Catherine Murphy (Kildare North, Social Democrats) | Oireachtas source

Speaking broadly about the intentions of the Bill, we will be supporting the legislation. It contains some logical and practical provisions. Some Covid-19 legacy legislation is hanging around the House and we see another piece here, addressing the issue, for example, of remote meetings, which can be an option on a permanent basis in the right set of circumstances.

The framework that will govern this is clear and it is set out well in the legislation, including that notice for virtual or hybrid meetings must clearly identify the platform to be used; access, participation and voting must all be set out in advance; and even what should happen if the technology fails. We have long had the technical means to do this, before the Covid-19 pandemic. Covid-19 mitigation measures forced us to do things differently. Not many of us would disagree that it was a good thing in some respects. We should not lose the benefits, where they exist. We all - I use the word loosely - enjoy the benefits of remote work and remote meetings, when you are not bored silly with Zoom meetings. It has been possible to hold meetings remotely where that was not commonly done before. In not having to commute or travel halfway across the world for board meetings, there is an environmental benefit to be gained with regard to the potential for cutting down on corporate miles and so forth. That aspect is beneficial.

There are a number of new measures in the Bill associated with involuntary strike-off of companies for basic failures in the area of good governance, for instance housekeeping and the failure to notify the Companies Registration Office of a change in registered offices - a number of such things have been included - a void in the recorded company secretary at the CRO and being remiss about providing beneficial ownership information to the central register of beneficial ownership as notified by the Registrar of Beneficial Ownership. I do not have an issue with those provisions that will expand on the existing reasons for involuntary strike-off outlined in 2014, but I will come back to beneficial ownership in more detail shortly. I have a few things to say about areas the legislation will not capture, some serious things that need to be captured.

My understanding from reading the Bill is that the Corporate Enforcement Authority, CEA, will have broadened powers for investigating breaches of company law. This is to be welcomed, but before I do so, I will roll back to when the CEA was devised and established. There was a serious issue with resourcing. I remember the tussle that went on between a few bodies, including An Garda Síochána and the CEA about the secondment of staff who were gardaí as there was a need to have the powers to interview, arrest and so on. A memorandum of understanding, MoU, between the director of corporate enforcement and An Garda Síochána was eventually drawn up and signed. It took a year to get the personnel in place and it was a gigantic frustration for those of us who were given an assurance that this would come into being on a particular date. We were constantly asking questions about it. The MoU was subject to periodic review. How many reviews have taken place to date? Have any issues emerged that required action? It is one thing to allocate more powers, but unless those powers are properly resourced, they will not have the practical effect intended. Will the Minister of State tell the House the number of people who are seconded and whether it is almost a permanent secondment? If people are put in they will become experts. If they are then moved out, there will be a loss of institutional memory. I regret that the ability to recruit people as permanent employees who had those powers was not included in the legislation and in the CEA. That would have been a better way to go. Will the Minister of State address that issue in her wrap up?

The framework sets out such matters as co-operation, communication, training and resourcing, to name but a few. Let me give an example of something that emerged between the CEA and An Garda Síochána. A recent media piece by Ken Foxe detailed some friction between the two bodies due to seconded Garda officers that stemmed from traditional overtime payments. These payments were for pre-shift briefings between colleagues. That is time in work. It gives us a glimpse of the kinds of things that are happening in the agency and it would be useful for us to have a response to those kinds of issues that have emerged.

I will move on. The audit exemption and the thresholds for retaining that privilege, especially for those in the micro and small enterprise sector, are useful. There can be genuine reasons for late filing. Small operators have 101 things going on and often the burdens of running a business and the cost of getting those filings in on time can be a problem. However, we should not ignore that there has to be good governance. I welcome a relaxation of the law. It is proportionate because it does not remove the obligation to file, rather there will be a graduated sanction with which we can live.

We produced a document on an independent anti-corruption agency. We published it and have been talking about it since we were founded because we have a lot of siloed organisations. We need to look at how we can have a bigger organisation that can deal with issues. We looked at the state of Victoria in Australia as an example. That is the one we settled on. Resources can be moved around as needed in an organisation that is big enough. We have lots of silos that have limited resources and do not have the flexibility to do that, and we could do things differently.

I was reading the explanatory memorandum in the first place because I was looking at things I wanted focus on. Section 4 amends section 2 of the Companies Act 2014 which sets out the definition of terms used throughout the Companies Act 2014. Section 4 inserts a new definition, the definition of the register of beneficial ownership. I thought it would go further and it may. The Minister of State might tell me if I am misreading the situation. I will use a few examples to test it.

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As members of the public, we should be able to see who is the beneficial owner of a company, particularly if it is getting State contracts. I am not sure whether we can fully do that. I have seen several individuals make very large purchases of buildings who did not appear to have the means to do so. They were awarded State contracts for accommodating international protection applicants and facilitating homeless services for the Dublin Region Homeless Executive. In those instances, I queried whether the individuals in question were the beneficial owners of the companies and posed questions about shadow directors. Obviously, both categories of people I referenced need to be housed. To be clear, I have no issue whatsoever with that. However, when a company is in receipt of significant contracts from the Government and local government, knowing who the beneficial owner is surely is the very least we should expect.

I have in mind a particular example. The Ceann Comhairle will be very pleased to hear I will not be naming individuals or locations. I know of someone who is on a disability payment who is now at the centre of a multimillion euro business. One of the buildings purchased by this individual for more than €20 million received a contract for ten years for an amount in excess of €86 million from the Dublin Region Homeless Executive. I am horrified in the first instance that there is an expectation that homelessness will continue to be an issue in ten years' time despite the commitment or objective that it will end in 2030. That aside, I do not believe for a minute that the named person is the beneficial owner of that building. I have done credit checks and cross-referenced the many companies where that individual and other individuals with the same profile, who have very limited means, are listed as directors. There are multiple companies involved.

I wrote to the Corporate Enforcement Authority setting out some of my concerns and asking for a response. It is my view that the authority gave the queries I put to it serious consideration. I was of the understanding that a shadow director is someone who is not an appointed director of a company but is the beneficial owner, with someone else acting as a front. Such practice may well be legitimate in some cases. In other cases, it is very questionable. We must make sure our legislation gets to the people and situations where there is very questionable activity happening. I have a pile of documents, running to a depth of 10 in., comprising some of the material I have gathered. It seems clear to me there is a gap in the law. I might be wrong, however, and this legislation may well be plugging some of that gap. Is it always the case that the beneficial owner is seen as the beneficial owner? When we have a situation where a Department is granting a contract and the person to whom the contract is awarded is understood not to be the beneficial owner of the company in question, there is something really odd about that.

I got quite a lengthy reply from the Corporate Enforcement Authority to my queries. It included the following:

The Corporate Enforcement Authority has considered all instances in the Companies Act 2014 referring to shadow directors and no company law offence arises by virtue alone of operating as a shadow director. A shadow director is a person in accordance with whose directions or instructions the directors of a company are accustomed to acting through that person, though that person is not formally appointed as a company director. This definition is set out under section 221 of the Companies Act 2014. While not formally appointed as a company director, any person acting as a shadow director may still commit certain offences under the Companies Act 2014 and those persons shall bear the responsibilities that apply for the company directors generally.

Section 228 sets out a statement of company directors' principal fiduciary duties. These include, amongst others, the duty to "act in good faith in what the director considers to be the best interests of the company" and to "act honestly and responsibly in relation to the conduct of the affairs of the company."

If someone is a beneficial owner of a company and he or she is not declaring it, how do we get to that information? Where is that set out as unlawful? The Minister of State might point me in that direction. I would be happy to meet with her officials to outline some of the issues about which I have concerns. I am frustrated that there are situations where somebody is very obviously gaining and not declaring that gain. That person is the beneficial owner but somebody is providing a front - I can point to more than one instance of this - who simply does not have the means to purchase properties worth in the millions of euro. That is what is happening. That is my primary concern. There is an opportunity in the legislation to close off something and I am concerned that the opportunity is not being taken. Perhaps it is being taken, in which case the Minister of State can point me in the direction of where it is being done, if I am incorrect on this.

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