David Cullinane (Sinn Fein) | Oireachtas source

I shall be honest and say that I have not read the Bill. I did not draw the short straw in my party; somebody else did. I got the job of reading the explanatory notes, which are themselves 402 pages long. It is one of the largest pieces of legislation in the history of the State. It has 1,429 sections, so the sheer scale and size of the Bill are causes for concern in terms of oversight and implementation.

The Bill consolidates 16 Companies Acts with the aim of simplifying and modernising company law for the purpose of making it easier to do business in Ireland. We would all support that and would all want to make legislation as simple for businesses as possible while also protecting the integrity of company law.

I turn to some of our points of concern. Work on this legislation began in 2000 and the bulk of its drafting was completed prior to the economic and financial crisis. The Irish Congress of Trade Unions has warned that, as no investigation has been carried out of the role that existing company law played in the crisis, the Bill is not sufficiently robust with regard to regulation or protection of the public interest. It is also the view of the Irish Congress of Trade Unions that the legislation's primary concern is business interests and that it does not adequately consider third parties such as suppliers to small businesses or employees. The legislation does not provide that a registered company be managed and controlled in the state; rather, a company need only "carry on an activity" to be formed or registered in this state. The provision for a directors' compliance statement excludes the majority of companies due the height of the monetary amount set for the annual turnover and balance sheet, thus rendering the measure ineffectual. Following the DIRT inquiry, robust legislation was passed in 2003 which would have ensured directors' compliance in the areas of auditing and accounting. However, not all provisions were commenced, despite concerns raised by Revenue and the Director of Corporate Enforcement. Directors' responsibilities to their employees have not been enhanced and remain vague. We have just heard about what happened to the Paris Bakery workers. I accept that Revenue has stepped in there, but workers were left in a state of limbo for many years because the company was not formally wound up or put into liquidation. There is no guarantee that that will not happen again, nor that, if it does so, Revenue will step in as it did in this instance. We need to correct those anomalies, which have an impact on workers' rights.

Currently, all companies have an objects clause which sets out the business that a company is allowed to perform, for example, entering into a contract. Such clauses are often lengthy, as they have to provide for every scenario. If a business engages in a transaction not provided for in the objects clause, it is considered to have gone beyond its powers and will find itself on the wrong side of the law. Businesses and their advisers have long complained about the objects clause and argued that it is obsolete in a modern business environment. In response, the Government has included a provision that gives companies full and unlimited capacity to carry on and undertake any business or activity, and to act or enter into any transaction inside or outside the state. As a consequence, as the Irish Congress of Trade Unions identifies, the Government has changed the legal persona of a company to that of a natural person, which in effect gives a company the same rights as an individual. This is a big shift in company law. Similar changes to legislation in the US have resulted in mischievous business owners engaging in anti-worker practices, arguing that it is their company's human right to do so. The objects clause is not fit for purpose, but there should be some middle ground. That could easily be achieved by amending the relevant section to state limitations on the right provided for. The Irish Congress of Trade Unions has called for the provision to be referred to the Irish Human Rights Commission, which I would support.

This Bill was an opportunity for the Government to deal with rogue employers who abused the insolvency provisions for a limited company, which I have just talked about.

While we will table amendments, if they are not accepted, it is proposed to initiate a stand-alone Bill to deal with this issue once and for all. The legal anomaly needs to be sorted out.

Currently a creditor can seek the winding up of a company for a debt to the value of €1,269. The proposed legislation increases this amount to €10,000, which effectively removes the ability for an employee to pursue court action for salary moneys owed. It allows for a group of creditors to pursue a debt worth €20,000, but this scenario would not be helpful to workers in a small business. With specific references to employees, it remains the case that they could pursue an employer for moneys owed through the High Court, the cost of which is obviously prohibitive. Legislation could provide an opportunity to address this by enabling such a case to be heard in a lower court.

The Bill provides a bond of €25,000 where there is no director resident in Ireland. Arguably this is an arbitrary figure and should be accompanied by a provision that ensures the bond amount is linked to turnover and the wage bill, which would ensure that unpaid salaries, redundancy and the minimum provision for creditors are covered. Concern remains that the Bill is not sufficiently robust to ensure auditors' compliance to provide a true and fair view of a company's position. This has been dealt with during the Second Stage debate in the Dáil when the role of auditors during the economic crisis was debated. As previous speakers in the Seanad said, a balance must be struck and we need to ensure auditing is not overly prohibitive while at the same time ensuring proper scrutiny and auditing of companies and business. We have seen in banking and other sectors that auditing processes have failed and let us down. We need to learn the lessons from that.

These are some of the concerns that not only my party but other organisations such as the Irish Congress of Trade unions have. We will debate some of those issues on Committee Stage.