Richard Bruton (Dublin North Central, Fine Gael) | Oireachtas source

Amendment No. 13 is not appropriate, as section 6(2) already provides for criminal liability for certain persons connected to a body corporate in certain circumstances. In the case of offences under this Act, extending liability for the debts of an insolvent company to the officers of the company would, I am advised by the Attorney General, be constitutionally suspect and would represent a major departure in company law.

The overriding principle of company law is that a director's duties are owed to the company and not to the individual shareholders or employees. If there is a breach of duty on the part of a director which causes damage to the company, he can be sued or held liable for damages. Claims can be brought by shareholders, by a financial institution or on a director-versus-director basis. Liability may arise out of lack of care and skill in the performance of the director's duties, negligent advice or a misstatement. Any act which goes beyond the limits of the company's constitution, such as excessive borrowing, unauthorised payments, failure to disclose the full extent of the director's interests or a failure to comply with requirements, may involve a director or officer in personal liability.

Company law penalties vary from restriction or disqualification orders to fines and periods of imprisonment. The Companies Bill provides for a four-tier categorisation for most of the offences, with the exception of fraudulent trading and market abuse. The Companies Bill also contains a new provision in section 872 whereby, following conviction for an offence under the Companies Act, a trial judge can order that the convicted person should remedy any breach of the Companies Act in respect of which he was convicted. In effect, the provisions of the Companies Bill amount to a more constitutionally robust rewording of section 383 of the 1963 Act, as amended by section 100 of the Company Law Enforcement Act 2001. From a company law perspective, the proposed amendment challenges the entire principle of company law. If it were to be implemented, the doctrine of separately legal personality would become a exception rather than the rule.

Having regard to the foregoing, I am not going to accept the amendment. What the Deputy is suggesting is, on the advice of the Attorney General, not something I can accept. We are looking to have new enforcement procedures under this Bill. This is one of the areas we are seeking to improve. Where there is a breach and a finding for the worker, the idea is that it becomes easier to enforce such cases, and that is being provided for in this legislation. The Deputy's amendment is seeking to reconstitute company law and, for the reasons outlined, that is not acceptable.