Dara Calleary (Mayo, Fianna Fail) | Oireachtas source

I thank the Minister for his speech. I thank him also for the information on the Bill provided by his office over the past number of days. I compliment all the officials involved and all those who have been involved since 2000, the members of the Company Law Review Group. I suspect they feel like parents seeing their child go off to school for the first time - they have nurtured and cared for this child and they will worry what will happen next. I assure them we will look after it. We will be supporting the Bill on Second Stage and in the interests of the child's education we might make some suggestions on Committee Stage.

I previously expressed frustration at the slow pace of the preparation of the Bill. However when preparing my contribution I read the 1962 debate. The then Minister introduced the Bill on 14 November 1962. He apologised that the preparation of the Bill had taken rather longer than he had expected. The Opposition spokesman, Deputy Liam Cosgrave, paid tribute to the work of the company law reform committee which had been set up in 1951 and reported in 1958. The legislation eventually came to the House in 1962. Everything changes but many things remain the same. I commend the phenomenal job of work. The Bill is an excellent example of tidying up legislation while maintaining very strong legislation in all areas. The legislation has been simplified but the message must be that it is not being made easier to evade one's responsibilities as a company director or company operator. The Minister made it clear on a number of occasions that the Bill is designed to provide easier access to information and to legislation.

People's responsibilities in providing for that ease of access are far clearer now. There can be no question of evading their responsibilities on the basis of a failure to understand.

Fianna Fáil will support the Bill on Second Stage. The other State agency involved is the Health and Safety Authority, with which I was threatened if I sent someone from my office to collect a physical copy of the Bill from the Minister's Department. It has probably fallen through the floor in the Minister's office so we have used the online version. It is a credit to all of the work done on the Bill that there has been very little criticism of it given the impact it will have on company life. The manner in which the Company Law Review Group communicated its work consistently during its tenure and in which the Minister has engaged with interested bodies has ensured a general welcome for the legislation. There is now encouragement and a demand that legislators get on with its implementation. The Opposition spokesman in the 1962 debate, Liam Cosgrave, proposed a special committee. The Minister had the same proposal but it is not going to happen. We will work to enact the legislation and when it has been, the Minister will have a responsibility to educate people about it. There is a danger that the extent of changes is so great that many organisations will seek to make a quick buck on it. While we are all in favour of enterprise, the LEOs and the enterprise board structure should be implemented at an early stage to educate people and companies as to the changes which are being made. The voluntary sector must be involved also as some of the most significant changes hidden in the Bill relate to making the work of voluntary organisations a great deal easier. A great deal of work must be done to provide information on the legislation and to let people know that things have changed and will be much easier.

Fianna Fáil welcomes anything that makes it easier to do business and create jobs. It is vital that any legislation be clear and accessible, which is a test the Bill passes in most respects. As the first report of the Company Law Reform Group pointed out, company law reform has generally been driven by crises, of which we have seen many in the last few years, the need to comply with EU directives and regulations, important innovations in peer jurisdictions and lacunae identified in the course of company law investigations or tribunals of inquiry. It is significant that some of the recommendations in the Moriarty report are included in the legislation. Deputy Bruton is the first Fine Gael Minister to acknowledge the report, which is a welcome development. The establishment of the Company Law Review Group in 2000 made clear the desirability of reviewing the companies code on an ongoing basis. The review process must continue when the legislation is passed. We must not leave a future Oireachtas in the position we are in now of having to introduce a massive Bill. Future Oireachtais will have to commit to ongoing review.

The review group was tasked to simplify the Companies Acts to create greater clarity and transparency in the companies' code and to increase its accessibility for business people. It has done so. In proposing simplifications, the review group recommended an increased focus on the needs of small private limited companies, in which respect it fully endorsed the think-small-first approach favoured by the Company Law Steering Review Group in the UK. The principles to be followed are that the law should be clear and accessible; that there should be no undue sacrifice of accuracy and certainty in an attempt to make the law superficially more accessible, and that legislation should be structured so as to ensure that the provisions applying to small companies are identifiable. I welcome the way the relevant law has been broken up into sections. As the group made clear, a body of law that affords protections to shareholders and creditors, while legislating for the orderly administration of solvent and insolvent entities, can never be really simply. There is no doubt that the Bill passes all of the tests while retaining a high bar for people who enter into the company law sphere. Locating all provisions in one Act will reduce complexity for all end users. In terms of competitiveness and our international standing, the legislation will be among the newest and, possibly, clearest regimes in Europe. Clarity in the years to come will depend on the range of amending legislation.

The Bill does not alter drastically basic concepts of company law including limited liability, shares and membership, the roles, duties and obligations of directors and other company officers or the liabilities of companies to creditors and employees. The major changes are geared towards streamlining mechanisms which allow companies to be easier to operate and do business with. Changes addressed to the doctrine of ultra viresfor companies limited by shares grant companies the full, unlimited capacity to carry on any business or do any act, which is not contrary to the general law, and will result in greater simplicity and certainty for people doing business with them while reducing the time and expense involved in company formation. The reform will not apply to public limited companies. In recent years, there has been a great deal of public frustration that the investigation of breaches of company law has been slow. Breaches have been so technical that in many cases that investigating authorities did not have sufficient resources to investigate. We must ensure that the Bill is proofed against such breaches. There must be a review clause in the Bill to ensure that the legislation is reviewed and amended on an ongoing basis to ensure that trends in business, company law internationally and the legal business can be tracked without having to wait for a long legislative process.

Regulation is essential for the proper functioning of society. Whether through primary or delegated legislation or more informal arrangements, rules provide clear guidance and a solid basis for stability and progress. Some regulators have a primarily economic function to ensure the harmonious use of a shared resource and to guard against anti-competitive practices in particularly vulnerable sectors. While regulation is often necessary to achieve a country's social, economic and environmental objectives, it also imposes costs on businesses, consumers, Government and the wider community. It may be that the way in which some regulations have evolved has led to a situation where they have become unnecessarily complex and costly to comply with. It may also be that the originally intended benefit of regulations can be achieved more simply and cheaply. The administrative burden of regulation can be significant, especially for small businesses. As well as imposing the cost of dealing with red tape, regulation may cause businesses to adjust production processes in a way that adds to costs. Inappropriately designed regulation may also have adverse effects on innovation and entrepreneurship while reducing productivity and competition. I emphasise that reducing the burden is not about deregulation or making regulation less stringent. Examples of good practice already put in place include the online motor tax system and online revenue services, which show the benefits which can be achieved by reducing administrative burdens without altering the substance of the regulations themselves. In many ways, the operation of those regimes provides a good template for the implementation phase of the Bill.

The World Bank's 2013 report on doing business compares domestic regulation for firms worldwide and puts Ireland 15th of 183 countries for ease of doing business. It is worth pointing out that those countries that come ahead of Ireland in the survey were not necessarily those with a reputation for having deregulated economies. All of the Scandinavian countries rated ahead of Ireland, with Denmark and Norway in the top six, Finland in 11th and Sweden in 13th place. There were areas in which we scored particularly well. We came joint first in making contracts enforcement easier in terms of the number of procedures involved. We came sixth in the protection of investors and in payment of taxes. We came tenth in relation to the ease of starting a business. The provisions of the Bill will allow us to improve the ease of starting a business. Where we did not do well was in electricity access, registering property and, ironically enough, trading across borders.

I welcome the provisions in the Bill which deal with examinership and aim to reduce its cost burden to open the process to small businesses. Almost 1,000 jobs with small firms were saved through the examinership process in 2012, representing a year-on-year increase of 67% on 2011. The legal costs of examinership could be cut by up to 50% through the Bill's provisions to make it a more accessible and affordable option for SMEs. This has the potential to double the number of jobs that are saved.

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