Mary White (Fianna Fail)

I welcome the Minister of State, Deputy Kelleher. I also welcome the proposed changes in the Bill. It comes on the back of the shocking revelations that a bank had concealed from public scrutiny huge loans granted to a former chairman for eight years. The Bill closes a legal loophole that allowed bank directors to keep their individual borrowings secret from the Financial Regulator and sets strict limits on the amount that may be borrowed by bank directors.

Company law has in the past treated banks differently from other businesses in recording loans to directors. The Companies Act 1990 limits loans from businesses to their directors to 10% of the company's assets. Until now, banks have been exempt from detailed disclosure but were required to record the aggregate total of loans to directors at the end of the year. This situation could not continue. As has been shown by all the recent scandals, policing the 10% rule has been next to impossible for the authorities.

This Bill specifies that all loans above the threshold to each individual named director will have to be disclosed separately in the annual accounts. I also am pleased to note that the liability of directors has been amended by making every director of every company that contravenes the Bill severally and individually liable for the contravention as the current legislation provides that liability is confined to the directors who approved contravening loans to other directors. Second, the Bill will make it an offence for companies and their directors to fail to comply with the disclosure provisions regarding loans and material interests of directors in company contracts.

The Director of Corporate Enforcement will now have a right to access third party records relating to a company under investigation. The 2008 report of the Office of the Director of Corporate Enforcement showed a 22% rise in alleged breaches of company law which in many cases involved directors' loans where borrowings were used for improper impersonal benefit amounting to €134 million last year, a four-fold increase on 2007. Go raibh míle maith agaibh, a Aire agus a Leas-Chathaoirligh.