John Lyons (Dublin North West, Labour)
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I thank the Minister for Education and Skills, Deputy Ruairí Quinn, for taking the time to listen to my concerns about this issue. I want to highlight a number of issues that affect management companies and the residents who constitute their members. I raise this issue on foot of a report in The Irish Times on Friday last on a potentially serious situation which was developing with regard to a large management agent, Assured Property Management. At one point this company managed approximately 40 estates or apartment complexes and many homeowners are dependent on it. One of these developments is located in my constituency. I will not name it, but I can say residents have been in touch with me since Friday and are genuinely very worried about what this means for their homes.

According to the newspaper article, the company was listed to be struck off the Companies Register.

I checked the Company Registration Office website today and the status of the company has changed back to normal.

This episode highlights the fragile situation of residents of developments served by management companies. If such a company was struck off, clearly the creditors would be exposed but the implications for residents could include no home insurance, no refuse collection and no maintenance of their estates. These are very serious issues. It is important to remember that these are ordinary people who go out to work and who pay their management fees. They should not be at the mercy of a company failing and not meeting its obligations. Most of these people bought their homes during the boom and are also affected by negative equity. As residents, they are members of the management companies, but this means that when situations such as the one referred to arise, they are expected to deal with complex legal and financial matters. In most cases, they are not equipped to do so. These are people who have paid for their homes, who go to work and have lives to live and this extra burden is very time consuming and stressful for them. I spoke to one affected resident who told me she had to take a day off work last week to deal with management company issues.

Residents are entirely dependent on the management agents so a high bar must be set for the operation of such companies. I appreciate that the recently established Property Services Regulatory Authority, PSRA, is there to license and regulate property services providers but home owners need to have faith in the system. The issue here is the application of the law and in that context, I have two particular questions. Is the Director of Corporate Enforcement sufficiently resourced and staffed to enforce corporate law, particularly in respect of management companies? Does the PSRA have the budget and staff to fully carry out its role?

Under the Multi-Unit Developments Act, common areas are meant to be vested with management companies and sinking fund accounts are supposed to be set up. I know of cases where this has not happened yet but the only recourse the residents have is to the District Court. Again, this is another time consuming and complex area for residents to have to get involved in and represents another burden for them.

I appreciate that Deputy Ruairí Quinn is not the line Minister responsible but I look forward to his response.

Ruairi Quinn (Dublin South East, Labour)
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I am taking this matter on behalf of the Minister for Justice and Equality. Property management agents are regulated by the Property Services Regulatory Authority, PSRA. The Minister for Justice and Equality established the authority on a statutory basis on 3 April 2012. The main function of the authority is to control and regulate property services providers, that is, auctioneers, estate agents, letting agents and management agents. This includes the licensing of all such services providers, the establishment of a complaints investigation and redress system for consumers, the setting and enforcement of standards in the provision of property services, the administration of client accounts, the establishment and maintenance of a compensation fund and the creation of a residential and commercial property register. On 6 July 2012 the authority introduced a new licensing system for all property services providers and the new residential property prices register on 30 September 2012.

In relation to company law, the current framework to address the late filing of company annual returns and accounts was introduced in 2001 in order to address the very low compliance rate with annual return obligations. In 1998 only 14% of companies were filing on time, while the compliance rate now stands at 89%. Under the Companies Acts, 1963 to 2009, a company is required to file prompt and accurate annual returns with the Companies Registration Office, CRO, whether the company is trading or not. A company can have up to nine months and 28 days from its financial year-end to complete its accounts and file its annual return. Where it uses the electronic filing system provided by the CRO, it can obtain a further 28 days to deliver the documents to the registrar. The fee for filing an annual return on time is €20 for an electronic filing and €40 for a manual filing. The CRO issues a reminder letter to every company about one month before its annual return date.

A late filing penalty of €100 becomes due in respect of an annual return on the day after the expiry of the filing deadline, which deadline is 28 days after the effective date of the return, with a daily penalty of €3 accruing thereafter, up to a maximum penalty of €1,200 per return. This penalty is in addition to the standard filing fee of €40 per return. If a company's annual return for the current year or the previous year was not filed on time, the company cannot avail of the audit exemption. Where an annual return is filed late in the year in which an exemption is claimed or in the preceding year, the company loses its entitlement to claim audit exemption not only for the year in question but for the following year also. It may only claim back the audit exemption in the third year if it files correctly and on time in the second year. Although the loss of audit exemption may have harsh consequences for late filing companies, it serves an important purpose, namely the encouragement of compliance with basic corporate filings. In tandem with the revisions to late filing fees, the potential loss of audit exemption has proved to be an effective way of encouraging a culture of compliance. It is important to note that companies have at least ten months after their financial year-end in which to file their annual return.

In addition, a company may be struck off the register and dissolved for failure to file an annual return. If a company is struck off, the assets of the company become vested in the Minister for Finance and if the business continues to trade, the owners will no longer enjoy the benefit of limited liability and so are personally responsible for any debts incurred so long as the company remains dissolved. Any person who was a director of a company at the date of sending to that company of a strike-off notice due to the non-filing of annual returns, may be disqualified from acting as director by the High Court, where the company is struck off leaving outstanding liabilities. Such order may be made by the court on the application of the Office of the Director of Corporate Enforcement.

John Lyons (Dublin North West, Labour)
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I mean no disrespect to the Minister - I know it is not his fault - but I could have found out all of that information myself today. It is absolutely deplorable to be given such a response on a matter of urgency that was raised in a national newspaper last week and which affects thousands of people in houses and apartments all over the country. The reality is that unless there are enough resources and staff to implement the regulations that are in place, management companies are at the risk of failing. We had an example of that with Assured Property Management last week.

Many people are left wondering what would happen if their management company were to fail. They do not know, for example, if it will affect their home insurance, which is particularly worrying if something were to go wrong with their homes and indeed, we know that there are problems with many developments built during the boom. People may be left with no home insurance and with nowhere to turn. The law as it stands may address this matter but it makes it very complex and difficult for ordinary people, many of whom are working full time, because they must become directors of the management companies. In reality, many of these management companies are questionable and are often two sides of the same coin, with close links to the developers of the estates or complexes.

People need to know that if their management company fails, there will be some sort of compensation or support for them, possibly through the local authorities. We had a near miss last week with Assured Property Management. According to the website of the CRO, that company is now back in a normal state but the consequences of such a company failing are too drastic to contemplate. Residents would find that their refuse would not be collected, their estates would not be managed and ultimately, their home insurance would be invalid, despite having paid high management fees, not to mention the original cost of their homes.

I acknowledge that the Minister was asked to read the reply today and it is not his responsibility but I am highly dissatisfied that this is the type of response given to a public representative who raises a matter of national importance.

Ruairi Quinn (Dublin South East, Labour)
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I can understand the Deputy's frustration. I am here on behalf of the Department of Justice and Equality and what I have in front of me is entitled Notice of Matter for the Adjournment. We abolished matters on the Adjournment at the start of this Dáil session and they are now called Topical Issues. The reply states clearly that the topic is the enforcement of company law in relation to property management agents. I do not know if that is exactly what the Deputy put down.

John Lyons (Dublin North West, Labour)
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It is, yes.

Ruairi Quinn (Dublin South East, Labour)
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There is a shared responsibility for the vagueness of the reply.

John Lyons (Dublin North West, Labour)
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The heading on the reply incorrectly describes it as a matter on the Adjournment.

Ruairi Quinn (Dublin South East, Labour)
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The response was not specific to the case described by Deputy Lyons. I will draw the attention of the Department of Justice and Equality to the facts outlined by the Deputy and ask it to provide a comprehensive response outlining the rights and safeguards available to his constituent in everyday English, as distinct from a litany of legalese and a set of a steps that could only be followed by a full-time professional without another occupation to pursue.