Kathleen Lynch (Cork North Central, Labour)

His contribution was of enormous interest to every consumer and for that he should be congratulated.

The Labour Party is broadly supportive of the Investment Funds, Companies and Miscellaneous Provisions Bill in so far as it is intended to resolve anomalies in company law and implement relatively minor, yet significant, changes to the legal framework in which business must be conducted. This is a technical Bill and the real detail must be scrutinised closely on Committee Stage.

As with all modern economies, it is vital that we work to ensure our corporate legislative framework can keep pace with the changes in business practice and keep Ireland competitive on world markets. The Labour Party also welcomes the transposition by this Bill of the EU transparency and takeovers directives, about which I will speak in more detail later.

The potential of the sections of this Bill dealing with the securitisation industry is important. The securitisation industry is a major sector of international financial business, and our current legislative framework is restrictive compared to our European counterparts. The success of the new financial services hub in the Dublin docklands, and of the business it generates across the country, will rest on the ease with which international financial services business can be conducted under Irish law. The securitisation industry is one of many where we must be sure we get the right mix of regulation for the protection of customers, most of whom are businesses, and flexibility of operation for businesses.

The owners of small and medium businesses will welcome the thrust of increases in audit exemption thresholds. Reducing bureaucracy and the regulatory burden on small businesses is a key element of Labour's enterprise policy. This move will bring us to approximately the same limits as the United Kingdom and to the EU maximum. Small businesses are the great drivers behind our economy. All companies started small. We must work to enable as many as possible to grow to become large companies, a matter on which the Government and Opposition agree. While we may wish for fewer companies to be covered by the audit requirements we hope more companies can grow to the size that will require full audits.

There is a minor anomaly in this section of the Bill, which we will examine more closely on Committee Stage. The Minister of State might consider it with respect to amendments he may make. New international auditing standards are to be implemented from now on in auditing of company accounts. Many small accountancy firms have a large proportion of clients who currently fall within the requirements for audited accounts, but would fall outside those limits after this Bill is passed. The cost to small accounting businesses of training up or outsourcing to meet these standards is quite significant, especially when one considers they will probably only need that knowledge for one financial year. The Minister of State should examine this on Committee Stage.

The dematerialisation of securities will bring us broadly in line with the rest of Europe, especially with regard to compatibility with the CREST system. However, there is some concern on this point. The explanatory memorandum released with the Bill suggests that dematerialisation will affect only securities of companies trading on a regulated market. I heard the Minister of State speak about this in his opening speech. It appears to the Labour Party and to all those it has consulted, among them very eminent corporate lawyers, that the provisions will apply to all public companies, including those with securities listed on IEX and AIM.

A more welcome aspect of this section is that we can be assured it will reduce paperwork. If only we could do the same for public representatives. The many members of the public who were stung by the Government in the Eircom flotation and now own shares in Vodafone as a result will be aware of the volumes of paperwork that pass through their hands in respect of minor changes in shareholdings, especially if they are reinvesting their dividends in the share purchase scheme. Under current regulations, additional share certificates must be issued every time a shareholder's stake is increased or decreased, even if the change only involves a single share. Under the changes proposed here, these alterations in shareholdings could be conducted electronically for those persons who wish it, thereby not only saving the small shareholder the significant inconvenience of securely storing valuable share certificates but also preventing the considerable environmental damage caused by printing and distributing that many share certificates.

When he discussed this Bill in the Seanad, Senator Quinn informed the House of the difficulties which he, an eminent and highly experienced businessman, had in reconstituting some of his shareholdings after a fire in his office. If an individual like Senator Quinn, who is an expert in the field of business and shares, could experience these difficulties, one wonders how a normal member of the public would fare. The creation of a system allowing for electronic versions of shareholdings would give those members of the public, as well as experienced shareholders and businesses, an additional backup should events such as those which befell Senator Quinn take place.

The transposition of the transparency directive is welcome. However, I question whether the Government will steer this Bill through all Stages by the transposition deadline in January 2007. This directive has been on the books since 2004. Why was it not transposed in the Investment Funds, Companies and Miscellaneous Provisions Act 2005? This is an important directive and it compliments the earlier prospectus directive and market abuse directive. It will bring an additional level of protection for small investors, in particular, who may not have the same research resources as the pension funds and larger investors. I also hope the Minister will be allocating some additional resources to the Financial Regulator to police this new provision, one which is obviously taken seriously given the inclusion of criminal sanctions.

The completion of transposition of the takeover directive will also be enacted by this Bill. However, as with far too many directives recently, this final part of the transposition is significantly past the deadline agreed by EU member states, including Ireland. The original transposition by SI 255 of 2006 was sloppy because it created two sets of general principles to be followed by the takeovers panel. This directive should have been completely and properly transposed by last May at the latest. Again, it was agreed in early 2004. As with the transparency directive, I would like the Minister of State to explain why this directive was not fully transposed earlier. If we continue to be so sloppy in respect of directives, we will quickly fall behind the rest of Europe in our corporate regulatory structure.

In respect of the provisions of the takeover directive transposition section of this Bill, Part 4, and the amendments to the Irish Takeover Panel Act 1997, I am glad to see the takeover panel will now be empowered to consider relevant EU law when ruling on takeover applications. However, the Labour Party has a problem with section 18 of this Bill, which would repeal section 9(11)(b) of the Consumer Information Act 1978, as amended, and has already been discussed by Deputy Hogan. Section 18 allows for the post of Director of Consumer Affairs to be left empty for more than six months. Surely a more suitable solution would be to appoint a person to replace the resigning director fully and appoint a new Director of Consumer Affairs until such time as the national consumer agency can be fully established. Continuing for an indefinite period with an interim acting director is unfair both on the person in question and on his or her staff and must necessarily weaken the Office of the Director of Consumer Affairs at a time when consumers need more protection than ever before. On a related point, I would appreciate if the Minister could tell me when he expects the national consumer agency to be fully established by statute. Can we take it from this section of the Bill that it is not envisaged this will happen in the immediate future?

The moving of this Bill again brings to the forefront a problem which has been of serious concern for some time. We are still waiting for the Company Law Consolidation and Reform Bill, which was promised several years ago. There are at least 15, and some estimate there may be more than 20, different pieces of legislation in the field of company law which businesses must bear in mind. The difficulties created by this and the necessary complexity of corporate legal issues that arise from time to time are a significant drain on resources, especially for small and medium-sized enterprises.

Consolidating all company law into one single piece of legislation would greatly simplify the matter for small business owners and directors. It would allow them to easily understand their rights and obligations without requiring them to have recourse to legal advisers on even the most minor issues. I am informed the company law review group, which was established by my colleague, Deputy Ruairí Quinn, when he was Minister for Enterprise, Trade and Employment, will soon publish the result of its extremely extensive investigation and attempt at consolidation of the existing body of corporate law. I hope the Minister of State will take this opportunity to assure the House that he will move this process forward to the introduction of a Bill to the House as soon as possible because it is clear to everyone that it is urgently needed. It will be a massive Bill with hundreds of sections and require intense and deep scrutiny by every party in the House. There is every possibility this Bill will be taken by the Labour Party in Government.

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