Dáil Éireann Debate, Thursday - 7 October 2004
58 Dr. Twomey asked the Minister for Enterprise, Trade and Employment if his attention has been drawn to concerns that have been expressed by business and accountancy groups regarding the increasing regulatory burdens being imposed on companies as a result of new companies, competition and regulatory legislation; if he will introduce a study to assess the cost of regulation to business; and if he will make a statement on the matter. [23619/04]
Amharc ar fhreagraAll regulatory legislation involves striking a balance between the public benefits sought to be achieved by each measure and the costs involved for those being regulated and for the economy. I believe that in general we get that balance right. We are not an over-regulated country. While I do recognise the importance of keeping all regulatory burdens under appropriate review, I do not see a need at this stage for a general study of the kind referred to in the question.
In respect of new legislation relating to company law, Deputies will be aware that the Committee of Public Accounts inquiry into deposit interest retention tax identified a number of shortcomings in regard to auditing. The Tánaiste established the review group on auditing, representative of the social partners and other major interest groups, and the Companies (Auditing and Accounting) Act 2003 was designed to implement the recommendations of that group.
The primary objective of the Act was to establish the Irish Auditing and Accounting Supervisory Authority, IAASA, whose main purpose is to oversee the manner in which the accountancy bodies regulate their members. In addition, IAASA is empowered to review the accounts of certain classes of companies — essentially large companies.
The Act also contains provisions relating to the establishment of audit committees and the preparation of compliance statements by directors. In the course of the passage of the Bill through the Oireachtas these provisions were significantly amended. The result is that the requirements in both provisions have been ameliorated and while they apply to all public limited companies their application to private companies has been redefined. In the case of the compliance statement they only apply to private companies with a turnover in excess of €15.236 million and in the case of the audit committee to private companies with a turnover in excess of €50 million.
Consistent with his remit to encourage compliance with the Companies Acts, the Director of Corporate Enforcement commenced work earlier this year on developing guidance to assist the relevant companies and company directors to comply with the new directors compliance statement. He invited IBEC, the Institute of Directors, the Consultative Committee of Accountancy Bodies — Ireland and the Revenue Commissioners to assist him in finalising appropriate draft guidance. In late July, the director published a consultation paper and draft guidance on the compliance statement obligations for directors. His office also participated in the development by the Auditing Practices Board of equivalent draft guidance with respect to reports by auditors on the directors' compliance statements, and this was published by the board in August for comment. The closing dates for receipt of observations on the two sets of draft guidance for directors and for auditors was set at 30 September and 15 October, respectively.
I understand that the Director of Corporate Enforcement has received some 30 submissions to date and that he is now commencing to review the submissions in conjunction with representatives of those who assisted in preparing the original draft guidance. He has publicly indicated that he will shortly be referring to my Department for consideration the comments relating to the commencement of the relevant provision of the 2003 Act. It is the director's intention to publish definitive guidance on the obligation to prepare compliance statements as soon as possible after the making of the relevant commencement order.
The development of this guidance is welcome and should assist company directors in developing a common understanding of its scope and requirements. The associated consultation process is also consistent with the principles of transparency and effectiveness outlined in the Government's recent White Paper entitled Regulating Better. I believe that the Companies (Auditing and Accounting) Act 2003 is a reasonable, proportionate and balanced response to the concerns which arose from the PAC DIRT inquiry.
More generally, in the year 2000, a standing advisory body on company law, the company law review group, was set up to advise the Minister for Enterprise, Trade and Employment on the reform and modernisation of company law. The group brings together the expertise of business, regulators and social partners. Its first report, published in February 2002, sets out a blueprint to restructure, consolidate, simplify and modernise company law in Ireland. The Government approved this strategy and the general scheme of the Bill to give effect to these proposals is now being drafted.
Simplification and consolidation are in themselves core principles of good regulation. Moreover, a major focus of the Bill will be the simplification of procedures for incorporation and governance of private companies, with a consequent reduction in costs. The review group has an ongoing role in advising on striking the right balance to ensure that markets work efficiently, effectively and fairly, and that market failure is addressed appropriately through information, removal of barriers, enforcement or regulatory intervention. The general scheme of the new Bill will apply those principles throughout.
In so far as competition legislation is concerned, the Competition Act 2002 reduced the regulatory burden on companies by increasing the turnover thresholds and abolishing the asset threshold for mandatory notification of mergers and acquisitions. The Act also made provision for more effective enforcement of competition law.
