Joe O'Toole (Independent)

I am disappointed with the response. I accept the Minister of State spoke to a number of people and gave it some thought. The Minister of State and Senator Callely referred to limited liability and I want to clarify why it is a gift and a privilege. It is not just because of the limited nature of the liability. It exists to encourage entrepreneurship. If I am running a company I may decide to advance and develop the company by taking a risk that might go wrong and cost a lot of money. By ensuring I can still do this without losing my house and everything behind me, limited liability ensures entrepreneurs and companies can develop without being put personally at risk beyond the limited liability of the company. It is crucial and I would be the first to defend it.

We had to deal with this in the 1990 Act. In the late 1980s, the equivalent of "Prime Time" produced a number of programmes on companies closing and setting up with a similar name or the same address where they were clearly the same entity. We introduced the concept of reckless trading to ensure limited liability was protected. This is an example for Senator Callely. We have dealt with this on a number of occasions.

Senator Callely asked a question, which is why I interrupted the Minister of State, for which I apologise. Very wisely and logically, Senator Callely asked why we did not amend this measure if it had been in place since 2002 and was not working. The answer is that it was recommended in 2002, introduced into the Bill in 2003, passed by the Houses at the end of 2003 but has never been commenced. That is disgraceful. The reason is that certain members of the groups referred to by the Minister of State used their influence quietly to block the measure. What I suggest is what was proposed by the Office of the Director of Corporate Enforcement, recommended by the audit review group and accepted by the Committee of Public Accounts of these Houses. That is the validation of my amendment.

Why should we listen to the Director of Corporate Enforcement? The only person mentioned in the Long Title of this Bill is the Director of Corporate Enforcement because the Bill gives him additional powers. The director would not thank me if the record showed his response as being that he agreed the Government was entitled to legislate. I would be doing him a disservice. I refer to what he said when asked a question by the Company Law Review Group, which I understand is still his view. He stated: "as the body responsible for encouraging compliance with company law including the preparation of books of account which give a 'true and fair' view of a company's state of affairs, the ODCE finds unacceptable a proposal which omits reporting on obligations 'that may materially affect the company's financial statements'". That is what he says; nothing could be clearer.

If Senator Callely receives representations on this, part of the argument will be based on the cost. Senator Callely's example was good. A person who is a director of a company approves the books when they come in. Prior to that, the finance sub-committee of the board, two of which I chair, or the audit committee will have ensured the structures are in place to ensure the books are right. We still cannot stop fraud, however. There must be trust and confidence and one way to build that is by taking decisions.

The big companies will say they will need teams of consultants to comply. The Director of Corporate Enforcement has responded to that point by stating: "the proposal that a company may rely, at the directors' discretion, on internal or external advisers to help secure compliance is unnecessary". That would be heavy regulation and there is an attempt to present it as that. Company directors make their judgments as they see fit.

The Director of Corporate Enforcement states: "the provision for auditor review of the directors compliance statement has been entirely deleted". This does not refer to the legislation we are debating but to a Bill proposed for the spring. The reason is that the ODCE states:

[T]he proposal that a company has in place 'appropriate arrangements or structures' to secure compliance is unclear. It appears possible that an appropriate 'structure' can be independent of any arrangements or procedures for securing compliance and that it could be a designated compliance officer[.]

That is why he is opposed to it, as well as the fact that: "the proposed definition of 'material compliance' no longer requires that the 'arrangements or structures' in place must be reasonably effective".

The answer to the question posed is that a person can say they have put in place something they believe is effective and they can give various reasons for that belief. In effect, this is about acting honestly. That person may be wrong but it does not commit them to jail or to handcuffs, in the words of the Minister of State, if they have acted honestly and honourably. I do not want to be misrepresented as trying to bury, hang or jail company directors. I want them to act honourably, openly and easily, and to say they have done their job, examined the results and are satisfied they are compliant. They might be wrong but only if we find out they knew something that was material, such as a director receiving €110 million, would they be in trouble.

I refer to the consolidated Bill, with 1,250 sections. No doubt it is growing by the day and will get bigger and bigger.