Robert Troy (Longford-Westmeath, Fianna Fail)
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I thank the Chair and look forward to working with him and the committee members in the term ahead. I thank the Chairman for the invitation to speak here on Parts 4 and 5 of the omnibus Brexit Bill. I am joined by Ms Fiona O'Dea who is a principal officer in the Department's unit that has responsibility for company law. As members will be aware, the briefing is a substitute for the pre-legislative scrutiny process for this Bill and I thank the committee for facilitating all of this.

I will speak to the two Parts of the Bill that relate to my Department. Part 4, while short and technical, nevertheless forms an important part of Ireland's response to the UK's decision to leave the EU. It amends the Companies Act 2014 to facilitate the migration of Irish securities from their current central security depository, Euroclear UK & Ireland, to the Euroclear Bank after Brexit. The central securities depositories are specialist financial institutions that hold securities and facilitate trading between market operators. They are a vital and systemic part of the financial market infrastructure.

Due to the close historic links between the Dublin and London Stock Exchanges the Irish market currently relies on central securities depositories based in the UK, which operate the CREST settlement system. Once the UK becomes a third country, the central securities depositories will no longer be able to passport its services from the UK into Ireland. As a result, Euronext Dublin, formerly the Irish Stock Exchange, announced in October 2018, its intention to transfer the settlement of trades in Irish equities and other exchange-traded instruments from CREST to Euroclear Bank, which is a central securities depository based in Belgium. Recognising the time and complexity involved in such a transition, the European Commission granted, in December 2018, equivalence to UK central securities depositories until the end of March 2021 in the event of a hard Brexit.

The Migration of Participating Securities Bill 2019, commenced earlier this year by my colleague, the Minister for Finance, allows for an orderly migration en blocof all Irish securities held in the UK system to the new system ahead of the 31 March 2020 deadline. While the 2019 Act provides a once-off mechanism for companies to transfer their listed securities from CREST to the Euroclear Bank, Part 4 of this Bill provides for miscellaneous amendments to the Companies Act 2014 to ensure the successful functioning of the model post-migration.

A successful migration and functioning security system after Brexit, enabled by statutory provision, is imperative. In the absence of a successful migration it would not be possible to trade Irish shares once the European Commission's temporary equivalence decision expires in March 2021. While the 2019 Act takes care of the immediate risks, any ongoing issues with the functioning of the system would have a significant impact on Irish listed companies and damage Ireland's reputation as a world-class location for financial services. In addition, the ongoing collection of stamp duty on Irish trade, which totalled €380 million in 2019, could be impacted.

Part 5 provides for a small technical amendment to section 10(2) of the Employment Permits Act 2006 to avoid disruption for business when the Brexit transition period ends. Approximately 45,000 UK nationals are employed in Ireland. The employment permits regime is governed by the Employment Permits Act 2006, as amended. It contains a number of protections for domestic and European economic area labour markets. Among the safeguards is the 50:50 rule, which requires that employers seeking to hire non-EEA nationals on an employment permit have sourced at least 50% of their workforce from Ireland, the EEA or the Swiss Confederation. This policy underpins the Government's employment creation objectives by requiring employers in the State to hire, in a balanced manner, from the domestic labour market. As the legislation is currently drafted, UK citizens are included under the EEA figures.

When the Brexit transition period ends, under the terms of the common travel area, UK citizens will not be required to obtain an employment permit to work in Ireland. The same will apply to Irish citizens working in the UK. However, under the Employment Permits Act, as currently drafted, when the transition period ends UK citizens will fall outside the EEA category for the purposes of the 50:50 rule. This would give rise to a considerable disruption for companies which are applying for new employment permits and companies applying for employment permit renewals because they may not satisfy the 50:50 rule if they are unable to include UK citizens, who are employees, as they can at present.

To avoid disruption for business, Part 5 provides for an amendment to section 10(2) of the Employment Permits Act 2006 to facilitate the continued inclusion of UK citizens in the employee count, and this needs to be in place when the Brexit transition period ends. The proposed amendments to the Companies Act and the Employment Permits Act are just one technical part of the Government's wider work to ensure business is Brexit-ready regardless of the EU-UK future partnership negotiations.

I am happy to answer any questions that members may have.