
The Minister will still answer parliamentary questions as the responsible Minister, but clearly with the establishment of the office of the Director of Corporate Enforcement, the Minister will not have knowledge of the detailed day to day activities of the director and his or her staff. Consequently it will be a matter either for the Deputy to communicate with the office of the director or through a committee to seek detailed information.
We are making a major change here which is to the benefit of everybody.
I know that under the changes proposed the existing investigations shall remain under the control of the Minister for Enterprise, Trade and Employment and so we can continue to question her about those. Any new investigations will be directly under the control of the Director of Corporate Enforcement. Will it be possible to get the same level of information we are currently getting regarding the progress of these reports from the Director of Corporate Enforcement? Will the Director of Corporate Enforcement be obliged to give those answers to a committee of the House? Will the director be obliged to give that information to a Member of the House on the basis that it is a Member of this House who is requesting information?
I ask the Minister to return to one of my original questions about the ambiguity regarding the use of the word "performance"versus the word “investigation”. Will it leave the Director of Corporate Enforcement in a position where he may not furnish the information because the length of time it would take to compile the information would restrict the performance of that office? That is an important issue on which the Minister of State needs to give an answer. How does one define the term “performance”? It is like asking how long is a piece of string. That needs to be clarified. We all agree that the investigations cannot be prejudiced but the issue of performance needs to be clarified.
I want the Minister of State to come back to the nuance involved in the changed subsection (4). The subsection (4) which will now be enshrined in the Bill will still provide that "the Director shall not be required to furnish any information or answer any questions the furnishing or answering of which would, in the opinion of the Director, be likely to prejudice the performance by him or her of any of his or her functions.". Will the Minister of State relate that to the circumstances of amendment No. 18? If the director were before an inquiry, as envisaged in amendment No. 18, and he said, in answer to a question, that he had formed the opinion that it was likely to prejudice the performance of his duties, would that be the end of the road?
Supposing the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunity of Witnesses) Act, 1997, were invoked and a committee were engaged in an inquiry, even on a matter already being investigated by the director. If the committee concerned asked the director for information, which certainly would be ruled out under the old subsection (4), is it now permissible for the director to furnish that information to the inquiring committee?
A number of questions have been raised and I want to respond to them as best I can. To return to Deputy Perry's earlier question, the position of the director in this regard is not similar to that of the Director of Public Prosecutions, who is a law officer of the State. The Director of Corporate Enforcement will be required to appear before Oireachtas committees whereas the DPP is not required to do so.
On the various points raised, there was reference to amendment No. 18 again. The Director will be required to provide information to an Oireachtas committee of investigation and that is why we have deleted subsection (5). Unless reporting on progress would actually prejudice the investigation under way, which is highly unlikely, the director would have to give progress reports to the committee. He would have to respond to the committee but he would respond to an individual Deputy at his discretion – I am sure he would respond to an individual Deputy out of courtesy.
Surely he could be compelled? Supposing he was compelled to appear as a witness in the kind of circumstance to which I referred.
I have spoken to the Deputy before about interventions.
In such circumstances, would he not be required to answer the questions?
If he is compelled to appear as a witness before an Oireachtas committee, he is obliged to answer the questions provided that the answer he gives does not prejudice the investigation which may be under way at the time. In other words, he would have to protect information which could lead to subsequent prosecution by his office of offences committed by a particular individual, company or groups of individuals within a company or others. In other words, justice, fair play and equity would have to prevail. He could not presume that anybody was guilty unless he had sufficient evidence to do so.
Supposing a tribunal of inquiry asked him to appear, would he be free to answer the questions?
Yes. If he were before a committee in the context of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunity of Witnesses) Act, 1997, he would have to answer the questions.
Amendments Nos. 9 and 10 are related and may be discussed together by agreement.
I move amendment No. 9:
In page 14, line 34, after "opinion of" to insert "the Competition Authority or".
Section 18 provides that a member of An Garda Síochána or an officer of the Revenue Commissioners may disclose information to the Director of Corporate Enforcement if, in the opinion of the garda or the officer, the information may relate to the commission of an offence under the Companies Acts. This provision is to overcome the general obligation of confidentiality attaching to the gardaí and officers of the Revenue Commissioners in respect of information obtained in the performance of their official duties.
On Committee Stage, Members questioned whether this section may be too limited in its application in that there may be other persons who might obtain information relating to apparent offences under the Companies Acts and who might be statutorily prohibited from disclosing that information to the director, for example, members of the Competition Authority.
The proposed amendment provides for this section to also apply to the Competition Authority. Section 18 will now provide that, notwithstanding any other law, information obtained by the Competition Authority, a member of the Garda Síochána or a Revenue official which, in the opinion of the garda or official concerned, may relate to the commission of an offence under the Companies Acts may be disclosed to the Director of Corporate Enforcement or to his or her staff.
I move amendment No. 10:
In page 14, line 36, after "that" to insert "Authority".
Amendment No. 11 is in the name of Deputy Rabbitte. Amendment No. 12 is related. Therefore amendments Nos. 11 and 12 may be discussed together by agreement.
I move amendment No. 11:
In page 16, lines 1 and 2, to delete "certify the refusal under their hand" and substitute "make application in that regard in respect of the alleged failure or refusal".
The net point here is that I argued on Committee Stage that an amendment such as this may be required for constitutional reasons. Where a party applies to the court, the application must be given reasonable equality with the case for the defence. The certification here would seem to carry a presumption of additional evidence, by mere virtue of it being certified. On Committee Stage the Minister undertook to take advice on that point.
Amendment No. 12 relates to a constitutional point in terms of the use of the word offender, that if it applied to a criminal offence, then the term offender is wrong and the words "a person alleged to have so refused" would be more appropriate. We discussed this on Committee Stage when the Tánaiste undertook to take advice on both points.
Amendments Nos. 11 and 12 relate to section 23 of the Bill which provides for the amendment of section 10 of the Companies Act, 1990. Section 10 of that Act sets out the powers of High Court inspectors appointed under section 7 or 8 of the Act to investigate the affairs of a company. Among these powers is the power to require the production of documents, to require persons to attend for examination and to require them to answer questions put to them in the course of such an examination. Section 10(5) and (6) deals with the refusal or failure of a person to comply with the requirements imposed by court appointed inspectors. It provides that the inspectors may certify the refusal or failure to the court and that the court, having heard any evidence of witnesses offered on behalf of the person concerned, may make any order it deems appropriate. Such an order could be for the person to attend and answer the questions of the inspectors or, indeed, that the person need not do so. Subsection (5) makes reference to a person who has refused or failed to attend for examination or answer a question as the alleged offender. Deputy Rabbitte's proposed amendment, previously submitted on Committee Stage, seeks to change the reference from the person alleged to have so failed or refused on the basis that the use of the word "offender" was inappropriate in that refusal or failure to comply with a requirement of court appointed inspectors would not constitute an offence. The Tánaiste agreed to consider this amendment for Report Stage and having sought legal advice on it, I can now accept the proposed amendment.
Deputy Rabbitte's amendment No. 11 proposed the deletion of the provision in section 10(5) whereby inspectors may certify the refusal or failure of a person to comply with their direc tions on the basis that the provision of certificate evidence is not appropriate to a criminal matter. With the removal of the reference to an offender, section 10(5) and (6) no longer carries any criminal connotation and the provision whereby inspectors may certify certain facts to the court as appropriate means no amendment is therefore required or appropriate in respect of this element of section 10.
Is Deputy Rabbitte pressing his amendment?
The bringing forth of a new amendment No. 12 by the Minister removing any criminal connotation in respect of the area covered by amendment No. 11 is an improvement. I remain puzzled about the proposition concerning a party applying to the court whose application must be afforded reasonable equality with a defence. One cannot, therefore, have the applicant furnishing a certificate also and saying there is an assumption that that is tantamount to additional evidence. I am still a bit confused, even if we have removed it from the rubik of criminal connotation. I am happy to withdraw amendment No. 11.
I move amendment No. 12:
In page 16, lines 4 and 5, to delete "alleged offender" and substitute "person alleged to have so refused or failed".
Amendment No. 13 is consequential on amendment No. 18 and amendment No. 19 is related and may be taken together by agreement. Agreed.
I move amendment No. 13:
In page 16, line 27, to delete "(f)" and substitute "(fb)".
Amendments Nos. 13, 18 and 19 relate to the disclosure to the Oireachtas or a committee of the Oireachtas of information obtained by the director of corporate enforcement under section 19 or 20 of the Companies Act, 1990.
Deputy Rabbitte proposed an amendment on Committee Stage to include the Oireachtas or a committee of the Oireachtas in the list of competent authorities to whom such disclosure would be permitted under section 21 of the 1990 Act. His amendment No. 19 would have that effect. While similar proposals have been rejected in the past on the grounds that they might unnecessarily damage the section 19 examination process, the Tánaiste indicated on Committee Stage that she was disposed to the provision of relevant information to an Oireachtas committee of inquiry where this would facilitate the deliberations of such a committee.
As already stated the Tánaiste would like to see the role of the Oireachtas enhanced regarding inquiries. Members of the Oireachtas have shown that they can act in a highly professional manner in the conduct of such inquiries as was evidenced in the Committee of Public Accounts DIRT inquiry. Having considered the matter carefully, amendment No. 18 is now proposed and provides that information obtained by the director of corporate enforcement under sections 19 and 20 of the Companies Acts may be made available to committees of the Oireachtas in particular circumstances. The circumstances are such that the committee in question must be one that has been granted powers under the Committees of the Houses of the Oireachtas (Compellability of Privileges and Immunities of Witnesses) Act, 1997. The information must be required for the performance by the relevant committee of its functions. I believe this represents a reasonable measure of disclosure that will facilitate the performance of their functions by relevant committees without the potential for damaging section 19 examinations that might result from open disclosure to the Oireachtas generally of information obtained under section 19.
Consistent with this position, I also believe that the Director of Corporate Enforcement should, if required, attend before an Oireachtas committee that has been given compellability powers and give evidence that may assist the committee in carrying out its mandate. As I indicated earlier, an amendment was introduced to delete section 16(5) of this Bill which would have exempted the director from the provisions of the 1997 Act.
Amendment No. 13 is a technical amendment to section 24 which provides for the amendment of section 11 of the Companies Act, 1990, dealing with reports of court appointed inspectors appointed under section 7 or 8 of that Act. This amendment is directly consequential upon amendment No. 18. Its effect is to update the cross reference in section 11 of the 1990 Act to section 21 of that Act to include reference to the new subsection (1)(fb) inserted in section 21 by this new amendment No. 18.
I think we have established, for the record, that in the event of the director being required to appear before a committee in the circumstances here envisaged he would be required to answer any reasonable question put to him provided the committee was seen to be discharging its mandate. If such an investigation is carried out by a committee of the House under the compellability powers and that committee makes an order for discovery, is the director required to furnish the information sought in that order for discovery? There are several circumstances where a committee of the House may be seized of an identical matter to that being investigated by the director. A committee of the House may not even know that the director is looking at the same area but may have reason to believe he has information pertinent to its inquiry. If an order for discovery is made by the committee, must it be complied with by the director?
Yes. If a committee is investigating a matter and has a discovery request and the director has the relevant information, he or she is obliged to pass on that information.
Amendments Nos. 30 and 32 are cognate on amendment No. 14 and may be taken together by agreement. Agreed.
I move amendment No. 14:
In page 19, line 6, to delete "or she".
Amendments Nos. 14, 30 and 32 correct drafting errors in the Bill as published. They concern references to the Director of Corporate Enforcement where these have been inserted in existing enactments by virtue of amendments made in this Bill. In such instances the director was referred to in gender neutral language not rescinding the fact that the enactments in which the references were being inserted were cast in gender specific terms. The advice of the parliamentary counsel is that this approach is not the correct one and any reference to a person that occurs in a gender specific Act should be in gender specific terms. The opportunity is taken here to correct three references where this occurs in the Bill. They are technical adjustments and I would appreciate the agreement of the House on them.
Amendment No. 41 is related to amendment No. 15 and both may be taken together by agreement.
I move amendment No. 15:
In page 20, to delete lines 10 to 15, and substitute the following:
"in possession of–
(a) other books or documents which may constitute copies of any books or documents of the body,
(b) subject to subsection (4), other books or documents which may relate to any books or documents of the body;
but where any such person claims a lien on books or documents produced by him, the production shall be without prejudice to the lien.
(4) The power under subsection (3)(b) shall not be exercised unless–
(a) in the opinion of the Director, there are reasonable grounds for believing the first and second-mentioned books or documents in subsection (3)(b) are related to one another (and those grounds may include grounds related to the relationship between the body and the person of whom the requirement under subsection (3)(b) is proposed to be made, a common origin of some or all of the information contained in the said books or documents or similar considerations), and
(b) save where the Director is of opinion that compliance with this paragraph could result in the concealment, falsification, destruction or the disposal otherwise of the books or documents concerned, the Director notifies the person of whom the requirement under subsection (3)(b) is proposed to be made ('the third party') that the Director proposes to make that requirement and states in that notification the grounds for his opinion under paragraph (a) and that the third party may (if such is his contention) make submissions to the Director, within 21 days from the date of the making of the notification, as to why he believes the said opinion of the Director to be erroneous (and the Director shall have regard to any such submissions so made before finally deciding whether to make the said requirement or not),
but in no case shall the third party be obliged to comply with such a requirement in relation to a particular book or document concerned if he would be entitled, by virtue of any rule of law or enactment, to refuse to produce, in any proceedings, the book or document on the ground of any privilege (whether the privilege to which section 23 applies or not).".
Section 29 provides for the repeal and substitution of section 19 of the Companies Act, 1990, which provides for the examination of the books and documents of companies and other bodies. Section 19(3) provides that where the Director of Corporate Enforcement has the power to require the production of books and documents from any body he shall have the power to request their production from any person who appears to be in possession of them. On Committee Stage it was agreed to extend this subsection to cover books or documents also that may constitute copies of any books or documents of the body in question.
This amendment provides for the further extension of this subsection to cover books or documents that appear to the Director of Corporate Enforcement to relate to books and documents of a body whose books are being examined by the director. It has been the experience with a number of section 19 examinations that arrangements are often put in place to hide the company's true business by using intermediate vehicles, such as other companies and trusts. As the law stands it has not been possible to obtain the books and documents that these other companies or intermediate vehicles may have relating to the business of the target company. Thus, the progress of section 19 examinations has often been inhibited by a lack of adequate legal powers. The Bill addresses these weaknesses by providing for the production by any other bodies of documents relating to a body whose books and documents are under examination.
This additional amendment now proposed for section 19(3) should significantly enhance the usefulness of section 19 examinations. Access to the personal or private documents of individuals who have been involved or who have done business with the body under examination may be essential if the director is to obtain meaningful information or evidence of how a body conducted its affairs. As the books and documents referred to in subsection (3)(b) are the personal and private documents of an individual, I also propose the introduction of a new subsection (4), which is designed to protect the individual's right to privacy. The new subsection will ensure that the power under subsection (3)(b) will only be exercised where the director has reasonable grounds for believing that the individual's books and documents relate to the books and documents of the body under examination. The director must notify the individual concerned of the reasons his or her books or documents are being requested for examination.
The amendment also provides that where the individual concerned believes the director's reasons for forming his or her opinion are erroneous he or she can make representations to the director accordingly. Finally, the proposed subsection (4) provides for the individual referred to in subsection (3)(b) to be relieved from his or her obligation and to produce personal or private documents if he or she is entitled to do so under any legally recognised form of privilege.
The new section 371A of the Companies Act, 1963, introduced by amendment No. 41, is intended to address a situation in which a person claims a privilege under section 19(3)(b) but the Director of Corporate Enforcement disputes this claim to privilege. In such circumstances the director may apply to the court to compel the person to comply with his or her demand for production of the books or documents in question. The court would, as part of hearing any such application, settle the question of whether the books or documents were privileged or otherwise.
Given the recent state of the environment in which this legislation will oper ate, I appreciate that the Department has a good deal of experience in terms of this kind of intermingling and interaction of companies, their books and documents as envisaged being related to the subject matter of inquiry. This amendment goes some way to meet the debate on Committee Stage, in so far as the director is required to have reasonable grounds for sequestering the additional books and information, referred to here as second mentioned documents and so on.
There is also some relief in that, as I understand it, the company may make a submission within 21 days if it thinks the intrusion is unwarranted, unfair and not relevant. To some extent the fishing expedition that was originally envisaged as feasible has been constrained and the requirement of there being reasonable grounds for this kind of intrusion is an improvement. Presumably this matter has been finessed by the Minister of State and his colleagues in the Department in as far as it is likely to go.
While the amendment is an improvement, there may still be casualties in that the director has the final say. If a person felt aggrieved that there was no reasonable grounds requiring him to produce additional documentation and made a submission to the director does the director sit in a quasi-judicial capacity and make the decision? Presumably the person could have ultimate recourse to the courts but in the first instance the director decides.
With regard to the quasi-judicial role of the director, the aggrieved individual must make a submission within 21 days. Will the Minister of State comment on that? In many cases third parties can be foreign registered companies or companies that have been taken off the shelf, as has been shown in relation to the ongoing investigations in the Department where foreign registered companies have been used as the third parties. What is the position regarding the disclosure of information from these companies if they are outside the jurisdiction of this State and the EU?
What controls or powers are there to ensure that information is furnished to the Director of Corporate Enforcement or is it the case that the director would have to fight a case under the legislation prevailing in other jurisdictions? This type of situation has arisen in the ongoing investigations in the Department where the third party is not under this jurisdiction even where control may rest with individuals within the jurisdiction. How does the amendment address that kind of situation?
Will the Minister of State outline the role of the District Court judge in terms of search warrants? The judge may act on a suspicion. What is meant by that?
With regard to the points raised by Deputy Rabbitte, the director has the final say but the person could seek judicial review. If an individual refuses to comply with the wishes of the director the director can go to court to force that decision. Alternatively, if the individual is not satisfied to comply or believes he is being unfairly treated he can seek a judicial review and can go to court requesting the court to prevent the director from procuring the relevant information.
On the point raised by Deputy Naughten about the enforcement of judgments orders within the European Union, I expect the Director of Corporate Enforcement will have some powers. However, I doubt he will have any powers outside the European Union. It would be a matter for him to seek information through the courts in foreign jurisdictions. As we know, this is not easy to procure and the risks and costs involved are high. A judgment call would have to be made at the time.
If a company is carrying on business in Ireland, it must provide the information under the Bill when it is enacted. There is provision for getting assistance from other company law authorities in other jurisdictions and we will expect and seek their support. Partnerships could develop where they might request information about individuals operating through companies in this country and vice versa. I am sure it will be possible to reach an arrangement in certain instances. However, the legislation would not have a mandate in foreign jurisdictions. Co-operation may be the order of the day, particularly between the police services. The fact that members of the Garda Síochána will be members of the office of corporate enforcement will ensure that there is a better chance of procuring information.
Some countries pride themselves on the fact that they do not disclose such relevant information. This will make such locations much more popular in the future. I appreciate it is a difficult area and that it will be difficult to ensure such information is furnished. If it is the case that the Director of Corporate Enforcement believes information is available through a so-called foreign registered company, will finance be provided to ensure a case can be taken if the director believes it is an integral part of the investigation that is taking place?
As we are aware, there are difficulties with regard to the Competition Authority, which is a similar body under the umbrella of the Department. Up to recently, it had not functioned for the previous year or 18 months because it did not have the resources to recruit staff. If somebody made a complaint, he or she received a letter from the Competition Authority stating that an investigation could not be considered due to a lack of resources and staff. Will the Minister give a commitment that whatever resources are required will be provided by the Department if the Director of Corporate Enforcement believes the office has a valid case to make in one of the countries involving information that is vital in relation to taking a successful case against a company in this jurisdiction?
It is difficult to conclude that a case will be successful. However, as far as I am concerned—
I am referring to the opinion of the director prior to the taking of a case.
If, in the opinion of the director, resources are required to pursue a case to procure information that may lead to the successful prosecution of a case, I am sure they would be available.
I move amendment No. 16:
In page 21, line 31, to delete "company" and substitute "body".
This is a technical amendment to section 29 of the Bill which provides for the repeal and replacement of section 19 of the Companies Act, 1990. Subsection (9) of the replacement section 19 provides that the court may order a company whose books and documents are examined by the Director of Corporate Enforcement to bear the cost of that examination.
The amendment substitutes the word "body" for "company" as an examination of books and documents under section 19 may be in respect of a range of incorporated or unincorporated bodies as set out in section 19(1) and not only companies within the meaning of the Companies Acts. To ensure the position is legally correct, I ask the House to agree to the amendment.
I move amendment No. 18:
In page 24, line 37, to delete "any of its functions;'," and substitute
"any of its functions;
(fb) for the purpose of the performance by a committee (being a committee within the meaning of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997 to which sections 3 to 14 and 16 of that Act apply) of any of its functions;',”.
Amendment No. 22 is an alternative to amendment No. 21 and both may be discussed together.
I move amendment No. 21:
In page 28, to delete lines 37 to 45 and page 29, to delete lines 1 to 3 and substitute the following –
"(2) The amendments made by paragraphs (a) and (b) of subsection (1) shall not have effect in relation to a declaration under subsection (1) of section 150 of the Act of 1990 made before the commencement of this section and, accordingly, the requirements of subsection (3) of that section 150 that shall apply in respect of a person who is the subject of such a declaration made before that commencement shall be those that applied before that commencement.”.
Section 41 of the Bill amends section 150 of the Companies Act, 1990, by increasing the amount of share capital that a company is required to hold where one or more of the directors of the company is subject to a restriction order under that section. The amounts in question are to be increased in the case of a private company from £20,000 to £50,000 and in the case of a public company from £100,000 to £250,000. The increases in these amounts are intended to ensure that companies that have restricted persons among their directors have adequate share capital to meet prospective debts in the more buoyant economy that now obtains compared to the period when the figures were set out ten years ago.
On Committee Stage, we introduced an amendment that provided for transitional arrangements in respect of existing companies that currently have restricted directors. This would give these companies six months to raise the required additional share capital. The increased levels would have immediate effect for companies whose directors are restricted post commencement of the new provisions. Deputy Rabbitte proposed an amendment to this amendment, seeking to remove the retrospective nature of the provision by having the increased share capital imposed only on companies whose directors are restricted by orders made post commencement of the section and to exempt companies who currently have restricted persons among their directors. This amendment has been resubmitted as amendment No. 22.
In light of the points made on Committee Stage, I have reconsidered the matter and tabled amendment No. 21. In essence, I agree with Deputy Rabbitte's view that the increased share capital requirement should only apply to companies whose directors include a person or persons who have been restricted by the court subsequent to the commencement of section 41. The amendment provides for this by limiting the application of the increased share capital amounts to orders for restriction made after the commencement of the section.
Amendment No. 24 is an alternative to amendment No. 23 and both may be discussed together by agreement.
I move amendment No. 23:
In page 30, lines 15 and 16, to delete "considers it just to make a disqualification order against him" and substitute "is satisfied that, if the conduct of the person or the circumstances otherwise affecting him that gave rise to the said order being made against him had occurred or arisen in the State, it would have been proper to make a disqualification order otherwise under this subsection against him".
Section 42 of the Bill amends section 160 of the Companies Act, 1990, which deals with the disqualification of persons from being directors or other officers of companies. The amendment clarifies the power of the court to make a disqualification order in respect of a person who is disqualified in another state.
On Committee Stage, an amendment to section 160 of the 1990 Act was introduced to include a provision whereby a person who is disqualified in another jurisdiction from being appointed or acting as a director or secretary of a company may, if the court considers it just, also be disqualified in this jurisdiction. Deputy Rabbitte tabled an amendment to this on Committee Stage to provide that the court, prior to making a disqualification order, must be satisfied that the conduct of the person that occasioned the foreign disqualification would, had it occurred here, been such as to warrant disqualification. This proposal has been resubmitted as amendment No. 24.
I agree that Deputy Rabbitte's amendment would help to clarify the power of the court to make a disqualification order. Having consulted the parliamentary counsel, I propose amendment No. 23 which takes on board the Deputy's suggestion. It was the intention of the relevant Government amendment on Committee Stage that a disqualification order would only be made against a person on the basis of a foreign disqualification in a case where the court considered that the actions that occasioned that foreign disqualification would also warrant disqualification here. However, the amendment leaves no doubt about the power of the court in this regard.
I move amendment No. 25:
In page 30, line 21, before "liabilities" to insert "net".
The Minister will be familiar with the reasoning behind the amendment. Its paternity involved the accountancy bodies and the arguments were thrashed out on Committee Stage. However, I am interested in the Minister's views.
This amendment relates to section 42 of the Bill which provides for the amendment of section 160 of the Companies Act, 1990. Section 160 deals with the disqualification of persons from being directors or other officers of companies. Paragraph (b) of section 42 of the Bill amends section 160 to provide that a court may order the disqualification of a person on the basis that he or she was a director of a company that was struck off the register for failure to file an annual return. The primary reason for this is to discourage abuse of the strike off procedure by directors of companies seeking to frustrate creditors from securing payment of debts. When a company is struck off the register it ceases to exist as a legal entity and creditors must have the company restored to the register before they can pursue payment of their debts through the courts or have the company wound up either by the court or otherwise.
Section 42 paragraph (c) amends section 160 of the 1990 Act further to provide that the court shall not make a disqualification order against a person on the grounds that he or she was a director of a company that was struck off for failure to file if the court is satisfied that the company in question either had no liabilities when it was struck off or that any such liabilities have since been discharged.
As the purpose of providing for disqualification of directors in these cases is to prevent companies from seeking to evade their liabilities, it is reasonable to remove the possibility of disqualification where there are no liabilities or where the liabilities have been discharged. Deputy Rabbitte's amendment seeks to limit the matter to a consideration of net liabilities only. On the face of it this may seem reasonable, as virtually all companies have some liabilities, but in most cases these will, I hope, be outweighed by assets and the company would, therefore, have no net liabilities.
As it has gone past 10 o'clock, I ask the Minister of State to draw his contribution to a conclusion.
I will conclude with just a couple of sentences for the benefit of Deputy Rabbitte who asked me to refer to the matter.
It is these very cases that the amendment to section 168 seeks to address. It is in circumstances where a company, despite having liabilities, has sufficient assets to discharge those liabilities that the striking off of the company is particularly deleterious to the creditors' interests as their rightful entitlement to a share of the assets of the company is frustrated by the fact that the company no longer exists in law. It is, therefore, important that the provision whereby the directors may be disqualified in such cases is retained, whereas the Deputy's amendment would remove this. Another important factor is that simply because a company does not have net liabilities does not mean it will discharge the liabilities it has. Allowing the company to be struck off the register by failing to file an annual return may be part of a strategy on the part of the directors to have the company avoid discharging its liabilities.
Since it is now 10 p.m., I am required to put the following question in accordance with an order of the Dáil of this day: "That the amendments set down by the Tánaiste and Minister for Enterprise Trade and Employment and not disposed of are hereby made to the Bill, that Fourth stage is hereby completed and that the Bill is hereby passed".
