Sean Barrett (Independent) | Oireachtas source

I welcome the Minister of State, Deputy Sean Sherlock, to the House. Presenting a Bill with 1,436 sections must be a record, certainly since I have been in the Seanad. I congratulate the Minister of State on his weight-lifting prowess in bringing it forward today. This is welcome legislation, its object being to reduce the cost of doing business in Ireland.

I agree with Senator Feargal Quinn's point regarding the need to define the term "accountants" in law. There are proposals circulating in this regard, some of which I am sure have reached the Minister of State. The regulatory agency for accountants has been stymied by court cases pending, as detailed in its annual reports. Some of those court cases have been resolved and we can look forward to much stricter regulation of accountants in the future.

Senator Quinn's one-for-two proposal - that one extra imposition in law on companies should be accompanied by two others being removed - is similar to a proposal that was made in respect of quangos by the well-known economist, Colm McCarthy. In making that proposal, the latter pointed to the pub licensing rule whereby the opening of a new pub required the extinguishing of two existing licences. Mr. McCarthy regarded pubs as much more important than quangos and argued, on that basis, that the establishment of any new quango certainly should require two existing bodies to be expunged.

The provision regarding the objects clause is important. We have had a tradition in this country of board membership being a badge of honour or representing inclusion in some type of club. These days, however, board members have a great deal of work to do, particularly in the financial sector where so many companies collapsed in 2008 or thereabouts. In future, directors will have to take a much stricter view of what is going on and the role that is required of them. I welcome the requirement for a statement of compliance with the objects clause. To turn directorships from an honorary role akin to membership of a club into a hard-working position is essential to the reforms the Minister of State is proposing.

I have some concerns regarding the provisions relating to annual general meetings. Sometimes at meetings useful facts can emerge, ideas can be exchanged and so on. Would there be an element of things going underground if AGMs were conducted in written form rather than taking the form of an actual meeting?

The provision regarding a directors' compliance statement is welcome, as is the proposal regarding statutory auditors and the procedures for removing them. There was a view in company law reform debate - a view that seems to have gone somewhat out of fashion - that some auditors were around too long and became part of the problem rather than the solution. The proposal was that there be a limit on the length of time an auditor can stay with any one company. Perhaps the Minister of State will consider some type of measure in this regard, such as a requirement to rotate auditors.

In his introduction to Part 15, which deals with the functions of the Registrar of Companies and advisory bodies, the Minister of State referred to the Irish Auditing and Accounting Supervisory Authority, the Director of Corporate Enforcement and the Company Law Review Group. The latter, under the chairmanship of Dr. Tom Courtney, has received universal praise. It is important to note, however, that the Irish Auditing and Accounting Supervisory Authority and the Director of Corporate Enforcement are both regulatory and enforcement bodies, and that enforcement function should be made clear in the legislation.

I support the requirement to establish an audit committee and would argue, moreover, that the audit exemption should be granted very sparingly. In fact, my view is that even entities whose dealings do not involve large sums of money - a small tennis club, for example - should prepare accounts. This is important in terms of training people up to be properly accountable. Perhaps the Minister of State will review that provision.

The provisions regarding directors' fiduciary duties and directors' statements represent welcome improvements in corporate governance. I have a query regarding section 195, which deals with majority written decisions. The note from the Minister of State's advisers indicates that this will eliminate the need for face-to-face shareholders' meetings and any inconvenience or cost associated with such physical meetings. The counterweight argument, however, is that these things should be done in public. I take my lead from Senator Ivana Bacik in pointing out that much of what is proposed in this legislation is effectively extending the openness and transparency of Parliament to the corporate sector, which is welcome. In the past, too much of what was happening was done in secret, until Parliament was required to step in when it all came off the rails in 2008. The response to the argument that it is too inconvenient or costly to have meetings is that perhaps it is too costly not to have meetings.

Finally, the note to which I referred raises a query as to whether these provisions will result in a significant divergence between the systems of company law operating on either side of the Border. Has any detailed consideration been given to that issue?

The Minister of State is moving in the right direction with this legislation. Its objects are ones we all share and the reforms he is proposing merit support. I thank the Minister of State's advisers for their help in working through this immense document. The presentation and note prepared by Mr. Brian Hutchinson and Dr. Noel McGrath were most helpful, and those learned gentlemen have assisted us greatly in coming to terms with these very complex proposals. I wish the Minister of State well in advancing the legislation. There is broad support for it in the House and his endeavour deserves to succeed.