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SELECT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS díospóireacht -
Thursday, 4 Dec 2003

Vol. 1 No. 3

Companies (Auditing and Accounting) Bill 2003 [Seanad]: Committee Stage.

This meeting has been convened for the purpose of consideration by the committee of the Companies (Auditing and Accounting) Bill 2003 [Seanad]. I welcome the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Michael Ahern, and his officials.

Sections 1 to 3, inclusive, agreed to.
NEW SECTION.

Amendments Nos. 1 and 4 are related and may be discussed together by agreement.

I move amendment No. 1:

In page 6, before section 4, but in Part 2, to insert the following new section:

4.-(1) Subject to subsection (2), unless a person is a qualified person he or she shall not-

(a) describe himself or herself as an accountant, or

(b) so hold himself or herself out so as to indicate, or be reasonably understood to indicate that he or she is an accountant.

(2) Subsection (1) shall not prevent any person who is-

(a) a turf accountant, or

(b) a legal cost accountant, or

(c) within a category of persons prescribed by regulations made by the Minister describing himself or herself as, or holding himself or herself out to be, a turf accountant, a legal cost accountant, or within the category of persons so prescribed.

(3) In this section 'qualified person' means a person who is-

(a) a member of a prescribed accountancy body who is entitled, by virtue of the Constitution or bye-laws of that prescribed accountancy body, to call himself or herself an accountant,

(b) qualified in accordance with section 187 of the Companies Act 1990 to be an auditor of a company or a public auditor of industrial and provident society or a friendly society,

(c) within a category of persons prescribed by regulations made by the Supervisory Authority as being entitled to use the name accountant, or

(d) otherwise certified by the Supervisory Authority as being a suitable person to use the name ’accountant’.”.

A similar amendment has been tabled by Deputy Hogan. On Second Stage we discussed the scope of the Bill. The Institute of Chartered Accountants of Ireland asked us to table such an amendment. The institute has advised that it will allow the public to be properly protected by ensuring that all persons acting as accountants fall within the scope of this Bill and of the supervisory mechanisms being proposed here. The scope of the supervisory authority on auditing should apply to all who hold themselves out to be auditors. As the Bill is drafted, only those members who are recognised or prescribed by the professional bodies will be encompassed. It is only their activities which will be properly supervised under the provisions of the Bill. It is a reasonable suggestion that those who are not members of recognised accounting bodies, but who hold themselves out to do audits, should be scrutinised in the same way.

As in the case of Deputy Howlin's amendment, the purpose of my amendment No. 4 is to ensure the public is properly protected by providing that all persons who describe themselves as accountants fall within the scope of the supervisory authority. The review group, in drawing up its report, acknowledged that the business of clients would benefit as a result of being able to distinguish between those who are professionally qualified and those who are not.

The ability of persons to act as accountants, outside the new regulatory framework, is a matter of some concern in terms of misleading the public and creating an unfair advantage for those persons who are not members of professional bodies. As such persons will not be subject to supervision, it raises a question mark over consumer protection. There is little point establishing a new supervisory authority and a new mechanism for supervision if, by doing so, it provides an incentive for people to operate outside the remit of IAASA.

The only way to restore confidence to the accountancy profession and financial services is by ensuring that everybody who describes himself or herself as an accountant is operating on a level playing pitch with those who are already members of the prescribed bodies. I understand the Minister of State indicated in the Seanad that he would consider a definition of "accountant". I hope the amendments which have been put forward will find favour with him, with a view to clarifying the status of any person who practices in this important area.

If one was to take it to its extreme, one could say that if accountants who are qualified to be members of the various recognised professional bodies did not wish to come under scrutiny or to be policed, they could stay outside those bodies. While that may be an extreme situation, it is a possibility.

First, I declare an interest as an accountant and auditor, although I am currently retired from that profession. Amendments Nos. 1 and 4 were tabled by Deputy Howlin and Deputy Hogan, respectively, with regard to providing legal protection for the term "accountant". This issue would, benefit from further consideration and research. I will request the supervisory authority, when statutorily established, to examine the issue in detail and to report back to me when it has completed its deliberations. In the context of this issue, I take the opportunity to exhort members of the recognised accountancy bodies to promote themselves as such on all appropriate occasions. That is very important nowadays. Until I receive that advice from the supervisoryauthority, I consider it best to leave this matter aside.

I regard the Minister of State's response as inadequate. Like St. Augustine, he said it might be a good idea, but not just yet.

I agree it is a good idea——

But not just yet?

——but I want the supervisory authority to carry out further research on the matter.

I do not believe it will have a very big impact in that most companies who engage accountants will select those who are members of the professional bodies. However, some non-registered individuals hold themselves out as accountants. We also discussed this issue on Second Stage in terms of the title "accountant" and we will deal with it later by way of amendment. In terms of ensuring that the same rules apply to all, I regard it as a straightforward matter of principle which should be accepted now.

With regard to revisiting such matters, the difficulty of changing statutes is well known. We now have an opportunity, when a suitable legislative vehicle is going through the Oireachtas, to get the legal definition right. If, shortly after the enactment of this Bill, the supervisory authority makes such a recommendation to the Minister, we will have to wait for a new companies auditing Act, or equivalent, to wend its way through the Houses of the Oireachtas, which might be several years away. If the Minister of State is not willing to accept the amendments at this stage, will he undertake to discuss the matter further in his Department and either accept one of these amendments or bring forward his own on Report Stage?

I am surprised the Minister of State has not produced a definition of "accountant" at this stage because this Bill has been ongoing for some time. One would expect the Department to have come to terms with what is in the best interests of consumers. People who are trying to effect a major improvement——

Does the Deputy have a question?

I am making a contribution, as I am entitled to do.

It is a Second Stage contribution.

The Minister said he is sympathetic towards accepting the amendments, but he wishes to reflect further. We have had a great deal of reflection since the Bill was debated in the Seanad, where this particular issue was raised, and there are 82 Government amendments. I am surprised the Minister of State will not accept one of the amendments we are now discussing and, perhaps, amend it further on Report Stage. That would indicate that Deputies have a meaningful and important contribution to making this legislation watertight in the interests of the profession and the consumer.

I support both amendments. I am surprised the matter has not been addressed because the issue was teased out in considerable detail and at reasonable length on Second Stage. It is a major issue which requires resolution.

The review group on auditing looked at the matter and was of the view, at this stage, that further research is required. I made it clear, in the Seanad and on Second Stage in the Dáil, that I would refer the matter to the supervisory authority. Having given it a great deal of thought, my Department officials and I consider it inopportune to include it in this Bill. There will be a companies consolidation Bill in 2004 or 2005. It is hoped that, by then, we will have completed the necessary research to provide a watertight definition of the term "accountant".

Is the amendment being pressed?

I had hoped the Minister of State would at least say he was open to considering the matter further prior to Report Stage, which probably will be taken next week.

It would be untruthful of me to say that and I will not do so.

I would not expect the Minister of State to do that, but clearly there is no point pushing the matter further. Although I regret the Minister of State has not brought this issue to a conclusion, I will withdraw the amendment.

Amendment, by leave, withdrawn.
SECTION 4.

Amendments Nos. 2, 3, 20, 35 and 72 are related while No. 19 is an alternative to No. 20 and all may be discussed together. Is that agreed? Agreed.

What is the position with regard to my amendment?

We are now on amendment No. 2 and related amendments. We will come to amendment No. 4 later.

I move amendment No. 2:

In page 6, subsection (1), line 17, after "Part” to insert “, except where the context otherwise requires”.

In terms of grouping of amendments, I understood Nos. 2, 3, 19, 20, 35 and 72 were being discussed together.

Amendment No. 19 is an alternative to amendment No. 20. I apologise for moving so fast.

I assume the Minister of State will give a reasoned argument for his amendment.

Yes. Throughout the Bill, there are references to different types of standards, such as accounting standards, auditing standards and standards applied by the accountancy bodies to their members in areas such as ethics and so on. There is a specific definition of "standards" in sections 23 and 35. The substantive amendment No. 3 in this group of amendments inserts a definition of "standards" which will replace the definition in section 23. The amendment was suggested by the accounting profession on the basis that it was more flexible and less restrictive than that set out in the Bill as passed by Seanad Éireann.

Amendment No. 2 contains the term "except where the context otherwise requires" to be added to the introduction of the list of definitions. This amendment provides that the definitions of the terms which follow and which relate to Part 2 of the Bill are the interpretations intended where these items occur in that Part, unless the context in which they are found requires a different interpretation. The previous amendment provides an illustration of where the context varies, such as accounting and auditing standards and standards of accountancy bodies.

The purpose of amendment No. 19 is to provide a definition in new subsection (1) of approved procedures applicable to recognised accountancy bodies which embraces those approved under section 9 of this Bill as well as those approved under the 1990 Act, which is being amended under section 31 of this Bill. The main effect of this is to prevent a hiatus developing between the original regime under the 1990 Act and that provided for in this Bill. The proposed process will take time to become operative.

The revised subsection (2) contains two changes. First, it prevents the supervisory authority undertaking an inquiry pursuant to this section if it has already conducted an investigation under section 24 into the same matter. The overall objective of this and the similar provision in section 24 is to prevent a member of a prescribed accountancy body being subject to sanctions under two separate sections in respect of the same matter. Second, paragraph (c) is deleted because the primary focus of this section is to establish whether a prescribed accountancy body in carrying out an investigation under this section has complied with approved investigation and disciplinary procedures. The deletions and amendments in sections 24 and 35, provided for by amendments Nos. 35 and 72, are similar and consequential. Amendment No. 20 tabled by Deputy Hogan is essentially covered by these amendments and, therefore, is unnecessary.

Will the Minister of State refer to amendment No. 35? I have no problem with the intent of the Minister of State regarding this amendment. However, in terms of the internal disciplinary procedures of the various accounting bodies, will there be any correlation of those or is that a matter entirely for the professional organisations? Will the Minister of State have a role in the internal disciplinary rulings which are now being recognised as part of a procedure under statute?

Amendment No. 35 relates to section 24. It will take the word "standards" out of section 24 because it is now in section 4.

Will the Minister of State repeat what amendment No. 35 is about?

Amendment No. 35 deletes the word "standards" from section 24 because it is now included under section 4.

Will the Minister of State clarify the other point about the various types ofdisciplinary procedures operated by thedifferent professional bodies? Amendment No. 19 states:

'approved investigation and disciplinary procedures' means in relation to a prescribed accountancy body that is a recognised accountancy body, the investigation and disciplinary procedures approved under section 9(2)(c) of this Act or approved under the Act of 1990 before or after the amendment of that Act by section 31 of this Act. . .

There will be a statutory recognition of the disciplinary procedures adopted by the various professional bodies. Is there an overview of what those procedures might be? Is it a matter exclusively for the professional bodies to set their own rules?

The supervisory authority will examine the procedures of the accountancy bodies. Section 9(2)(c) states that the new authority will have the power to review the accountancy bodies and the constitution and by-laws of each prescribed accountancy body, including its investigation and disciplinary procedures and its standards. The new authority can recommend changes if necessary.

I do not wish the Minister of State to pre-empt the supervisory authority's view but does that mean there is a requirement or a view within the Department that there should be a standardised disciplinary procedure that would encompass the three professional bodies?

It would be for the supervisory authority to decide whether it should be standardised. That will depend on whether it considers all the procedures are of a sufficiently high standard. There may be differences, but the standards authority will judge each of the prescribed bodies.

Amendment agreed to.

I move amendment No. 3:

In page 7, subsection (1), between lines 5 and 6, to insert the following:

" 'standards', in relation to a prescribed accountancy body, means the rules, regulations and standards that body applies to its members and to which, by virtue of their membership, they are obliged to adhere;".

Amendment agreed to.
Section 4, as amended, agreed to.
SECTION 5.
Amendment No. 4 not moved.

Amendments Nos. 135 and 136 are alternative proposals to amendment No. 5 and all may be discussed together. Is that agreed? Agreed.

I move amendment No. 5:

In page 7, subsection (1), line 26, after "Authority" to insert "or in the Irish language Údarás Maoirseachta Iniúchta agus Cuntasaíochta na hÉireann".

The purpose of the amendment is to insert the Irish title of the new supervisory authority in the text of the Bill. I assume the amendment will be accepted.

While I am prepared to accept the principle behind this amendment to include the Irish name of the new statutory authority in the Long Title of the Bill, I understand the English name must come first in the English text. That is the form of Government amendment No. 136. I accept a slight variation of the Deputy's amendment.

What does Minister of State mean by the English language first?

In the English text, the English name comes first while in the Irish text, the Irish name will come first. I will accept the amended amendment.

Amendment agreed to.
Section 5, as amended, agreed to.
SECTION 6.

I move amendment No. 6:

In page 8, subsection (2), line 8, to delete paragraph (e) and substitute the following:

"(e) the Institute of Directors;”.

The authority is heavily weighted in favour of the public sector and non-business members. With the exception of the two IBEC nominations, there is no place for company directors despite the fact that sections 26, 40 and 43 will have an important impact on companies and their directors. Why should the Pensions Board be represented since its remit is covered by the Irish Association of Investment Managers and the Stock Exchange? This section will have serious implications for companies and their boards of directors. It will be difficult for some boards to operate with the same degree of attention to ensure that their businesses survive. I do not want to see a lack of balance among board members on the authority. I want to see private sector directors having some input to this matter.

Amendment No. 6 provides for the inclusion of the Institute of Directors as a designated body. In the context of the re-examination of the composition of the board of the supervisory authority, I looked closely at the list of designated bodies in section 6. Each of these bodies has the right to nominate a person as a director to the board. I added the Law Society of Ireland to the list of designated bodies on Committee Stage in the Seanad. I am happy with the list of designated bodies provided for in section 6, and their nominees to the authority should bring a balance and an appropriate range of expertise to the body. I am not prepared to accept the amendment.

It is of interest that the Minister of State is enthusiastic to appoint lawyersto the accounting body but is not so keen to appoint them to the Personal Injuries Assessment Board.

I am sure lawyers have considerable business experience.

We want to ensure there is no conflict of interest as well.

Amendment, by leave, withdrawn.
Section 6 agreed to.
Sections 7 and 8 agreed to.
SECTION 9.

I move amendment No. 7:

In page 9, subsection (2)(c)(i), lines 13 and 14, to delete “in the area of ethics”.

This amendment is consequential on the inclusion of the new definition of standards in section 4.

Amendment agreed to.

I move amendment No. 8:

In page 9, subsection (2)(c)(ii), line 18, to delete “in the area of ethics”.

This amendment is also consequential on the inclusion of the new definition of standards in section 4.

Amendment agreed to.
Section 9, as amended, agreed to.
SECTION 10.

Amendments Nos. 9 and 58 are related and may be discussed together by agreement.

I move amendment No. 9:

In page 10, lines 15 to 19, to delete subsection (4) and substitute the following:

"(4) The Supervisory Authority may apply to the High Court for an order under section 28(6) compelling-

(a) a prescribed accountancy body to comply with a rule adopted or guideline issued under subsection (3) of this section, or

(b) a recognised accountancy body to comply with a term or condition attached under section 192 of the Act of 1990 (before or after the amendment of that Act by section 31 of this Act) to the recognition of that body,

if, in the Authority's opinion, the body concerned may fail or has failed to comply with the rule or guideline or with the term or condition, as the case may be.".

The main amendment occurs in section 10(4)(b). This allows the supervisory authority to apply to the High Court to oblige a recognised accountancy body to comply with conditions set out under the specified provisions under the 1990 Act, which are being amended by section 30 of the present Act. Amendment No. 50 is consequential on this amendment.

Amendment agreed to.
Section 10, as amended, agreed to.
SECTION 11.

Amendments Nos. 10 and 11 are ruled out of order as they involve a potential charge on the Revenue.

Amendments Nos. 10 and 11 not moved.

Amendments Nos. 12 to 14, inclusive, are related and may be discussed together by agreement.

I move amendment No. 12:

In page 10, subsection (1), lines 25 and 26, to delete paragraph (b).

I first wish to speak to my amendment No. 11 which was ruled out of order. This is a dubious reason for disallowing a debate on the critical issue of the number of directors on the supervisory authority. I sought two additional directors and Deputy Hogan's amendment was similar. It is a pity that we cannot have a debate on this issue due to the notion that it would cost money. We need to broaden the scope of the board to allow for a better representative authority. It is important to get this right. There may be some scope for the Minister of State to give a view on these matters.

On the publication of the Bill, there were differing schools of thought on the appropriate level of representation by accountants on the board of the supervisory authority. While some considered that the original representation was correct, others disagreed. I deliberated at some length and with considerable care before altering the permissible level of representation by accountants. The formula I devised in so doing was designed to achieve a fair, realistic and equitable balance in overall representation on the board.

The number of directors can be altered by means of a ministerial regulation under section 46(1) as a consequence of changes made to prescribed or designated bodies. While enjoying the right of nomination of directors, the members of the body, unlike the position in a normal company, are not permitted to instruct directors in the discharge of their duties as directors of the supervisory authority. This is designed to secure the independence of the supervisory authority.

Section 11 deals with the appointment of directors of the supervisory authority by the Minister. In this regard and arising from changes which I made in the Seanad to deal with concerns in some quarters about the perceived under-representation of accountants on the board, 14 directors will be appointed by the Minister, nine of whom will be nominees of designated bodies listed in section 6(2), with the chief executive officer holding his or her directorship ex officio.

To ensure the independence of the new supervisory authority, no more than four of the directors appointed by the Minister can be members of a prescribed accountancy body, three from the accountancy bodies and one of the nominees of the designated bodies may also be an accountant. No such restriction applies to the chief executive officer. The outcome will be enhanced board representation for members of the prescribed accountancy bodies of up to five directors.

I tabled amendment No. 12 as a matter of general principle. We regard it as good practice not to have the chief executive on the board of a company. The Chairman, who has some significant business experience, sees the importance of separating the work of the chief executive and the authority of the board. While the chief executive should attend board meetings, he should be subject to the board directors and not a voting member of the board. It blurs the necessary divisions of responsibility between the chief executive and the board which gives instructions to the chief executive to be carried out by the employees of the company in normal circumstances. The chief executive of a company should obviously be entitled to attend board meetings but as an employee of the board and should not therefore be a member of the board. This is a general principle that should apply to this as with any other board.

I come to amendment No. 13, which I understand we are discussing with amendment No. 12.

We are also discussing amendment No. 14.

We are dealing with them seriatim, as a distinguished local authority member in Wexford once said.

Was that Tommy Howlin?

No it was another Tommy, Tommy Byrne, whom I am sure the Chairman knew.

Was he supporting the Chairman?

We were on the wrong side anyway.

While Tommy Howlin would have been a supporter of the Chairman, Tommy Byrne would not have been. However, they both would have supported each other.

The Minister of State has indicated an intention to address the paucity of accountants on the board. While we all have a strong view on self-regulation, it was somewhat ridiculous to have three accountants out of 14 members. We should not have a preponderance of the profession that is being supervised and it is good to have a majority of non-accountants on it. The Minister of State appears to be willing to move towards this.

Amendment No. 14 proposes to delete lines 39 to 44 in page 10 and lines 1 to 6 on page 11. The purpose of this is to delete sections 11(3) and 11(4). These subsections prohibit more than four members of the board from being members of the accounting profession. These sections need to be amended to achieve the objective of amendment No. 13, which is to increase the numbers.

It is wrong in principle. A paucity of supervising accountants would only guarantee that the supervisory authority would be deficient in terms of the necessary knowledge of the subject matter of its responsibilities. One needs good accountants in sufficient numbers to do the work of this supervisory authority. I do not want the Minister of State to tell me that they can employ accountants. It is a matter of balance which is insufficient in the proposal as published. The set of amendments I tabled seeks to strike the right balance and to remove the chief executive from board membership.

I support the amendments, especially amendment No. 12. I know of instances where chief executive officers who were members of boards of directors assumed they were entitled to formulate policies outside of board meetings. This fundamental distinction ought to be made. I hope the Minister of State will take this point on board.

Although the practice of appointing the chief executive officer as a board member was adhered to up to now, it was an erroneous one and this legislation can begin to change the practice. I commend Deputy Howlin for his amendment.

With regard to amendments Nos. 12, 13 and 14, these amendments could only be accepted if the number of directors was increased, something I am not prepared to do. In recent months, the matter was discussed with various institutions, including the Law Society and the company law review group.

We will study the position of the chief executive officer between now and Report Stage. The amendment proposes appointing up to five accountants and, as I explained, it is possible to have up to five, which I believe to be sufficient.

I am pleased that the Minister of State will study this matter further. There should be a strong principle. The Chairman, who is bound to impartiality, should support the amendment because of its merits. I welcome its reconsideration. I will withdraw it with the right to resubmit on Report Stage.

Amendment, by leave, withdrawn.

Amendment No. 13 has already been discussed with amendment No. 12.

I move amendment No. 13:

In page 10, subsection (2)(a), line 29, to delete “3” and substitute “5”.

If the number of board members is 14, five provides the right balance. Although the Minister stated that up to five members can be accountants, he should give an assertion that five of the 14 members appointed would be accountants. If he will do so, I am happy to withdraw the amendment.

Originally it was intended to have three accountants but that was increased to four and now it is five. Up to five accountants can be appointed, but this depends on whether one of the bodies wants to appoints certain people. If I accept Deputy Howlin's amendment, the chief executive officer could not be one of these. As he or she is usually an accountant, this would reduce the number to four. We will examine the issue and come back on Report Stage.

Amendment, by leave, withdrawn.
Amendment No. 14 not moved.

I move amendment No. 15:

In page 11, subsection (10), line 25, after "subsection (2)(b)” to insert “, and a statement of those reasons shall be laid before both Houses of the Oireachtas”.

The purpose of the amendment is to ensure that, where a member of the supervisory authority is removed, the Minister must formally notify the Dáil and Seanad as to the reason for the removal. In an era of accountability, that is a proper and straightforward requirement, and one I do not believe to be contentious.

In amendment No. 15, Deputy Howlin proposes that the reasons for the removal by the Minister of a director of the supervisory authority should form the basis of a statement to be laid before both Houses of the Oireachtas. There are no grounds or precedent for this in corresponding legislation and, accordingly, I do not propose to accept the amendment.

Is Deputy Howlin withdrawing the amendment?

No. That is an outrageous response to an important proposal. In the past there has been an implication of nepotism in appointments, and removals are sometimes suspected as being done for political reasons. The change in the amendment is necessary if we are serious about having an open and transparent democracy, especially when we are setting up a supervisory authority to bring about transparency in a professional group. If somebody is to be removed from this board, it is not unreasonable to expect a note of explanation to be given to the Houses of the Oireachtas. This should be a minimum requirement. I am outraged that the Minister of State would dismiss the proposal as one of no merit.

Does Deputy Howlin also think it necessary for reasons to be given before appointments are made?

Under the Ethics in Public Office Act, the Minister of State had to state the qualifications of anyone he appointed as adviser. That was a new introduction to law, but one that might well merit consideration.

We will consider the matter before Report Stage.

I am happy with that.

Amendment, by leave, withdrawn.
Section 11 agreed to.
Sections 12 to 14, inclusive, agreed to.
SECTION 15.

Amendments Nos. 16 and 116 are related and will be taken together by agreement.

I move amendment No. 16:

In page 14, subsection (2), lines 42 to 48 and in page 15, to delete lines 1 to 34, to delete paragraphs (b) and (c) and substitute the following:

"(b) each private company limited by shares that, in both the most recent financial year and the immediately preceding financial year of the company, meets the following criteria:

(i) Its balance sheet total for the year exceeds-

(A) €25,000,000, or

(B) if an amount is prescribed under section 46(1)(e) for the purpose of this provision, the prescribed amount;

(ii) the amount of its turnover for the year exceeds-

(A) €50,000,000, or

(B) if an amount is prescribed under section 46(1)(e) for the purpose of this provision, the prescribed amount;

(c) each private company limited by shares that is a parent undertaking, if the parent undertaking and all of its subsidiary undertakings together, in both the most recent financial year and the immediately preceding financial year of the parent undertaking, meet the criteria in paragraph (b);

(d) each undertaking referred to in Regulation 6 of the 1993 Regulations that, in both the most recent financial year and the immediately preceding financial year of the undertaking, meets the criteria in paragraph (b);

(e) each undertaking referred to in Regulation 6 of the 1993 Regulations that is a parent undertaking, if the parent undertaking and all of its subsidiary undertakings together, in both the most recent financial year and the immediately preceding financial year of the parent undertaking, meet the criteria in paragraph (b).”.

This is a technical amendment to bring the provision into line with section 26 which was the intention of the previous text but which contained inadvertent differences. One of the purposes of the reserve fund to be established under section 15 is the review of companies' accounts, including those assigned in the amendment for compliance with the Companies Acts.

Amendment No. 116 is a consequential amendment in section 46. I commend the amendments.

Amendment agreed to.
Section 15, as amended, agreed to.
Sections 16 and 17 agreed to.
SECTION 18.

I move amendment No. 17:

In page 17, between lines 31 and 32, to insert the following subsection:

"(5) A disclosure pursuant to subsection (2) or section 19(1) or a decision pursuant to subsection (4) shall be notified to the Standards in Public Offices Commission and shall be made available publicly by the Standards in Public Offices Commission.”.

The purpose of the amendment is to ensure that declarations of interest are made available to the public. The same logic which I argued earlier applies here. Declarations should be public knowledge and, if there are conflicts of interest, these should also be known.

Deputy Howlin proposes in amendment No. 17 that stipulated matters regarding material interests arising in sections 18 and 19 should be notified to the Standards in Public Office Commission and made available publicly by the latter body. It is not appropriate to have such piecemeal inclusions in individual items of legislation. If disclosure is genuinely necessary, it will be a matter for the commission to require it.

The amendment attempts to commit the commission to making the information available, which, is inappropriate. For these reasons, I am not in a position to accept the amendment. I suggest that the consolidation Act is a more appropriate vehicle for this type of provision. The Deputy can make a submission to the company law review group.

What is the problem with the amendment? Everybody expects transparency and that interests would be declared by Members of the Oireachtas and office holders. Why should this not apply to a member of a statutory supervisory body which is effectively a State agency? We establish agencies and State organisations which make decisions on important matters, yet only Ministers and public representatives must come before the Houses of the Oireachtas and publish their interests.

The standards in public office and ethics legislation is in place. The persons in question must comply with the provisions of the Acts. The Bill before the committee has a different purpose. We are not setting out in it the details referred to in the other legislation. The necessary regulations are in place.

Is there a fear that the Government will not be able to attract members to these organisations if they are required to declare all their interests?

People are required to comply with the legislation in place. This has nothing to do with the Bill before the committee.

It is odd for the Minister of State to suggest that this is a matter for the Standards in Public Office Commission. The commission does not make the law, we do. We thought the air of transparency and accountability was blowing through the institutions of State and their sub-elements. There are some who feel the regulations should only go so far. Those of us who stand for public office must be open and accountable. It is felt that, when we establish quangos, there is a protection against full disclosure. There is a requirement pursuant to section 19(1) for disclosure to the Standards in Public Office Commission.

My amendment seeks to provide that, where a declaration is required and made in the public interest, its details are available to the public. The provision could not cause difficulty. The notion that there should be some sort of ethics consolidation Act is bizarre. No such legislation is envisaged. As a matter of routine, the normal standards applied to civil servants should apply to a new quango, governmental organisation or supervisory authority we establish. That is the simple logic of the matter.

The commission——

We need to turn up the volume, especially on the Minister of State's microphone. However, I am told it is not possible.

Can committee members hear me?

As Chairman of the Committee on Members' Interests of Dáil Éireann, I raised at our previous meeting the issue of the inefficiency of the materials which are supposed to supply sound to the committees. The sound is not sufficient.

Imagine what it is like for me with my army deafness.

I knew the Deputy was an old military boy.

I must leave. I hope to be back tomorrow.

I hope we are here.

That would suit us all. If the Minister of State would consider positively the issues he has undertaken to examine, it would give us all a much easier ride.

Is that the Deputy's parting shot?

I would not have used the word "shot".

I thank the Deputy for joining us for so long.

The necessary ethics legislation is in place. The commission will review the submissions it receives. As committee members know, the directors must answer questions Deputies raise about standards in public office.

I am getting nowhere. We are wasting time.

If the commission requires changes, its members can request them. That is how changes are made. The commission requests changes and it is up to the Oireachtas to make them.

If the committee will pardon the pun, I do not wish to labour the matter further. It is mind-numbing that a Minister of State would attend a committee of the Houses of the Oireachtas and say that someone other than the Legislature elected by the people should decide what the law should be. If it is a good idea, we make the law, not the Standards in Public Office Commission.

I agree that we make the law. However, people such as the members of the Standards in Public Office Commission see how it operates and they make suggestions to us. Then it is up to us to change the law.

Can we not have an idea ourselves?

Amendment, by leave, withdrawn.
Section 18 agreed to.
Sections 19 to 21, inclusive, agreed to.
SECTION 22.

I move amendment No. 18:

In page 20, lines 43 to 47, to delete subsection (7).

This amendment seeks to remove the gags on the chief executive and chairman of the supervisory authority. Under the Bill as drafted, they will be prohibited from commenting on Government policy. I regard this provision as inappropriate. Why should the chairman or chief executive of the supervisory authority be politically gagged in the event that he or she agrees or disagree with Government policy? It seems an extraordinary state of affairs. I seek by the deletion of subsection (7) to put the matter right.

The amendment seeks the deletion of section 22(7). This provision was inserted at the explicit request of the Department of Finance which has pointed to the fact that similar provisions are included in comparable legislation. I have heard this matter discussed in recent years. It has generally been concluded that chief executives could discuss the nuts and bolts of actions but not policy decisions which do not come under their remit. Governments make policy.

The notion that because the Department of Finance asked for something the Oireachtas should get down on one or two knees is striking. Some of us want to develop the Houses of the Oireachtas as a place which conducts the public business.

We used to make that argument when we were on the other side of the House and the Deputy's party defended the case I have made.

As a distinguished representative from Westmeath once said when a statement of that nature was put to her, I was over there then, I am over here now.

The Chair could not possibly comment.

People should be allowed to comment on public policy when they are intimately involved in its implementation.

They have room to comment on policy through the Minister and within the proper fora.

If we were sitting as a joint committee and we wished to examine the operation of the accounting profession, the chairman required to come before us could not comment on policy matters. That strikes me as a diminution of the rights of this committee. It is wrong.

The chairman would not be allowed to comment on the policy of the Government, rather than on the day-to-day operation of the IAASA.

I did not say that.

That is his function.

I have laboured the point.

Amendment, by leave, withdrawn
Section 22 agreed to.
SECTION 23.

I move amendment No. 19:

In page 21, lines 1 to 21, to delete subsections (1) and (2) and substitute the following:

"(1) In this section, 'approved investigation and disciplinary procedures' means-

(a) in relation to a prescribed accountancy body that is a recognised accountancy body, the investigation and disciplinary procedures approved under section 9(2)(c) of this Act or approved under the Act of 1990 before or after the amendment of that Act by section 31 of this Act, and

(b) in relation to any other prescribed accountancy body, the investigation and disciplinary procedures approved under section 9(2)(c) of this Act.

(2) Following a complaint or on its own initiative, the Supervisory Authority may, for the purpose of determining whether a prescribed accountancy body has complied with the approved investigation and disciplinary procedures, enquire into-

(a) a decision by that body not to undertake an investigation into a possible breach of its standards by a member,

(b) the conduct of an investigation by that body into a possible breach of its standards by a member, or

(c) any other decision of that body relating to a possible breach of its standards by a member,

unless the matter is or has been the subject of an investigation under section 24(2) relating to that member.".

Amendment agreed to.
Amendment No. 20 not moved.

Amendments Nos. 21, 41, 42, 73 and 74 are cognate. Amendments Nos. 43 and 44 are alternatives to amendment No. 42. Amendments Nos. 21, 41 to 44, inclusive, 73 and 74 may be taken together by agreement.

What does cognate mean?

It is the same principle in different parts of the Bill, such as changing the word "institute" each place it appears, for example.

I move amendment No. 21:

In page 21, between lines 21 and 22, to insert the following subsections:

"(3) The Supervisory Authority, upon receipt of a complaint against a prescribed accountancy body and before conducting a formal investigation under this section, shall-

(a) provide the body with particulars of the complaint, and

(b) give the body an opportunity to make representations in connection therewith.

(4) If, following such a preliminary inquiry, the Supervisory Authority proceeds with an inquiry pursuant to this section, any prescribed accountancy body concerned, shall be given an opportunity to-

(a) attend and be heard at a formal hearing before the Supervisory Authority,

(b) being represented before the Supervisory Authority through its solicitor or counsel,

(c) adducing documentary evidence,

(d) cross-examining witnesses giving evidence against the body concerned,

(e) calling witnesses to give evidence on its behalf, and

(f) making submissions to the Supervisory Authority.”.

Amendment No. 21 proposes the insertion of two subsections. This amendment was suggested by the ICAI. It pointed out in its submission that a preliminary examination may be appropriate before a formal inquiry under section 23. That seems reasonable. It also suggests that due process is specifically referred to in the section and, since that is a constitutional imperative, I cannot see why there would be an objection to providing for it in the section.

Deputies Howlin and Hogan have tabled amendments to section 23 and similar ones to section 24 on prescribing processes and procedures which a supervisory authority should follow in carrying out inquiries on compliance with relevant procedures by accountancy bodies under section 23 and in respect of investigations by the supervisory authority under section 24 of possible breaches of accountancy body standards' by members. After dealing with the substance of these amendments, I will give an account of each of these sections to illustrate the linkages and the differences between them.

First, I put on record my reluctance to alter the present symmetry of each of these sections and their overall architecture. I have already explained the amendments which I will move aimed at preventing a member from the hazard of being subject to sanctions under both sections. These will go some way towards giving the kind of assurances which, to an extent, underlie the Deputies' amendments. It is not necessary or appropriate to include the kind of detailed procedures for the supervisory authority to follow in invoking the provisions under sections 23 and 24 which are set out in the detailed amendments. If, for example, we proceeded to include these kinds of procedures in the Bill and if something proved to be defective or unworkable, we would be obliged to remedy it in future legislation which, in itself, is a difficult enough task not to mention all the difficulties and uncertainty which would be created in the interim.

We can confidently rely on the supervisory authorities to develop a code of practice and procedures for these inquiries and investigations. There will be no shortage of examples to guide them in framing these. Each of the accountancy bodies develops its own set of procedures for application in respect of its members from which they could learn. We should bear in mind that the supervisory authority must produce a set of procedures which are fair and can be demonstrated to be so. It goes without saying that the authority would not wish to have these arrangements subject to challenge, so there is an onus on them to get them right.

I have no doubt that the supervisory authority will make the necessary contacts and engage in the necessary consultation in devising these rules. I am confident they will be guided by fairness and common sense. After all, they want the system to work. It seems likely that the supervisory authority will set out how it proposes to operate fair procedures. It must also be borne in mind that, while the accountancy bodies were most anxious to have the conduct of their investigatory procedures underpinned by legislation - I refer, for example, to the areas of requiring persons to attend for hearings of the disciplinary committee, examining persons under oath, requiring them to produce books, co-operate and so on, and invoke——

We were only given the list of grouped amendments as we arrived. There is a material difference between amendments Nos. 21 and 41 and the others I tabled. Amendments Nos. 43 to 45, inclusive, are materially different.

Amendment No. 45 is not being taken now.

I propose that we deal with amendments Nos. 21 and 41 now but that we leave amendments Nos. 43 and 44 to a separate discussion. I do not want to confuse my arguments about due process with the taking of oaths.

Is that agreed? Agreed.

Are we dealing with amendment No. 21?

We are dealing with amendments Nos. 21, 41 and 42.

On amendment No. 21, I am not sure the Minister of State has made a compelling argument in this regard. He spoke about the symmetry of the Bill. It is wonderful to hear the words "cognate" and "symmetry" in the same discussion. In terms of due process, there can be no argument that there should be a preliminary screening and that due process, as outlined in my amendment, should apply to that. If the Minister of State is rejecting that amendment, what does he propose as an alternative?

The purpose of these amendments is to ensure fair procedure and due process when a complaint is made in respect of an accountancy body. At present, there is no requirement when a complaint is received about a professional body to refer the matter automatically to IASA rather than go to the prescribed body which represents the accountant for the purpose of screening the complaint and establishing if there is a bona fide case to be answered. Perhaps the matter could be resolved satisfactorily without having to go through the process and expense of an investigation by the supervisory authority. It is common sense that a frivolous or small matter should be resolved by the prescribed body without engaging the power, structures and expense of IASA. If it is not resolved to the satisfaction of the consumer, then he or she has the alternative of going to the supervisory authority.

People usually make complaints to the prescribed body of which an accountant or an auditor is a member. People will approach this in a common sense way and will go to the accountancy or auditing body of which the accountant or auditor against whom they wish to make a complaint is a member. They may then go to the IASA, although that does not necessarily mean it will deal with the complaint. It will study the complaint first to see if the individual should complain to the accountancy body. As I explained, the IASA will be careful in establishing its procedures to ensure they are fair and equitable.

Without knowing what the codes of conduct will be, it is difficult to make a judgment on what the Minister of State has said, namely, that there will be a reasonable process and procedure and that people are reasonable. Unfortunately, people are not always reasonable in legal matters. In my experience, people do not go to prescribed bodies first. They go to Big Brother who is watching those bodies from which they do not believe they will get the necessary action or attention.

I know from the financial services sector that there are considerably more complaints to the consumer director of the authority than one would expect because people do not believe they get satisfaction directly from the financial institution against which they have a complaint. They do not go directly to the body directly prescribed for the profession but to the State prescribed authority to get redress. We need to know what procedure and code of conduct will be prescribed in the regulations before we pass this legislation.

I am concerned by the Minister's reply. The issue goes to the heart of what we are about. We are dealing with the supervision, of a profession on a statutory basis and are setting out, by way of amendment, a procedure to be followed. The Minister rejects the procedure without explaining the reason he finds it defective and suggests a procedure to be followed which is yet unclear or unknown.

We need to look specifically at what is proposed in amendments Nos. 21 and 41. Amendment No. 21 states:

The Supervisory Authority, upon receipt of a complaint against a prescribed accountancy body and before conducting a formal investigation under this section, shall-

(a) provide the body with particulars of the complaint, and

(b) give the body an opportunity to make representations in connection therewith.

It prescribes a certain clear procedure which is clear, logical and complies with natural justice and due process. Amendment No. 41 states: "The Supervisory Authority, upon receipt of a complaint against a member and before conducting an investigation under this section, shall . . . " This amendment goes through the same sequential list of due process which is clear, enshrined in statute, not done by way of secondary legislation or regulation and complies with constitutional rights. What is wrong with doing this in the primary statute?

Any complainant will have the choice of either going directly to the accountancy body in question or to the supervisory authority. Deputies have asked about a code of practice and procedures. In my original reply I said I was confident that people could rely on the supervisory authority to develop a code of practice and procedures for these inquiries and investigations. There will be no shortage of examples to guide it in framing a code of practice and procedures. Over the years, accountancy bodies developed their own set of procedures for application in respect of their members and they can learn from that experience.

The supervisory authority will also have to produce a set of procedures which can be demonstrated as being fair. There is an onus on the authority to get the procedure right at the beginning because it would not wish to have these arrangements subject to challenge. I have no doubt but that it will make the necessary contacts and have proper consultation in devising its rules and I am confident it will be guided by fairness and common sense because it wants the system to work.

The problem is that we do not know what the process will be if a complaint is lodged. The Minister of State is not prepared to explain the code of conduct, the type of regulation which will be in force or the process for dealing with the complaint. We know people have the option of going to the prescribed body or to the IASA but we do not know what form the process will take afterwards. We do not want to see the emergence of frivolous or vexatious complaints which will tie up the resources of IASA and prevent the upholding of due process. As the Minister of State knows, one of the accountancy bodies is very familiar with disciplinary procedures because it has spent €3 million or €4 million in the Blaney inquiry. It has built up experience and understands the process well.

The reason we are introducing supervisory authorities is our experience with inquiries and also international experience. I am especially familiar with the Ethics in Public Office Act which was introduced to regulate the political profession. We were careful when setting out its procedure. Complaints against a Member are submitted to the Clerk of the House who is required to determine whether they are vexatious or frivolous. If he determines that the complaint merits investigation, it comes before the Committee on Members' Interests and, if it concerns an office holder it is dealt with under the Standards in Public Office Act. The statute lays out how we deal with complaints against Members. Why then do we meet resistance when attempting to set out a clear procedure for complaints against a member of a professional body? Let us learn from our experience and from the rules we have enacted for ourselves.

I am confident that the authority will set up procedures which will screen complaints.

Why can the Minister not tell it to do that?

I do not think it is right to prescribe in detail how it should operate. I am confident it will screen the complaints coming before it.

The Minister of State is abdicating responsibility in asking us to approve something without knowing the detail of it or without telling us how it will work. The review group was set up three years ago and he has had ample time to discuss these matters. The Minister of State and his officials will approve the regulations within a matter of weeks. He could have spelled out for us today how the procedures would work and explained the remit of the supervisory authority to carry out its duty and deal with complaints, but he has failed to do so. We do not know the remit of the authority. The Minister is asking us to buy a pig in a poke. He is leaving it to a quango to make the decision rather than informing us on Committee Stage how it will work. I cannot accept that.

The legislation sets out how IASA will operate. Deputies want me to set out in detail what it can and cannot do but that is not appropriate. The authority is a responsible organisation and how it will operate in the field is its responsibility.

We will have to finish the debate on this because it is the core of the issue. The Minister of State asserted that the authority will be responsible and that may be the case. Is he saying then, by implication, that the Standards in Public Office Commission is so irresponsible that we had to set out the framework for dealing with complaints against Members differently from what is proposed here? I am sure he does not suggest that because the Standards in Public Office Commission is chaired by a distinguished member of the High Court and includes the Cathaoirleach of the Seanad and the Ceann Comhairle of the Dáil. We set out a statutory complaints procedure for the commission.

May I ask the Minister of State a specific question on the proposed procedure? He envisages that regulations will be put in place shortly. My experience suggests that the regulations are probably already in draft form. If the Minister of State has the draft regulations, will he distribute them to the members of the committee now?

I do not have them.

The Minister of State does not know the procedures.

Sections 8 and 9 set out the objects and functions of the authority in detail. The authority will be charged with setting out how it will comply with sections 8 and 9.

Amendment put.
The Committee divided: Tá, 4; Níl, 7.

  • Hogan, Phil.
  • Howlin, Brendan.
  • Lynch, Kathleen.
  • Murphy, Gerard.

Níl

  • Ahern, Michael.
  • Callanan, Joe.
  • Cassidy, Donie.
  • Dempsey, Tony.
  • Lenihan, Conor.
  • Nolan, M.J.
  • Wilkinson, Ollie.

Amendments Nos. 23, 24 and 40 are related to amendment No. 22 and amendment No. 24 is an alternative to 23. We will, therefore, take amendments Nos. 22 to 25, inclusive, and No. 40 together by agreement.

I move amendment No. 22:

In page 21, lines 22 to 29, to delete subsection (3) and substitute the following:

"(3) The Supervisory Authority upon receipt of a complaint against a prescribed accountancy body and before conducting a formal investigation under section 23(2) shall-

(a) provide the body with the full details of the complaint and any allegations contained therein, and

(b) give the body the opportunity to make representations as it considers appropriate to the Supervisory Authority.”.

This amendment is similar to amendment No. 21. I want to find a mechanism whereby the prescribed body will be provided with full details of a complaint and allegations contained therein and given an opportunity to make representations, as it considers appropriate, to the supervisory authority. Investigations of this nature are expensive and they can last, as we have seen in the recent case of one of the prescribed bodies, for a considerable period. It would not take long for the budget of the supervisory authority to be expended if many investigations, which could have been resolved at an earlier stage by the prescribed bodies, arise.

If we can remove the unnecessary expenses incurred by everyone involved in order to ensure that, if possible, a matter can be resolved at an early stage, that should be the course of action taken. Prescribed bodies should be given every opportunity to solve matters initially and this should be set out in statute. At the very least, we should be told what will be the contents of the regulations before we dispose of these amendments.

Amendment No. 25 substitutes a new subsection (5), which is an elaboration of subsection (4)(b), and it contains rules as to the effect of a decision of the supervisory authority. Under paragraph (a), where it directs an accountancy body to carry out an investigation, any decision of the body is immediately suspended. Under paragraph (b), where it directs an accountancy body to carry out a fresh investigation, the original decision of the body will only be suspended where the court so determines under section 28(5). Amendment No. 24 is consequential to amendment No. 19.

For the reasons I have already explained in respect of the practices and procedures in section 23, I am not prepared to further change their structure. Accordingly, I cannot accept amendments Nos. 22, 23 and 40.

Amendment put.
The Committee divided: Tá, 4; Níl, 7.

  • Hogan, Phil.
  • Howlin, Brendan.
  • Lynch, Kathleen.
  • Murphy, Gerard.

Níl

  • Ahern, Michael.
  • Callanan, Joe,
  • Cassidy, Donie.
  • Dempsey, Tony.
  • Lenihan, Conor.
  • Nolan, M. J.
  • Wilkinson, Ollie.

It is proposed to suspend until3.20 p.m. Is that agreed? Agreed.

Sitting suspended at 1.15 p.m and resumed at 3.20 p.m.

Amendment No. 23 has already been discussed with amendment No. 22. Is Deputy Hogan moving his amendment?

I will not move it, subject to leave to reintroduce it on Report Stage.

Is that agreed? Agreed.

Amendment No. 23 not moved.

I move amendment No. 24:

In page 21, subsection (4), lines 31 and 32, to delete "investigation and disciplinary procedures approved under section 9(2)(c)” and substitute “approved investigation and disciplinary procedures”.

Amendment agreed to.

I move amendment No. 25:

"(5) Where the Supervisory Authority decides to direct a prescribed accountancy body under subsection(4)(b) to conduct an investigation or a fresh investigation into any matter, the following rules apply:

(a) in the case of a direction to conduct an investigation, any decision of that body relating to the matter is suspended as soon as the body is notified by the Supervisory Authority of the direction;

(b) in the case of a direction to conduct a fresh investigation, any decision of that body relating to the matter is suspended if and as soon as the body is notified by the Supervisory Authority that the direction has been confirmed under section 28(5).”.

Amendment agreed to.

Amendment No. 27 is an alternative to amendment No. 26. Amendments Nos. 28 to 30, inclusive, and amendments Nos. 32, 33 and 57 are related. Amendments Nos. 28 and 47 are cognate. Amendment No. 31 is an alternative to amendment No. 30 and amendments Nos. 26 to 33 inclusive. Amendments Nos. 47 and 57 will be taken together by agreement.

I move amendment No. 26:

In page 22, lines 1 to 4, to delete subsection (5) and substitute the following:

"(5) For the purposes of an inquiry under this section the Supervisory Authority may inspect all relevant documents in the possession and control of the prescribed accountancy bodies.".

Section 23 provides that the supervisory authority may, for the purpose of an inquiry, "inspect and make copies of all relevant documents in the possession or control of the prescribed accountancy body". Confidentiality issues may arise regarding making copies of relevant documents available. The amendment proposes the deletion of these provisions as inspection should be sufficient to enable the supervisory body get sufficient information to undertake an inquiry.

I am speaking to all the amendments, including those in may name and in the names of Opposition Deputies. The substantive Government amendment is amendment No. 57. It provides that where the supervisory authority wishes to annul a decision or direct that a fresh investigation be conducted by an accountancy body, this must be confirmed by the court before it has effect. Amendment No. 31 is a consequential amendment to amendment No. 19.

Turning to the Opposition amendments, I have already described at section 23 the reasoning behind the particular structure contained in the section. It will be useful if I give a short expose of sections 23 and 24, which will address the other points raised in these amendments. The two sections are different in intent as regards the situations which they cover. It may be helpful to go back to the concept stage of section 24, in particular, to see what it was designed to do and then look at its provisions to see how it does this.

Section 24 was originally conceived as a way of dealing with an Enron/WorldCom scenario, where there is a need for decisive action and relevant powers of investigation. The section gives these to the supervisory authority, which would carry out the investigation instead of the accountancy body to which the member involved belonged. Recourse to the courts by the supervisory authority could arise if the compliance of a relevant person is not forthcoming. There is a need for the authority to have adequate financial resources for this purpose. As such situations are not likely to be a regular occurrence, but could be costly if they were, the creation of a fighting fund was decided upon, originally to deal exclusively with this situation, but later expanded to provide funding for review of company accounts for compliance with the Companies Acts. A dedicated fund to cover these two activities is provided for in section 15.

Accordingly, section 24 allows the supervisory authority to carry out an investigation encompassing, for example, the member in question, all relevant clients of the member and any other person whom the authority considers might shed light on the situation. Persons can be examined under oath and compliance ordered by recourse to the courts. The supervisory authority can impose sanctions at the end of this process if it considers the member to be in breach of prescribed accountancy standards. These are defined in section 4.

Section 23, however, involves the supervisory authority in a situation where the central issue is one of whether a prescribed accountancy body has complied with investigation and disciplinary procedures approved by the authority as regards all relevant aspects of actions by the prescribed accountancy body against a member under these procedures, in the case of a possible breach of standards by that member, including failure by the prescribed body to act. The function of the supervisory authority in this case is to register shortcomings by the accountancy body in question as regards the application of the investigation and disciplinary procedures to its members in the situation in question. While the focus in both cases is different, both are unquestionably complementary. In all the circumstances I do not consider there is a justified basis for the amendments proposed by the Deputies and, accordingly, I do not propose to accept them.

Is Deputy Hogan withdrawing the amendment?

Before that question is put, we are dealing with a wide grouping of amendments, yet the Chairman wants to end the discussion in one sentence.

I did not know anyone was offering to debate the matter further.

Amendment No. 27 in my name seeks to do a simple thing, in line 1 of page 22 to delete the word "may" and insert the word "shall". Its purpose is to ensure that all disciplinary decisions of the supervisory authority are published. That position is already enshrined, for example, as regards solicitors and I do not see why the findings as regards accountants should be any different.

I apologise. I did not see the Deputy's name. I was looking at a subsequent sheet.

My advice is that there may be occasions where it would not be suitable to publish the results. That is why the word "may" is used instead of the word "shall".

What implications will this have under the freedom of information and data protection legislation? What advice does the Minister of State have on the release of documentation under various Acts that require disclosure?

Will the Minister of State instance a circumstance where it would not be in the public interest to have such a publication made?

I am advised that all of the circumstances that may arise are not cognate.

All eventualities are covered.

Amendment No. 26 has been withdrawn. We will move to amendment No. 27.

We are dealing with all of the amendments together.

Yes. I will be guided by the Deputy.

If you conclude now, there will be no further discussion of this group.

If nobody is looking to discuss them, I will ask the question. Members are showing that there is no difficulty with them.

We were doing well this morning.

The Solicitors (Amendment) Act provided for publication of the results of inquiries. I cannot envisage circumstances where it would not be in the public interest to publish the results. Our approach to most legislation now is to provide for the public's right to know. That is the genesis of the Freedom of Information Act, notwithstanding its amendment by the Government. A compelling case would have to be made as to why there should not be openness about findings rather than saying there might be circumstances where it would not be in the public interest and, as a principle, enshrine the possibility of non-disclosure in legislation. That is the wrong approach.

As we will deal with the Freedom of Information Act in a later section, we can discuss it then.

That is not the point. My point is that there "shall" be publication without recourse to the Freedom of Information Act. We can deal with the freedom of information issue separately. However, the principle of freedom of information should, as a matter of routine, apply to inquiries of this type. Once the inquiry is concluded, the results of all disciplinary decisions by the statutory supervisory authority should be made public. I cannot envisage any case, let alone a compelling one, that can be made to the contrary.

I do not have any examples but the reason for the provision is that we must wait and see what situations arise. There might be some financial implications that would be disastrous for individuals or companies.

I am sure there are. The accountants involved in Enron would have been delighted if their names had not been published. If everybody complies with the law and the findings amount to an exoneration, there is no problem. However, if wrongdoing is discovered, why should it be kept a secret?

I take the Deputy's point. We will reflect on it between now and Report Stage.

We are also discussing amendments Nos. 30, 31 and 32. If a prescribed body is admonished by the supervisory authority following an investigation, the process by which the prescribed body will be treated is dealt with in this section. Will it have an opportunity to see an interim or draft report and be informed by the supervisory authority before it is published, in the same way that some financial inquiries which are taking place at present deal with their clients by giving them, under due process, the opportunity to examine the draft and make further submissions before the report of the supervisory authority is published? In the event that the prescribed body is not happy or satisfied with the outcome of the supervisory authority's report, there must be an appeal mechanism to the High Court. Does the Minister of State have any plans to provide for a final appeal process through the courts for the prescribed body if it is not satisfied with due process in the inquiry by the supervisory authority?

Section 23 provides:

The Supervisory Authority may publish each decision made under subsection (4) and the reasons for the decision after giving the prescribed accountancy body and the member concerned not less than 3 months notice in writing of its intention to do so.

(6) The prescribed accountancy body or the member concerned may appeal to the High Court against the decision of the Supervisory Authority.

(7) An appeal under subsection (6) must be brought before the expiry of the notice given under subsection (5) to the prescribed accountancy body and the member concerned.

Effectively, the body is given early notice and can take whatever action it wishes.

Amendment, by leave, withdrawn.

The Minister of State has given a commitment to consider amendment No. 27 again.

Amendments Nos. 27 to 30, inclusive, not moved.

I move amendment No. 31:

In page 22, subsection (8), lines 12 to 14, to delete all words from and including "a" in line 12, down to and including "section 9(2)(c)” in line 14 and substitute “an investigation or a fresh investigation into the matter, complied with the approved investigation and disciplinary procedures”.

Amendment agreed to.
Amendments Nos. 32 and 33 not moved.
Section 23, as amended, agreed to.
SECTION 24.

Amendments Nos. 34 and 71 are related and may be discussed together. Is that agreed? Agreed.

I move amendment No. 34:

In page 22, subsection (1), between lines 26 and 27, to insert the following:

" 'refusal' includes failure and 'refuses' includes fails;".

These are simply tidying up amendments suggested by the parliamentary counsel. I commend them to the committee.

Amendment agreed to.

I move amendment No. 35:

In page 22, subsection (1), lines 39 and 40, to delete all words from and including "law;" in line 39 down to and including "section 23” in line 40 and substitute “law”.

Amendment agreed to.

Amendments Nos. 36 to 38, inclusive, are alternatives while amendment No. 39 is related. Therefore, amendments Nos. 36 to 39, inclusive, may be discussed together. Is that agreed? Agreed.

I move amendment No. 36:

In page 22, lines 41 to 45, to delete subsection (2) and substitute the following:

"(2) Following a complaint or on its own initiative, the Supervisory Authority may undertake an investigation into a possible breach of a prescribed accountancy body's standards by a member if-

(a) in the Authority’s opinion, it is appropriate or in the public interest to undertake the investigation, and

(b) the matter is not and has not been the subject of an enquiry under section 23 relating to that member.”.

This amendment provides for the substitution of a new subsection (2). The essence of the amendment is that where the supervisory authority has undertaken an inquiry under section 23, it cannot undertake a separate investigation into the same matter under section 24. The overall objective of this and a similar provision in section 23 is to prevent a member of a prescribed accountancy body being subject to sanctions under two separate sections in respect of the same matter.

Amendments Nos. 37 to 39, inclusive, would change the balance of procedures in the section. I am, therefore, unwilling to accept them. I have explained the architecture and structures of sections 23 and 24 in response to previous amendments. I commend amendment No. 36 to the committee.

Is the amendment agreed?

No. The next two amendments are in my name.

If amendment No. 36 is agreed to, amendments Nos. 37 to 39, inclusive, cannot be moved. Does the Deputy wish to speak to them?

Notwithstanding the architecture of the Bill, amendment No. 38 seeks to delete the words "appropriate or". This amendment was suggested by the ICAL. I agree with the association about the lack of clarity in the section, as drafted. What the subsection means is unclear. The supervisory authority should not investigate a complaint if it is not in the public interest to do so. The test of public interest should, of itself, be sufficient to determine whether an investigation should proceed. It does not add anything to give an alternative power to investigate, where appropriate. The draft the Minister of State has put to us states, "investigate where it is in the public interest or where appropriate". If it is not in the public interest to investigate, the Minister should explain how it could be appropriate.

Amendment No. 39 seeks to insert a new subsection. It reads:

In page 22, after line 45, to insert the following subsection:

"(3) The Supervisory Authority may refer any question as to a possible breach of a prescribed accountancy body's standards by a member to the prescribed accountancy body concerned for investigation by it.".

The supervisory authority should not be perceived as the first port of call - the point made by Deputy Hogan. It should have the express discretion to refer matters back to individual accountancy bodies since that is the model decided upon.

The Chairman may recall our discussion on Second Stage when I had concerns about the architectural model - to use the Minister's phrase - which now includes a supervisory authority after the individual professional bodies. I had discussions with a number of people and was minded to suggest a single complaints investigation body - the supervisory authority - as the clearing house for all such complaints. I have spoken to the Minister and the Tánaiste about the matter and have decided not to seek to undo the model proposed by way of amendment. If one accepts the architectural model the Minister has adopted, one must give discretion to the professional bodies to provide for preliminary scrutiny and act a first port of call.

There is merit in amendment No. 39 which would fit properly and effectively with the model decided upon by the Government as promulgated by the Minister of State.

With regard to amendment No. 38, if we were to delete the word "appropriate", how would one define the term "in public interest"? If somebody was to challenge them, it could delay decisions.

How does one define the word "appropriate"?

However, if the accountancy body states it is appropriate, it will take the decision which we will back with statutory powers. That is the advice given to us by the parliamentary counsel as well as by the IASA review body. That is the reason for including the word "appropriate" and the term "in the public interest".

Earlier we discussed complaints to the board without a screening method. It will be able to distinguish between real and frivolous or vexatious complaints and does not have to be the first port of call. Any complaints against members should first be made to their own organisations - the accountancy bodies.

We have sufficient quangos to know that is not the experience. People will be inclined to go to the top and work their way down rather than starting at the bottom and working their way up. That is the expensive way of doing it but, nevertheless, it is the reality. If people are making complaints against a prescribed body, that body is entitled to due process and know the exact nature of the complaint. The Minister of State should be able to set out the process.

If the IASA considers that the complaint is not relevant to its board, it will be able to tell people to revert to the accountancy bodies.

In plain English, it is no more difficult to define the term "in the public interest" than it is to define the word "appropriate". I suggest that, in terms of lack of clarity, the meaning of the word "appropriate" is much broader than the term "in the public interest". If one is open to challenge, the other is also. Therefore, I do not see the point the Minister of State is making. I cannot see an investigation ever being appropriate if it is not in the public interest.

I am taking the advice of my advisers on this matter.

Let us leave aside the advisers for one second and tease out normal English when reading this legislation.

Normal English is very dangerous when one is dealing with legislation.

How can it ever be appropriate if it is not in the public interest, or how can it ever be in the public interest and not be appropriate? I hope the Minister of State will reflect on this issue, although I will not waste time dealing with it now.

As regards the other issue, the Minister of State seems to have accepted the point I am making.

A minor complaint may not be in the public interest but very appropriate to the individuals concerned. Therefore, if one does not have the word "appropriate"——

The Minister of State should not be scraping the bottom of the barrel.

We are talking about plain English.

Yes but whether it is a minor or major breach, it is in the public interest.

Even if a minor issue is not of public interest, it may be of major interest to the individual making the complaint, or the person against whom it is made. We should, therefore, include both terms to cover both sides.

From my time on both sides of the argument - presenting legislation and responding to it - I know it helps when a Minister is sometimes willing to accept logic.

Does the Deputy not accept the logic that something may not be in the public interest but could be very appropriate?

We must disagree.

If it is appropriate, it is in the public interest. If it is not, it could never be appropriate to investigate it. That is the issue.

We are leaving the term "in the public interest" in the section.

That is the point.

Is amendment No. 36 agreed to?

We are discussing more than one amendment together.

Yes, but this chitter-chatter has to be to the point.

It is normally called a Committee Stage debate.

I know but there are procedures to be adhered to and other members may like to come in also.

The Minister of State seems to have accepted the spirit of what I want to achieve in amendment No. 39 but will not accept the inclusion of a new subsection.

I agree with the principle.

He agrees with what I am saying but feels it is not necessary to insert the subsection, although he is saying the supervisory authority may refer back possible breaches. He is saying that is possible but does not want to enshrine the provision explicitly in the legislation. Is that the position?

The authority may refer back.

Why do we not agree to state this explicitly?

There is no need because there is nothing in the section to state the authority cannot do so.

Is the Minister of State saying it is not required?

It is not required.

The Bill should be explicit in stating the supervisory authority will be able to refer back possible breaches to the accountancy body, if that is the model preferred by the Minister of State. If he was arguing for a single supervisory authority without a two-step process, in other words, professional bodies and a supervisory authority, his position would be perfectly tenable. However, if he wants the two-step approach, the amendment would be appropriate.

There is no need to include a reference to referral by the supervisory authority to prescribed bodies.

Amendment agreed to.
Amendments Nos. 37 to 41, inclusive, not moved.

I move amendment No. 42:

In page 23, lines 11 to 17, to delete subsection (4) and substitute the following:

"(4) Any member subject to investigation under section 24(2) shall be given the opportunity of-

(a) attending and being heard at a formal hearing before the Supervisory Authority,

(b) if he so desires being represented before the Supervisory Authority by counsel or by any other party so named by the member,

(c) adducing the documentary evidence,

(d) cross-examining witness called by the person or persons presenting and prosecuting the complaint,

(e) calling witnesses to give evidence on his behalf, and

(f) making such submissions as he wishes to make to the Supervisory Authority.”.

We have discussed the issue of due process on a number of previous amendments, whereby the supervisory authority would have to have certain codes of conduct in regard to how it would deal with a prescribed body.

That matter was discussed when dealing with amendment No. 21.

Yes, I know we have discussed it already and I am sure the Minister of State has come to a conclusion on it. Is he accepting amendment No. 42?

This amendment was discussed with amendment No. 21.

What is the Minister of State's position on it?

I presume it is the same as that on amendment No. 21.

We discussed this amendment with amendment No. 21 which we did not accept.

Amendment, by leave, withdrawn.

Amendment Nos. 43, 44, 73 and 74 are cognate and may be discussed together. They would give effect to the same principle in different parts of the Bill.

I move amendment No. 43:

In page 23, subsection (4)(a), line 13, after “oath” to insert “or affirmation”.

In regard to amendments Nos. 43, 44, 73 and 74, the Interpretation Act 1937 provides in paragraph 20 of the Schedule that "oaths" includes "affirmation." Accordingly, the amendments are not necessary and I am unable to accept them.

It is true that the Interpretation Act 1937 states "oaths" includes "affirmation" where a person is entitled by law to give an affirmation. There must, however, be a pre-existing entitlement. The only relevant entitlement is provided for in the Oaths Act 1888 which only applies to proceedings. It is unclear whether "proceedings" in this context means administrative proceedings of the kind being contemplated in the Bill. Accordingly, I am advised strongly that the amendment is necessary.

We have had discussions with the parliamentary counsel on the matter and are advised that this is not legally necessary.

I suggest the Minister of State would be wise to use the precautionary principle. It would do no injury to the Bill to provide for the making of affirmations as well as oaths. If there is any potential for even the slightest doubt, why would it not be in the interests of the safety of the legislation to accept the amendment?

We will come back to the matter on Report Stage just to cover ourselves twice.

Amendment, by leave, withdrawn.
Amendment No. 44 not moved.

Amendments Nos. 45 and 75 are cognate and may be discussed together.

I move amendment No. 45:

In page 23, subsection (6)(c), line 37, after “other” where it firstly occurs to insert “ancillary or consequential”.

My advice is that the section, as drafted, is of dubious constitutional strength. I am advised it is not appropriate for the supervisory authority to simply give a certificate to the High Court, on foot of which it might punish a person who is not co-operating with it. Subsection (6)(c), in particular, is wide and might be thought to include a power to send a person to jail until he or she co-operates. Clearly, this would be unconstitutional and contrary to the right to have the decision made by a court and to a fair trial. Accordingly, only an ancillary or consequential order under the paragraph could be constitutional. The amendment is designed to save the Bill from possible attack on its constitutionality.

I was advised not to accept the amendment but will have another look at it over the next week or so in the light of what the Deputy has said and consider it before Report Stage.

That is good enough for me.

Amendment, by leave, withdrawn.
Amendments Nos. 46 and 47 not moved.
Section 24, as amended, agreed to.
SECTION 25.

Amendments Nos. 48 and 49 may be discussed together.

I move amendment No. 48:

In page 24, subsection (1), line 26, after "9(2)(b)” to insert “of this Act or approved under the Act of 1990 before or after the amendment of that Act by section 31 of this Act”.

This amendment extends the scope of the review of recognised accountancy bodies to embrace terms and conditions approved under section 9(2)(b) of the Bill as well as the Act of 1990 or as amended by section 31 of the Bill. It is advisable to capture the full extent of terms and conditions of recognised bodies in order that they can be applied to a review undertaken under this section. This adequately covers the probably intent of Deputy Hogan’s amendment, amendment No. 49. Accordingly, I am not prepared to accept his amendment and commend mine to the House.

The Minister of State is effectively agreeing with my amendment by putting it in a different way, which I accept.

Amendment agreed to.
Amendments No. 49 to 51, inclusive, not moved.

Amendments Nos. 52 and 53 may be discussed together.

I move amendment No. 52:

In page 24, subsection (2), lines 36 to 39, to delete paragraph (c) and substitute the following:

"(c) if the member fails to co-operate in accordance with paragraph (b) of this subsection, section 24(3) to (6) applies, with any necessary modifications, in relation to the member as if the review were an investigation under section 24.”.

This amendment enables the supervisory authority to ensure the co-operation of a member of a recognised accountancy body where this is not forthcoming through the ability to apply the procedures of section 24, subsections (3) to (6), which can be invoked where the authority is carrying out an investigation into possible breaches of standards of prescribed accountancy bodies. The amendment is a reasonable and pragmatic insertion if the provisions of section 25 are to be given proper effect. This has the effect of substituting a new subsection (2)(c), which Deputy Howlin’s amendment was designed to remove. I commend my amendment to the House.

It is often difficult to read legislation and I am not clear on the impact of this new subsection. Subsection (2)(c) will read as follows:

If the member fails to co-operate in accordance with paragraph (b) of this subsection, section 24(3) to (6) applies, with any necessary modifications, in relation to the member as if the review were an investigation under section 24.

What specifically does the Minister mean by this and what does he mean by any necessary modifications? Who will make these necessary modifications?

This will allow the supervisory authority to bring a member to court. The court will make a decision on whether the person should give answers, evidence and documentation, or they can refuse to do so. The wording of the amendment is legal terminology to effectively allow the supervisory authority to go to court and make a decision in regard to the person brought before the court. Otherwise subsections (3) to (6) would have to be repeated in total.

What is meant by "with any necessary modifications" and who will make them?

The procedures for one section are used in another, hence the need to cater for slight revisions. The procedure in one section is being applied in another section and, as there might be slight differences or variations, one must include some revisions. This is legal jargon.

I have never seen this in an Act over a period of 20 years. Who will make the modifications and deem them necessary?

On section 24(3) to (6), the amendment is a legal device to prevent repetition in section 25(3) to (6), and there might be a small revision.

I have no difficulty with repetition. My problem is enacting into a basic statute a provision that states section 24(3) to (6) shall apply in the circumstance, with necessary modifications. This is no way to make law. What are the necessary modifications and who will determine them? Who will determine what is necessary and who will set out the modifications? Will it be done by way of secondary legislation and be subject to parliamentary review? Will it be a matter for the IAASA?

It is not necessary to repeat subsections (3) to (6) of section 24 in section 25, which deals with an individual member rather than a body.

I understand that. The Minister of State is referring to the repetition of section 24(3) to (6), with necessary modifications. Who will determine what those modifications are and who will deem them necessary?

The difference is that one is dealing with a member rather than a prescribed body. This is a different circumstance.

No, it is not a different circumstance. We are setting out a procedure dealing with obstruction of an investigation. The Minister of State is including a new subsection proposing that the same procedure as outlined in section 24 will apply, but with necessary modifications. This is being included in the basic statute. I am asking who will make the modifications and who will determine they are necessary.

Under section 24, the supervisory authority may certify the refusal of the High Court if a relevant person defined in section 24(1) is a member of a prescribed accountancy body, a client or former client, etc. By applying this in section 25(3) to (6), one is not speaking about the relevant person as defined in section 24, but about a member.

That is clear but it is not the issue. The Minister of State will provide by statute that section 24(3) to (6) will apply with any necessary modification. I am not asking to whom the section will apply or about the procedures because I can read this in section 24. I am saying the paragraphs in section 24 will apply to this area, subject to modification. Who will make the modification?

Who will make the modification?

The necessary modification in this case is that it will be applied to a member, not to a relevant person.

Is this the supervisory authority, the prescribed body or the Minister? Who will decide?

When the supervisory authority is included in section 24, the reference is to a relevant person. The relevant person could be a member of a prescribed accountancy body; a client or former client and, if the client or former client is a body corporate, a person who is or was an officer, employee or agent of the client or former client; the prescribed accountancy body or a person who is or was an officer, employee or agent; or any person whom the supervisory authority reasonably believes etc. Under section 25, one is dealing solely with members, not with the statutory authority or relevant person as described.

As Deputy Howlin is anxious to point out, who will make the decision about necessary modifications?

Will it be done by legislation? Will it come back to the House?

No formal modifications will be made by the Irish Auditing and Accounting Supervisory Authority or by anyone else.

Could the Minister of State formulate a sentence in plain English to state, in the primary statute, what these modifications are and take the sub-clause out altogether?

I am advised this is a legal device which has been used in other legislation.

I like to see clarity. The section, as drafted, allows the supervisory authority to punish a member who does not co-operate with it. We have already established in the previous section that if a person is not co-operating with the supervisory authority, it can go to the High Court to require compliance. I thought this was a more than sufficient route. It would be inappropriate for the supervisory authority to be able to impose professional disciplinary sanctions on the person concerned as well. That is why amendment No. 52 proposes the deletion of paragraph (2)(c). If a member is not complying with the supervisory authority's investigation the authority can require the courts to compel him to do so. We are becoming accustomed to that measure being taken with people who do not comply with directions.

The select committee met in private sessionat 4.13 p.m. and resumed in public session at4.15 p.m.

We are discussing amendmentNo. 52

I fully understand the Minister of State is effectively doing what I suggested in my amendment. Rather than giving the power to the IAASA to discipline a member in the same way as a professional body would, the Minister seems to be opting to go to the courts and require a member to comply. I am happy with that. My difficulty was with the phrase, "necessary modification". If it has no difficulty in legal meaning and is simply a device to prevent the frustration of investigation, I accept at face value what the Minister of State says.

Amendment agreed to.
Amendment No. 53 not moved.
Section 25, as amended, agreed to.
SECTION 26.

Amendments Nos. 54 and 55 are related and may be discussed together, by agreement. Is that agreed? Agreed.

I move amendment No. 54:

In page 26, subsection (3)(b), lines 1 and 2, to delete “, or may be,”.

I propose this amendment for the purpose of gaining clarity in a section which is important for compliance with the Companies Acts. Using words such as "may be", "may arise" or "it appears" does not give certainty to compliance legislation. Senator Quinn referred to this matter in the Seanad. I propose the deletion of the words "or may be" in the subsection to which the amendment refers. It seems astonishing that the supervisory authority would be given power to act if it thinks there may be a problem. The word "appears" is also used. A citizen or a company is entitled to protection against what might be no more than the opinion of a suspicious mind. We have enough of those without giving them help in legislation.

Amendment No. 55, which relates to section (4)(a), refers to “matters in respect of which it appears to the Supervisory Authority that the question of compliance with the Companies Acts arises or may arise”. This terminology is very loose and could unwittingly cause problems. There is an overuse of the words “appears”, “may be” and “arises or may arise” in this legislation. We need more certainty.

Deputy Hogan has proposed an amendment to section 26(3)(b) which would entail the removal of the words, “or may be”, regarding the provision of notice by the supervisory authority to a relevant undertaking where it appears to the authority that the question of compliance by that undertaking’s accounts with the Companies Acts arises. A similar deletion is proposed in amendment No. 55.

I would be concerned at the removal of these words because it could make it easier for undertakings to try to resist a notice from the supervisory authority, for example by court challenge. I have every confidence that the supervisory authority will use its powers responsibly and will not rush to judgment. On this basis I do not propose to accept the amendment.

I withdraw the amendment on the basis that the proposal will be considered on Report Stage.

Amendment, by leave, withdrawn.
Amendment No. 55 not moved.

I move amendment No. 56:

In page 27, subsection (8)(c), line 1, after “the” where it firstly occurs to insert “relevant undertaking or the”.

The purpose of the amendment is to state explicitly that the company concerned, as well as the directors of the company, can be ordered to pay costs. I am advised that, under the section as drafted, there might be doubt as to whether it is intended the company should ever have to pay costs. I am advised the proposed amendment would ensure there is no doubt and would improve the section.

Deputy Howlin has proposed the insertion at section 26(8)(c) of the words "relevant undertaking, or the". The provision, if this amendment were agreed, would read "require the relevant undertaking or directors of the relevant undertaking to pay". It further relates to costs and expenses.

The words "relevant undertaking" refer to a company that has neither given a satisfactory explanation to the Supervisory Authority of its annual accounts nor revised them to comply with the Companies Acts such that the authority has had to have recourse to the High Court for a declaration of non-compliance and an order under subsection (8), the section at issue in this regard. The court, under subsection (8), may take a number of actions, one of which is that specified at subsection (8) which requires the directors of the relevant undertaking to pay costs and other reasonable expenses. The effect of Deputy Howlin's amendment would be to leave open whether it was a relevant undertaking or the directors who would pay the costs in question. It is anomalous that this penalty should fall upon the company as a corporate entity because the directors' responsibilities are clear in the matter and in the circumstances they would have been given ample opportunity to amend defects in the accounts. It is only proper and appropriate that the directors be liable for the costs involved and, accordingly, I am unable to accept the amendment.

I would like to tease out this matter with the Minister. Inquiries can be costly as can be noted from the most recent one which cost €3 million. Company directors could all be members of one family. Is it not appropriate to include a provision which provides that the courts may determine whether a company should pay any onerous bill with which the supervisory authority may be faced, otherwise the directors could end up bankrupt and no significant money would accrue to the State or the authority in terms of the real expenses involved? One can envisage situations where the supervisory authority would be short changing the public interest by not providing that a particular company and its directors would carry the can if the courts were to deem this appropriate.

The directors are responsible for drawing up and signing off on accounts. If they do not comply with company law and make the changes requested by the supervisory authority, then they should be held liable.

Subsection (8) provides that if the court is not satisfied, having heard the application, that the relevant undertaking in its annual accounts referred to in subsection (3) do not comply with the Companies Acts, it may make a declaration to the effect that under subsection (8)(c) the directors of the relevant undertaking pay the cost incurred by the supervisory authority. If a significant cost were incurred, it may not be even marginally recoverable from the directors. Should the court not be in a position, if a company is fraudulently trading and has accrued significant assets by way of such trading, to ensure those assets are amenable to the supervisory authority to offset its expenses in uncovering such wrongdoing?

Section 137 of the 1990 Act makes directors personally liable for fraudulent trading. This Bill will ensure directors are more careful about what they sign in carrying out their duties as they will be aware of the penalties for not doing so.

I am not convinced by the Minister's argument.

Amendment, by leave, withdrawn.
Section 26 agreed to.
Section 27 agreed to.
SECTION 28.

I move amendment No. 57:

In page 28, subsection (3), line 31, after "Authority" to insert "annulling all or part of a decision of a prescribed accountancy body under section 23(4)(a), directing a fresh investigation under section 23(4)(b) or”.

Amendment agreed to.

I move amendment No. 58:

In page 28, lines 44 to 47, to delete subsection (6) and substitute the following:

"(6) On application under section 10(4) for an order compelling compliance with a rule adopted or guideline issued by the Supervisory Authority or with a term or condition of recognition, the Court may make any order or give any direction it thinks fit.”.

Amendment agreed to.
Section 28, as amended, agreed to.
Section 29 agreed to.
SECTION 30.

I move amendment No. 59:

In page 29, subsection (3), between lines 29 and 30, to insert the following:

"(i) a committee of either or both Houses of the Oireachtas;".

This simple amendment, which I expect the Minister to accept, seeks to add to the list of discloseable bodies a committee of either or both Houses of the Oireachtas. It would be patently absurd if the supervisory authority could disclose information to the long list of bodies outlined in section 3(b) and not to Members of the Dáil and Seanad for the purposes of an inquiry which they were undertaking.

Any committee of the Houses of the Oireachtas can instruct, under section 22, the board to come before it to answer questions.

What Deputy Howlin is seeking is already dealt with in section 22.

Yes and I see no grounds for accepting this amendment.

What part of section 22 deals with this matter? Does it come under the part relating to annual reports?

It is dealt with in subsection (4) which states that whenever required to do so by the committee of the Dáil established under Standing Orders to examine a report, the chief executive officer and chairperson shall give evidence to that committee. Subsection (5) also states that when requested by any other committee appointed by either House of the Oireachtas or appointed jointly by both Houses, the chief executive officer and chairperson of the board shall account to the committee for the performance and functions and the exercise and powers of the supervisory authority etc.

That appears to cover what the Deputy is seeking.

I am not happy with that. Section 30 states that "no person shall disclose, except in accordance with law, information. . . ". That does not prohibit the supervisory authority from disclosing information under that section to the following people: the Minister, the Minister for Finance, the Garda Síochána, the DPP, the Director of Corporate Enforcement, the Revenue Commissioners, the Comptroller and Auditor General, the Central Bank, the Irish Financial Services Regulatory Authority, take-over panels, Stock Exchange, Pensions Board, accountancy bodies, members of recognised accountancy bodies who qualify as auditors or inspectors and any person under section 46(1) for the purposes of this section.

What damage would be caused in making it clear that the prohibition in section 30(1) does not apply to a committee of the House? Section 24 is general in application in terms of reports. Section 30 is explicit in stating that no person shall disclose, except in accordance with law, information as outlined in the section.

Does the Minister want to consider it for Report Stage?

Under section 22, the committee has power to call the chairperson and chief executive before it to ask any relevant questions.

This relates only to the specific items mentioned in section 22.

Section 22(5) states:

Whenever requested by any other committee appointed by either House of the Oireachtas or appointed jointly by both Houses, the chief executive officer and the chairperson of the board shall account to the committee for the performance of the functions and the exercise of the powers of the Supervisory Authority.

Why should a committee of the Houses of the Oireachtas be excluded from the long list?

It is not excluded.

It is patently excluded if it is not on the list.

While I do not believe it is necessary, I will consider it for Report Stage. We do not want to include it twice.

What harm if we have an abundance of caution?

We will check it out.

Amendment, by leave, withdrawn.

I move amendment No. 60:

In page 30, between lines 8 and 9, to insert the following subsection:

"(5) Reference to this section is deemed to be inserted in the Third Schedule to the Freedom of Information Act 1997.".

The purpose of this amendment is to facilitate the application of the Freedom of Information Act to the supervisory authority.

This amendment, if accepted, would insert a new subsection. The legal advice given to me is that application of the Freedom of Information Act 1997 procedurally falls to be addressed once the Bill is enacted. I am minded to adhere to the legal advice. There may be implications for the confidentiality of the information concerned in this section if the amendment is accepted and I do not propose to accept it.

While I would rather the amendment was accepted, I will not argue the point.

Amendment, by leave, withdrawn.
Section 30 agreed to
SECTION 31.

Amendments Nos. 61 and 62 are related and may be discussed together. Is that agreed? Agreed.

I move amendment No. 61:

In page 30, subsection (1), line 9, to delete "the Schedule” and substitute “Schedule 1”.

These amendments are purely technical and take account of the fact that an additional Schedule has been added to the Bill.

Amendment agreed to.

I move amendment No. 62:

In page 30, subsection (1), line 10, to delete "the" and substitute "that".

Amendment agreed to.

Amendments Nos. 63 and 64 are related and may be discussed together. Is that agreed? Agreed.

I move amendment No. 63:

In page 30, subsection (2), line 11, to delete "Each" and substitute "Subject to subsections (3) to (5), each”.

This amendment arises primarily because of the necessity to include a provision setting out various scenarios and eventualities concerning an application by the Institute of Incorporated Public Accountants for recognition. In this regard I confirm that an application has been received.

Is this amendment No. 64?

I am discussing amendments Nos. 63 and 64.

This was already discussed with amendment No. 63. Is the amendment agreed?

We are in the middle of a discussion on these amendments.

This was already discussed with amendment No. 63. Is that not right?

The Minister did not get a chance to speak about it.

I did not know there was any necessity. I thought it was agreed.

The Minister has tabled a very long amendment.

We agreed to discuss them together.

I understood it was agreed and there was no point in the Minister reading it for the sake of it.

The Minister has a very important explanation for his long amendment.

I apologise. The Minister should continue.

I received an application for recognition from the Institute of Incorporated Public Accountants and I have referred it to the interim board of IAASA for advice, which is still awaited. The amendment provides that a member of the Institute of Incorporated Public Accountants at the time of the making of the institute's application is deemed to continue to hold recognition until the commencement of the section or the date of the decision on the application, whichever is the later. Importantly, if the application is refused, the members of the Institute of Incorporated Public Accountants are considered to hold recognition for a further three year period, mirroring the situation for individually recognised auditors provided for in section 34.

This arises from the decision of the High Court where recognition of this body was an issue. The Minister is leaving it to IAASA to decide whether it will be a prescribed body.

If I have the advice before the section is commenced, I can decide whether to give it recognition. However, if that decision has not been made prior to commencement of the section, then IAASA will make the decision.

Amendment agreed to.

I move amendment No. 64:

In page 30, lines 15 to 28, to delete subsections (3) to (5) and substitute the following:

"(3) Where, on an application made by the Institute of Incorporated Public Accountants under the Act of 1990 before 15 September 2003 as though it were not a recognised body of accountants, the Minister decides, before the commencement of this section, to grant the Institute recognition (with or without terms and conditions) for the purposes of section 187 of that Act or to refuse to grant it such recognition-

(a) the decision is not invalid or ineffectual by reason only-

(i) that the recognition granted to the Institute before 29 January 2003 had not been withdrawn before the date of application, or

(ii) that the decision to grant or refuse recognition was made before the commencement of this section,

(b) if recognition is granted, the Institute is deemed to have become a recognised body of accountants on the date of the decision, subject to such terms and conditions, if any, as may be specified by the Minister at the time of granting recognition, and

(c) if recognition is refused, the Institute is deemed to have ceased to be a recognised body of accountants on the date of the decision.

(4) If for any reason a decision in relation to the application referred to in subsection (3) has not been made before the commencement of this section, the Minister shall, on the commencement of this section, refer the application to the Supervisory Authority for a decision.

(5) If, following the referral of the application, the Supervisory Authority decides to grant the Institute of Incorporated Public Accountants recognition (with or without terms and conditions) for the purposes of section 187 of that Act or to refuse to grant it such recognition, the decision is not invalid or ineffectual by reason only that the recognition granted to the Institute before 29 January 2003 had not been withdrawn before the date of application.

(6) For the removal of doubt and subject to subsection (3), section 192 of the Act of 1990 as amended by this section applies during its currency to any recognition granted to the Institute of Incorporated Public Accountants following the application referred to in subsection (3).

(7) Each person who, on the making of an application referred to in subsection (3), was a member of and held a valid practising certificate from the Institute of Incorporated Public Accountants is considered, for the purposes of section 187 of the Act of 1990, to be a member of a recognised body of accountants until the later of-

(a) the commencement of this section, and

(b) the date on which the Minister or the Supervisory Authority, as the case may be, makes a decision in relation to the application.

(8) If the Minister or the Supervisory Authority, as the case may be, decides to refuse to grant recognition to the Institute of Incorporated Public Accountants-

(a) each person referred to in subsection (7) is, from the date on which he or she ceases under that subsection to be considered to be a member of a recognised body of accountants, considered for the time being authorised to be appointed as an auditor of a company or as a public auditor, as though he or she had been granted an authorisation by the Minister under section 187(1)(a)(iv) of the Act of 1990, and

(b) section 187(14) of the Act of 1990 applies in respect of an authorisation under this subsection, except that the 3 year period referred to in that section runs from the date referred to in paragraph (a).

(9) For the removal of doubt, section 192 of the Act of 1990 as amended by this section applies during its currency to an authorisation under subsection (8).”.

Amendment agreed to.
Section 31, as amended, agreed to.
SECTION 32.
Amendment No. 65 not moved.

Amendments Nos. 66 and 79 are related and may be discussed together. Is that agreed? Agreed.

I do not consider that amendment No. 79 should be discussed with amendment No. 66. Amendment No. 79 is related to amendment No. 76 and should be part of the group of amendments Nos. 76 to 78, inclusive.

We will take amendments Nos. 76 to 79, inclusive, together when we reach amendment No. 76. We will now discuss only amendment No. 66.

I move amendment No. 66:

In page 31, subsection (3), line 21, after "person" to insert "in good faith".

I move the amendment on behalf of Deputy Howlin.

While I am not convinced of the necessity for the insertion proposed by Deputy Howlin - I am sorry he is not here at present - in the spirit of good will, I am prepared to accept the amendment. Is this for future coalition purposes?

The Minister only accepted it because I moved it for Deputy Howlin. Perhaps Deputy Howlin should stay out of the room.

Amendment agreed to.
Section 32, as amended, agreed to.
SECTION 33.

Amendments Nos. 67, 69, 87 to 90, inclusive, and 94 are related and may be discussed together. Is that agreed? Agreed.

I move amendment No. 67:

In page 32, line 3, to delete "1993).";" and substitute the following:

"1993);

'the 1992 Regulations' means the European Communities (Companies: Group Accounts) Regulations 1992 (S.I. No. 201 of 1992).'.".

This amendment inserts a definition of what is meant by the European Communities (Companies: Group Accounts) Regulations, which are subsequently referred to in a number of sections. Amendment No. 69 specifies what is meant by group accounts. Amendment Nos. 87 to 90, inclusive, 94 and consequential amendments are related.

Amendment agreed to.

I move amendment No. 68:

In page 32, to delete lines 10 to 12 and substitute the following:

"(i) any other firm where, at any time during the financial year, both firms were under common ownership and control;".

Amendment agreed to.

I move amendment No. 69:

In page 32, lines 45 and 46, to delete "subparagraph (ii)."." and substitute the following:

"subparagraph (ii).

(3) A reference in this Part to group accounts is to be construed as follows:

(a) in accordance with the 1992 Regulations, in the case of an undertaking to which those Regulations apply;

(b) in accordance with the Principal Act, in the case of any other undertaking.’.”.

Amendment agreed to.
Section 33, as amended, agreed to.
SECTION 34.

Amendments Nos. 70 and 85 are related and may be discussed together. Is that agreed? Agreed.

I move amendment No. 70:

In page 33, paragraph (b), lines 31 to 35, to delete all words from and including “share,” in line 31 down to and including “auditors.”;” in line 35 and substitute “share.’;”.

The substantive amendment here involves the deletion of sections 36(5) to 36(9). These subsections provided for the application by the Director of Corporate Enforcement to the courts to have members of recognised accountancy bodies removed from the register of auditors. The submissions from the accountancy bodies argued that it is a function of the bodies themselves to remove a member from acting as an auditor. This will now be subject to oversight by the supervisory authority. The director will still have the power, under section 160 of the Companies Act 1990, to seek the disqualification of a person from acting as, inter alia, an auditor. Amendment No. 70 which entails the deletion of section 34(b)(i) arises from the previous amendment.

I commend the amendments to the House. I wish to make a correction. The substantive amendment is amendment No. 85, not amendment No. 40.

Amendment agreed to.
Section 34, as amended, agreed to.
SECTION 35.

I move amendment No. 71:

In page 34, between lines 19 and 20, to insert the following:

" 'refusal' includes failure and 'refuses' includes fails;".

Amendment agreed to.

I move amendment No. 72:

In page 34, to delete lines 38 to 45 and in page 35, to delete line 1 and substitute the following:

" 'standards', in relation to a prescribed accountancy body, means the rules, regulations and standards that body applies to its members and to which, by virtue of their membership, they are obliged to adhere.".

Amendment agreed to.
Amendments No. 73 to 75, inclusive, not moved.

Amendments Nos. 77 and 78 are alternatives to amendment No. 76 while amendment No. 79 is related. Amendments Nos. 76 to 79, inclusive, may be discussed together. Is that agreed? Agreed.

I move amendment No. 76:

In page 36, to delete lines 7 to 51 and in page 37, to delete lines 1 and 2.

Amendments Nos. 76 and 79 delete subsections (6) to (10), inclusive, and subsections (13) and (14) of section 35. The amendments remove the legal underpinning of sanctions arising from the disciplinary approach of prescribed accountancy bodies and the requirement to have them ratified by the High Court. This is in line with the expressed wish of some of the accountancy bodies, which indicated that they could impose delays, increase costs and otherwise undermine the basis on which the bodies impose sanctions on their members. Amendments Nos. 77 and 78 are, therefore, unnecessary.

The Minister's amendments do the same as our amendments.

I welcome the Minister's approach. There seems to be a conviction on the part of the parliamentary draftsman that the only bodies which can impose a monetary penalty are the courts when, for example, striking off a practitioner is a more severe penalty. This is a better approach and it prevents a slower process. I welcome it.

Amendment agreed to.
Amendments Nos. 77 and 78 not moved.

I move amendment No. 79:

In page 37, to delete lines 13 to 26.

Amendment agreed to.
Section 35, as amended, agreed to.
NEW SECTION.

I move amendment No. 80:

In page 37, before section 37, to insert the following new section:

36.-Section 194 of the Act of 1990 is amended as follows:

(a) in paragraph (b) of subsection (3A) (inserted by the Company Law Enforcement Act 2001) by substituting ’access to books and documents’ for ’access to documents’;

(b) in subsection (3A) by substituting ’being information, books or documents’ for ’being information or documents’;

(c) in subsection (4) by substituting ’subsection (1), (3A), (5) or (5A)’ for ’subsection (1), (3A) or (5)’;

(d) in subsection (5) by inserting ’(other than an indictable offence under section 125(1) or 127(12) of the Principal Act)’ after ’an indictable offence under the Companies Acts’;

(e) by inserting the following after subsection (5) (inserted by the Company Law Enforcement Act 2001):

'(5A) Where the auditors of a company notify the Director of any matter pursuant to subsection (5), they shall, in addition to performing their obligations under that subsection, if requested by the Director-

(a) furnish the Director with such further information in their possession or control relating to the matter as the Director may require, including further information relating to the details of the grounds on which they formed the opinion referred to in that subsection,

(b) give the Director such access to books and documents in their possession or control relating to the matter as the Director may require, and

(c) give the Director such access to facilities for the taking of copies of or extracts from those books and documents as the Director may require.’.”.

This amendment inserts a new section which amends section 194 of the 1990 Act. It is designed to enable the Director of Corporate Enforcement to seek and obtain information in respect of indictable offences reported to his office. It will also permit the director to access books, which is not covered by the existing text in section 194. The inclusion is designed to relieve auditors of the obligation to notify the director in respect of offences relating to sections 125 and 127 of the Companies Act 1963, which relates to the filing of annual returns, on the basis that these offences are already apparent from the public record in the Companies Registrations Office.

I saw this amendment for the first time yesterday. It seems far reaching. Will there be an opportunity to discuss it again on Report Stage? I am not sure if the procedure permits that but can I attempt to amend this section on Report Stage if I wish?

We have had discussions with the director and the accountancy bodies on this issue and the amendment was welcomed by them.

Subsection (5A) imposes many obligations which I did not see earlier.

It removes a weight from the shoulders of auditors and accountants.

I would like to discuss it further.

Deputy Hogan makes a fair point. The Government and you, Chairman, wish to put legislation through the House in the last couple of weeks of the session, which gives Members little time. Last night, following the Budget Statement, we received two separate lists of amendments, to be dealt with the following day. Most of us have not had time to consider the Government amendments in the same way as we considered the rest of the Bill. As a matter of principle, this practice should not be encouraged.

I have been informed that as the amendment was introduced on Committee Stage, it can be discussed again on Report Stage.

Amendment agreed to.
SECTION 36.

Amendments Nos. 81 and 82 are cognate while amendment No. 83 is related. Amendments Nos. 81 to 83, inclusive, may be discussed together. Is that agreed? Agreed.

I move amendment No. 81:

In page 37, line 34, after "auditor" to insert "of a company or as a public auditor".

Section 187 of the Companies Act 1990 covers not only persons who are not qualified to act as an auditor of a company, but also those who are excluded from acting as public auditors of friendly societies or industrial and provident societies. Amendments Nos. 81 to 83, inclusive, will ensure the prohibition in section 198(2) being inserted by section 36 will apply to such public auditors as well as company auditors.

Amendment agreed to.

I move amendment No. 82:

In page 37, line 35, after "auditor" to insert "of a company or as a public auditor".

Amendment agreed to.

I move amendment No. 83:

In page 37, line 38, to delete "an auditor or a registered" and substitute ", or is registered as, an auditor of a company or a public".

Amendment agreed to.

I move amendment No. 84:

In page 38, between lines 19 and 20, to insert the following:

"(4) This section does not apply to the Comptroller and Auditor-General.".

Section 187(8) of the Companies Act 1990 at present exempts the Comptroller and Auditor General from the scope of that section. Amendment No. 39 clarifies that the Comptroller and Auditor General is also exempt from the provisions of the section 198 being inserted by section 136.

From what is the Comptroller and Auditor General exempted?

He is exempt from advertising himself as an auditor.

Is he exempt from the requirement or exempt from the right to do it or exempt from the prohibition on doing it?

We will look at the Act and provide the Deputy with the exact wording.

Deputy McHugh?

Do I detect an improvement in relations, Chairman?

Section 187 of the Companies Act 1990 sets out the qualification for appointment as an auditor. Under subsection (8), the section shall not apply to the Comptroller and Auditor General.

Does the Comptroller and Auditor General not have to be an auditor?

Not under section 187 of the Companies Act 1990.

Can anybody at all be Comptroller and Auditor General?

No. The Comptroller and Auditor General operates under the Constitution.

There are no qualifications in law for it?

Not in company law.

Everybody qualifies.

This does not mean that he is not a member of an accountancy body. As a matter of interest, the 1993 Act relates to the Comptroller and Auditor General.

Amendment agreed to.

I move amendment No. 85:

In page 38, to delete lines 30 to 51 and in page 39, to delete lines 1 to 35.

Amendment agreed to.
Section 36, as amended, agreed to.
Sections 37 and 38 agreed to.
SECTION 39.

I move amendment No. 86:

In page 41, line 28, to delete "body or bodies" and substitute "prescribed accountancy body within the meaning of the Companies (Auditing and Accounting) Act 2003 or the Supervisory Authority within the meaning of that Act, which is”.

This is a technical amendment for purposes of clarity. I am advised that as the section, as drafted, is extremely wide, it allows the Minister to prescribe any body or bodies, which would then have power to have accounting standards. I am sure the Minister does not intend to do that, but it should be clear that the power to prescribe bodies that can set standards for accounting should be limited to accountancy bodies or to the supervisory authority itself. I am not suggesting that, under this broad section, a maverick Minister could give anyone he likes the power to set standards for accounting, but the amendment would provide clarity in this regard.

The Deputy's amendment refers to section 39, inserting a new section 205A(1) where he wishes to delete the term "body or bodies" and substitute in its place "prescribed accountancy body within the meaning of the Companies (Auditing and Accounting) Act 2003 or the Supervisory Authority within the meaning of that Act, which is". The effect of what the Deputy is proposing would be to relate the issuance of accounting standards and written interpretation of standards to prescribed accountancy bodies and the supervisory authority. I am unable to accept the amendment because the drafting deliberately allows for bodies to be prescribed by regulation. In view of the developments existing and foreseen particularly in the domain of internationally developed standards, it is desirable to maintain an openness to the entity to be prescribed for the purpose in question, particularly with regard to the international accounting standards board.

I am sure the supervisory authority could take upon itself the recommendations of the international accounting standards body. We are bringing in some of those international accounting standards by regulation next year, but could the supervisory authority not simply replicate those standards? I will not labour the point but I thought it would be clearer that an accounting body or the supervisory authority should set standards and not any body to which the Minister deems to give that authority.

Is the amendment being withdrawn?

I would like the Minister of State to respond.

I thought the Deputy was making a statement.

International accounting standards regulations are being introduced because of EU regulations.

Is that a directive?

Yes. It is up to the Minister to prescribe the body if that proves necessary.

I know that the international standards body will apply under the EU directive, although the full scope of that has yet to be teased out and this committee will have a further debate on that matter. Notwithstanding that, would it not be possible for the supervisory authority to set the standards as enunciated by the international accounting standards body, if that is the only issue that requires such broadness of drafting?

It is not done by a national body. The international accounting standards effectively will be decided at European level, not at national level.

Amendment, by leave, withdrawn.

I move amendment No. 87:

In page 41, to delete lines 38 to 43, and in page 42, to delete lines 1 and 2 and substitute the following:

"(a) that its annual accounts and, where relevant, its group accounts include a statement as to whether they have been prepared in accordance with applicable accounting standards, and

(b) that any material departure from applicable accounting standards, the effect of the departure and the reasons for it are noted in the annual accounts and, where relevant, in the group accounts.”.

Amendment agreed to.

I move amendment No. 88:

In page 42, line 4, after "accounts" to insert "and, where relevant, to its group accounts,".

Amendment agreed to.

I move amendment No. 89:

In page 42, line 6, to delete "its annual" and substitute "those".

Amendment agreed to.
Section 39, as amended, agreed to.
SECTION 40.

I move amendment No. 90:

In page 43, lines 16 to 18, to delete all words from and including "European" in line 16 down to and including "1992)" in line 18 and substitute "1992 Regulations".

Amendment agreed to.

Amendments Nos. 92 and 93 are alternatives to amendment No. 91 and all may be discussed together. Is that agreed? Agreed.

I move amendment No. 91:

In page 44, to delete lines 4 to 50, in page 45, to delete lines 1 to 50, in page 46, to delete lines 1 to 50, in page 47, to delete lines 1 to 49 and in page 48, to delete lines 1 to 3 and substitute the following:

"(2) Subject to subsection (16), the board of directors of a public limited company (whether listed or unlisted) shall establish and adequately resource a committee of directors, to be known as the audit committee, with the following responsibilities:

(a) reviewing, before they are presented to the board of directors for approval-

(i) the company's annual accounts, and

(ii) if the company is a parent undertaking, the group accounts of the group of undertakings of which the company is the parent undertaking;

(b) determining whether the annual accounts so reviewed comply with section 205A(2) and whether, in the committee’s opinion, they give at the end of the financial year a true and fair view of-

(i) the state of affairs of the company, and

(ii) the profit or loss of the company, even if, by virtue of section 3(2) of the Companies (Amendment) Act 1986, section 3(1) of that Act does not apply to the company's profit and loss account;

(c) determining whether the group accounts so reviewed comply with section 205A(2) and whether, in the committee’s opinion, they give at the end of the financial year a true and fair view of-

(i) the state of affairs of the group of undertakings of which the company is the parent undertaking, and

(ii) the profit or loss of that group;

(d) recommending to the board of directors whether or not to approve the annual accounts and group accounts so reviewed;

(e) determining, at least annually, whether in the committee’s opinion, the company has kept proper books of account in accordance with section 202;

(f) reviewing, before its approval by the board of directors, the statement required to be made under section 205E (5) and (6);

(g) determining whether, in the committee’s opinion, the statement so reviewed-

(i) complies with section 205E(5) and (6), and

(ii) is fair and reasonable and is based on due and careful enquiry;

(h) recommending to the board of directors whether or not to approve a statement reviewed under paragraph (f);

(i) advising the board of directors as to the recommendation to be made by the board to the shareholders concerning the appointment of the company’s auditor;

(j) monitoring the performance and quality of the auditor’s work and the auditor’s independence from the company;

(k) obtaining from the auditor up to date information to enable the committee to monitor the company’s relationship with the auditor, including, but not limited to, information relating to the auditor’s affiliates;

(l) recommending whether or not to award contracts to the auditor or an affiliate of the auditor for non-audit work;

(m) satisfying itself that the arrangements made and the resources available for internal audits are in the committee’s opinion suitable;

(n) reporting, as part of the report under section 158 of the Principal Act, on the committee’s activities for the year, including, but not limited to, the discharge of its responsibilities under paragraph (j);

(o) performing any additional functions prescribed by regulation under section 46(1)(m) of the Act of 2003;

(p) performing any other functions relating to the company’s audit and financial management that are delegated to it by the board of directors.

(3) Subject to subsection (16), the board of directors of each large private company and of each relevant undertaking shall either-

(a) establish an audit committee that-

(i) has all or some of the responsibilities specified in subsection (2), and

(ii) subject to subsection (8), otherwise meets the requirements of this section, or

(b) decide not to establish an audit committee.

(4) The board of directors of each large private company and of each relevant undertaking to which subsection (3) applies shall state in their report under section 158 of the Principal Act-

(a) whether the company or undertaking, as the case may be, has established an audit committee or decided not to do so,

(b) if the company or undertaking, as the case may be, has established an audit committee, whether it has only some of the responsibilities specified in subsection (2), and

(c) if the company or undertaking, as the case may be, has decided not to establish an audit committee, the reasons for that decision.

(5) For the purpose of applying subsection (2) to a large private company or relevant undertaking that decides under subsection (3)(a) to establish an audit committee with some or all of the responsibilities specified in subsection (2)-

(a) a reference in any applicable paragraph of subsection (2) to a public limited company or the company is to be construed as a reference to the large private company or relevant undertaking, as the case may be, and

(b) subsection (2) applies to the extent specified by the large private company or the relevant undertaking with any other modifications necessary for that purpose.

(6) The audit committee is to consist of such directors as the board of directors concerned thinks fit, provided, subject to subsection (8), both of the following requirements are met:

(a) the committee consists of not fewer than 2 members;

(b) all those appointed to the committee qualify under subsection (7).

(7) A director qualifies for appointment to the audit committee unless he or she-

(a) is, or was at any time during the 3 years preceding appointment to the committee-

(i) an employee of the company or undertaking concerned, or

(ii) an employee of any subsidiary of the company concerned or of a subsidiary undertaking of the undertaking concerned,

or

(b) is the chairperson of the board of directors.

(8) The requirements specified in paragraphs (a) and (b) of subsection (6) do not apply if-

(a) only one director on the board of directors of the company or undertaking concerned qualifies under subsection (7),

(b) that director-

(i) is appointed as the sole member of the audit committee, or

(ii) is appointed as the chairperson of an audit committee consisting of not more than 2 members (including the chairperson) and has, in the case of an equal division of votes, a second or casting vote,

(c) any conditions prescribed under section 46(1)(m) of the Act of 2003 are met, and

(d) the directors of the company or undertaking concerned state in their report under section 158 of the Principal Act the reasons for the company’s or undertaking’s exemption from those requirements.

(9) Written terms of reference concerning the audit committee's role in the audit and financial management of the company or relevant undertaking concerned shall-

(a) be prepared and approved by the board of directors,

(b) be submitted for the information of the shareholders of the company or undertaking concerned at its annual general meeting,

and

(c) be reviewed each year by the board of directors.

(10) Without limiting the matters that may be included under subsection (9), the terms of reference must-

(a) specify how the audit committee will discharge its responsibilities, and

(b) provide for a programme of separate and joint meetings with the management, auditor and internal auditor of the company or undertaking concerned.

(11) Subsection (9) applies also in relation to any amendments of the audit committee's terms of reference.

(12) Where the board of directors of a public limited company to which subsection (2) applies fails to establish an audit committee that is constituted in accordance with this section, each director to whom the failure is attributable is guilty of an offence.

(13) Where a director of a large private company or relevant undertaking to which subsection (3) applies fails to take all reasonable steps to comply with the requirements of subsection (4), the director is guilty of an offence.

(14) A reference in this section to the directors of a relevant undertaking is to be construed in the case of an undertaking that does not have a board of directors as a reference to the corresponding persons appropriate to that undertaking.

(15) For the purpose of applying this section to a partnership that is referred to in Regulation 6 of the 1993 Regulations and that is a relevant undertaking-

(a) the partnership is to be treated as though it were a company formed and registered under the Companies Acts,

(b) a reference in this section to a report under section 158 of the Principal Act is to be construed as a reference to a report under Regulation 14 of the 1993 Regulations, and

(c) this section applies with any other modifications necessary for that purpose.

(16) This section does not apply to-

(a) a public limited company that is a wholly owned subsidiary undertaking of another public limited company, or

(b) any company or undertaking of a class exempted under section 46(1)(j) of the Act of 2003 from the application of this section.’.”.

This amendment sets out the substance of the amended section, virtually as a whole. It does not entirely comprise amendments, but I consider that Deputies will get a clearer idea of the effects of the amendments I wish to make, and how they impact on the overall shape of the section, by presenting them in this way. The broad areas of change are the scope of the remit of the audit committee; amended requirements applicable to all relevant categories of company and relevant undertakings; the revised criteria for public limited companies; and the new requirements for large private companies and relevant undertakings.

The following is the position in respect of each of these areas. In terms of the scope of the audit committees remit, it is now being clearly provided at paragraph (a)(ii) and (c) that the audit committee will encompass group accounts. The audit committee will also now be required to review the director’s compliance statement in its entirety. The additional elements of this statement, which can be found in section 43(6) of the amended text, relate to the opinion of the directors that they used reasonable endeavours to secure the company’s compliance with its obligations and if they are not of that opinion, the reasons they are not so.

Of general relevance to commercial entities required to establish an audit committee are a relaxation under the new subsection (7) in the length of time an employee needs to have left the employment of a company, or its subsidiaries, from five to three years to qualify for appointment as a non-executive director and, ipso facto, to be available to be appointed as a memberof an audit committee. This should make iteasier for companies to find non-executive directors.

Subsection (8) of the amended text provides, by way of exemption from the earlier requirements of the section, as applicable to public limited companies, that only one director needs to qualify under the criteria at the new subsection (7), provided he is appointed as the only member of an audit committee or is the chairman of a maximum of a two person committee, having the casting vote.

In the case of directors of a public limited company to whom these provisions are applicable, whose board of directors does not establish an audit committee in conformity with this section, each director to whom this failure is attributable is guilty of an offence under the new subsection (12).

Under the new subsection (3), the board of directors of large private companies and relevant undertakings can, subject to satisfying the other applicable requirements, establish an audit committee with only some of the responsibilities listed for audit committees under subsection (2). This is a significant concession because these entities are being allowed directions as to which of the responsibilities they will direct their audit committee to take on, where they decide to establish one. In their report, under section 158 of the principal Act, such concerns will be required to state whether they had established an audit committee or decided not to, and whether they assumed some or the full list of responsibilities at subsection (2).

A director of a private company or a relevant undertaking is guilty, under the new subsection (13), of an offence where he or she fails to take all reasonable steps to comply with the requirements of subsection (4). These requirements, in summary, are to state in their section 158 report whether they have established or decided not to establish an audit committee and the reasons where the latter is the case, or to indicate where it has not taken on all of its responsibilities at subsection (2). Therefore the offence resides in the failure to make the due notification under subsection (4).

The new subsection (16)(a) exempts a public limited company which is a wholly owned subsidiary of another public limited company from having to establish an audit committee.

There are a number of other technical consequential amendments throughout the section arising from the more substantive amendments which I have just described. I consider that the section, as amended, accommodates the concerns expressed by various interests. Accordingly, I am not prepared to accept Opposition amendments Nos. 92 and 93. I commend my amendments to the House.

This is a long amendment which we saw for the first time yesterday and whose purpose we have not had time to digest, even after the Minister of State's explanation. It contains many terms, subparagraphs and subsections which need to be teased out and he can expect that we will be discussing this again on Report Stage.

The thinking behind amendments Nos. 92 and 93 is as follows. Audit committees are almost universal features of listed public companies and have a logical role in providing some protection and reassurance for outside shareholders who have little or no contact with the company in question and do not know what goes on therein on a daily basis. Many larger companies have hundreds of thousands of such shareholders and the role of audit committees is to act as a watchdog on their behalf.

The position in private companies is completely different. In the great majority of these, the shareholders form part of the management, the companies are tightly controlled and there is little danger of undue distance emerging between shareholders and management. Therefore, the need for a body to specifically represent shareholders does not arise.

The gist of my amendment is to remove from private companies the requirement to establish audit committees. Imposing audit committees in private companies would add little, if anything, to their controls in view of the distance that would arise between the day to day operations in respect of shareholders and of management. It would, however, make it necessary to hire non-executive directors specifically for the purpose of establishing and consulting an audit committee. This is an onerous and rather extraordinary development. If companies wanted non-executive directors they would appoint them, but bringing in non-executive directors would be of little benefit and add significant new costs to a private company's business. Private companies should not be required to establish audit committees.

On the specific responsibility of non-executive directors or directors of audit committees, I propose the more flexible option of introducing a code of practice rather than laying down specific duties in legislation. This is in line with the current practice and law, about which I have heard already today, and I am sure that my amendment will find favour with the Department as a result.

My amendment proposes fewer restrictions on who qualifies as a non-executive director and easing the difficulty of finding sufficient numbers of qualified non-executive directors. If the Minister makes it difficult for non-executive directors, in terms of compliance statements or their obligations as members of an audit committee, then one will not get the people with the necessary status or qualifications to sit on those committees, particularly in the case of companies from outside the jurisdiction which may be set up in Ireland. From what the Minister of State said, I suspect his amendment goes some way towards addressing this.

On the issue of cost, the private companies covered by the section are often family businesses which have selected board members for various purposes as required under company law. While they may not fit into this category, they do not have outside shareholders. The new section stipulates that companies of a certain size must comply with the requirement to establish an audit committee and seek non-executive directors who will fit into this category, irrespective of whether one wants them. The only reason they must be appointed is for the purposes of establishing an audit committee. Therefore, compliance with this requirement will result in additional and unnecessary costs to the company.

I already mentioned the private companies whose headquarters are located outside the jurisdiction and that they will not favour having to establish the committees concerned. Perhaps the Minister will be able to explain in more detail if the tenor of his own amendment meets the purpose of my amendments as I did not get that impression from his initial remarks.

I propose that Deputy Callanan take the Chair for a few minutes. Is that agreed? Agreed.

Deputy Callanan took the Chair.

We have made it quite clear that it is not mandatory for private companies to set up an audit committee. They will have to disclose, in the director's report, the reasons for not doing so. I am sure there are a few such reasons.

The way it is phrased in the original draft is that an executive chairman would have to be a member of an audit committee and a non-executive could not be a member of an audit committee. This is probably more important in the case of a non-executive chairman. The use of the word "executive" means that the person would have to be in full control of the day-to-day activities of the company. It would be more important that a non-executive chairperson would be a member of the audit committee. I want to get clarification in that regard on the membership of the audit committee.

The position is as the Deputy stated. Under subsection (7)(b) the chairperson of the board of directors would not qualify for appointment to the audit committee. The Deputy argued earlier that the chief executive should not be a member of the board because he would have undue influence. We feel that if the chairperson were a member of the audit committee, he too could have the same influence to which the Deputy referred and that is the reasoning behind the amendment.

The words "executive chairperson" are used in the text.

No, the amendment only uses the term "chairperson". The words "executive chairperson" might have been used in the original text.

This is one of a number of very long amendments which redraft sections. It is unfair to lob such amendments at the Opposition the night before a debate of this kind, particularly when it was budget night and we had other matters on which to focus. I make the point that we are teasing the matter out now but the Department has had this for a long time. I understand there are pressures at the end of a session but I would have preferred more time to tease this out and take some counsel.

Amendment agreed to.
Amendments Nos. 92 and 93 not moved.
Section 40, as amended, agreed to.
Section 41 agreed to.
SECTION 42.

I move amendment No. 94:

In page 49, to delete lines 40 to 42.

Amendment agreed to.

I move amendment No. 95:

In page 51, line 2, to delete "(3)(a)” and substitute “(2)(a)”.

Amendment agreed to.

I move amendment No. 96:

In page 51, line 7, to delete "(3)(b)” and substitute “(2)(b)”.

Amendment agreed to.

I move amendment No. 97:

In page 52, line 3, to delete "205B(12)" and substitute "205B(14)".

Amendment agreed to.

I move amendment No. 98:

In page 52, line 5, to delete "205B(13)" and substitute "205B(15)".

Amendment agreed to.
Section 42, as amended, agreed to.
SECTION 43.

Amendments Nos. 99 to 110, inclusive, and amendments Nos. 119 and 120 are related and will be discussed together. Amendments Nos. 100 to 105, inclusive, are alternatives.

I move amendment No. 99:

In page 52, between lines 10 and 11, to insert the following:

" 'amount of turnover' and 'balance sheet total' have the same meanings as in section 8 of the Companies (Amendment) Act 1986;".

Amendment No. 99 inserts a definition of terms which are to feature in the subsequent text of the section. Amendment No. 100 is a substantive amendment in line with the principle adopted in section 40. I am reproducing the main part of section 43 which relates to 205E so that the full effect of the changes can be seen in context. The amendment contains three key changes. The first is the introduction in subsection 9 of an exemption from the section for private companies, limited by share, whose balance sheet and turnover totals are not greater than €7,618,428 and €15,236,856, respectively. This means that companies operating at levels under these financial thresholds do not have to comply with these provisions. However, as a matter of prudence, I hope that companies not legally bound by these obligations will put the procedures and questions in the section in place in their operations because, while the provisions are not relevant to the present, the time could come when they are. The facility for me to vary the thresholds is contained in section 46(1)(i) and I intend to monitor how the provision operates in practice.

As a consequence of these changes, the link in the original section between exemptions and eligibility for audit exemption is done away with. The second core amendment for the companies which will be subject to this section is that one of the aspects of the directors' compliance statements has been deleted. I am referring to my decision to omit the requirement for an opinion to be given that the company, minor incidences apart, complied with its relevant obligations in the financial year to which the statement relates. I regard the removal of this requirement as a major concession.

The final significant change is that companies not trading for profit, for example, management companies for blocks of apartments, companies used by the voluntary sector and such like, which are usually constituted as guaranteed companies, as well as unlimited companies, have been removed from the scope of this section because of the wording of subsection (2). Due to the substantive changes I have outlined, a number of consequential technical-type amendments have also been included in the present draft.

I consider that the changes incorporated in these amendments remove the difficulties Deputies had envisaged in the operation of the section. While I appreciate the work that went into the drafting of the amendments, I am sure Deputies Hogan and Howlin will appreciate the significant adjustments and concessions I have made. I am not disposed, nor do I consider it necessary, to accept their amendments. I commend my amendments to the House.

I welcome the Minister of State's amendments, particularly the audit exemption levels and the changes in the compliance statement for non-executive directors. It meets the tone and tenor of many of the contributions made on Second Stage. I also welcome his clarification on companies that have no capital, such as voluntary organisations and management companies established for the purpose of dealing with a certain matter. These are also exempt from the particular regulations, which will be welcomed by small and medium sized businesses who wanted to know about the cost of meeting the requirements originally laid down in the draft. It also brings the legislation into line with most other European countries in regard to the level of turnover now being exempted.

This is the exemption limit, which we will come to later. These are filing figures which relate to the compliance statement, which is important.

I am sure the Minister of State will be equally generous later on the question of the audit exemption. I welcome his announcement.

I welcome the Minister's comments. Cross-referencing a whole swathe of amendments to see exactly how they impact on the original published statute is difficult for those of us in Opposition. This is why I want to take the issue step by step in order to understand what is happening.

Have the exemption thresholds for declarations been raised and are non-capital bearing companies, such as dance or art companies, exempt? Am I to understand that the burden in terms of a declaration of compliance with all statutory provision on non-executive directors is now removed, urbi et orbi almost, for everyone?

Specifically on the amendment I tabled to the section, when the Minister's amendments are accepted, will it be a requirement for a company which is not in compliance with any provision of company law to set out that non-compliance in its annual statement, even before a final determination is made by a relevant statutory authority? This would be a particularly onerous burden on a company. I would like a degree of clarity on what the sections will read, as amended, in terms of the fears we all outlined at committee, including the role of non-executive directors, the difficulty in getting non-executive directors to be part of young companies which in the past had a mentoring role and the issue of voluntary or arts companies to which significant business people lent their names in the past but who would not be in a position to sign off on the accounts or say everything is kosher in terms of the company complying with all company law in this State and elsewhere. Are these concerns fully addressed in the Minister of State's amendments?

I will read a paragraph which I read previously and which relates to the second core amendment for companies which will be subject to this section. One of the aspects of the directors' compliance statement has been deleted. Section 43(5)(a)(ii) which states that except for instances of non-compliance of a minor or otherwise immaterial nature that may have occurred, the company has complied with its relevant obligations in that financial year. That provision, which was included in the original Bill, is being deleted.

This relates to my decision to omit the requirement for an opinion to be given. That is a major element of the change which will be welcomed by company directors.

Is subsection (b) also being deleted?

No, subsection (b) is relevant to subsection (a)(i).

What remains is that directors shall in their compliance statement state that they used all reasonable endeavours to secure the company's compliance with its relevant obligations in the financial year to which the financial report relates.

Yes and if they are not of the opinion that the procedures are effectively in place, they shall give an opinion in that regard. The relevant subsection states that the directors of a company to which this section applies shall in the statement required under subsection 5(a) specify whether, based on the procedures referred to in that subsection and their review of those procedures, they are of the opinion that they have used all reasonable endeavours to secure the company’s compliance with its relevant obligations in the financial year to which the annual report relates and if they are not of that opinion to specify the reasons.

They are required to state they have reviewed the procedures and have used all reasonable endeavours to ensure the company has complied effectively with the procedures in place to ensure we obtain fair and true results.

I have no difficulty with that inasmuch as it does not apply to the situations I have instanced relating to non-capital companies. Is the Minister saying they are all exempt?

Amendment agreed to.
Deputy Wilkinson took the Chair.

Amendments Nos. 100 to 105, inclusive, are related and may be taken together by agreement. Is that agreed? Agreed.

I move amendment No. 100:

In page 52, to delete lines 39 to 44, in page 53, to delete lines 1 to 48, in page 54, to delete lines 1 to 51 and in page 55, to delete lines 1 to 9 and substitute the following:

"(2) This section applies to-

(a) a public limited company (whether listed or unlisted), and

(b) a private company limited by shares,

but it does not apply to a company referred to in paragraph (a) or (b) that is of a class exempted under section 46(1)(j) of the Act of 2003 from this section or to a company referred to in paragraph (b) while that company qualifies for an exemption under subsection (9).

(3) The directors of a company to which this section applies shall, as soon as possible after the commencement of this section or after this section becomes applicable to the company, prepare or cause to be prepared a directors' compliance statement containing the following information concerning the company:

(a) its policies respecting compliance with its relevant obligations;

(b) its internal financial and other procedures for securing compliance with its relevant obligations;

(c) its arrangements for implementing and reviewing the effectiveness of the policies and procedures referred to in paragraphs (a) and (b).

(4) The directors' compliance statement (including any revisions) must-

(a) be in writing,

(b) be submitted for approval by the board of directors,

(c) at least once in every 3 year period following its approval by the board, be reviewed and, if necessary, revised by the directors, and

(d) be included in the directors’ report under section 158 of the Principal Act.

(5) The directors of a company to which this section applies shall also include in their report under section 158 of the Principal Act a statement-

(a) acknowledging that they are responsible for securing the company’s compliance with its relevant obligations,

(b) confirming that the company has internal financial and other procedures in place that are designed to secure compliance with its relevant obligations, and, if this is not the case, specifying the reasons, and

(c) confirming that the directors have reviewed the effectiveness of the procedures referred to in paragraph (b) during the financial year to which the report relates, and, if this is not the case, specifying the reasons.

(6) In addition, the directors of a company to which this section applies shall in the statement required under subsection (5)-

(a) specify whether, based on the procedures referred to in that subsection and their review of those procedures, they are of the opinion that they used all reasonable endeavours to secure the company’s compliance with its relevant obligations in the financial year to which the annual report relates, and

(b) if they are not of that opinion, specify the reasons.

(7) For the purposes of this section, a company's internal financial and other procedures are considered to be designed to secure compliance with its relevant obligations and to be effective for that purpose if they provide a reasonable assurance of compliance in all material respects with those obligations.

(8) Where the directors of a company to which this section applies fail-

(a) to prepare, or to cause to be prepared, a directors’ compliance statement as required by subsections (3) and (4)(a) to (c),

(b) to include a directors’ compliance statement in the directors report as required by subsection (4)(d), or

(c) to comply with subsections (5) and (6),

each director to whom the failure is attributable is guilty of an offence.

(9) A private company limited by shares qualifies for an exemption from this section in respect of any financial year of the company if-

(a) its balance sheet total for the year does not exceed-

(i) €7,618,428, or

(ii) if an amount is prescribed under section 46(1)(l) of the Act of 2003 for the purpose of this provision, the prescribed amount, and

(b) the amount of its turnover for the year does not exceed-

(i) €15,236,856, or

(ii) if an amount is prescribed under section 46(1)(l) of the Act of 2003 for the purpose of this provision, the prescribed amount.”.

Perhaps the Minister will respond to my amendment No. 102 which relates to the requirement to publish a non-compliance in the annual reports. Is that unaffected?

That amendment relates to a section which we have deleted.

Amendment agreed to.
Amendments Nos. 101 to 105, inclusive, not moved.

I move amendment No. 106:

In page 55, line 14, to delete "subsection (2)" and substitute "subsections (3) and (4)".

Amendment agreed to.

I move amendment No. 107:

In page 55, lines 16 and 17, to delete "subsection (4)" and substitute "subsections (5) and (6)".

Amendment agreed to.

I move amendment No. 108:

In page 55, lines 43 and 44, to delete "205E(2) and (3)(a) to (c)” and substitute “205E(3) and (4)(a) to (c)”.

Amendment agreed to.

I move amendment No. 109:

In page 55, line 46 and in page 56, lines 1 and 2, to delete "or in the notes to the company's accounts as required by section 205E(3)(d)” and substitute “as required by section 205E(4)(d)”.

Amendment agreed to.

I move amendment No. 110:

In page 56, line 3, to delete "205E(4)" and substitute "205E(5) and (6)".

Amendment agreed to.

I move amendment No. 111:

In page 56, between lines 6 and 7, to insert the following:

"(4) Section 194(6) applies, with the necessary modifications, in relation to an auditor's compliance with an obligation imposed on him by or under this section as it applies in relation to an obligation imposed by or under section 194.

(5) A person who contravenes this section is guilty of an offence.'.".

This amendment inserts two new subsections under section 205F. The first applies to protection contained in section 194(6) to auditors who provide information to the Office of the Director of Corporate Enforcement against liability for disclosing confidential information. The new subsection (5) makes it an offence for auditors who fail to comply with their obligations under section 205F. I commend the amendment to the committee.

Amendment agreed to.
Section 43, as amended, agreed to.
SECTION 44.

I move amendment No. 112:

In page 56, between lines 8 and 9, to insert the following:

"(a) by substituting the following for subsection (1):

'(1) The annual return of a company shall be made up to a date that is not later than its annual return date, except that the first annual return of a company incorporated after the commencement of section 44 of the Companies (Auditing and Accounting) Act 2003 shall be made up to the date that is its first annual return date.’;”.

Paragraphs (a) and (b) of the existing section 44 are designed to facilitate companies who wish to file annual returns early without changing their annual return reference date. The Companies Registration Office has pointed out that this could lead to abuse in respect of newly formed companies and amendment No. 112 is designed to prevent such abuse occurring by ensuring that the annual return reference date contained in section 147 of the Companies Act 1963 remains applicable for such newly incorporated companies.

Amendment agreed to.
Section 44, as amended, agreed to.
SECTION 45.

Amendments Nos. 113 and 114 are cognate and are consequential on amendment No. 115 and may be taken together by agreement. Is that agreed? Agreed.

I move amendment No. 113:

In page 56, line 23, to delete "auditor's report" and substitute "report prepared in accordance with subsection (6B)".

The policy objective under section 45 which amends 128 of the Companies Act 1963 is to establish that those companies which do not have to attach accounts to their annual returns to the Companies Registration Office have had their accounts audited. The accountancy bodies have, however, pointed out that the submission of an audit report on the accounts of a company without the accounts would, in most instances, be meaningless. Accordingly, these amendments require auditors of such companies to prepare a separate report for attachment to the annual reports. The modified and additional provisions are based on section 18 of the Companies (Amendment) Act 1986.

Amendment agreed to.

I move amendment No. 114:

In page 56, line 28, to delete "auditor's report" and substitute "report prepared in accordance with subsection (6B)*".

Amendment agreed to.

I move amendment No. 115:

In page 56, between lines 33 and 34, to insert the following:

"(6B) The auditors of a company referred to in subsection (6) or (6A) shall prepare a separate report to the directors which-

(a) confirms that they audited the accounts for the relevant year, and

(b) includes within it the report made to the members of the company pursuant to section 193.

(6C) A copy of the report prepared in accordance with subsection (6B) shall be certified by a director and by the secretary of the company to be a true copy of that report and shall be attached to the company's annual return.'.".

Amendment agreed to.
Section 45, as amended, agreed to.
SECTION 46.

I move amendment No. 116:

In page 57, subsection (1), lines 6 to 9, to delete paragraph (e) and substitute the following:

"(e) prescribing for the purposes of the criteria referred to in section 15(2)(b) amounts that are higher or lower than the euro amounts specified in that section and that apply instead of the euro amounts,”.

Amendment agreed to.

I move amendment No. 117:

In page 57, subsection (1)(j)(ii), lines 29 and 30, to delete “other than the Companies Acts”.

This amendment enables the Minister, by regulation, to exempt classes of companies and other undertakings from certain provisions of the Bill on the basis that they are otherwise regulated. The basis for some, at least, of the regulation of these entities is contained in part 13 of the Companies Act 1990. Accordingly, it is necessary to remove the reference to "other than the Companies Acts".

Amendment agreed to.

I move amendment No. 118:

In page 57, subsection (1)(k), lines 35 and 36, to delete “standard accounting practice” and substitute “accounting standards”.

This amendment aligns the terminology with the definition of accounting standards in section 39.

Amendment agreed to.

I move amendment No. 119:

In page 57, subsection (1)(l), line 39, after “1990” to insert “or for the purposes of section 205E(9) of that Act”.

Amendment agreed to.

I move amendment No. 120:

In page 57, subsection (1)(l), line 40, after “definitions” to insert “or in section 205E(9)*, as the case may be,”.

Amendment agreed to.

I move amendment No. 121:

In page 57, subsection (1)(m)(ii), line 46, to delete “(7)(b) and substitute “(8)(c)”.

This amendment seeks to change an incorrect cross reference.

Amendment agreed to.

I move amendment No. 122:

In page 58, subsection (3), line 16, to delete "concerning the amounts to be prescribed".

This amendment has the effect of deleting an inappropriate reference which would have the effect of making the provision inoperable.

Amendment agreed to.
Section 46, as amended, agreed to.
Sections 47 and 48 agreed to.
NEW SECTION.

Amendments Nos. 123, 124 and 127 are related and may be discussed together by agreement.

I move amendment No. 123:

In page 58, before section 49, to insert the following new section:

"Amendment of Companies (Amendment) (No. 2) Act 1999.

49.-Section 32(3) of the Companies (Amendment) (No. 2) Act 1999 is amended as follows-

(a) in paragraph (a)(ii) by substituting ’the amount of turnover of the company does not exceed the amount specified in section 8(2)(b) of the Companies (Amendment) Act 1986’ for ’the amount of the turnover of the company does not exceed €250,000, and

(b) in paragraph (a)(iii) by substituting ’the balance sheet total of the company does not exceed that specified in section 8(2)(a) of the Companies (Amendment) Act 1986’ for ’the balance sheet total of the company does not exceed €1,500,000.’.”.

The purpose of this amendment is to determine who will comply with the regulations. Before commenting further, I would like to hear what the Minister of State has to say. He may have good news for me.

Amendment No. 127 inserts a new section 51 into the Bill. There are two substantive aspects to the amendment. The first increases the turnover exemption threshold below which companies are eligible to dispense with having their accounts audited from approximately €317,000, which was originally £250,000, to €1.5 million. This is a substantial increase in the operative threshold and it is likely to allow a significant number of companies to avail of the exemption. The second substantive amendment is to delete the present section 32(3)(b) of the Companies (Amendment) (No. 2) Act 1999 and to insert a new section 32A. The requirement here is that companies can only avail of the audit exemption if they file their returns in the Companies Registration Office on time in the year in question as well as for the previous year, where applicable.

In response to Deputy Hogan's amendment, the ability to avail of the exemption from the statutory requirement to have its accounts audited is not available to a private company that conducts investment business under the Investment Intermediaries Act 1995 or acts as an insurance intermediary within the meaning of the Insurance Act 1989. The Second Schedule to the Companies (Amendment) (No. 2) Act 1999 contains a long list of regulated companies that cannot avail of the audit exemption. I would not be prepared to make the changes proposed by Deputy Hogan without having the matter considered by the company law review group in consultation with the regulator, the Irish Financial Services Regulatory Authority.

I therefore cannot accept this amendment. However, I will ask the authorities mentioned to examine the merits of the case so it can be considered in the context of the forthcoming Bill to implement the recommendations for changes to company law made by the company law review group. I am satisfied that increasing the turnover exemption threshold to €1.5 million is a significant concession and I would not be prepared to go to a higher threshold implicit in Deputy Hogan's amendment No. 123. I commend my amendment No. 127 to the committee.

Most of our European counterparts have significant levels of audit exemption. In the UK I believe the exemption level is £5.6 million. I welcome the substantial increase from €317,000 to €1.5 million. It certainly takes small companies out of auditing obligations, which had never been intended for them. The small and medium business organisations will welcome this.

There are many new regulations for insurance intermediaries. As a former insurance broker, I believe the Central Bank regulations are very onerous and there are many complaints about the requirement to comply with the regulations assigned under this Bill in addition to Central Bank regulations. We are giving this unique business group a double whammy in the regulatory regime we are imposing on them through the Central Bank and the Companies Acts. It is unfair that a limited company, albeit an investment intermediary, which complies with the appropriate bonding and consumer protection regulations through the Central Bank, should not be able to avail of the audit exemption under this Bill.

If those insurance brokers are private companies and under the threshold of——

I ask the Minister of State to wait until the Deputies have all made their points on this matter.

Deputy Hogan mentioned the much higher £5 million exemption in the UK. As the EU directive allows for a much higher exemption what is the rationale for what is proposed in the Bill? There is considerable concern in the small to medium business sector, bearing in mind the internal competition they face from the internationally traded inward investment multinational companies that can afford to pay higher salaries, etc. We have an indigenous sector which is faced with huge salary overheads because the companies happen to be located in an economy that attracts a huge amount of foreign direct investment with the corresponding very high level of salaries that these companies are prepared to pay.

It is odd to now expect a level of compliance from them. There is a serious danger that we will overregulate and leverage an excessive preponderance of compliance on essentially small domestic companies. It is in our long-term interest to allow them grow bigger. We are inhibiting their ability to do so to the advantage of the international companies. Why is the Minister of State unwilling to push out the boat further and increase the threshold? I hear many complaints that we are overregulating small to medium sized businesses that are essentially Irish. It is almost patriotic to ask that our companies should not to be overregulated. They are not big corporations, but small owner-managed firms.

The purpose of this section is to exempt companies from the requirement to have audited accounts. It is very important for companies to have audited accounts unless they are too small. I believe the threshold in the United Kingdom is much too high. The Minister's amendment, which proposes a limit of €1.5 million, is about right as the limit in the Bill as originally published was too low. I would not agree with Deputy Conor Lenihan that a much higher level would be in the interest of anybody. It is in the interest of the shareholders and the public as well as being in the interest of the proper conduct of business to have audited accounts except where it is oppressive or excessively onerous to require them, particularly for small companies.

I strongly welcome the Minister of State's amendment, which shows he was listening to the points made on Second Stage. However, I have a concern over the requirement to have timely annual returns. If the objective of inserting thresholds is to reduce the burden on very small companies, it is possible those very small companies might not have filed returns in a timely way, simply because they do not have audited accounts.

They still have to furnish accounts.

Deputy Howlin should be allowed to continue.

There could be circumstances in which this requirement could be breached and therefore the exemption would not take effect for the very small companies the Minister of State envisages. I ask him to expand on the new subsection he proposes to insert.

Deputy Hogan spoke of a double whammy on insurance intermediaries. If their turnover is less than €15,236,856 and asset value is below €7,618,428, they are not required to comply with the compliance statement. That is the position under this legislation and that is the reason we have asked the Central Bank and other authorities mentioned in my introductory statement to look at the area to which the Deputy referred as we did not have sufficient information on which to base a decision.

Will that information be available before Report Stage?

No. With regard to Deputy Conor Lenihan's question, I wonder if he was confusing the filing limits and the audit exemption limits?

I was referring to the audit exemption limits.

Our exemption limit has gone to €1.5 million and the British limit was increased substantially a few weeks ago. The accountancy bodies in Britain were not in favour of that increase when it was proposed and subsequently implemented. Arising from studies undertaken in Ireland, the information available to me suggests that, on the basis of an exemption limit of €1.5 million turnover, approximately 100,000 companies would be taken out of the audit sphere, out of a total of approximately 122,000 companies. That is a substantial level of exemption. From my consultations with former colleagues in the accountancy profession, I believe most of them would be quite happy with what has now emerged. I also believe many companies will have audits carried out irrespective of whether it is necessary but, undoubtedly, many of them will not do so. However, they will still have to comply with the Companies Acts and the Revenue Acts. In this age of greater compliance, I do not believe people will revert to the shoe box era of accountancy. Deputy Howlin raised a question about the time of filing returns. It is important to promote a culture of compliance, which has been established over a number of years. However, there may still be some problems.

A small company which is already in trouble could incur a double whammy.

I am looking at that area. I believe there may be a need for some tweaking in that regard.

Amendment, by leave, withdrawn.
Amendment No. 124 not moved.
SECTION 49.

I move amendment 125:

In page 58, paragraph (a), line 41, to delete “striking out” and substitute “deleting”.

This is purely a minor drafting amendment, to follow normal drafting conventions.

Amendment agreed to.
Section 49, as amended, agreed to.
NEW SECTIONS.

I move amendment No. 126:

In page 59, before section 50, to insert the following new section:

The Company Law Enforcement Act 2001 is amended by inserting the following after section 110:

110A.-(1) In this section-

"appropriate officer" means-

(a) in respect of functions that, under the Companies Acts, are to be performed by the Minister, the Minister or an officer of the Minister,

(b) in respect of functions that, under the Companies Acts, are to be performed by the Director, the Director or an officer of the Director,

(c) in respect of functions that, under the Companies Acts, are to be performed by the inspector or inspectors appointed pursuant to Part II of the Companies Act 1990, an inspector or, where more than one inspector is appointed, any inspector, and

(d) in respect of functions that, under the Companies Acts, are to be performed by the registrar of companies, a registrar, an assistant registrar or any other person authorised in that behalf by the Minister under section 52(2) of the Companies (Amendment) (No. 2) Act 1999;

"item" includes a document and any other thing;

"notice" includes-

(a) any request, notice, letter, demand, pleading or other document, and

(b) any form of obligation that an individual may have under the Companies Acts by reason of a demand or request made by an appropriate officer, whether communicated in writing, orally or by other means.

(2) In any legal proceedings (including proceedings relating to an offence) a certificate signed by an appropriate officer in the course of performing his or her functions is, in the absence of evidence to the contrary, proof of the following:

(a) if it certifies that the officer has examined the relevant records and that it appears from them that during a stated period an item was not received from a stated person, proof that the person did not during that period furnish that item and that the item was not received;

(b) if it certifies that the officer has examined the relevant records and that it appears from them that a stated notice was not issued to a stated person, proof that the person did not receive the notice;

(c) if it certifies that the officer has examined the relevant records and that it appears from them that a stated notice was duly given to a stated person on a stated date, proof that the person received the notice on that date;

(d) if it certifies that the officer has examined the relevant records and that it appears from them that a stated notice was posted to a stated person at a stated address on a stated date, proof that the notice was received by that person at that address on a date 3 days after the date on which the document was posted;

(e) if it certifies that the officer has examined the relevant records and that it appears from them that a document was filed or registered with or delivered at a stated place, on a stated date or at a stated time is proof that the document was filed or registered with or delivered at that place, on that date or at that time.

(3) A certificate referred to in subsection (2) that purports to be signed by an appropriate officer is admissible in evidence in any legal proceedings without proof of the officer's signature or that the officer was the proper person to sign the certificate.

(4) A document prepared pursuant to any provision of the Companies Acts and purporting to be signed by any person is deemed, in the absence of evidence to the contrary, to have been signed by that person.

(5) A document submitted under the Companies Acts on behalf of a person is deemed to have been submitted by the person unless that person proves that it was submitted without that person's consent or knowledge.

(6) A document that purports to be a copy of, or extract from, any document kept by or on behalf of the Director and that purports to be certified by-

(a) the Director,

(b) an officer of the Director, or

(c) any person authorised by the Director,

to be a true copy of or extract from the document so kept is, without proof of the official position of the person purporting to so certify, admissible in evidence in all legal proceedings as of equal validity with the original document.

(7) A document that purports to be a copy of, or extract from, any document kept by the Minister and that purports to be certified by-

(a) the Minister,

(b) an officer of the Minister, or

(c) any person authorised by the Minister,

to be a true copy of, or extract from, the document so kept is, without proof of the official position of the person purporting to so certify, admissible in evidence in all legal proceedings as of equal validity with the original document.

(8) A document that purports to be a copy of, or extract from, any document kept by an inspector and that is certified by-

(a) the inspector, or

(b) any person authorised by the inspector,

to be a true copy of, or extract from, the document so kept is, without proof of the official position of the person purporting to so certify, admissible in evidence in all legal proceedings as of equal validity with the original document.

(9) A document that purports to have been created by a person is presumed, in the absence of evidence to the contrary, to have been created by that person, and any statement contained in the document is presumed to have been made by the person unless the document expressly attributes its making to some other person.'.".

The Office of the Director of Corporate Enforcement was established under the Company Law (Enforcement) Act 2001. That office assumed responsibility for the enforcement of the Companies Acts, which was previously the responsibility of the Minister. In the limited time the office has been in operation, a number of technical difficulties have arisen in the manner in which the office is able to bring information before the courts. Amendment No. 126 is designed to ease the way in which such information can be certified and submitted to the courts. It is then up to the court to determine what weight and value it wishes to attribute to any of the information or documents submitted.

The provisions are based on the precedent found in competition and taxation law. Similar provisions are included for the Office of the Director of Corporate Enforcement, the Minister and his officers, inspectors appointed under the Companies Acts and the Companies Registration Office. Overall, the amendment should assist the proper enforcement of company law. I commend it to the committee.

This section is not really germane to this Bill. It is a mini-Bill, encompassing an amendment to the Company Law (Enforcement) Act. While I have no difficulty in accepting it, I presume this Bill is simply the passing vehicle which is being used.

It sets the exemption limit.

If we had known about this provision earlier, we could have had greater consultation on it. However, from reading the amendment and hearing the Minister's explanation, I will support it if it helps corporate law enforcement.

Amendment agreed to.

I move amendment No. 127:

In page 59, before section 50, to insert the following new section:

The Companies (Amendment) (No. 2) Act 1999 is amended as follows:

(a) in section 32(1) by substituting ’Subject to sections 32A and 33(1)’ for ’Subject to section 33(1)’;

(b) in section 32(3)(a)(ii) by substituting ’€1,500,000’ for ’£250,000’;

(c) in section 32(3)(a)(v)(IV) by substituting ’(other than paragraph 18 thereof).’ for ’(other than paragraph 18 thereof),;

(d) in section 32(3) by deleting ’and’ where it occurs after paragraph (a)(v)(IV) and by repealing paragraph (b);

(e) by adding the following section after section 32:

32A.-Notwithstanding that the conditions specified in section 32(3) are satisfied, a company is not entitled to the exemption in a financial year unless-

(a) the company’s annual return to which the accounts for that financial year are annexed is delivered to the registrar of companies in compliance with section 127 of the Principal Act, and

(b) if the annual return referred to in paragraph (a) is not the company’s first annual return, its annual return to which the accounts for its preceding financial year were annexed was also delivered to the registrar of companies in compliance with section 127 of the Principal Act.’.”.

Amendment agreed to.

I move amendment No. 128

"In page 59, before section 50, to insert the following new section:

Section 43 of the Companies (Amendment) (No. 2) Act 1999 is amended by inserting the following after subsection (15):

'(16) In this section "director" does not include an alternate director.'.".

Amendment No. 128 inserts a new section 52 into the Bill. Essentially, it inserts a new subsection (16) into section 43 of the Companies (Amendment) (No. 2) Act 1999 to provide that an alternate director is not acceptable, for the purposes of this section, as fulfilling the requirement to have a resident director in the State. Deputies may remember that section 43 was one of a number of provisions contained in the Companies (Amendment) (No. 2) Act 1999 to address problems created by non-resident persons using the State as a companies registration point. I commend the amendment to the select committee.

Amendment agreed to.

I move amendment No. 129

In page 59, before section 50, to insert the following new section:

Section 13 of the Companies (Amendment) Act 1982 is amended by substituting the following for subsection (2):

'(2) The Minister may by an order made under this section declare that the provisions of section 376 of the Principal Act shall not apply to a partnership that is of a description, and that has been or is formed for a purpose, specified in the order.'.".

Section 13 of the Companies (Amendment) Act 1982 at present allows the Minister to make regulations disapplying the restriction in section 376 of the Companies Act 1963 on the formation of partnerships containing more than 20 persons. To facilitate venture capital partnerships, it is proposed to make such a regulation. However, it is considered appropriate that the exemption should apply to existing as well as new partnerships formed after the regulations are made. Accordingly, amendment No. 129 amends section 13 (2) of the 1982 Act to enable this to be done. I commend the amendment to the select committee.

Amendment agreed to.

I move amendment No. 130

In page 59, before section 50, to insert the following new section:

Section 200 of the Act of 1963 is amended by renumbering that section as section 200(1) and by adding the following:

'(2) Notwithstanding subsection (1), a company may purchase and maintain for any of its officers or auditors insurance in respect of any liability referred to in that subsection.

(3) Notwithstanding any provision contained in an enactment, the articles of a company or otherwise, a director may be counted in the quorum and may vote on any resolution to purchase or maintain any insurance under which the director might benefit.

(4) Any directors' and officers' insurance purchased or maintained by a company before the date on which the amendments made to this section by the Companies (Auditing and Accounting) Act 2003 came into operation is as valid and effective as it would have been if those amendments had been in operation when that insurance was purchased or maintained.

(5) In this section a reference to an officer or auditor includes any former or current officer or auditor of the company, as the case may be.'.".

Amendment No. 130 adds four new subsections to section 200 of the Companies Act 1963. The essence of the amendment is to ensure that companies can take out directors' and officers' liability insurance. There is a doubt as to whether companies can actually take out such insurance under the terms of existing section 200. These amendments serve to remove that doubt and also provide certainty for any existing cover.

Amendment agreed to.

Amendments Nos. 131 and 134 are related and may be discussed together, by agreement. Is that agreed? Agreed.

I move amendment No. 131:

In page 59, before section 50, to insert the following new section:

The Companies Acts specified in Schedule 2 are amended as indicated in that Schedule.".

Amendments Nos. 131 and 134 provide, by way of the detail in Schedule 2, for removing doubts which have arisen as to the ability of the Office of the Director of Corporate Enforcement to prosecute offences under the Companies Acts in respect of all the sections specified in this Schedule. At its simplest, the absence of the words "shall be guilty of an offence" or similar words in other sections has raised the spectre of an arguable case being made that the sections in question are not capable of being prosecuted in an appropriate manner. The various defaults set out in the sections in the Schedule are being corrected and will thus be capable of criminal prosecution, to be pursued by the Office of the Director of Corporate Enforcement.

Amendment agreed to.
Sections 50 and 51 agreed to.
SCHEDULE.

Amendments Nos. 132 and 133 are related and may be discussed together, by agreement. Is that agreed? Agreed.

I move amendment No. 132:

In page 60, in the third column, line 12, to delete "he" and substitute "the person".

This involves a minor piece of gender proofing by substituting "the person" for "he". I believe the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, would have no difficulty in accepting this amendment.

I would like to inform the Deputy that the best legal advice I have received indicates that it is appropriate to maintain the "he" formulation because the provision in question pre-dates certain gender-related requirements. Accordingly, I will not accept Deputy Howlin's amendment No. 132.

It is too late to argue about the matter. In the interests of plain English, it is preferable for those reading the Bill to see the word "he". The reference should be to "the person", regardless of the legal implications.

The provision relates to measures introduced before gender equality legislation was introduced. That is the legal advice.

Legal advice should be ignored occasionally.

Amendment, by leave, withdrawn.

I move amendment No. 133:

In page 60, in the third column, to delete lines 40 to 42 and substitute the following:

"(a) In subsections (1) and (2) substitute ’Supervisory Authority’ for ’Minister’ and substitute ’under or for the purposes of section 187’ for ’under section 187’.

(b) In subsection (3) substitute ’Supervisory Authority’ for ’Minister’ and substitute ’under or for the purposes of section 187’ for ’under the said section 187’.

(c) In subsection (4)(a) to (d) substitute ’Supervisory Authority’ for ’Minister’ wherever it appears.”.

Amendment agreed to.
Schedule, as amended, agreed to.
NEW SCHEDULE.

I move amendment No. 134:

In page 60, after line 49, to insert the following new schedule:

"SCHEDULE 2

ItemNumberActs and Provisions AffectedAmendments1.

Companies Act 1963, sections 10(10), 12(3), 44(8), 46(2), 47(4), 57(3), 58(3), 59(5), 69(2), 70(3), 78(5), 84(2), 86(2), 91(5), 92(4), 100(3), 101(2), 107(3), 110(2), 113(5), 114(3), 114(4), 115(6), 116(9), 117(4), 128(4), 136(3), 136(5), 143(5), 143(6), 145(4), 156(3), 157(2), 179(4), 180(5), 188(2), 193(4), 194(5)(b), 194(6), 195(12), 197(3), 201(6), 202(4), 202(6), 203(3), 205(5), 224(5), 227(2), 249(3), 252(2), 256(7), 261(7), 262(2), 263(3), 263(6), 263(7), 272(2), 273(3), 273(6), 273(7), 276A(3), 278(2), 280(4), 300, 301, 301A(5), 303(2), 305(2), 306(2), 310(2), 314, 317(2), 321(2), 322C(3), 358, 377(7) and 378(2)

Substitute, in each of the provisions specified in column 2, "shall be guilty of an offence and liable to a fine" for "shall be liable to a fine".

2.

Companies Act 1963, section 60(5)

Substitute, in the provision specified in column 2, "shall be guilty of an offence and liable to imprisonment for a period not exceeding 6 months or to a fine not exceeding €1,904.61 or to both" for "shall be liable to imprisonment for a period not exceeding 6 months or to a fine not exceeding £500 or to both".

3.

Companies Act 1963, section 102(2)

Substitute for the provision specified in column 2 the following:

"(2) If a judgment creditor makes default in complying with subsection (1) he shall be guilty of an offence and liable to a fine not exceeding €1,904.61, and if a company makes default in complying with that subsection, the company and every officer who is in default shall be guilty of an offence and liable to a fine not exceeding €1,904.61.".

4.

Companies Act 1963, sections 114(2), 131(6), 159(5), 190(9), 221(2), 234(5) and 398(3)

Substitute, in each of the provisions specified in column 2, "shall be guilty of an offence and liable to a fine" for the words "shall be liable to a fine" in both instances in which those words occur within that provision.

5.

Companies Act 1963, section 266(6)

Substitute for the provision specified in column 2 the following:

"(6) If default is made

(a) by the company in complying with subsections (1) and (2),

(b) by the directors of the company in complying with subsection (3), or

(c) by any director of the company in complying with subsection (4), the company, directors or director, as the case may be, shall be guilty of an offence and liable to a fine not exceeding €1,904.61, and in case of default by the company, every officer of the company who is in default shall be guilty of an offence and liable to a fine not exceeding €1,904.61.".

6.

Companies (Amendment) Act 1990, section 11(7)

Substitute, in the provision specified in column 2, "shall be guilty of an offence and liable to a fine" for "shall be liable to a fine".

7.

Companies Act 1990, section 50(7)

Substitute for the provision specified in column 2 the following:

"(7) If default is made in complying with subsection (1) or (5) or if an inspection required under subsection (6) is refused, the company and every officer of the company who is in default shall be guilty of an offence and liable on summary conviction to a fine not exceeding €1,904.61 and, for continued contravention, to a daily default fine not exceeding €63.49 and, if default is made for 14 days in complying with subsection (4), the company and every officer of the company who is in default shall be guilty of an offence and liable to a fine not exceeding €1,904.61 and, for continued contravention, to a daily default fine not exceeding €63.49.".

8.Companies Act 1990, section 60(10)

Substitute, in the provision specified in column 2, "shall be guilty of an offence and liable to a fine" for "shall be liable to a fine" in both instances in which those words occur within that provision

9.

Companies Act 1990, sections 80(10) and 161(6)

Substitute, in each provision specified in column 2, "shall be guilty of an offence and liable to a fine" for the words "shall be liable to a fine" in both instances in which those words occur within that provision.".

Amendment agreed to.
TITLE.

I move amendment No. 135:

In page 5, line 6, after "OF" to insert "A BODY TO BE KNOWN AS ÚDARÁS MAOIRSEACHTA INIÚCHTA AGUS CUNTASAÍOCHTA NA hÉIREANN OR IN THE ENGLISH LANGUAGE".

I proposed this amendment to include the Irish language version of the authority's title in the Bill. The Minister insists on putting the English language version first.

Amendment, by leave, withdrawn.

I move amendment No. 136:

In page 5, lines 6 to 8, to delete "THE IRISH AUDITING AND ACCOUNTING SUPERVISORY AUTHORITY" and substitute "A BODY TO BE KNOWN AS THE IRISH AUDITING AND ACCOUNTING SUPERVISORY AUTHORITY OR, IN THEIRISH LANGUAGE, ÚDARÁS MAOIR-SEACHTA INIÚCHTA AGUS CUNTAS-AÍOCHTA NA hÉIREANN".

Amendment agreed to.
Title, as amended, agreed to.

I thank the Minister of State and his officials for attending this meeting. I also thank members for their attendance and their contributions as representatives of their parties.

I thank members of the committee, particularly Deputies Hogan and Howlin for their contributions today and on Second Stage. I thank my colleagues for their assistance. I thank the Chair for his excellent control of today's events. I thank the staff of the House. I thank the staff of my Department. I know they have worked very hard on this legislation in recent years. I thank the interested individuals and groups, such as the Law Society, the various accountancy bodies, IBEC and the unions for their submissions. This is an important Bill.

I thank the Minister of State and his officials for listening to the views of the Fine Gael members of the committee.

I would like to be associated with the remarks made by the Minister of State.

I thank all those who helped us out from time to time.

Bill reported with amendments.
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