Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I will begin the debate on the governance area by setting out the briefing note for the section. Section 15 implements a number of the recommendations set out in chapter 11 of the commission's report, while also retaining certain measures provided for in section 53 of the Credit Union Act 1997. This section substitutes a new section 53 of the 1997 Act which provides that credit unions should have boards of directors with responsibility for the general control and management of the credit union. It also sets out the composition of the board of directors, the method of election of members of the board, their term of office and the re-election of retiring directors. Subsection (3) implements recommendation 11.3.12 of the commission's report, namely, that the board of a credit union shall comprise an odd number of directors, with a minimum of seven and a maximum of 11. This reduces the current maximum number of directors from 15 to 11. However, as each director will be required to have the knowledge skill and qualifications necessary to carry out the duties of a director, concerns regarding the number of qualified board members available need to be balanced against the reduction in the number of members required to sit on the board.

Subsection (7) sets out the term of office of a director. Subsection (7)(a) sets out when the term will begin and subsection (7)(b) ensures that the term will not extend beyond the third subsequent AGM.

These provisions are not new. They are part of the 1997 Act. Section 53(7)(c) has been amended from that contained in the 1997 Act to include applicable requirements of financial service legislation in line with new fitness and probity measures. The directors of a credit union are required under this section to have sufficient time to devote to their role and responsibilities associated with their role. This section prohibits a number of persons from acting as directors, including bodies corporate, persons not of full age, employees, voluntary assistances or members of the board of a credit union committee. Directors are required under this section to possess the necessary expertise, experience and probity and section 53(13)(b) provides that directors may be required to undertake training and development to ensure they have a minimum competence in specific relevant areas.

Although the new section 53(14) of the principal Act is faithful to the report recommendation 11.3.53, it has sparked a great deal of discussion. The report recommends that board members shall not serve on the board for more than nine years in aggregate in any 15-year period. For existing board members, the commission recommends that the nine-year period should commence from the date on which the requirement is introduced. The new section 53(15) ensures existing board members will be able to remain in the position for a further nine years following the enactment of the legislation. To avoid mass retirement after a nine-year term of office and to ensure experience is retained on boards, the number of directors retiring should, as far as possible, be the same at each AGM. This section also requires the secretary of a credit union to notify the Central Bank and the board oversight committee when the secretary becomes aware that all the credit union board members intend to resign on the same date.

I do not see a necessity to amend the restrictions to terms of service under the 1997 Act, which have worked well, and Deputy Boyd Barrett's amendment is such a case because the restriction proposed is in place. With regard to the new restrictions, I would like to establish the principle of rotation and I am prepared to listen to the advice of Deputies on how long that should be, but they should bear in mind that the amendment has been presented as if all the directors would have to go when the Bill is enacted and we would have to get new directors in everywhere who could only serve for nine years. The existing directors can serve another nine years under the section following the enactment of the legislation, and then the rotation will begin. The existing position prevails and the principle of rotation is the rock I will stand on regarding the new restrictions.