Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael) | Oireachtas source

I do not support amendment No. 2, the effect of which would be to introduce a permanent exemption from an important transparency measure. It would also be confined to a particular sector, which I believe would not be appropriate. Furthermore, it would raise concerns from a state aid point of view. It is a long-standing rule of Irish company law that virtually all types of company must include the company type in the company name. Therefore, a limited liability company must include "Limited" or "Ltd." in its name. It is important information for third parties doing business with the company as different rules and considerations apply, depending on the legal form a company takes. For example, a limited company has full legal capacity, like a natural person. However, a designated activity company is more restricted in what it can do. Similarly, the unlimited company is exempt from the obligation on other company types to file financial statements with the CRO. Therefore, company type is not an insignificant detail for third parties in extending credit to, or doing business with, a company. The Companies Act 2014 extended the general rule to unlimited companies. Up until that time unlimited companies were the only type of company that did not have to comply with the obligation to include the company type in its name. This change gave effect to a recommendation of the Company Law Review Group. The Government accepted that recommendation and made it public in 2007 as part of the general scheme of what became the Companies Act 2014.

I accept that the organisational challenge of adapting to the new requirements of the Companies Act 2014 may be significant for some companies. They may have complex businesses, perhaps with operations around the world, but these are not concerns that are confined to the pharmaceutical sector. For this reason, all companies were given an 18-month transitional period in which to make the necessary arrangements to comply with the 2014 Act. The transitional period ended on 30 November 2016. During that time the vast majority of companies managed to adapt, but some unlimited companies considered that 18 months was too short. At the time the Companies Act was being passed, the Oireachtas accepted that some unlimited companies might need more time to adapt; therefore, it gave the Minister the power to grant an exemption for longer than the 18-month period in special circumstances. During the transition period extensions were granted to just over 100 companies, some within the same group. These extensions are for an additional five years on top of the 18-month general transition period that applied to all companies. In other words, they run to 1 December 2021. I understand some companies may now find that the additional five years are not enough. I have received representations to this effect. As a result, officials in the Department are due to meet representatives of some companies to learn more about their concerns and identify appropriate solutions. As Minister, I will also be meeting some companies to discuss their concerns. If there is a concern, it may not be confined to the pharmaceutical industry, as the amendment suggests, and while some of the companies that have been granted extensions are in the pharmaceutical sector, not all of them are. In fact, the majority are in other sectors of the economy. Moreover, I am aware that there are some unlimited companies in the pharmaceutical industry that did not apply for any extension beyond the general transitional period and were able to adapt within the period of 18 months. If there is a concern, it may not be widespread within the sector.

I do not support the amendment because it would be an open-ended exemption from the rule that a company must include in its name its legal type. The rule is an important transparency measure that protects third parties doing business with that company. Moreover, we must be mindful of state aid rules. If we were to allow an exemption from compliance rules for only some companies on the basis of cost, we would risk falling foul of the rules. If an unlimited company faces such significant challenges that it requires more than six and a half years to adapt to the rule, we should examine appropriate ways to address the difficulties for that company. This should be the case, regardless of in what sector the company is operating.