Mary Coughlan (Donegal South West, Fianna Fail)

The purpose of section 7 of this Bill is to replace section 40 of the Companies Act 1990, which sets out the penalty for breaching the statutory prohibition on the making of loans by companies to the directors. To prove that an offence has been committed under the existing section 40, it is currently necessary to prove beyond reasonable doubt that the accused knew, or had a reasonable ground for believing, that the company was in breach of the requirements of section 31 of the 1990 Act. In effect, it is necessary to prove there was a wilful default. In other words, ignorance of the law can be used as a defence. The existing requirement on the prosecution to affirmatively prove the accused's knowledge of the law is unduly onerous, particularly when compared to many other offence provisions found elsewhere in the Companies Acts.

The proposed new provision will provide that if a company enters into a transaction or arrangement that contravenes section 31 of the 1990 Act, every officer of the company who is "in default" will be guilty of an offence. Section 383 of the Companies Act 1963 sets out the meaning of an "officer who is in default". It provides that an officer is "in default" if he or she authorises a default mentioned in the provision in question or, in breach of his or her duty as an officer, permits such a default to occur. Section 383 of the 1963 Act further provides that an officer is presumed to have permitted a default by his or company unless he or she can establish that he or she took all reasonable steps to prevent the occurrence of the event in question or, by reason of circumstances beyond his or her control, was unable to do so. In essence, the amended version of the 1990 Act will bring this offence into line with numerous similar offences in the Companies Acts. It will also set out a mechanism whereby an accused officer can defend his or her actions in appropriate circumstances. I am satisfied the approach being proposed is appropriate. Accordingly, I do not feel I can accept the deletion of this section.