Brendan Ryan (Labour)

At present section 23 of the Companies Act 1990 allows a person to refuse to disclose what he or she considers to be privileged information to the Office of the Director of Corporate Enforcement. Based on this, legal privileges were claimed in the Anglo Irish Bank case and the ODCE was not permitted to appoint a retired High Court judge to adjudicate on the matter of privilege claimed. The Bill proposes a change which would enable the ODCE to seize privileged information provided it maintains the confidentiality of the information until such time as a court determines if the information is protected by legal privilege. It also allows the appointment of a suitably qualified, independent person to prepare a report on the disputed information. The Bill addresses the issues arising from the Anglo Irish Bank case so we generally welcome it. However, one area causes me some difficulty. Section 40 of the Companies Act 1990 states: "An officer of a company who authorises or permits the ... company to enter into a transaction or arrangement knowing or having reasonable cause to believe that the company was thereby contravening section 31 shall be guilty of an offence." Section 31 restricts the giving by a company of loans and guarantees to its directors. It seems that the Bill's proposed amendment to the law will make each officer of the company guilty of an offence irrespective of their actions or knowledge of any wrongdoing. As I said, I have some difficulty with the proposed change because it risks criminalising an officer of the company even if he or she had no part in or knowledge of any wrongdoing. I ask the Minister to comment on this and perhaps to reconsider it.

Under company law, companies in general and banks have different obligations for disclosure. I do not know why this is so. Section 42 of the Companies Act 1990 requires companies in general to disclose in their annual accounts details of certain transactions, including loans to directors and connected persons, but banks are only obliged to disclose aggregated data on such loans where amounts were still outstanding at the end of the financial year. The Bill removes this anomaly by providing that loans made to directors of companies that are licensed banks shall be treated in the same way as loans made by any other company. All loans above a certain threshold to individual directors will have to be disclosed separately in the annual accounts rather than in an aggregated form. This is important, as we saw with the Anglo Irish Bank and Mr. Sean FitzPatrick affair. In future, the maximum amount outstanding during the year will be disclosed and not simply the amount outstanding at the end of the financial year. These provisions are to be welcomed.

The Bill also proposes a change to the requirement that an Ireland-registered company has at least one director who is resident in Ireland. The Bill replaces this by requiring at least one director who is resident in a member state of the EEA. This change was required by the European Commission to comply with EU law. It is understandable and reasonable.

Apart from the one reservation I mentioned, which might manifest itself in an amendment on Committee Stage, I, on behalf of the Labour Party, am happy enough with the broad thrust of the Bill. Before Committee Stage, we will look closely at the detailed wording of the Bill and we will likely return with several amendments.