Companies (Miscellaneous Provisions) Bill 2013: Committee Stage

The Companies (Miscellaneous Provisions) Bill 2013 was referred to the select committee by order of the Dáil on 28 November 2013. I welcome the Minister of State at the Department of Jobs, Enterprise and Innovation with responsibility for research and innovation, Deputy Sean Sherlock, and his officials to the meeting. I refer members to the grouping list of amendments for the purpose of debate. As indicated in the list, amendments Nos. 2 and 3, in the name of Deputy Dara Calleary, have been ruled out of order. We will now proceed to our consideration of the Bill.

Sections 1 and 2 agreed to.

I move amendment No. 1:

In page 5, between lines 11 and 12, to insert the following:

“3. The Minister shall, within 3 months of the enactment of this Act, by way of regulation, introduce an easier less cumbersome Circuit Court examiner application process, including the required accountant’s report, in respect of small companies as defined in section 2 of this Act.”.

I propose to speak briefly to the amendments that were ruled out of order when we discuss the section.

That is fine.

The Fianna Fáil Party has been supportive of the Bill, which has significant potential. To ensure the process, as proposed, does not come unstuck in red tape and become the preserve of wealthier small companies, I have tabled this amendment to simplify the process of entering examinership and to remove burdens in so far as that is possible. Acceptance of the amendment will place a responsibility on the Department to introduce regulations to this effect once the legislation has been enacted.

I will explain the reasons I do not propose to accept the amendment. I understand Deputy Calleary, in his contribution on Second Stage, indicated that the Minister should consider a simplified version of the independent accountant's report and the application papers for the appointment of an examiner to streamline the application process. The current court process mirrors the requirements of the Companies (Amendment) Act 1990 in respect of the appointment of an examiner. Section 3 of that Act requires that a petition for the appointment of an examiner be accompanied by a report prepared by an independent accountant. Section 3(3)(b) sets out the areas the report is required to cover.

The Bill does not propose to change these arrangements because the report of the independent accountant is essential to assist the court in determining whether the company has a reasonable prospect of survival. If the court is not satisfied that the company as a whole or any part of the undertaking has a reasonable prospect of survival as a going concern, it is precluded from making an order appointing an examiner. Thus, the independent accountant's report is a crucial piece of evidence for the court to consider. It should explain, in a reasoned manner, why the independent accountant is of the view that the company, and the whole or part of its undertaking, has a reasonable prospect of survival.

The report must have regard to a number of important matters, as detailed in section 3(3)(b) of the Companies (Amendment) Act 1990. The appointment of an examiner to a company will interfere with the rights of creditors and it is, therefore, of the utmost importance that the independent accountant's report provides evidence that will satisfy the court that the company has a reasonable prospect of survival as a going concern and whether a compromise or scheme of arrangement with creditors would offer such a prospect of survival. Modifying the terms which underpin the report would create a significant risk that the rights of creditors and their businesses, which may also have employees, would be impacted further as the evidential threshold would be lower. The Office of Parliamentary Counsel has also advised that allowing the Minister to alter the arrangements in question by way of a statutory instrument would not legally be permissible as it would exceed the extent to which matters can be delegated to a Minister, having regard to the Constitution.

Amendment, by leave, withdrawn.
Sections 3 to 6, inclusive, agreed to.

Amendments Nos. 2 and 3 are out of order.

Amendments Nos. 2 and 3 not moved.
Question proposed: "That section 7 stand part of the Bill."

I accept that amendments Nos. 2 and 3 have been ruled out of order, but there is no sense in us introducing this new system with all its attractions if it will end up being a cash cow for professional services. The reason for introducing this system is to make it more flexible and cost effective. If companies do not know what the cost of going into this process will be and do not have the capacity to find where that information is available to them in advance, we will not get the benefit of the Bill. I accept the amendments are ruled out of order but this Bill needs to come with a rider that it is not a gold ticket for professional organisations to mistreat small companies.

In respect of Deputy Calleary's amendments which have been ruled out of order, it is a matter of common sense and prudence for individuals or companies with an intention to procure goods or services to establish first the cost or the estimated cost of these. It would be particularly pertinent in the circumstances in question here.

The reforms being carried out are being brought through the Legal Services Regulation Bill which the Minister for Justice and Equality, Deputy Shatter, is sponsoring and which is currently before the House. These will provide for further disclosure of actual and potential costs to clients of any proceedings for which the legal practitioner is being engaged. That Bill is introducing a series of enhanced transparency measures on legal costs and is the appropriate vehicle for debate on the legal costs aspect of this.

In broader terms, it would not seem appropriate that the responsible regulator for the professions involved would advertise the fees of individual practitioners. This would be open to all types of misinterpretation, including, perhaps, a quasi-endorsement of the fees concerned. Alternatively, it could lead to the fees so publicised becoming set minima which, in effect, could impede competition among the relevant service providers who would have an officially published price list to hide behind. There is an inherent danger there. If the real purpose is to police levels of fees charged by the professions in question, I would contend that it is not appropriate to include such a provision in a specific and target measure as that under consideration here.

Deputy O'Brien and I were previously justice spokespersons when the Legal Services Regulation Bill came into the House two years ago, and we still have not seen it. I wish the Minister of State good luck with that one.

I take the point. I suppose for the first time in a long time we propose to implement legislation in respect of the matter. That is progress, if one takes the grand historical narrative of the foundation of the State and the particular profession involved.

Question put and agreed to.
Question proposed: "That section 8 stand part of the Bill."

I propose to bring forward an amendment to section 8 at Report Stage. In response to an amendment proposed by Senator Barrett on Report Stage in the Seanad, I agreed to make an amendment to provide for what he was proposing. This relates to a provision that the regulations which the Minister is proposed to be empowered to make under section 8(2) will be laid before the Houses of the Oireachtas.

In dealing with this proposed amendment on Report Stage in the Seanad, I proposed that, in incorporating the present measure into the Companies Bill 2012, the requisite amendment would be included as an amendment in that Bill. It has since transpired that the Office of Parliamentary Counsel can facilitate the drafting of this amendment in time for the Report Stage in this House and I am pleased to be able to confirm that I will be bringing forward this amendment at Report Stage of this Bill in this House.

Question put and agreed to.
Sections 9 to 11, inclusive, agreed to.
Title agreed to.

I thank the Minister of State and his officials. The meeting was brief, but it was important we got consideration of the Bill completed today so that it can go back into the Dáil.

Bill reported without amendment.