Robert Troy (Longford-Westmeath, Fianna Fail) | Oireachtas source

I take it everyone can hear me through my mask. It was produced by a local company in Westmeath, Mergon, if anyone wants to acquire one. I will just plug that company.

I am pleased to be in the Seanad as Minister of State with responsibility for trade promotion, digital and company regulation and to have the opportunity to present the Companies (Miscellaneous Provisions) (Covid-19) Bill 2020 for the consideration of the House. The Bill will provide for the first phase of measures intended to mitigate the impact that Covid-19 has had on the normal operation of business in Ireland. Before proceeding with a summary of the detailed provisions, I will first offer some background and context to the Bill.

As Senators may be aware, there are a number of issues in the area of company law that have come to the fore in light of the pandemic. From the onset of the Covid-19 business closures, my Department received a significant number of representations, including representations regarding proposed amendments to the Companies Act intended to support companies as they respond to both the operational and economic challenges of the crisis. Similar issues have arisen in relation to industrial and provident societies, which are mostly co-operatives.

Real practical issues were raised in respect of the ability to hold annual general meetings, AGMs, given the public health guidelines on social distancing. AGMs are an important forum for members to approve the accounts, appoint auditors and hold the directors accountable for the affairs of the companies and co-operatives. In addition, general meetings need to be held if a company or co-operative is commencing any of a range of activities, for example, a merger or members' voluntary winding-up. Indeed, the issue of AGMs has already been subject to litigation. A company recently found itself before the court where a shareholder brought proceedings to challenge the intention to hold an AGM with restricted attendance.

Concerns were also raised with regard to business solvency. In terms of these concerns, Senators will be all too aware of businesses in their own localities, including hairdressers, cafés and so on, which were thriving only a few short months ago but which now find themselves struggling to balance the books and being in fear of closure. Given that there are approximately 240,000 companies and 950 industrial and provident societies registered in Ireland, even if only a fraction encounter such difficulties, it provides clear evidence that a change is warranted to ensure they can continue to comply with their obligations under the legislation and that measures to alleviate the strain on their finances are required.

My Department, in conjunction with the Company Law Review Group, CLRG, a statutory advisory body charged with advising the Minister for Business, Enterprise and Innovation on company law, has worked to find practical solutions to these issues as a matter of urgency. Efforts were focused on matters which could be concluded within a short timeframe and, as such, this Bill deals only with those items which are required immediately and which are capable of being progressed quickly.

Extensive consultation took place with the CLRG, membership of which is broad and represents key stakeholders in this area such as the Irish Small and Medium Enterprises Association, IBEC, the Irish Congress of Trade Unions, the Office of the Director of Corporate Enforcement, the Revenue Commissioners, insolvency practitioners, legal practitioners, academics and my own Department. The group is uniquely well positioned to give a balanced view on the need for this legislation. My Department has also consulted with the Irish Co-operative Organisation Society, which is one of the co-operative umbrella organisations.

I will now turn to the main provisions of the Bill, which can be broadly summarised as follows. The Bill provides that the measures will be operative for an interim period up until 31 December 2020, with potential for extension, and provides for a regulation-making power in respect of extending the interim period and amending the operational detail of virtual meetings. The Bill also provides that general meetings for companies and for industrial and provident societies, which are mainly co-operatives, may be held virtually, as may creditors' meetings. Documents which are required to be executed under seal may now be executed in counterpart. The Bill will increase the amount at which a statutory demand can be issued from €10,000 singularly or €20,000 aggregate to €50,000. It will extend the examinership process to a total of 150 days, in exceptional circumstances and subject to court approval.

Part 1 of the Bill deals with preliminary and general provisions. It provides for standard provisions such as the Short Title and commencement. Sections 3 and 4 deal with the interim period. The interim period refers to the limited period of time for which the provisions of the Bill will be operational. This timeframe can be extended by Government order and different provisions may be extended by different times. This is an important point as it gives us the flexibility to respond to the changing nature of the crisis and its effects on companies.

Section 5 of the Bill makes a small but practical amendment to the Companies Act with regard to the sealing of documents. Under the Companies Act, there are a number of documents which must be executed under seal. This means they must have the company's official seal affixed to the document and the document must be signed by the company director and secretary. As more and more people are working from home, this has created situations where the signatories and seal are in separate locations. Now, documents may be signed and sealed on separate pages, which will be counted as one single document for the purpose of the Act. This will reduce the administrative burden on companies.

Sections 6 to 11 make provision for general meetings, including AGMs, to be held wholly by electronic means during the interim period.Such meetings may now be held by electronic means using online platforms such as Zoom or Webex or allowing people to dial in. Companies must guarantee the security of the platform used for the meeting, as far as is reasonably possible.

Provision is made for the details which must be included in the notice of a general meeting held by electronic means. Such notice must include details of how an attendee can access the platform used for the meeting as well as any measures put in place by the company for security purposes. For example, some companies may provide attendees with a personal identification number which they must enter to access the meeting.

Further consequential amendments are made to the Companies Act to ensure those who participate in electronic meetings will be counted as part of the quorum. Companies will be afforded flexibility to reschedule meetings should this be deemed necessary by the directors in order to comply with public health advice from the Government. There may be smaller companies that can hold a physical meeting and comply with social distancing guidelines. This provision is designed with them in mind should they schedule such a meeting and, subsequently, further restrictions are announced.

New provision is made for the withdrawal or amendment of dividend resolutions. Where a company has previously proposed to pay a dividend to shareholders but the impact of Covid-19 on the company's finances makes this untenable, directors may withdraw or amend the dividend resolution. This will ensure that directors are empowered to make decisions for the long-term financial stability of the company.

Finally, provision is also made for annual general meetings to be deferred until 31 December 2020. This is in line with measures taken at EU level as per Article 2 of the Council Regulation 2020/699 on temporary measures concerning the general meetings of European companies (SE) and of European cooperative societies (SCE) adopted on 25 May 2020.

Sections 12 and 13 amend sections 520 and 534 of the Companies Act and provide for an increase of 50 days to examinership, bringing the total period to 150 days. This is an important amendment intended to give companies additional breathing space to restructure, trade through the crisis and preserve employment.

Section 15 amends section 570 of the Companies Act which sets out the circumstances in which a company is deemed unable to pay its debts. Normally a company is deemed unable to pay its debts when it has failed to pay debts of €10,000 in respect of a single creditor, or €20,000 in the aggregate, within 21 days of a statutory demand being delivered. It is at this point the company may be wound up by the court. Section 15 increases the threshold at which a company is deemed unable to pay its debts to €50,000 for one or more creditors. This amendment is intended to prevent companies which were previously viable from being wound up for relatively low levels of debt.

Sections 15 to 24 deal with creditors' meetings under the Companies Act. Parts 9, 10 and 11 of the Act provide for several circumstances in which these meetings must occur. For example, examiners and liquidators are required to call meetings of creditors at various stages in the respective processes. This Bill will allow such meetings to take place by electronic means for the duration of the interim period in line with that which is provided for general meetings. There are a number of consequential amendments made to sections which specifically reference creditors' meetings to include a reference to creditors' meetings held by electronic communications.

Section 25 makes an amendment to section 1103 of the Companies Act, which provides for additional notice provisions required for general meetings of publicly traded companies. It includes additional information which must be provided should that meeting be held by electronic communications such as access details for the electronic platform.

Section 26 makes a minor amendment to section 1106 of the Companies Act with the substitution of the words "provide for" for "guarantee" at subsection 4(a)(i).

Part 3 of the Act, which consists of three sections, deals with temporary amendments to the industrial and provident societies, the majority of which are co-operatives.The provisions applying to companies were followed closely and adapted where necessary to reflect the unique requirements of industrial and provident societies, mostly co-operatives.

Section 27 provides that the measures will be operative for an interim period, up until 31 December 2020, with potential for extension by Government order. Section 28 makes provision in respect of general meetings. This section is aligned with section 6 of the Bill in relation to general meetings of companies. It provides that a general meeting, including an AGM, may be held in more than one physical location, by electronic means, or as a hybrid meeting, where some members attend physically, and others join electronically, for the duration of the interim period. Members attending by electronic means will be counted as part of the quorum.

Industrial and provident societies may also defer an annual general meeting until 31 December 2020. Industrial and provident societies will be afforded the flexibility to postpone, relocate and change the means of holding general meetings without the need to have a formal technical meeting to adjourn to another date.

The notice of the general meeting that includes participation by electronic communications specifies at a minimum the electronic platform and details for access to it; the time and manner by which a member must confirm his or her intention to attend the meeting; any requirements and restrictions put in place by the society to identify the members; the procedure for communicating questions and comments and the procedure for voting on resolutions. The Minister will have the power to make further provision, if necessary, for the convening and conduct of general meetings held by electronic communications.

Section 29 inserts additional definitions into the Industrial and Provident Societies Act 1893 to include a definition of "Covid-19" and the "interim period". As a result of previous amendments to the Industrial and Provident Societies Acts in 1978 and 2014, the company law proposals on examinership and creditors meetings, will automatically apply to co-operatives.

I look forward to an informed, positive and constructive debate on the Bill in this House. The Bill is important legislation for any companies and co-operatives that might be struggling financially and unable to comply with their administrative obligations under the current legislation. It is an important first phase of work in this area and I am happy to commend it to the House.