Joe Callanan (Galway East, Fianna Fail)

I welcome the opportunity to address the House on the issues laid before us in the Bill. This legislation covers many changes needed to bring the regulation of business into the next century. In particular, it deals with our position as a market leader in asset-backed securities investment in Europe. It will ensure that we continue to hold a lead in financial services and will address some concerns which have been raised by industry experts.

The Bill should reflect the greater need for regulation of transparency in business which is all important. With the near removal of barriers in the trade of securities, the legislation takes into account the greater use of technology in the exchange of securities.

Ireland has been driven by a remarkable ability to persuade financial services companies to base their European headquarters here. While many observers attribute this development solely to tax incentives, the supply of great human resources and the talent of the Irish workforce have been major factors in this regard. It is vital in regulating business that we walk the fine line between ensuring business is correctly regulated and conducted in a transparent and ethical manner and ensuring it is not choked with unnecessary administration and regulations. Business does not always recognise that politics has its best interest at heart and our imposition of regulations is often resented. I hope this legislation will be taken in the required spirit to update and modernise our rules and regulations to reflect changing technology and a greater need to govern the information flow and transparency of companies.

I wish to deal first with the changes to the Companies Acts. I welcome the increasing of the audit exemption thresholds up to the maximum levels permitted by the EU and the new threshold for turnover of €7.3 million and €3.65 million for a balance sheet. This means we now catch up and pass out England which has a £2.5 million audit exemption, as well as the rest of Europe, which has an average exemption of approximately €5 million. The previous relatively low audit exemption limit was particularly significant when one considers that the auditor was obliged to report all company law discrepancies, including minor ones which were punished severely in the 2001 Act. I also welcome the ability to hold in electronic form securities of companies based on a regulated market. This merely reflects the manner in which securities are being traded in the modern era.

The Minister of State has said that dematerialisation will facilitate ease and speed of trading by investors, enhance the international competitiveness of Ireland for securities trading, reduce the current costs associated with the cumbersome process of managing paper-based transactions, and avoid the risk of an escalation of the current settlement costs for Irish certificate transactions that would occur if there was a successful implementation of dematerialisation of UK securities. Dematerialisation is being considered in the UK and has already taken place in other European countries such as France, Denmark, Sweden and Italy. It also exists in other competing world markets such as India, Australia and New Zealand.

This Bill will ensure more of the financial services industry can be based anywhere in Ireland that has good commercial broadband and telecommunications infrastructure. With the recent roll out of fibre optic in Gort, Loughrea, Ballinasloe and Athenry, I hope we will start to see financial services jobs in the west. Our road structure also has a part to play in this. Ireland is now a modern, highly globalised, credibly regulated, competitive economy. We need to ensure we retain our attractiveness as a place to do business and as a location for foreign direct investment. We will achieve this objective by committing ourselves to fostering the conditions which support enterprise and in meeting the challenges and opportunities of an increasingly knowledge-based, regulated, globalised and environmentally sustainable economy.

Dublin today is recognised as a global centre for financial services. It is ranked only second to London and ahead of Frankfurt in terms of asset-backed securities. The aggregate amount of asset-backed securities investments managed by Dublin-based investors has witnessed huge growth in recent years. In 1999, the aggregate amount of asset-backed securities investments was around €6 billion. This grew to between €30 and €35 billion in 2003. Today, the figure is at least €80 billion. These figures demonstrate the position and importance of securitisation in terms of the domestic economy and the tremendous strides made in recent times. The strong track record that Ireland has developed in the asset-backed securities sector is a result of many factors. These include a conducive business environment, a common law system and the presence of skilled personnel with considerable international experience. All of these factors, along with Government support, have fuelled this growth.

Existing developments in securitisation give us the potential to develop as a primary centre for specialist debt-financing products. Business regulation in the field of company law feeds into improvements to our national competitiveness through high standards of corporate governance. It brings about a stable and predictable environment in which entrepreneurs can establish businesses, investors can invest, creditors can lend and the interests of the employees, consumers and other stakeholders are protected. Ireland's economic future is inextricably bound up with the global economy through investment, trade, people and business. We have to be at the top of the game in every aspect that affects competitiveness.

Part 2 of the Bill contains a number of amendments to the Companies Acts 1963 to 2005, which increase the thresholds below which companies are eligible to avail of exemption from having to have their accounts audited, amend the powers of the Minister to make regulations dealing with the holding of securities of companies in electronic form, otherwise called dematerialisation, and which amend the provisions of the Investment Funds, Companies and Miscellaneous Provisions Act 2005 dealing with the circumstances where issuers of prospectuses for non-equity securities may be held liable in civil actions to parties who may have suffered a loss as a result of subscribing for the securities in question. The need to increase the audit exemption threshold for companies is seen as requiring priority treatment. This will have a significant impact in terms of lessening the regulatory burden on small business and is seen as a priority measure in terms of maintaining our competitiveness generally.

The Bill proposes to increase audit exemption limits for turnover and balance sheet totals, thereby allowing more companies avail of the audit exemption. The provision in this Bill increases the turnover limit to €7.3 million and the balance sheet total limit to €3.65 million.

I commend the Bill to the House.

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