I move amendment No. 47:
In page 26, between lines 37 and 38, to insert the following:
"(a) by the insertion of the following after subsection (1):
'(1A) Without prejudice to subsection (1), a person who-
(a) fails to comply with section 3A(1) of the Companies (Amendment) Act, 1982, or section 195(8) of the Principal Act, or
(b) in purported compliance with the said section 3A(1) or 195(8), permits the first-mentioned statement in the said section 3A(1) or, as the case may be, the first-mentioned notification in the said section 195(8) to be accompanied by a statement signed by him which is false or misleading in a material respect,
shall, upon the delivery to the registrar of companies of the said first-mentioned statement or notification or, as the case may be, the said statement or notification accompanied by a statement as aforesaid, be deemed, for the purposes of this Act, to be subject to a disqualification order for the period referred to in subsection (1B).
(1B) The period mentioned in subsection (1A) is-
(a) so much as remains unexpired, at the date of the delivery mentioned in that subsection, of the period for which the person concerned is disqualified under the law of the other state referred to in section 3A(1) of theCompanies (Amendment) Act, 1982, or section 195(8) of the Principal Act from being appointed or acting in the manner described therein, or
(b) if the person concerned is so disqualified under the law of more than one other such state and the portions of the respective periods for which he is so disqualified that remain unexpired at the date of that delivery are not equal, whichever of those unexpired portions is the greatest.',".
Amendments Nos. 47 to 50, inclusive, 100 and 103 are among a number recommended by the company law review group. They relate primarily to the original section 39 amended by section 160 of the Companies Act, 1990. Section 160 of that Act is concerned with the disqualification of a person from being an auditor, director, officer, receiver, liquidator or examiner of a company or being in any way involved in the promotion, formation or management of a company. The company law review group is of the view that a person who is disqualified from being a director of a company in another jurisdiction should be capable of being disqualified in Ireland on the grounds of that foreign disqualification and provided the court is satisfied that the person should be disqualified. The amendments have been introduced to give effect to that proposal.
They provide a system whereby a person who is disqualified in another jurisdiction will be required to make a statement to that effect if he or she is appointed as, or proposes to become, a director of a company in this jurisdiction. The statement will be lodged with the Registrar of Companies. If a person who is required to make a statement fails to do so, he or she will be deemed to be disqualified here for the unexpired portion of their foreign disqualification. This is to discourage persons from concealing the fact that they are disqualified abroad. The director of corporate enforcement will have the power to apply to the court for a disqualification order in respect of a person on the basis that he or she is disqualified abroad. It is important to note that this system will not constitute an automatic recognition of foreign disqualifications as the court in this jurisdiction must be satisfied not only that a person is disqualified abroad, but also that it is just to make a disqualification order against that person. This will allow the person an opportunity to present an argument to the court as to why he or she should not be disqualified here.
Deputy Rabbitte's amendment to amendment No. 48 would alter the requirement that the court consider it just that a person who is disqualified abroad be disqualified here and provide instead that the court be satisfied that the conduct of the person that occasioned the foreign disqualification would, had it occurred here, have been such to warrant disqualification. It is the intention of amendment No. 48 that a person who is disqualified abroad should only be disqualified here if his or her conduct was such to warrant disqualification. Deputy Rabbitte's amendment may help to clarify the power of the court to make a disqualification order and I will consult with the parliamentary counsel with a view to taking it on board on Report Stage if the Deputy withdraws it at this stage.
In addition to provisions for the disqualification of persons who are disqualified abroad, the amendments also introduce a provision where a person may be disqualified on the grounds that he or she was a director of a company that was struck off the register for failure to file an annual return. This is intended to discourage directors from allowing a company to be struck off the register in an attempt to frustrate creditors seeking to enforce the payment of debts which often happens. The provision whereby directors may be disqualified and, therefore, effectively prevented from continuing in business if their company is struck off for failure to file an annual return should act as a powerful disincentive to the abuse of the strike off regime.
Provision is being made whereby a director may avoid being disqualified if he or she can show to the court that the company had no liabilities at the time that it was struck off the register or that any such liabilities have since been fully discharged. Deputy Rabbitte proposes in his amendment to amendment No. 49 that a director should escape disqualification if his or her company had no net liabilities at the time it was struck off the register. This would undermine the effect of the new provision as it would mean that the director of a company whose assets exceeded its liabilities at the time that it was struck off the register would not be subject to possible disqualification. It is in precisely these circumstances, that is, where a company has the capacity to meet its debts, that the strike off regime may be deliberately abused or may serve inadvertently to frustrate the claims of creditors. The fact that a company had no net liabilities at the time it was struck off does not in any way guarantee that its liabilities have since been discharged. As it is intended to ensure that the court is satisfied that any liabilities of a relevant company have been discharged in order not to proceed with the disqualification of the directors, I am not agreeable to limiting this to net liabilities only. I have considered and discussed this matter at length.
The effect of the various amendments is as follows. Amendment No. 47 provides for the insertion in section 160 of the Companies Act, 1990, of two new subsections. The purpose of the new subsections 1A and 1B is to provide that where a person who is required to make a statement as to his or her disqualification in another jurisdiction fails to do so or makes a false statement, the person shall be deemed to be disqualified in this jurisdiction.
Amendment No. 48 provides for the insertion in section 160(2) of two additional reasons for which disqualification may be imposed by the court. These are that the person in respect of whom the disqualification order was sought either was a director of a company that was struck off the register for failure to file an annual return or is disqualified in another jurisdiction. As I indicated, I intend to introduce a further amendment along the lines of the amendment tabled by Deputy Rabbitte on Report Stage.
Amendment No. 49 provides that the court shall not disqualify 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 if the person can satisfy the court that the company had no debts or that any debts were subsequently fully discharged. In relation to a person who is disqualified abroad, the amendment makes it clear that the court can impose a disqualification order notwithstanding that the person concerned is already deemed disqualified for failing to make the required statement as to that foreign disqualification.
Amendment No. 50 extends the list of paragraphs to which the new subsection 6A of section 160 will apply. This will permit the director of corporate enforcement to make an application for the disqualification of persons on any of the grounds for disqualification set out in section 160, including the proposed new paragraphs (h) and (i) inserted by amendment No. 48.
Amendments Nos. 100 and 103 respectively require a person who is disqualified abroad and who becomes a director of a company here, or who proposes to become a director of a company seeking incorporation here, to file a statement as to his or her foreign disqualification with the Registrar of Companies. This will alert the director of corporate enforcement to the fact that the person concerned has become a director of a company here and allow the director to consider whether to seek a disqualification order against the person so named.