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

We are starting in the foothills of a very big debate. This is a landmark project. It is the result of many years of detailed and comprehensive work by officials in the Department of Jobs, Enterprise and Innovation, the Company Law Review Group and the Office of the Parliamentary Counsel. It is the largest substantive Bill in the history of the State, spread out over 25 Parts and 17 Schedules and comprising 1,429 sections. It was recognised at an early stage of the process that a mere consolidation of the existing Companies Acts would be too limiting in light of the reforms that are necessary to sustain Irish competitiveness with respect to company law. Instead, an overhaul and restructuring of the company law framework was embarked upon. The result is a Bill that consolidates, simplifies and reforms company law to provide a state-of-the-art framework for all businesses operating in Ireland, whether domestic or foreign.

The principal objective of the Bill is to restructure, consolidate, simplify and modernise company law in Ireland, and in doing so to improve Ireland's competitive position as a location for business investment. This reform seeks to strike a balance between simplifying the day-to-day running of a business, maintaining the necessary protections for those dealing with companies, such as creditors and investors and putting in place an effective corporate governance regime to ensure compliance. Any modernisation and reform of company law must be viewed against the backdrop of the fact that limited liability itself is a concession by the State to business, and must therefore be tempered by robust regulation to protect creditors' interests and to ensure this concession is not abused.

The simplification of company law proposed in this legislation is consistent with the principle of maintaining high standards of shareholder and creditor protection and robust corporate governance. It is intended that by making company law more accessible, coherent and reflective of business practice, Ireland's international competitiveness will improve and ordinary businesses and companies throughout the country will find it easier to establish and operate. It is not intended to water down compliance as we simplify the law and make it more intelligible. If the law is more accessible, it is more likely to ensure respect and compliance. Although a process of simplification has been undertaken in drafting this Bill, it is a large and complex piece of legislation nonetheless.

Company law is technical by nature. The last major review and consolidation of Irish company law was over 50 years ago, in the lead-up to the Companies Act 1963. Since then, there have been 15 amending Acts and numerous statutory instruments which are required to be read as one with the Companies Acts. In that time, Ireland has taken on EU obligations in relation to the harmonisation of laws. This has inevitably added to the volume and complexity of Irish company law. Company law involves balancing many conflicting and possibly competing interests. The legislation must balance these interests, including creditor protection, shareholder protection, corporate governance and incorporation and registration of companies. This necessary balancing of interests undoubtedly contributes to the intricate nature of company law.

Notwithstanding the complexity of the existing body of legislation, it was considered that company law could be simplified. This Bill seeks to break company law into distinct principles and areas and remove or lessen administrative burdens, where possible and appropriate, bearing in mind that the public interest will sometimes require the introduction of additional regulation. Some new provisions will reduce burdens on business and simplify the day-to-day operation of a company, thereby offering tangible benefits to the ordinary businessperson. Changes in a number of procedures have been introduced to take account of technological and organisational developments in the conduct of business and communications and emerging best practice in corporate governance. This will lighten the regulatory burden, particularly on private companies, while balancing the interests of members, creditors and the public. This streamlining of the law will bring the Irish company law regime into the 21st century and ensure Ireland maintains a competitive edge as one of the best places in Europe and the world in which to do business.

The Bill is the culmination of many years of work by my Department and the Company Law Review Group, CLRG. The group is a statutory body that was set up in February 2000. Its role is to advise the Minister on the reform and modernisation of company law. The group includes all relevant stakeholder interests, with members from Government Departments, professional bodies including solicitors, barristers and accountants, employer and business interests, regulatory bodies; trade union interests and individual legal and finance practitioners. The group has published 14 reports since its inception 13 years ago. All of these reports have been available to access free of charge on its website. By making its reports publicly available, the Company Law Review Group has ensured its decision-making process is transparent and the reasoning behind any recommendations issued by it can be dissected. The general public and interested groups have been free to make submissions to the CLRG to express views or bring matters to its attention. All such submissions are given due consideration.

I wish to take this opportunity to thank the members of the CLRG for the sterling work they have done in shaping the Bill before the House today. I understand that some of them are with us today. Their interest in this work has endured to the start of the lengthy process of having this legislation passed. In early 2007, the CLRG submitted its general scheme, which represented the outcome of more than six years of work. In July 2007, the Government approved the formal drafting of a Bill along these lines. The next significant milestone came in May 2011, when Volume 1 was published in draft form on my Department's website. This gave all interested stakeholders an opportunity to become familiar with the proposed new legislation, to interrogate it from a technical perspective and to prepare themselves for its introduction. Submissions were welcomed. They were considered by the CLRG, by the Department and by me. A number of suggestions were accepted and are included in the Bill as published.

One of the principal innovations of the Companies Bill is reflected in its general structure. For the first time in Irish company law, the most common company type - the private company limited by shares - is placed at the centre of the legislation as the default company. The architecture of the Bill is inspired by the reality that almost 90% of companies currently registered at the Companies Registration Office, CRO, are private companies limited by shares. Existing company law is peculiar in that it presupposes that the public limited company is at the centre of corporate life in Ireland, whereas in reality less than 1% of registrations are public limited companies. Historically, legislation has never clearly distinguished the law applicable to private companies from the law applicable to public limited companies. This has resulted in small businesses being faced with an apparently massive company law code, when in fact a considerable amount of it has no application to their particular business enterprise. There is a world of difference between the one-person private company formed by a tradesperson and the large publicly listed limited company.

Therefore, Volume 1, containing Parts 1 to 15 of the Bill, sets out to ring-fence the law applicable to the most common company type - the private company limited by shares, or "the new LTD company".

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