Damien English (Meath West, Fine Gael) | Oireachtas source

I thank the Ceann Comhairle for the opportunity to speak on the Company (Miscellaneous Provisions) Bill 2013. I welcome the passage of the Bill through the House and I look forward to Committee and Report Stages in the coming weeks. I understand the plan is to have it all done before Christmas. The Joint Committee on Jobs, Enterprise and Innovation will certainly play its part to achieve that end. As Chairman of committee, I acknowledge the work done by the Department and the Company Law Review Group in the past 13 years to advise on the reform and modernisation of company law. It has been a great help to the process to have had the review group established. The group included all stakeholders and interested bodies.

The process has been a useful way to update and work on legislation and it has proved beneficial at committee level when it came to dealing with the Companies Bill. Many people have been involved in the process and it has taken such a long time but everyone has had their say. There was a great understanding, acceptance and knowledge of what was contained in the Bill and that made it easy and transparent to get it through Committee Stage. That was useful. I cannot emphasise enough the importance of the work done by the review group and the Department over a long period.

In recent months in the Dáil and the joint committee, great work was done by the Minister for Jobs, Enterprise and Innovation, Deputy Bruton, and the Ministers of State, Deputy Perry and Deputy Sherlock, in particular, on Committee Stage in facilitating the progress of the Bill and organising briefings for all members who were interested. Great work was done by the Minister's staff in facilitating any necessary briefings. This meant Members had all the information and a chance to get their questions answered. This was a sizable Bill to get through Committee Stage but having everyone on board made it far easier. I compliment the work done by the clerk to the committee and her staff to get that Bill through as well.

Today's Bill was originally part of the larger Companies Bill. The approach shows the importance this Government is attaching to job protection, not only job creation, in that it was willing to take this part out and try to get it done before Christmas because it is an important area. That was a wise and important move because the Companies Bill will take several months yet to get all stages finished.

It is important to introduce the changes to the examinership process at this stage because companies are under a good deal of pressure. Many companies are being choked by legacy debt and are struggling to survive and we need to do all we can to try to unravel that. This is only one part of the process. It is not the solution or the silver bullet to everything, but it will certainly make the examinership process a little easier to use or get involved in. It will certainly make it more affordable for many companies which are under pressure and which need this.

Many good companies are currently profitable on a day-to-day basis. They are creating jobs and winning business. They could grow, save existing jobs and create new jobs, but they are being held back by debt, which might have been built up or associated with another business. However, looking ahead, if that debt was not outstanding those businesses would survive and we would have more jobs. From a jobs point of view we must do all we can to get the businesses separated from the debts, if needs be. That may not always be an option but certainly some payment structure should be put in place which will mean the business will not end or terminate. That would be a great shame for an existing company which is profitable today and which could work and grow in future. We need to protect them and this Bill is part of that process.

This Bill deals with the examinership process and makes it more affordable by going through the Circuit Court as opposed to the High Court. This is altogether common sense and the right thing to do. However, we also need to help companies with this process. Earlier, I listened to Deputy Dara Calleary discussing the need to make it clear that this has actually happened. He was right. It is not in everyone's interest to broadcast that this is now an option. We need to work to advertise what we are doing. The fact that thousands of companies are going through receivership every year but so few going through examinership suggests something is wrong. The procedure is not commonly used in Ireland, possibly because of the cost of going to the High Court and so on. Anyway, it is a good way to try to get some space for a business to sort out its difficulties in a given number of days and we should encourage the use of it more. We also need to help companies, through mentoring or whatever else, to try to engage with their banks and other creditors to work their way out of debt. We have all seen it, but it is a great shame to see successful businesses pulled down by debt unnecessarily. Certainly, businesses have to deal with the debt and try to pay it off, but we need to try to protect the business as often as possible.

I urge all the banks which are dealing with customers in this situation to give more time and space and to work out solutions genuinely. I acknowledge that the banks generally try to do that if they see hope for a business and if the cash flow can sustain it. Some will allow it and some will let it go and sometimes historical issues or personalities get in the way, but we need to move beyond that. If a business is feasible everything should be done to protect it and try to pay down the debt in some way or another. The Government has a duty to do all it can in this area as well. The Bill sends out a strong message to the effect that we want this done and that we believe in that as well and I encourage that.

In some situations there is a rush on the part of various banks or institutions to put in receivers and remove the person who owns the business from the business. That brings about high costs to run that business but that does not always work. It is often in the interests of some of the companies. If I am a receiver and I do not go in and run the hotel, public house or whatever the business, then I will not get paid high fees. There is something of an incentive sometimes to remove the business person from the equation because he will obviously get paid and that means high costs. That is not acceptable either and we need to watch that practice to ensure it is not abused.

Let us consider the way NAMA works generally. Although the taxpayer may not always fully get what is going on or fully like it, it is often in the best interests of the State to let the developer trade out and work through the business and to continue to be paid a wage. On the face of it, one might wonder why that is done, but it is because it is more affordable to the taxpayer in some cases. I understand NAMA will try to do that as much as it can when developers are co-operating and I can see the logic in that. We may not always like it when we see a developer who has large debts continue to get well paid, but there is a logic in it when it comes to value for money. The same logic should be applied to other businesses and banks to ensure that, when it is the right thing to do, the owner of the business is left in place to run it and to try to get it back on its feet. We should not be too quick to move in and put in a receiver or liquidator. In some cases high fees can apply and we do not always get the best result in terms of job creation and so on. We should watch that. The Government has a role to keep an eye on that as well.

I welcome the moves on examinership to extend the process to the Circuit Court. It makes perfect sense and it is common sense. It will reduce legal costs and make it more attractive to businesses.

I welcome the simplification of the electronic filing process. Again, that makes common sense and will reduce costs for business.

Another issue I wish to raise relates to the changes to the auditing system and the term "quality assurance". Basically, we are going to bring in greater inspection and quality assurance, reflecting international best practice when it comes to public interest entities. We are taking public oversight back to the Irish Auditing and Accounting Supervisory Authority. The authority will do that from now on as opposed to the recognised accountancy bodies. This makes perfect sense and can only enhance our reputation abroad. I realise it is not necessary to do this in Europe but it is necessary in America and other countries with which we trade a good deal. If we did not change we would be open at some stage to questioning about that. This measure will bring clarity and confidence to our system with regard to the public scrutiny of the auditing process of public interest bodies, which include listed companies, credit institutions and insurance undertakings. It is important, in light of what has happened in the past five or six years, to have the highest standards when it comes to auditing. The measure will give great assurance in this regard. I welcome the moves on quality assurance as well. The Bill will bring in a levy to offset some of the costs the supervisory authority will have.

This makes sense and I accept this is a worthwhile measure in the Bill.

While speaking on the subject of auditors, I wish to take the opportunity to raise another issue of which the Minister, Deputy Bruton, and, no doubt, the Minister of State, Deputy Brian Hayes, are well aware, that is, auditing fees for small community-based not-for-profit organisations that are limited companies. While this issue is not part of this Bill, this is another opportunity to raise it, as much more discussion in this regard is needed.

I bring up the matter because I spoke this morning to Betty Carey from Enfield, County Meath, who the Minister of State also would know and who is one of the many local volunteers with the Baconstown Old School Childcare and Community Company Limited. As an example, this group, based in rural south County Meath, is like many other groups throughout the country in that it is not for profit in its nature and is run on a community and voluntary basis for the betterment of that area. This is similar to many other groups such as the Tidy Towns organisations, amenity groups or the Meath East Community Association, to use another local example. There is an endless number of such groups and in Baconstown, the old school was restored and developed to provide a community child care centre. It has a brilliant preschool facility that follows the HighScope curriculum. It also provides a community centre that is made available to the local community groups and organisations to use. In other words, all the group's activities are community-orientated. However, the company must maintain accounts, even though it only has only a small number of actual income and expenditure transactions. It only has lodgements for rent received from some of the child care activities and so on, while its payments mainly concern electricity and insurance. On top of being obliged to do the accounts for all this and to pay out the various accountancy fees, the company is also required to have its accounts audited at a cost that can be anything from €1,200 or €1,500 per year In my view and that of many community groups, this cost is not a sensible use of money, which could be spent better and could go towards the community spend. This would be of much greater benefit to the local area.

I urge the Minister to continue in his efforts to address the situation of auditing fees for such small, not-for-profit community-based organisations nationwide and hope he will do his best in finding a solution for them. While this issue is being worked on, a solution must be found, as many community groups are in a similar position. It is a senseless waste of their money. I accept there must be good practice and an eye must be kept on matters, in particular if such groups are drawing down grants and so on from the Government. However, to be paying out €1,500 per year in the case of this small group or €4,000 or €5,000 in the case of other clubs, constitutes a crazy waste of money for such groups. A different way must be found of checking their accounts and keeping an eye on that because they cannot continue to afford such a cost in the present climate.

I commend this Bill to the House. It is a short Bill when compared with what it was necessary to go through over the past month in respect of the Companies Bill 2012. It is based on common sense, makes total sense and I look forward to its passage through Committee Stage and its return to this Chamber on Report Stage, hopefully before Christmas

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