Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

I thank the committee for facilitating us in taking this issue. This was essentially an inadvertent omission from the Companies Act, which, as the committee knows, is quite a tome. Basically, section 1120, which is being amended here, provided for the application of provisions that were set out in Part 1 of the Bill - sections 310 to 313 - that applied to private limited companies. It transferred their application to other types of companies in Part 2 of the Act. They were companies like designated activity companies, companies limited by guarantee and so on. Unfortunately, in drawing up that provision, one group of companies was omitted, namely, unregistered traded companies, of which there are very few. They do exist, most significantly, in the banking area. One of them is Bank of Ireland.

I wish to make it clear that what we are doing here is applying the very same rules to a credit institution that is an unregistered traded company - one formed under charter before independence - as would apply to any other credit institution. The effect of applying section 1120 to an unregistered credit institution in Schedule 14 is to ensure that the law governing the disclosure requirements in a credit institution's financial statement is the same for all companies trading as credit institutions in Ireland. If the section is not applied to unregistered traded companies, such companies would be placed at a significant disadvantage in respect of all other credit institutions, for example, by having to break the confidentiality of family relations of directors where loans from an unregistered company to them would have to be disclosed in the financial statements, which never was the intention. Credit institutions, regardless of the manner in which they are formed, must adhere to company law code as defined for traded companies. The various sections that are being provided here - sections 310 to 313 - essentially set out the requirements for disclosure of loans or other like transactions between directors of the company and the company. They do not apply to connected persons so they do not have to return in their financial statement the detail of loans to connected persons. However, there are a number of safeguards that apply in all these cases. First, the aggregate information about such loans must be provided in the financial statement. Second, a register of all of those transactions in their full detail must be kept by the bank. It must produce this register to the Director of Corporate Enforcement if required and facilitate the director in examining and making copies of it. It also must make the full statement available not less than 15 days before the annual general meeting for inspection by members.