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

Amendment No. 37 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 this Act. To extend liability for the debts of an insolvent company to the officers of the company would, I am advised by the Attorney General, be constitutionally suspect and would represent a major departure in company law.

The overriding principle of company law is that a director's duties are owed to the company and not to individual shareholders or employees. If there is a breach of duty on their part which causes damage to the company they can be sued and held liable for damages. Claims can be brought by shareholders, a financial institution or on a director versus director basis. Liability may arise out of the lack of care and skill in the performance of the duties, such as negligent advice or misstatement. Any act which goes beyond the limits of the company's constitution, such as excessive borrowing, 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 officer in a personal liability.

Company law penalties vary from restrictions to disqualification orders to fines or periods of imprisonment. The new companies Acts provide for a four-tier categorisation for most of the offences with the exception of fraudulent trading or market abuse. The Companies Acts also contain a new provision whereby a judge, following a conviction for an offence under the companies Acts, may order that they remedy any breach of the Companies Acts in respect of which they were convicted. In effect, the provision in the Companies Acts 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 then the doctrine of separate legal personality would become an exception rather than the rule. Having regard to the foregoing, I am not prepared to accept this amendment.