Richard Bruton (Dublin North Central, Fine Gael) | Oireachtas source

The amendment is not appropriate as section 7(2) of the Bill already provides for the criminal liability of certain persons connected to a body corporate in certain circumstances in the case of offences under the Act. Extending liability for the debts of a solvent company to its officers would, I am advised by the Attorney General, be constitutionally suspect and represent a major departure in company law. The overriding principle of company law is that a director's duties are owed to the company, not to the individual shareholders or the employees. If there is a breach of duty on a director's part which causes damage to the company, he or she can be sued and held liable for damages. Claims can be brought by shareholders, financial institutions or on a director versus director basis. Liability may arise from a lack of care or skill in the performance of the director's duties, including negligent advice or misstatement. Any act which goes beyond the limits of a company's constitution such as excessive borrowing, the making of unauthorised payments, a failure to disclose the full extent of the director's interests or a failure to comply with requirements may involve a director or an officer in a personal liability.

Company law penalties vary from restriction or disqualification orders to fines and periods of imprisonment. The new Companies Act provides for a four-tier categorisation for most offences, with the exception of fraudulent trading and market abuse. The Act also contains a new provision in section 872, whereby a court may, following a conviction for an offence under the Act, order that the convicted person remedy any breach of the Act in respect of which he or she was convicted. In effect, the provision is a more constitutionally robust rewording of section 383 of the 1963 Act, as amended by section 100 of the Company Law Enforcement Act 2001.

From a company law perspective, the proposed amendment challenges the entire principle of company law. If it were to be implemented, the doctrine of separate legal personality would become an exception rather than the rule. Having regard to the foregoing, I am not in a position to accept the amendment.