I welcome the Minister of State, Deputy Calleary.
Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024: Second and Subsequent Stages
Question proposed: "That the Bill be now read a Second Time."
I am pleased to bring before the House the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024, which will amend the Companies Act 2014. The Bill has completed its passage through the Dáil and I acknowledge the co-operative support of all Deputies across the House on Committee Stage. I note the constructive engagement, particularly on the provisions giving companies and industrial and provident societies the option to hold virtual meetings while at the same time ensuring the rights of members are not negatively impacted. The pro-enterprise provisions of the Bill were also well supported, in particular the amendments made to the audit exemption regime for small companies.
The Companies Act 2014, from now on to be referred to as the 2014 Act, is a world-class company law code. It establishes the legislative framework for companies and businesses operating in Ireland. It facilitates entrepreneurial activity, primarily through the provision of separate legal personality and limited liability. A thriving and well-regulated enterprise base is the cornerstone for a competitive economy. Once enacted, this Bill will form part of a strong regulatory regime that ensures businesses in Ireland operate on a level playing field. The statutory authorities established under the 2014 Act, that is, the Companies Registration Office, CRO, the Corporate Enforcement Authority, CEA, and the Irish Auditing and Accounting Supervisory Authority, IAASA, underpin and bolster the framework within which businesses operate.
Company law is dynamic, and the Bill was developed on foot of regular reviews carried out by our Department to ensure the objectives of Ireland's company law remain valid and the law is fit for purpose, reflects national and international developments and can be delivered effectively. The policy objective of the Bill is to enhance the 2014 Act primarily in the areas of corporate governance, company law enforcement and supervision, company law administration and corporate insolvency. It strikes a balance between reducing the regulatory burden on the one hand, while balancing the interests of members, creditors and the public on the other.
The Bill has been developed in consultation with enterprise, the relevant statutory bodies and the Company Law Review Group. The Bill has two key provisions. The first provides companies and industrial and provident societies with the option to hold general meetings either partially or wholly by the use of electronic communications technology. The second amends the current audit exemption regime for small companies by introducing a more proportionate and graduated regime for the benefit of these companies while still upholding transparency. The Bill also contains provisions that will assist the CEA, IAASA and CRO to effectively undertake their statutory functions in respect of the oversight, supervision, regulation and enforcement of company law.
I will now outline the structure of the Bill and summarise its main provisions. The Bill is largely technical, made up of three Parts and 90 sections. Part 1 comprises the standard provisions setting out the Short Title, arrangements for commencement, definitions and repeals. Part 2 is made up of 82 sections amending the 2014 Act. Rather than providing a section-by-section breakdown of Part 2, I will deal with its provisions under the themes of corporate governance, company law enforcement and supervision, company law administration and corporate insolvency.
Regarding corporate governance, pragmatic solutions and streamlined processes were adopted on an interim basis in response to the Covid-19 pandemic, and this Bill introduces some of these permanently to facilitate continued good corporate governance in this digital age. Section 7 provides flexibility for companies in the execution of documents containing the company seal by allowing the seal and necessary signatures to be on separate documents, which can then be counted as one.
Sections 11 to 14, inclusive, and 86 provide for virtual and hybrid meetings of companies. Companies will now have the option to hold virtual or hybrid meetings, but only where this is not expressly prohibited by the company’s constitution. The rights of members will remain unaltered, with the rights of members who attend physical meetings being carried through in this Bill to apply to those attending virtually. Further safeguards for shareholders have been built into the relevant sections. Sections 29, 30 and 87 give effect to the recommendations of the CLRG to address matters arising from practical problems relating to mergers.
Regarding company law enforcement and supervision, 11 sections in Part 2 relate to the functions of the CEA. The CEA powers are augmented in this Bill by the creation of efficiencies in the CEA’s information gathering capabilities, the extension of the statutory gateway that allows the CEA to share and receive information from other investigative and regulatory agencies, and through the streamlining of certain procedures which will expedite processes and reduce costs. Of particular note is section 66, which introduces a new criminal offence relating to obstruction, interference with or impeding an officer of the CEA.
Section 67 is also important as it amends section 795 by streamlining the court process in regard to claims of legal professional privilege, with the aim of expediting and reducing the costs in complex cases where thousands of documents are at issue. Sections 73 to 78, inclusive, relate to the functions of IAASA and serve to refine its processes, allowing for a greater focus on risk-based enforcement. Section 77 confers a new power on IAASA, allowing it to take immediate action to impose temporary restrictions or conditions on a statutory auditor in certain circumstances. This emergency provision will allow IAASA to act quickly in the public interest to mitigate any further harm.
Sections 21, 22 and 58 to 64, inclusive, relate to the enforcement and supervision functions of the CRO. Section 21 disapplies the Probation of Offenders Act 1907 for an offence where a company fails to file an annual return. Section 22 reforms the audit exemption regime, providing for a two-step graduated approach for those small companies that are late in filing returns, the details of which I highlighted earlier. Sections 58 to 64, inclusive, provide for three additional grounds for involuntary strike-off by the Registrar of Companies and consequential amendments.
Regarding company law administration, Sections 15 to 20, inclusive, 51 to 53, inclusive, 55 and 56 relate to documents submitted to the registrar and provide that these documents shall be in the prescribed form. This will ensure the integrity, accuracy and consistency of information that is included on the Register of Companies. Sections 6 and 8 provide a statutory basis for the registrar's approval of registered office agents and electronic filing agents, which are currently dealt with on an administrative basis.
Section 9 provides that the registrar may require evidence to verify a company’s registered office address and may refuse to register documents if not satisfied. Section 71 provides that a company may voluntarily submit information relating to the composition of the board of directors by reference to gender. Sections 84 and 85 modernise certain administrative requirements for companies as recommended by the CLRG in its report on financial securities.
Regarding corporate insolvency, sections 24 to 28, inclusive, amend the 2014 Act by further strengthening the regulation of receivers, including providing greater transparency in regard to their fees. This is in line with the recommendations of the CLRG in its May 2019 report on the regulation of receivers and with commitments made in the programme for Government.
Sections 31 to 50, inclusive, contain amendments to the small company administrative rescue process, SCARP, including increasing transparency on process adviser's fees and expenses, providing greater clarity for stakeholders, and ensuring the social and cultural importance of a company is considered by the process adviser when deciding whether it has a reasonable prospect of survival and may be eligible to apply for SCARP.
Part 3 contains sections 89 and 90. Section 89 amends the Industrial and Provident Societies Act 1893, providing industrial and provident societies with the option to hold virtual meetings on a permanent basis. Section 90 amends the Registration of Business Names Act 1963, allowing the charging of a fee to high-volume users for business name related documents and data provided by the registrar.
I am confident this Bill reflects international best practice to facilitate entrepreneurship while also protecting employees, members, creditors and consumers with appropriate safeguards. It will provide business certainty.
It will enable entrepreneurs to take appropriate risks, support the growth of enterprise and assist in job creation.
This will probably be the last Bill I bring to this House in the current Oireachtas. I thank all Members for their engagement over the past two and a bit years on various pieces of legislation we have brought through, and I wish them every success for the future. Go raibh míle maith agaibh.
I welcome the Minister of State to the House. I also welcome the Bill. As the Minister of State has outlined, the Bill provides the option for companies to hold general meetings partially or fully by the use of electronic communication technology. This is something we have had the technical capacity to do for some time but Covid-19 required the holding of more meetings online and we have all seen the benefits of that. There are time benefits for participants, who can simply log on for an hour or two instead of spending a day or more travelling to and from a meeting. There are also environmental benefits when people do not have to travel for meetings. This is one of the positives to come from Covid. It is welcome we are recognising that by ensuring companies continue to have the option to hold virtual meetings when the interim legislation providing that option expires next month.
I welcome the introduction of a graduated regime in respect of late filing with the Companies Registration Office. As the Minister of State outlined, the current system involves an automatic loss of audit exemption after the first late filing, which is overly harsh, particularly these days when SMEs have considerable paperwork and regulation to work through. There are usually genuine reasons for late filing from SMEs and many face considerable daily pressures. The graduated regime to be enacted by the Bill is a more appropriate framework and will result in significant financial and time-management savings for SMEs.
I highlight the strengthening of the Corporate Enforcement Authority, the Companies Registration Office and the Irish Auditing and Accounting Supervisory Authority. The Bill will ensure they have the appropriate legislative tools to investigate and prosecute breaches of company law. These three bodies play an essential role in ensuring Ireland has an appropriate framework for business, maintaining our reputation as an attractive place for companies to operate. The technical measures in the Bill will mean these bodies are more capable of fulfilling their roles to ensure Ireland continues to be recognised as a positive place to do business, with a company law structure that is clear and appropriate.
I believe the legislation will have a positive impact on SMEs, in addition to maintaining the stability of our company law framework. I thank the Minister of State and Department for their work on bringing the Bill forward.
I welcome the Minister of State to the Chamber and thank him for introducing the Bill. The fact there are no amendments suggests it will be widely accepted. We did a lot of pre-legislative scrutiny on this in the Committee on Enterprise, Trade and Employment and most things have been thrashed out. It is a technical but important Bill. I acknowledge the work the Minister of State and his officials in the Department have done on it. We have got it through just in time, which is good. I thank the Minister of State for the work he has done in his role. As he said, this is probably his last time in the Chamber for this term. He has always been approachable and respectful to this House. We support the Bill and expect it to go through quite quickly.
Gabhaim buíochas leis na Seanadóiri Crowe agus Ahearn as páirt a ghlacadh sa díospóireacht thábhachtach seo. I thank the Senators for their remarks about the Bill and the work of the bodies. I assure the House the legislation not only provides safeguards for Members but provides the Minister of the day with the ability to draft regulation should changes be required in how meetings are held on a virtual or hybrid basis.
The Bill is another step in the right direction as the Government continues to strive for better practice corporate governance among companies operating in the State and to drive compliance with company law and, where necessary, enforcement. I know this work is being done. I acknowledge and thank the Corporate Enforcement Authority, the Irish Auditing and Accounting Supervisory Authority and the Companies Registration Office for their work, which demonstrates how effective regulation and proportionate enforcement can operate in an enterprise environment. The Bill copperfastens our commitment to ensuring Ireland has a solid regulatory framework in place that allows enterprise to flourish, bolstered by the bodies under the Companies Act.
I thank all the officials in my Department who put much work into this. I acknowledge the work of the Company Law Review Group, whose members are practitioners in this space, give of their time and expertise for the benefit of the State and review legislation such as this. They do fantastic work. I thank Senators for their contributions and look forward to the next Stage.
Question put and agreed to.
When is it proposed to take Committee Stage?
Now.
Is that agreed? Agreed.
Sections 1 to 90, inclusive, agreed to.
Schedules 1 and 2 agreed to.
Title agreed to.
Bill reported without amendment.
When is it proposed to take the next Stage?
Now.
Is that agreed? Agreed.
Bill received for final consideration.
When is it proposed to take the next Stage?
Now.
Is that agreed? Agreed.
Question, "That the Bill do now pass", put and agreed to.
Cuireadh an Seanad ar fionraí ar 1.14 p.m. agus cuireadh tús leis arís ar 2.30 p.m.
Sitting suspended at 1.14 p.m. and resumed at 2.30 p.m.