Dáil debates

Wednesday, 10 November 2021

Companies (Corporate Enforcement Authority) Bill 2021: Report and Final Stages

 

7:32 pm

Photo of Robert TroyRobert Troy (Longford-Westmeath, Fianna Fail) | Oireachtas source

I understand from the Deputy’s questions about this section on Committee Stage that she is concerned with the perception that there is a lack of equity. She has raised that again just now. A director cannot be levied with an administrative financial sanction so high that they could be adjudicated bankrupt. However another person fined by the court for a different breach of law could experience hardship as a result of a fine. As I explained previously, the administrative financial sanctions referred to in this section derive from EU law and statutory audit.

In legal terms, the administrative sanctions in Chapter 3B of the Bill and particularly in this section are financial sanctions. Our aim is to ensure that they are robust and not subject to challenge. This is because it is an administrative body making the decision to impose the sanction. Any person subject to a decision by the administrative body must benefit from fair procedures and proportionality. This is so that the administrative body does not exceed its reach or powers under the Constitution. If I accepted this amendment, ironically, rather than strengthening the framework for imposing administrative sanctions, it would undermine it. It would be vulnerable to challenge on constitutional grounds, resulting in a situation where we are unable to fulfil our EU mandate obligations. The main reason this is the case is the need to ensure fair procedures and proportionality in the process of decision-making by an administrative body. In addition, if a director is adjudicated bankrupt as a result of an administrative financial sanction, this leads to a slew of other consequences such as automatic disqualification. This is a type of double punishment. If a director's behaviour is so bad that disqualification is the appropriate sanction, then it is open to the authority to use the powers that it has in the Companies Act 2014, which include the restriction and disqualification of company directors by way of statutory undertakings and, where appropriate, summary prosecution or referral of matters to the Director of Public Prosecutions.

We all want to ensure that directors who break the law are brought to account. The maximum sanction in this section is €100,000, a considerable sum, along with the reputational damage of receiving such a sanction. We need to ensure that the law is robust and not at risk of challenge. The Companies Act 2014 is a toolbox for enforcement by the authority. Chapter 3B of the Bill contains one set of tools for a particular set of breaches. These must be framed in a certain way in law. I think that this section gets the balance right for necessity and for this reason, I do not propose to accept the amendment.

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