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Dáil Éireann debate -
Wednesday, 2 Dec 2009

Vol. 696 No. 4

Companies (Miscellaneous Provisions) Bill 2009 [Seanad]: Second Stage.

I move: "That the Bill be now read a Second Time."

I am pleased to introduce this Bill in the Dáil and I thank Deputies for facilitating an early debate on the urgent issues it addresses. I will explain as I move to the specific sections of the Bill the urgency attaching to them. This is the second Bill this Government has introduced this year to amend the Companies Act. Like its predecessor, the Companies (Amendment) Act 2009, this Bill focuses on making a small number of timely, focused changes to company law. These amendments are required immediately so that company law remains dynamic and responsive to emerging opportunities and challenges.

As Deputies will be aware, work on drafting the consolidation Bill, which will incorporate all existing 14 Companies Acts into a single text, is currently under way. I expect to publish that Bill, which will have some 1,300 sections, in September 2010. The provisions of the Bill we are debating today will be incorporated into the consolidated Bill.

The measures in today's Bill can be summarised under four headings. First, it will allow for the use of US generally accepted accounting principles, known as US GAAP, in the preparation of the accounts of a specified category of companies. It will also give the Minister for Enterprise, Trade and Employment the power to prescribe other internationally recognised accounting standards should this become appropriate in the future. The second measure will allow the Minister to make regulations recognising stock exchanges outside the State for a specified purpose. Third, the Bill will limit the potential exposure of the Exchequer to costs that could arise from court appointed inspectors carrying out investigations into the affairs of a company. Fourth, the Bill will ensure continuity of membership by directors of committees of inquiry established by the Irish Auditing and Accounting Supervisory Authority.

The Companies Acts should respond swiftly and appropriately to emerging opportunities. To meet this goal, I am currently finalising another significant company law proposal which is at an advanced stage. I hope it will be brought to a point where it is ready for inclusion in this Bill and I therefore wish to advise Deputies that I intend to seek the permission of the House to include it by way of Committee Stage amendment.

On the first of the Bill's provisions, which I will refer to as the US GAAP proposal, I wish to make some introductory comments. Attracting and developing foreign direct investment in the State is a major strand of the policy of this Government. Foreign direct investment has played a pivotal role in Ireland's economic growth over the past decades and will continue to do so into the future. The nature of the investments we have attracted has changed significantly over the years. While in the past, we were a location that concentrated primarily on manufacturing, we have become a centre for educated young Europeans. Ireland now plays a key role in the smart economy, which is built on the dual strengths of our innovativeness and entrepreneurship. The appointment last week of Ms Maire Geoghegan Quinn as European Commissioner for Research and Innovation clearly demonstrates that Ireland's commitment to the innovation agenda is well-recognised internationally.

I offer my best wishes to future Commissioner Ms Geoghegan Quinn. We look forward to the role she will play in promoting research and innovation, which is a key component of the Irish strategy and of the Lisbon agenda in the context of job creation and making sure we move Europe forward in terms of investment in research and development, innovation, commercialisation and other such areas.

Ireland's readiness to adapt and respond to changing circumstances has contributed significantly to the fact that, notwithstanding the economic downturn, we continue to be an attractive location for foreign direct investment. To date the IDA has made 48 announcements, with a combined investment in excess of €650 million and a potential to create 3,300 jobs. It is encouraging that so many companies are prepared to undertake and announce these investments in Ireland given the current global economic environment. The more optimistic economic forecasts for 2010, globally and for Ireland, should help the IDA to make a significant contribution to economic recovery and continue to secure foreign direct investment for Ireland.

However, to attract investors, industrial promotion policy needs to be agile, flexible, imaginative and continuously evolving. This is particularly the case where the attraction, integration and retention of foreign investment projects in Ireland are concerned. This is paramount at times like now where the global economy is facing almost unprecedented challenges and where there is intense competition for a restricted pool of foreign direct investment. In times like these foreign investments do not come easily and there is intense competition, so we should try to remove as many obstacles as possible while at the same time making sure our integrity is protected.

Multinational companies also face challenges as they seek to adjust and adapt to a changed and changing economic situation worldwide. Those who wish to survive, not to mention prosper, simply cannot afford to stand still. For many, this means restructuring and reconfiguring their global operations to the best advantage. Such strategies have the potential to result in opportunities or disadvantages for investment locations around the world. This is the challenge facing Ireland. It is possible that in the context of the reconfiguration of multinationals globally we may be the beneficiary of such moves or the companies concerned may move elsewhere. That is something of which we have to be conscious. The pool is currently shrinking. Multinationals are experiencing difficulties. They are realigning all their operational bases, and consolidation and takeovers are taking place. We have to be responsive to their needs.

Ireland does not have the luxury of passively watching as multinational investment disappears to competitive destinations which have kept up with or anticipated new trends and developments. We cannot afford to miss out on these possibilities if we are to work our way through our current economic difficulties. The Government is aware that openings must be created and availed of and it is committed to doing all that is possible to meet this goal.

The US GAAP proposal is the broad policy context in which the US GAAP measure, contained in the Bill before us today, can be seen. The Bill is designed to facilitate multinational companies which have operations in Ireland to continue to add activities and substance to such operations. This will further contribute to economic activity here and provide valuable employment opportunities. This measure will assist in attracting specific categories of companies from abroad to establish in the State. Certain multinational companies, which already have a substantial investment presence in Ireland, have further integrated their activities here by transferring their parent undertakings to Ireland. As these companies are listed on US stock exchanges and report to the US Securities and Exchange Commission, they will continue to have to prepare US accounts using US accounting standards to remain compliant in the United States.

In addition to this obligation, as Irish registered companies, these multinational parent undertakings also have to prepare Irish accounts. The accounting standards followed by most companies in this State are Irish generally accepted accounting practices, known as Irish GAAP, or international financial reporting standards, known by the acronym IFRS and which were adopted by the EU. It would be particularly onerous and expensive for a company if the obligation to convert to Irish GAAP or EU IFRS were to arise over a compressed period, and inordinately so, if this requirement arose during a company's current financial year. This is the prime reason for the urgency of this Bill, so I would appreciate the co-operation of both sides of the House to pass it. It is based on the need to address the accounting year for 2009. The companies concerned need to have formal confirmation as soon as possible of the nature of their reporting requirements in Ireland for the current year.

The legislation I am now introducing provides for the use by this restricted category of companies of US GAAP for a limited period. The arrangement will apply for a maximum of four financial years and will expire on 31 December 2015 at the latest. This measure will facilitate an orderly transition by these companies to the use of Irish GAAP or IFRS. There is a precedent for this. When IFRS was introduced by the EU, a transitional period was allowed so that the various parties could make the necessary preparations.

Another point I make is that companies will be subject to Irish company law generally, including all the provisions which relate to accounts. My objective is that Irish company law will override any provision of US GAAP if it conflicted with the Companies Acts.

Allowing these companies to prepare their Irish accounts using US accounting standards for a limited period would eliminate the significant duplication of cost and effort of preparing two sets of accounts under two different sets of accounting standards. It will also create a bridge roughly spanning the period during which significant international developments are expected regarding the convergence of US and international accounting standards. In the interests of providing for future flexibility in this area, I am including an enabling provision for ministerial prescription of other specified internationally recognised accounting standards if such a demand arose and it was considered appropriate to do so. Any such regulations will apply for the same transitional period as the US GAAP measure.

The second measure in the Bill is one I introduced by way of Committee Stage amendment in the Seanad. It is designed to allow Irish registered companies which are listed on foreign stock exchanges to exercise a right to buy back their own shares on that exchange on a similar basis to that permitted when they buy back their own shares through a stock exchange operating in this State. It will also facilitate international groups relocating their parent undertaking to Ireland but who are not listed on the Irish stock exchange and that wish to make market purchases of their own shares. This will result in significant internal administrative simplification for those companies.

To briefly outline the impact of this measure, at present the Irish stock exchange is the only exchange recognised for market purchase of own shares. Market purchases must be authorised by the company at a general meeting and this authorisation is sufficient for all contracts for purchase of own shares for the period of the authorisation, which is usually 18 months. For the purchase of own shares on stock exchanges that are not recognised, the terms of each individual contract for purchase of the shares must be authorised in advance by a special resolution of the company. The measure included in today's Bill will enable the Minister for Enterprise, Trade and Employment to make regulations recognising stock exchanges outside the State for a new type of purchase called an "overseas market purchase". An overseas market purchase is similar to a market purchase but with a new obligation on the company to publicise its purchase of own shares on the company website for the purposes of informing the market.

The third measure in the Bill addresses a potential exposure of the Exchequer to costs of inspectors appointed by the High Court under section 7 of the Companies Act 1990. That Act contains two related powers which allow the court to appoint inspectors to investigate the affairs of a company. Section 8 facilitates such an appointment at the request of the Director of Corporate Enforcement, while section 7 provides that a variety of specified interested parties can petition the High Court to have inspectors appointed. Those parties include the company itself, a director of the company, a creditor and a group or block of shareholders of the company.

As the law stands at present, there is an upper limit of €317,435 on the amount that those who petition for such an appointment can be required to pay towards these costs. This limit applies both to the security they can be asked to advance before the investigation commences and to the amount of the eventual costs of the investigation that the applicants would be required to bear. Unless the court decides that a company should meet all or some of the costs of the investigation, the balance of those costs, namely the amount above the applicants' statutory ceiling of just over €317,000, would need to be borne by the State. On the basis of previous experience, the cost of a wide-ranging investigation could amount to €10 million.

It is necessary to take immediate action to protect the taxpayer from having to meet the very significant costs of such investigations, some of which could conceivably duplicate investigations happening elsewhere in the State system, for example by the Office of the Director of Corporate Enforcement, the Financial Regulator or the Criminal Assets Bureau. This requirement needs to be balanced with the competing duty of the State to ensure shareholders and others have suitable access to justice. To ensure an optimum balance would be achieved I considered a number of alternative policy responses to this question. Having regard to wider safeguards provided for in company law that are available to prospective applicants under section 7, I have concluded that the fairest and most balanced way of approaching this issue is to remove the absolute limit on costs currently applicable to applicants.

This will leave total discretion to the court on the issue of costs and will place applicants under this provision on the same general footing as other parties initiating court proceedings in that they can be held liable for the full costs if the court so decides. The costs of investigations initiated by the ODCE, under section 8 of the Companies Act 1990, would continue to be met in the first instance by the Exchequer through the Department of Enterprise, Trade and Employment's Vote.

The final measure in the Bill was also introduced on Committee Stage in the Seanad, which proves the usefulness of the Seanad. It provides for continuity of membership by directors of committees of inquiry established by the Irish Auditing and Accounting Supervisory Authority, IAASA. This measure addresses the problem that arose regarding one of the current directors of IAASA whose term of office was due to expire in January 2010. That director was a member of a committee of inquiry by virtue of being a director. Therefore if the work of the committee continued beyond January 2010 the director would no longer have entitlement to his place on the committee. This would cause the make-up of the committee to change during the inquiry, which could raise questions of due process and fair procedures, and might leave the process open to challenge by way of judicial review.

The measure I have included in the Bill therefore provides that a person who is a director at the time of the formation of such a committee will be entitled to continue on that committee until the inquiry is completed. The amendment will also provide that inquiries already ongoing will not be affected by the proposed changes in the Bill. The amendment will also ensure that staff of IAASA can make preliminary inquiries into matters that come to the attention of IAASA before deciding whether such matters should be submitted to the board for full inquiry.

I shall now outline the details of the Bill. Section 1 provides that a true and fair view of a parent undertaking may be given by the use of US GAAP by certain parent undertakings. These relevant undertakings are tightly defined in the section. This is subject to the proviso that the use of those principles in the preparation of the undertaking's accounts does not contravene any of the provisions of the Companies Acts or any regulations made under those Acts. The accounts in question are the company's group accounts and the individual accounts of the parent company. This arrangement will be limited to a specified category of companies. These are defined as parent companies incorporating in Ireland for the first time whose securities are not traded on a regulated market in the European Economic Area, whose securities are registered with or which are subject to reporting to the US Securities and Exchange Commission, and which, on the date that this Bill passes into law, have not already incurred an obligation to file their first accounts with the Companies Registration Office.

The section also provides for this arrangement to apply in respect of a relevant undertaking for a maximum of four financial years and it expires on 31 December 2015 at the latest. Where accounts are prepared under this section, the notes to the accounts are required to state that this is the case.

Section 2 gives the Minister the power to make regulations that may prescribe other specified internationally recognised accounting standards under which specified categories of companies may prepare accounts for a maximum of four financial years or to end by 31 December 2015. Any such regulations shall specify the accounting standards, which shall be internationally recognised, and generally accepted accounting principles or practices of a jurisdiction where a majority of the subsidiaries of the parent undertaking have a substantial connection or where the market is situated on which the shares of the parent undertaking are primarily admitted to trading. In preparing accounts using other internationally recognised accounting standards, companies must not contravene any provision of the Companies Acts or any regulations made under these Acts. Where accounts are prepared under this section, the notes to the accounts are required to state that this is the case.

Section 3 makes a number of amendments to the Companies Act 1990 to facilitate two of the measures already mentioned which are contained in this Bill. All but two of the amendments in this section relate to the recognition of stock exchanges outside the State. This has required some technical amendments such as to the definition of a "recognised stock exchange". The new concept of an overseas market purchase that I referred to earlier is contained in this section, as is the requirement to publish particulars of the purchase of its own shares on the company website for the purposes of informing the market.

In addition to these amendments section 3 also removes the current upper limits that applicants can be asked to contribute towards the costs of court investigations initiated on foot of their applications under section 7 of the Companies Act 1990. This amendment involves removing the statutory limit in the two sections of the 1990 Act where it appears — section 7 dealing with security for costs and section 13 which deals with the final costs of the completed investigation.

Section 4 amends the Companies (Auditing and Accounting) Act 2003 to provide for the continuity of committees of inquiry of IAASA and for staff to make preliminary assessments of matters that come to the attention of IAASA without the need for immediate reference to the board of directors.

Section 5 is standard drafting and simply contains the short title and the fact that the Act and the Companies Acts shall be read as one.

The measures in the Bill are evidence of the Government's commitment to ensuring that company law remains responsive to any emerging challenges and opportunities. I commend the Bill to the House.

The consolidation of the 14 Companies Acts is at an advanced stage. It is major undertaking. This legislation and the previous one the House passed will be incorporated into the consolidated companies Bill when it is published.

When will it be published?

We hope to have it published in September 2010. It is a major undertaking.

The Minister of State should take his time.

Everybody accepts it is a large undertaking involving approximately 1,300 sections. We would like to get the legislation right as opposed to rushed. Obviously with the co-operation and input of this House — if we are all still here — I very much look forward to taking it through the various Stages. With the co-operation of all sides it could implemented in 2011. However, we first need to get it published and we are working on that.

The purpose of the Bill is to allow US companies that move their parent undertaking to Ireland to continue to use US GAAP for the next four years. The Bill allows the Minister to extend by order the same recognition to other accounting systems for a limited period. There are also additional Seanad amendments to which I will need to give more attention at a later Stage. When reviewing the Bill we need to consider three things. First, we need to consider the potential gain for Ireland in jobs and investment. The second matter is the potential reputational risks that may derive from the Bill and the third is the appropriateness of section 2 and whether we should give the Minister powers of this nature to recognise other accounting systems without being required to come back to this Parliament.

As the House will be aware, EU regulations currently require that companies use the international financial reporting system or continue to use Irish GAAP. A convergence of accounting standards is currently taking place and I do not know when it will be concluded. In view of this, it is probably appropriate to allow a transition period for companies that are moving their parent undertakings here.

Implementation of this legislation would appear to involve genuine economic gains for Ireland in terms of jobs, investment and, potentially, revenue, provided the operations involved are real and not just brass-plate operations. It also helps to underline the pro-business nature of our country and the fact that we are open to foreign direct investment. However, I would be interested to know one or two things. Is any reciprocation being offered to Irish companies that may for whatever reason decide to have their parent undertakings in the United States? Will such companies be allowed to use Irish GAAP or IRFS? Has that situation arisen?

Part of the justification for this legislation is that companies would face a significant cost in making the transition from US GAAP to IFRS over such a short period. It has been suggested by one company that it would cost it €20 million to do so. I find that hard to believe, and I ask the Minister of State to outline at a later stage the estimated administrative cost to companies if this legislation were not brought in. The figure of €20 million was mentioned in the regulatory impact analysis for this Bill. What is not explained in the RIA is whether the additional cost is entirely an administrative one. Given the complications of moving from one system of accounting to the other, is this the case? Are there other benefits for companies in this? For example, can they declare their assets or pay their taxes in a different way?

I read the detailed table showing the difference between US GAAP and IFRS. Not being an accountant, it was difficult for me to understand, but there seemed to be many differences in the way companies do their books under each system. How does that affect the potential benefits for these companies? Will they be in a position to pay less tax than they would if the Bill was not introduced? Will they be able to value their assets in a different way — for example, based on capital depreciation of equipment? What is the potential impact on the State in terms of lost revenue, if any, given that the four companies mentioned are here already?

We must have some regard to the potential reputational issues arising from this legislation. We often talk about the five-part crisis: the budgetary crisis, with which the Government is obsessed; the banking crisis, with which it is also obsessed; the jobs and competitiveness crisis, which it does not care about; and the social and reputational crises. Ireland's reputation has taken a real hit because of the failure of our political system, our Civil Service, our banks and our public institutions. As a result, Ireland has gone from being a good word to a bad word internationally, which is costing us in terms of investment and jobs. It is also costing our exporters by making it harder for them to export overseas, and the Government by raising the cost of borrowing.

We have a duty over the next couple of years to restore the reputation of Ireland. If there is any possibility that this legislation may result in damage to our reputation or cause us to be perceived as the Bermuda of Europe, the Wild West or Liechtenstein on the Liffey, as we have been described by the Financial Times for other reasons, we must take this very seriously. The RIA states that the Revenue Commissioners, the Department of Finance and the IDA do not believe there are any reputational risks in this legislation and I suppose I must take that on trust. However, I have concerns about potential damage to our reputation from the Government’s bending over backwards to facilitate a small number of companies which are moving their headquarters from Bermuda — a tax haven that is now being squeezed by President Obama — to what I hope is not a new tax haven in the west of Europe.

I refer to section 1(1)(a). The explanatory memorandum states: “These are parent companies incorporating in Ireland for the first time whose securities are not traded on a regulated market in the EEA, whose securities are registered with or who are subject to reporting to the US Securities and Exchange Commission (SEC)”, while the Bill itself states:

"relevant parent undertaking" means a parent undertaking—

(a) which does not have securities admitted to trading on a regulated market,

but does not specifically mention the EEA. Is there a reason for this?

I have serious problems with section 2. I will need to confer with my colleagues on this but I do not think we as a party can stand over this section, which would essentially allow the Minister to recognise accounting systems other than US GAAP by order. I do not know what types of accounting system are out there in the world, but I am not sure whether I trust this Government — or any Government — to have the power to decide, by order, suddenly to recognise Zimbabwe GAAP, Iceland GAAP or Serbia GAAP. If it was appropriate for the Minister of State to come to this Parliament with primary legislation to recognise US GAAP, it would be equally appropriate for him to come here again with primary legislation, if he feels it necessary, to recognise accounting systems of fourth and fifth countries and explain to the House — that is, the representatives of the people — why he thinks that should be done.

I also have some concerns about regulation and monitoring. Is it the view of the Minister that the Irish Auditing and Accounting Supervisory Authority and the Office of the Director of Corporate Enforcement are fully competent and resourced to regulate, manage and oversee three different systems of accounting — namely, Irish GAAP, IFRS and US GAAP — or will we be relying on the SEC? Will we be effectively outsourcing oversight to a foreign country?

The Minister commented on the usefulness of the Seanad. As Members know, it is my party's proposal to have a referendum on the future of the Seanad. The Seanad in its current form is not capable of being reformed and should be abolished. That is not to say I do not see the case, in some countries, for having an Upper House, but our Seanad is not an Upper House. What happens in a proper parliament — which, under this Constitution and Government, we unfortunately do not have — is that legislation is brought in to the lower house and discussed and amended, after which the upper house reviews and reconsiders the legislation. It should be made up of people who are not ordinary politicians and who are not directly elected but have a particular expertise or sectoral experience. The practice of introducing Bills into the Seanad and amending them before they are discussed in the Dáil undermines it. If we are to have a Seanad at all it should be an upper house; legislation should be introduced and amended in the Dáil and should then go to the Seanad for a fresh look. If we are to continue to have an upper house that is the kind of role it should have. I would welcome some clarification on the matters I have mentioned.

On behalf of the Labour Party I confirm our acceptance of the need for this legislation, subject to a number of caveats, some of which have been referred to and elucidated by Deputy Varadkar.

This is the second Bill brought before the House with some degree of urgency; we have also had to deal with the Companies (Amendment) Act 2009. Dr. Thomas Courtney will have a busy time in the not too distant future bringing forward a new edition of his book, which I purchased after the last time when I had some other book on which I was relying. Dr. Courtney's book is an excellent tome and probably the definitive guide on company law.

We should seek outside expertise like Dr. Courtney to help in the oversight of the new consolidated Bill which, as Minister of State, Deputy Kelleher, stated, will incorporate the 14 pieces of company legislation. We should not be afraid to engage somebody of that expertise. The Minister of State is correct. It is an arduous task, trying to fit it all into one composite Bill and make it a coherent and understandable corpus of legislation. We should ensure that it is clear, not just for lawyers but for the ordinary persons and the shareholders and directors for whom greater fiduciary duties and obligations are now being set out.

We are getting to the stage where many will not want to become directors of companies because some of the obligations now being imposed upon them are arduous and significant. We all want to ensure good corporate governance, etc., and that people are fully aware of their obligations and duties. One of the best ways of doing so is that people taking on those onerous roles would be fully equipped and educated. It is no longer good enough for a person to just arrive into a company as a director, even one of the smallest ones, because these are now tasks which carry criminal sanctions if they do not comply. It is important that they are properly educated, and courses should be run. More fundamentally, directors should be aware.

I agree with the Minister of State that rushing the forthcoming piece of legislation would be foolhardy. We might as well take our time and get it right. It is important in this context that it be understandable for the ordinary person and that it contains linkage.

There are a number of points I want to make on this and there are a number of caveats which the Labour Party would attach to some degree to the legislation. I wonder why, when it has been introduced in the Seanad, the Minister had to make further amendments. I understood that this would be just a two-section Bill. It started off like that. I accept there are other parts of sections included which are normal company law issues, but it makes it a little more difficult for us to deal with some of the issues that arise. There are now a number of different and unrelated issues in the Companies (Miscellaneous Provisions) Bill 2009 being put forward.

The first element of the legislation deals with companies based in America, in particular, the application of the US generally accepted accounting principles, US GAAP. This will allow companies which relocate their parent or head office companies to Ireland to continue for a specified defined period of time to draw up their group accounts and individual parent company accounts using the relevant accounting standards that govern their operation in the USA, and which is clearly required, I suppose, in the context of the requirements of the listing of US companies. However, I understand from the Minister of State today that these transitional arrangements will terminate at the end of December 2015. The specific derogation for US companies for the period means they will now be in a position to comply with the company law standards and provisions that apply in their home country as opposed to having to comply with Irish or, indeed, international financial reporting standards. It is clear that this amendment will now necessitate some other amendments being made to the Companies (Auditing and Accounting) Act 2003. One anticipates that the thrust of this amendment is to ensure that Ireland remains an attractive place for inward investment originating in the USA and that any obstacle, either real or perceived, is removed in this context and as a result of this legislation.

I agree with the Minister of State that the work of IDA Ireland in this context is extremely important in ensuring continued foreign direct investment, which is an important component of Irish economic growth. We must salute IDA Ireland's ongoing efforts in terms of its powerful role of attracting foreign investment. However, I must use this opportunity somewhat regretfully to convey once again my extreme disappointment at the failure of IDA Ireland to attract a major, influential and core industry in the high-tech, health care or financial management areas to the excellently located and well-appointed IDA industrial park in Marlinstown in Mullingar. The site encompasses 70 acres, 27 acres of which have planning permission and on which there are buildings located, and includes roadways and infrastructure. It is well-located beside the N4, the N52 and Mullingar, with the N6 only a few miles up the road. From a road infrastructural viewpoint, it is excellently serviced. We have excellent educational facilities. Secondary schools include the Christian Brothers, Mullingar Community College, St. Finian's College, Wilson's Hospital which is only out the road, Killucan community college and Castlepollard Community College. There also are the secondary schools in Rocheford Bridge and Kilbeggan. Athlone Institute of Technology, one of the best institutes of technology in the country, with Professor Ó Catháin at its head, is only 25 miles away.

I have conveyed my disappointed directly to Mr. Barry O'Leary and Mr. Kevin McCarthy who are trying to do their best. We now have a good stock of housing, keenly and competitively priced, and a well-educated and ready-to-work workforce. We have everything in place, yet we seem to have been bypassed in the attraction of employment. We have not been successful over the past number of years and it is a source of great disappointment to the entire community in Mullingar, from the education sector to the chamber of commerce, the trade union sector and the local authorities. Westmeath County Council played a pivotal role in ensuring that Marlinstown was up and running. It took all steps, and worked hand in glove with IDA Ireland, to accelerate its development and make it such an attractive place, and yet we have been bypassed.

I reiterate my call to the Minister of State, who is responsible for this area with IDA Ireland, to ensure that IDA Ireland focuses on Mullingar as an area which is entitled to its fair share of inward investment. Particularly given the efforts of the local people and the efforts of the local authorities and the State agencies involved, its time has now come. We are in the whirlwind of an economic recession and we need FDI more than ever. Mullingar has waited and has been bypassed, and it will no longer accept being second class in terms of not getting its fair share of IDA Ireland activity.

I accept that IDA Ireland executives are doing their best, but I call upon them today to redouble their efforts in this regard. If nothing happens in 2010, it will be an ultimate failure and we will not stand for it any longer. I am extremely disappointed with the progress to date. I say that with regret but I must say it because I am elected to represent the people and to make such statements in this regard.

The second issue on the Bill which I did not have much time to consider and to which I may need to return relates to the recognition of the stock exchanges, particularly those outside the State, for a new type of purchase called an "overseas market purchases". It is important that the public is made fully aware of the companies' activities especially where they are purchasing their own shares. That is a matter to which we will be paying particular attention so that information is conveyed in a very public way. The Minister of State referred to the fact that it would be publicised on the company's website. As somebody who may not be as sharp on such matters as others, however, I would like to see the widest level of publication so that people are made fully aware, particularly about the purchase by a company of its own shares. There are restrictions contained with the Company Acts in this regard and they should be pronounced and elevated to a particular status in this context.

On section 2, I agree with Deputy Varadkar, who stole my thunder. The making of regulations is a matter about which I have grave reservations. In this context, the Minister is assuming power to make regulations that may prescribe other specified internationally recognised accounting standards under which specified categories of companies may prepare accounts for a maximum of four financial years or to end by 31 December 2015. Unless something peculiar happened in the interim, surely the Minister of State would now be aware and have those on the tip of his tongue. He should be in a position to convey the relevant information on any such company that might be in that group. I have already made my views known on secondary legislation, including regulations, and I do not like it. Laying matters before the Houses in a simplistic manner is not the way to do business. It is an extension of our powers that is not subject to appropriate debate, scrutiny, evaluation and assessment.

All legislation should be subject to such oversight. Very often legislation emerges, but a particular aspect of it may cause significant difficulty and can become problematic in some area or form. People then wonder how such legislation reached the Statute Book, but much secondary legislation is laid before the Houses of the Oireachtas in the form of regulations. It derives its power from the originating legislation, but is never subject to the same degree of scrutiny as the Bill before us. Notwithstanding that we are in favour of this Bill, we must take great care to ensure that whatever goes on the Statue Book is consistent with the legislative norms that apply, particularly in the context of company law. As the Minister of State said earlier, there is already a significant corpus of legislation concerning the implementation of various sections that have been enacted since 1963, and subsequently amended.

I wished to issue that caveat, which I have raised before concerning the Disease of Animals Acts 1996 and 2000. Many things that were said at that time have not been honoured. As legislators we should be slow to give any Minister the power to introduce measures through regulation. I am not referring personally to the Minister of State, Deputy Billy Kelleher. However, I have the deepest reservations about secondary legislation in the context of this and other Bills.

The Bill before us seeks to limit the potential exposure of the Exchequer to the cost of inspectors appointed upon petition or application by various parties or bodies. A company or its creditors could apply to the High Court pursuant to section 7 of the Companies Act 1990. From memory, there used to be a cap of £250, which petitioners had to pay towards the cost by way of security. That was the maximum by way of security towards the overall eventual costs that were arrived at. The security of costs could be sought for approximately £300 at the commencement of proceedings, which is covered by another section of the Companies Act, and ultimately when costs are being determined. These sums were fixed about 19 years ago and are now outdated.

The Bill rightly restores discretion to the High Court itself, which can then make its observations. It may decide to award all costs to the petitioner or applicant, or may decide not to award any. In that case, a person may have to bear the costs involved, but that is only fair depending on whether the application is successful.

I note that the Office of Corporate Enforcement is protected under section 8. That office is judicious and does not embark on its investigations without a preliminary sorting of them. It is correct in that regard. Some people want everything to be investigated, but the Director of Corporate Enforcement uses his resources well in focusing and targeting the investigations. He has done an excellent job to date in that regard. Some of those investigations can cost millions of euro, so we must take cognisance of that. Those issues must be examined in great detail and nobody should pursue them as a frolic. They are always subject to great scrutiny and I salute the office for corporate enforcement for its work. The director examines such investigations very carefully before embarking upon them.

The Minister of State indicated that he will table another amendment on Committee Stage, but he did not specify its nature. We continually respond to various maters which arise and which may not be anticipated, and we all accept that. I generally support this Bill, subject to the caveats I have put in. The Minister of State should furnish us with the amendment he proposes to table on Committee Stage; otherwise, we will be landed with it without warning. It would be better to have it some days in advance so we can consider it. Perhaps the Minister of State can indicate if he wants this Bill passed before the Christmas recess, although obviously it is also a matter for the select committee. In the context of what my party leader said this morning, that will be a tall order considering we have only five or six working days from next week. Committee chairpersons will take note of the fact that the committee system could become pretty strained in the coming months in trying to deal with various matters.

There could be a glut.

There could be a glut, which is the point I am trying to make. However, we will try to facilitate this Bill. Where Ireland's best interests are involved, the Minister of State can be assured that the Labour Party will support such legislation to ensure that the country does not lose out on any commercial opportunities that might arise.

We do not have any Government speakers, so the next speaker will be Deputy Jim O'Keeffe.

I wish to share time with Deputies English and Durkan.

Is that agreed? Agreed.

There is a fine tradition in this House, which involves Members from all sides supporting whatever Government is in office when battling for foreign direct investment. That tradition has helped to bring many returns to the country and it is one I am glad to follow in the few comments I wish to make on this Bill. The word should go out from this House that we are supportive of foreign direct investment coming into the country, and continuing to come in great volumes if possible. Having said that, the Bill gives rise to some questions that need to be posed. We would not be doing our job as members of the Opposition if we did not allude to them. I only heard of this Bill just over a month ago. At the time, the draft Title given to me was the companies (transitional accounting standards) Bill. I tabled a question about it at the time and I got a rather cryptic response from the Minister saying it was proposed to bring in the Bill to allow the use of the US generally accepted accounting principle in the preparation of accounts for a specified category of companies for a limited period of time. That aroused my interest even further because it was a rather unusual approach. However, the Bill is now before the House. The Minister of State says another significant amendment is to be published, which appears to be substantive. To a degree we are taking the Minister of State at face value, in good faith. Such good faith might not be justified in other areas, but in this instance we have to accept to a degree the bona fides of the Government, despite the questions that exist.

In the event, I can only raise a few questions. I take it that there are specific corporations in mind. It is probably inappropriate to ask for the names, but we must accept the Minister of State's assurance that they are either here at the moment or on their way. I presume these are all solid institutions and as such should be welcomed. We shall have to take the Minister of State's word in that regard. Perhaps he might confirm that. He might also confirm that in making this change there will not be any loss of revenue to the Exchequer. Hopefully, it might be the reverse and result in some improvement in much-needed Exchequer resources.

That will not happen.

The Minister of State could also deal with a point raised by my colleague, Deputy Varadkar, as regards section 2. I have some concern about having an open house in relation to institutions from other parts of the world that might, perhaps, not be as welcome as the institutions, hopefully, coming from the United States.

The last issue I want to raise is, perhaps, of main concern. We want to have foreign institutions locating here and we want to encourage them in every way that is reasonably possible. On the other hand we do not want to assume any of the undesirable characteristics of an offshore location that is regarded as a tax haven. That is where we would be worried. Again, we have to take some assurances in this regard from the Minister of State. What is the attitude of the European Commission to this Bill and what is the attitude of the US Administration towards it, and indeed, other EU member states? Is the Government satisfied that we are embarking on an initiative that we can, in essence, stand over and be proud of? If it is a matter of giving the IDA and other agencies another instrument in the battle for foreign direct investment, that is fine with me. If it goes over the line, however, so that we might get an undesirable reputation abroad by going too far, I should be worried. That is the main issue I want to raise.

I have a couple of questions for the Minister of State. I accept the contents of his speech and believe the motives are right as regards trying to attract foreign business to Ireland. Is this a common initiative across Europe, and have many other countries done it? I accept when we were changing years ago to the IFRS system, sufficient time was given to companies. However, have other countries implemented similar measures for specific companies? I have not seen a list of these companies, either, but have they received guarantees that this would happen? They assume this will be passed in the Oireachtas, or is it unfair to suggest this?

Part 2 of the Bill gives the Minister for Enterprise, Trade and Employment power to prescribe other internationally recognised accounting standards. My understanding is that there are only two international standards, the US GAAP and the EU IFRS. Is there something else I do not know or are there local standards to be considered, as well? I know about the two international standards and everything else, in the event, would be "local GAAP", depending on the particular country. Are we giving the Minister power to accept the "local GAAP" of Slovenia or some other country, or are we missing something here? That needs to be clarified today, even while in general we are in agreement on this. I am not aware of any other international standards but if there are the Minister of State should outline them.

It is important that the Minister of State deals with this when replying to the debates. I know of only about five areas in which there is a difference between the two accounting systems, the US GAAP and the EU IFRS. Asset valuation is one of them. That generally only affects paper profits, but the House needs clarification in terms of whether this has tax implications in Ireland. I do not believe it has and that it is largely to do with presentation, but in any event, the Minister of State should clarify the position in this regard.

Without knowing the companies the Minister of State has in mind, I would say that research and development costs are of major importance in this legislation. Under US GAAP this is entitled to be written off immediately as an expense, whereas under the IFRS it can be capitalised and written off over a number of years. That will affect profits and therefore has to affect tax. Again, are we just talking about paper profits or will it affect the bottom line and the taxes payable to this country?

I accept we want to create jobs and bring in more foreign companies, but we must also have fair play. All companies operating in Ireland must work to the same system. Generally, on the question of taxes, one cannot have a situation where one company will have more advantage than another. If the legislation is to disadvantage existing Irish companies, that would be somewhat unfair. This will affect the presentation of accounts. Therefore when the stakeholders, whether investors, pension funds, etc., come to look at these companies relative to others operating in Ireland, there might be unfair comparisons.

An unfair advantage might accrue to those companies given permission to use US accounting principles, since they will be able to present their accounts differently. In the event, these accounts will look different to the non-educated person who wants to make a quick decision as regards investing, or who may have other reasons for looking at a company. There are implications in all of this and it is not just a simple matter of allowing this set of procedures for four years. The implications can have knock-on effects for everyone availing of such accounting information. That aspect should be discussed here as well, and clarified.

Who determined the four year interval, or why is that being used? My understanding is that already there is a roadmap to converge international accounting standards under the Norfolk agreement, which provided for changes to commence in 2009, with bigger changes scheduled for 2010-11. Is that initiative based on a four-year plan, and in the event, is that the reason why a four-year period was decided on? Will the Minister of State clarify this because there must be some reason for it?

Although we all want to see more jobs being created that does not mean we are going to accept a Bill, willy-nilly. There is lack of information in the presentation of this Bill. The answers to many questions could have been contained in the Minister of State's speech. Such answers should be forthcoming at some stage before the Bill passes through the House, because they touch on important matters. Any acceptance of somebody else's standards is very important. As my colleague Deputy O'Keeffe has mentioned, it could impact on Ireland's reputation. Ireland does not want to be seen as an easy mark in terms of changing standards. Will this mean that if a company arrives here next year from South Africa or wherever, we will have to accept their accounting norms? Are we setting ourselves up for other problems down the line?

Like my colleagues, I believe we need to welcome anything that improves the investment situation in the economy at present. That is positive and good. However, the introduction of legislation that is described as "urgent" worries me most of all. If the legislation is so urgent, why was it not flagged six months ago? There should never be an emergency in terms of legislation. Anybody in Government, a company or any organisation that cannot anticipate legislative requirements coming down the tracks well in advance should not be in the job. That is not a reflection on the Minister of State, Deputy Kelleher. Somebody down the tracks, somewhere else, should have been telling the Minister of State of this requirement long before now.

If the legislation is so important, why have we not had a longer lead-in? People have been raising the question of company law reform in this House for the last 12 months on a regular basis. Apart from being told that the Companies Act was about to be reformed and the consolidation legislation was in train, nothing was said. I am concerned for similar reasons to those expressed by my colleagues. However, I want to bring one aspect in particular to the attention of the Minister of State. This House can approve all the amendments he likes, but unless the economy becomes competitive we are wasting our time. One phrase in the Minister of State's speech worries me concerning the fact that the nature of the investments we attract has changed significantly over the years. While in the past Ireland concentrated primarily on manufacturing, he said, we had become a centre for what he termed "educated young Europeans".

What a lovely phrase. However, if people in Ireland think they can afford to ignore or avoid the competitiveness and cost effectiveness of the manufacturing and service sectors, they will be wasting their time. One can play around with this point as much as one likes. We can pretend that we are more clever than anyone else in the world or that our brains are better, sharper and greater than those of anyone else. We can pretend the whole world will want to invest among us simply for the pleasure and privilege of being in our midst. As the Minister of State is aware, we can forget it. For a considerable period, Ireland has slipped down the competitiveness scale to such an extent that eventually, as a nation, we will be obliged to prostitute ourselves to encourage foreign direct investment. This is a crazy situation and I cannot understand the reason this has not been recognised.

I refer to the points that already have been raised by my colleagues. I welcome the positive work being done by the IDA, Enterprise Ireland and everyone else to create the proper environment for investment and job creation. However, all of that will come to naught unless we can compete effectively with all other jurisdictions around us. It is patently obvious and as plain as the nose on one's face that at present, we are not competitive. Moreover, it does not appear as though we will become so. Why should shoppers leave this jurisdiction en masse to shop in other jurisdictions at weekends? This should tell us something and surely something should be done about it because all the other points are insignificant when considered in this context.

I wish to discuss another matter in respect of company law. The Acting Chairman, being a good and shrewd observer of the markets, is aware that when interest rates are low, greater investment in commodities tends to take place and this is one of those times. When this happens, the range of commodities is varied and far-reaching and can have a greatly negative impact on an open economy such as Ireland's. For some unknown reason, the mantra in Ireland always has been that a company director's first interest and responsibility is to the investor. In a low-interest environment, once that principle has been established and accepted, one can forget about everything else because the company will become a bank. It no longer will be a company providing a service in the manufacturing, services or utility sectors or whatever. Once the principle is established that a director's first responsibility is to the investor, one then is in the business of creating a bank by another name. All Members are aware where such thinking has led this country recently and should not need to ask for advice from anyone in this regard.

As the Acting Chairman is aware, the moral of the story is that it is extremely dangerous to get into such a position because what happens is that the investor will get a dividend. That will come first, the company will come last and eventually it will cease to exist. Regardless of the company's original business, be it in service provision, manufacturing or whatever, it will go nowhere. Interestingly, in the United States, in so far as I can ascertain, the first responsibility is not to the investor but to the company. If the company becomes trashed, someone is held responsible. However, were that to take place in Ireland, nothing would happen. Everyone thinks it was a great deal even though the service, the company and everything else has gone.

Consequently, there is an urgent need to reconsider this issue. As the Taoiseach mentioned here a few weeks ago, Members, of whom I was one, spent 18 months studying the Companies Act 1990 on Committee Stage for their sins. Every single issue that has arisen recently with regard to insolvency and everything else was anticipated. However, nothing has happened. Nothing ever happens and no action is taken. The Government and the Oireachtas allow the show to go on as though there were no regulations, no authority and no need to comply with regulations. That is what has happened and is what has left Ireland in its present economic position.

While I will not go over the points raised by my colleagues, I emphasise the urgency of the need to make this economy competitive. Unless our manufacturing sector is competitive, it will not make any difference what happens thereafter because other competing economies outside this jurisdiction also are competing for the smart economy and they are just as smart as are we. The fact that Ireland has introduced emergency legislation into this House to cater for a particular situation will make no difference. Other jurisdictions can do so as well and will do it equally quickly. However, they will anticipate it a long time in advance. Moreover, the same thing must be done in respect of the services sector.

I note the Acting Chairman is looking askance at me. I must be approaching the end of my allotted time and I will take a cue from that.

I wish to call Deputy Morgan, who I wish to be in possession before the sitting is suspended. Consequently, the Deputy might conclude.

I always am willing to do anything to oblige. Before concluding however, I emphasise the great importance for our economy to recognise the need to become competitive. We are not competitive and unless something is done soon, it will get worse. I have tabled numerous questions to the Ministers of Enterprise, Trade and Employment and Finance asking them to itemise and identify the issues that impede such competitiveness. However, I have not yet been told. The replies always are coy and cute but do not deal with the subject matter. The Government should apply itself to this issue as a matter of extreme urgency. I hope this proposal will be successful and will not adjust one situation at the cost of creating a worse situation. I also hope there will be urgent recognition that we are not necessarily the smartest people on the globe. Everyone else is just as smart and we must compete with them.

I am unsure whether it is a great privilege to be in possession because I was once charged with being in possession. However, I assume that possession——

Were the Deputy to conclude within two minutes, he would not be in possession.

Was it drugs or guns?

It was for guns and explosives, the whole works.

We can help the Deputy out.

To return to the legislation under consideration, Members are aware this is a transitional measure because section 2 ties it down to December 2015. Consequently, I accept that to this degree, it is guaranteed to be transitional. Moreover, it undoubtedly will help to consolidate and retain jobs and hopefully will create new jobs. While all that is highly welcome, it is exceptionally important to ensure that proper accounting standards are maintained. I share the concerns expressed by Deputy English in particular and without going over that territory again, I look forward to the Minister of State's summing up in this regard. Some measures in the Bill, such as the publishing of share purchases, are tied down in the legislation, which is to be welcomed. Members have witnessed how other institutions in the State conducted their business in respect of shares and the example of Anglo Irish Bank comes to mind immediately. However, this measure is open and transparent in this regard, which I welcome greatly.

A number of speakers referred to their reservations regarding the Minister's powers. I do not refer to the Minister of State in particular but it seems to be open season for all Ministers to retain substantial power to make whatever regulations they wish, almost as they go along. While the Minister's contribution referred to flexible and agile company law, what is needed is a flexible and agile parliament. What is needed is an Oireachtas that can respond quickly to a Minister who wishes to introduce regulations before the Houses to have them discussed quickly in a flexible, agile and efficient manner. Were the business of the House to be carried out in that fashion, it would be much more accountable to the people of the State. Somewhere along the line, the Government should make up its mind to ease back on its current practice of simply giving a Minister the power to introduce almost any regulation he or she wishes. I look forward to change in this regard.

Debate adjourned.
Sitting suspended at 1.30 p.m. and resumed at 2.30 p.m.
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