Dáil Éireann Debate, Wednesday - 18 April 2018
20. Deputy Billy Kelleher asked the Minister for Business, Enterprise and Innovation her views on the robustness of the Companies Act 2014 with respect to corporate governance; and the penalties in operation for breaches under the Act. [16974/18]
Amharc ar fhreagraWill the Minister give her views on the robustness of the Companies Act 2014 with respect to corporate governance and the penalties in operation for breaches under the Act? We are all aware of alleged breaches and investigations and everything that flows from that in a prominent media outlet at this time. Is the Minister confident and happy with the robustness of the Office of the Director of Corporate Enforcement and the penalties in the Act to address issues of breaches of corporate governance in plcs and other companies?
I want to begin by congratulating Deputy Kelleher on his appointment as spokesperson for business, enterprise and innovation and I look forward to working with him. I do not have a monopoly on good ideas and I am happy to work closely with Deputy Kelleher, as I do with my other colleagues, in doing everything we can to create and sustain jobs and to support enterprise.
I am satisfied that the Companies Act 2014 is robust. It is an important element in ensuring Ireland's regulatory environment is maintained to the highest standard. All companies, regardless of size, are required to comply with the extensive provisions of the Companies Act 2014.
Moreover, company directors are obliged under common law to exercise fiduciary duties, which include the obligation to act with care, skill and diligence. Alongside company law, companies must comply with a broad range of legal requirements on the treatment of employees and creditors, disclosure to Revenue and the protection of the environment etc. Taken together, these regulations make up a wide-ranging legal framework for the conduct of business.
The Companies Act 2014 introduced some changes that are relevant to the governance of all companies, both listed and not. In particular, one of the key innovations of the Act is that directors' common law fiduciary duties are codified together with the diverse statutory duties and assembled into one place. This makes the law more accessible and comprehensive for directors.
The Act also introduced a new directors' compliance statement at section 225. This places an onus on directors of affected companies to make a statement confirming that a company has policies in place to ensure it complies with "relevant obligations" and that they have conducted a review of the appropriateness of these policies or structures during the financial year. The "relevant obligations" mean the company’s obligations under tax law; and company law obligations, the breach of which would be a serious offence as defined. Section 225 applies to all public limited companies and large private companies, that is, private companies where the balance sheet for the year exceeds €12.5 million and the turnover for the year exceeds €25 million.
The Companies Act 2014 provides for remedies for breach of directors’ fiduciary duties. In general, the company may sue for damages, seek an indemnity for losses or seek an account of profits. In addition, there are circumstances provided for in the Act where a director can be made personally liable for the debts of the company. Examples include reckless trading; fraudulent trading; failure to keep adequate accounting records; and acting in breach of a restriction or disqualification order.
The Government is committed to ensuring that the Companies Act 2014 continues to deliver a robust yet competitive corporate regulatory framework for business in Ireland. Consequently, the provisions of the Act are under continuous review.
I thank the Minister for her kind words. I believe I can be co-operative. The purpose of parliamentary democracy is to hold to account while at the same time to proffer ideas that may address some of the challenges out there.
We speak in hushed tones because the alleged breaches in a company, namely, Independent News & Media, INM, relate to corporate governance. We also speak in hushed tones about the alleged data protection breaches in the same company. I tabled this parliamentary question to ensure that we are confident that we have a robustness, not only around the legislation but also around our ability to enforce the legislation. It is a clear issue. We can have very fine Acts on the Statute Book but we need to be able to ensure there is proper enforcement. I accept that fiduciary duties, underpinned by common law and by this legislation, put an onus on company directors. Equally, it places an onus on the State to ensure the enforcement of such legislation.
The Office of the Director of Corporate Enforcement, ODCE, has played and continues to play a key role in facilitating compliance and enforcement of company law. The ODCE 2016 annual report points to a number of key success during the year. Following the scrutiny of reports submitted to the office by liquidators of insolvent companies, 90 company directors were restricted and a further 11 were disqualified by the High Court. The Office of the Director of Corporate Enforcement examines and reviews all such reports and then makes a determination as to whether or not the liquidator is relieved from the obligations to apply for the restriction of a company director. Some 93 restriction undertakings were obtained from directors of insolvent companies and as a proportionate and cost-effective alternative to formal enforcement actions, cautions issued to a total of 61 companies, 108 directions were issued to relevant parties requiring them to comply with their statutory obligations under company law. In keeping with the ongoing strategic shift towards the investigation of more serious indications of wrongdoings, five investigation files were submitted to the Director of Public Prosecutions. The Office of the Director of Corporate Enforcement is certainly doing a lot of work in that space.
Within the Office of the Director of Corporate Enforcement, one has the office and within that office, one has the individual, the actual director. Will the Minister clarify that she is happy with the director of the office? Is she uncomfortable with the idea that while every individual is entitled to vindicate his or her good name, people would hold the director personally responsible in acting out his duties under the various Acts that have established the office and under the Acts he is obliged to enforce? This is in the context of references made that the director, Mr. Drennan, would be held personally responsible for alleged leaks and breaches of confidentiality.
It is important to say that this matter is before the courts. We need to respect that ongoing process. I am bearing that in mind with regard to what I say here. I am very confident in regard to the work done by the Office of the Director of Corporate Enforcement. It is an independent agency and it acts independently of my Department. It is the function of my Department to provide the necessary funding. We have increased its funding over the last number of years to enable it to employ more specialised people, such as forensic accountants, and the people it needs to carry out the work more effectively.
With regard to indemnity, it is absolutely the case that any public servant who acts properly and in accordance with his or her mandate, and who does not breach any laws or ethical principles, is indemnified by the State. This point was made by the Taoiseach in the Dáil yesterday. We resource the Office of the Director of Corporate Enforcement and we have increased the resources over the last number of years. It is very much strengthened compared to where it was, and I am satisfied that it acts independently and it carries out its work in a proper way.
