Skip to main content
Normal View

Company Law

Dáil Éireann Debate, Tuesday - 14 July 2020

Tuesday, 14 July 2020

Questions (102)

Alan Farrell

Question:

102. Deputy Alan Farrell asked the Tánaiste and Minister for Business, Enterprise and Innovation the measures that will be put in place to reform company law in view of Covid-19; and if he will make a statement on the matter. [16130/20]

View answer

Written answers

I brought proposals to Cabinet yesterday, which were approved by Government, for the priority drafting of proposed amendments to the Companies Act 2014 to take account of the continuing impact of Covid-19 on our economy.

The proposed amendments to the Companies Act follow extensive engagement by my Department with the Company Law Review Group (CLRG) and are designed to help companies mitigate the impact Covid-19 continues to have on the normal operation of business while maintaining the appropriate safeguards for the protection of employees and creditors.

On 25 June, the CLRG recommended a number of amendments to address areas of concern in respect of operational matters in relation to compliance under the Act such as the requirement to hold an Annual General Meeting (AGM), and protective measures designed to pre-empt certain impacts the crisis may have on a company’s solvency with a view to protecting viable businesses, retaining employment and supporting economic recovery post-crisis. The CLRG recommended that amendments be temporary in nature and operational until 31 December 2020, with the potential for extension.

The proposed amendments to the Companies Act that I am bringing forward on this basis are to:

- Provide for virtual general and creditors’ meetings. This is to allow companies to comply with their obligations under the Companies Act while also ensuring they act in accordance with the latest Government health advice.

- Allow companies to postpone an AGM until 31 December 2020.

- Allow documents which are required to be executed under seal to be signed in separate counterparts. This is to address the situation where a company seal and its directors and secretary are in separate locations due to remote working. It is a small amendment but one with a practical impact that will reduce the administrative burden on companies;

- Increase the amount at which a creditor can issue a statutory demand from €10,000 for a single creditor and €20,000 in the aggregate to €50,000. This amendment is intended to support viable businesses and ensure they are not wound up by the Court for relatively low levels of debt.

- Extend the examinership process to a total of 150 days. The amendment seeks to provide businesses in examinership with additional breathing space as they attempt to restructure and trade through the pandemic. This extension is subject to court approval and in making its determination the court will consider the impact of Covid-19 and the impact any extension will have to the survival of the company and preservation of employment.

- Codify a directors’ duty to creditors as a company approaches insolvency. This amendment is based on a recommendation of the Company Law Review Group in its 2017 Report on the Protection of Employees and Unsecured Creditors. It would put the duty owed to creditors on a statutory footing, in line with other fiduciary duties.

These amendments are considered necessary in the immediate term to address the instant impacts of the crisis.

The General Scheme of a Bill to provide for these proposed amendments to the Companies Act 2014 is being published on my Department’s website today.

As the country moves forward from the immediate impacts of the Covid-19 crisis, it will also be essential that we consider stabilisation measures required in the medium term. In this regard, I have requested the Company Law Review Group examine as a priority the issue of corporate rescue for SMEs and micro-enterprise, given the vital part that such businesses will play in our country’s economic recovery.

Top
Share