Mick Wallace (Wexford, Independent) | Oireachtas source

I move amendment No. 146:

In page 938, between lines 36 and 37, to insert the following:
“1233. (1) An unlimited company shall disclose by the filing of a notification with the Companies Registration Office a list of all members which are limited companies, and their respective number of allocated shares.(2) Subsection (1) shall apply to all body corporate members, wheresoever registered.
(3) A transfer of shares to a new body corporate member which is a limited liability company shall not take effect until the notification referred to in subsection (1) has been filed with the Companies Registration Office.
(4) Failure to file the notification referred to in subsection (1) may result, on application to the Court by any interested party, to the imposition of limited liability status on the unlimited company in question.”.

I am sorry I delayed proceedings.

Most people assume that when dealing with an unlimited company there is no upper limit on the personal liability of the shareholders for the company's debts if the company was to become insolvent. Approximately 4,000 or 2.3% of current Irish companies are unlimited and, as a result, they escape the stricter filing and disclose requirements that private limited companies are under. The filing and disclosure requirements allow a creditor to appraise himself of a company's solvency before trading with it. However, many large corporate sources are using unlimited liability companies but seeking to limit liability by ensuring that some or all of the shareholders of the unlimited company are themselves limited liability entities.

It is always open to the courts to look through the corporate charter of unlimited companies and see for themselves unlimited company members - in other words, to lift the corporate veil - but this can only be done with the expense of an application to the courts. However, as the High Court recently remarked in the Goode Concrete v. CRH case, this approach is not possible when a limited company is an offshore company.

This amendment requires all private unlimited companies to notify the Companies Registration Office, CRO, of any shareholder company that might limit its liability. In this way, a creditor may check the CRO records of an unlimited company at the outset of contractual negotiations and be aware of a fact that although a company may be registered as unlimited, the company's liability may be limited. The failure of an unlimited company to notify the CRO of any limited liability shareholder could result in the imposition of limited liability status on the companies immediately, as the courts see fit, within the limits of reasonableness and proportionality.

I do not know whether the Minister of State is aware of this, but at least four of the major construction companies that left in the region of €1 billion in debts behind were unlimited. People trading with them would not have been privy to their position because of their unlimited nature, and many companies are not quite as unlimited as they seem because of the loophole I have outlined. It would be a good idea for the Minister of State to take this on board.