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

I am not in favour of this amendment. As I told the Senators during Committee Stage, the CLRG, a statutory body, has undertaken to examine and recommend ways in which company law and indeed the wider legislative code could be potentially amended to ensure better safeguards for companies, employees and unsecured creditors. To this end, I understand that the CLRG has convened a sub-committee with the relevant expertise and that this group has met 13 times. I understand that a report to the CLRG plenary is pending and in due course I expect to receive its recommendations. I have reason to hope that this will be available before the summer recess. I will examine any recommendations in that report very carefully, and as yet I have no reason to believe that the provisions in the Companies Act 2014 are ineffective in striking a reasonable balance between the proper promotion of limited liability on the one hand, and ensuring that the distinction between companies that are functionally a single entity is not misused on the other. Of course, if it emerges that the law does not properly strike that balance it will be necessary to review these provisions. For these reasons I am not in favour of accepting this amendment.

I wish to clarify that I am not opposed to amending the Companies Act for the purposes of ensuring robust remedies against companies that improperly transfer or dispose of their assets in order to circumvent their company or employment law duties. However, before I propose any amendment I need to be satisfied that such amendments are deemed to be desirable and necessary. I am not in favour of amending the law merely so that it appears that a problem that may or may not exist appears to be fixed. It is not clear how imposing more descriptive criteria, as is proposed by this amendment, on the court's discretion to make an order would provide for a more robust provision, or indeed would result in a provision being tested. Therefore I am not in favour of this amendment.

I do appreciate that what the Senators are trying to do here, and I note that this is an altered amendment from that proposed by Senator Nash at Committee Stage. However, I cannot emphasise enough that we must be aware of adverse consequences when proposing to improve an existing legislative provision. I cannot support an amendment only to find out that by doing so we, the legislators, have made it unworkable. In my view, the existing section 599 already covers most of the conditions that this amendment is purporting to insert to it. However, some of the additional conditions and the manner in which they have been drafted have caused me alarm. For example, with regard to the new paragraph (d), it is arguable that it would introduce vicarious liability for directors and result in a situation where any breach by any director of the directors duties, without a casual link to the company that is being wound up. On the new paragraph (g), experience has demonstrated over and over again that to prove intent behind the setting up of corporate structures, particularly in circumstances where such corporate structures have been in place for a period of time, is very difficult if not impossible to do. Furthermore, the provision appears to undermine the very essence of separate legal personality of individual companies in a group structure.

For these reasons, I am cannot support and I am not in favour of accepting this amendment.