Mark Daly (Fianna Fail)
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I remind Senators that they may speak only once on Report Stage, except the proposer of the amendment, who may reply to discussion on the amendment. Amendments Nos. 1 and 8 are related and will be taken together by agreement.

Joe O'Toole (Independent)
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I move amendment No. 1:

In page 3, line 30, after "1999" to insert the following:

", TO AMEND SECTION 45 OF THE COMPANIES (AUDITING AND ACCOUNTING) ACT 2003 CONCERNING DIRECTORS' COMPLIANCE STATEMENTS".

I welcome the Minister of State and his advisors but I see no sign that he will accept this amendment.

The Government has had a bad run and I am putting forward two simple amendments, even if the second amendment runs to four pages. A couple of months ago we had the row with the banks. I am proposing what was originally in the Finance Bill 2003 that was changed because of opposition from auditors from the big four accountancy bodies and from IBEC.

These amendments will require company directors to disclose any information that is material to the accounts and will require auditors to confirm it has been done. I doubt there are five people in Ireland who would not agree with that after all we have gone through with the banks. It irritates me because this debate will get no publicity in the newspapers but when any of us are in the pub at the weekend, we will be asked what we are doing about the bankers.

If this had been in place when a certain bank got into huge difficulties three months ago, a board member who had previously been chief executive who had loans of €100 million would have had to declare it. We found ourselves in a situation where the senior Minister and others had to say they did not know if what had happened was in breach of any law. I am correcting that situation with these amendments. In doing so, I am going through company legislation as it was previously.

Where did I find this amendment? This is the amendment the Director of Corporate Enforcement submitted to the Company Law Review Group. I am proposing what the Director of Corporate Enforcement wanted. He is the watchdog for the people and in every amendment the Minister rejected on Committee Stage, one of the reasons given was the view of the Director of Corporate Enforcement. I have turned that around; this is the view of the Director of Corporate Enforcement.

In 2002 following the establishment of the audit review group, which I chaired on behalf of the Government, the senior Minister in the Department was Deputy Harney. The then Minister agreed with the viewpoint I am putting forward today but came under pressure, as did the Government, and there was a change. The Minister had appeared before the Committee of Public Accounts with me and if we revisit what she said at the time, when Jim Mitchell was Chairman and Deputies Rabbitte and Durkan were also members, the point was that never again would she have to listen to the view expressed when the off-shore accounts were revealed, when directors claimed they did not know what was happening. It was like the concentration camps in Germany, they did not know. We will require people to do something.

When the audit review group looked over this, one of the issues it reported on was the directors' compliance statement, where effectively a company director could say that to the best of his knowledge and as far as was practical, the company was compliant with the law of the land. That suddenly became a huge problem for all the wrong reasons. A Senator at the time, who was also a director of a large multinational company, asked how could he know what was going on in a back office of his South African operation. The answer is that a director could not know but he should be able to say what he put in place to ensure compliance and present the reports his executives provided throughout the last year. That is not much to ask. In 2002 I believed naively there was nothing above and beyond what would be required of a company director if there was no legislation.

I asked the following question at the time and I ask it again today. When we, as a democracy, give the privilege of limited liability, what do we expect back? To understand that, we must look at from where it came. It came from a time when conducting financial transactions was based on the honour system. If somebody deliberately conducted business fraudulently, it was a capital offence. That was the case in Genoa, Barcelona and all the centres of trade and commerce in the Middle Ages.

To get away from that savage era when people were hanged outside their financial offices and at a time when usury was a mortal sin in the Christian churches, we developed limited liability. Limited liability is a gift we give people but it has stopped being that. People now believe they can set up a company with limited liability and that they cannot be held responsible for anything beyond the means of the company etc. Why do we allow someone to set up a company, take money from people and trade in a democracy? We do so on the basis of trust.

What is required is that the directors of a company put in place the structure to ensure they comply with the laws of the land. The first argument against that was that people would have to check out health and safety, bullying, environmental issues and so on. In 2002-03, people were not sure. There is not one person on either side of this House who would have an ounce of sympathy for a company dumping dangerous chemicals in a place it should not, as happened in the constituency of the Minister of State, Deputy Kelleher. We would hold people responsible for that. We would not jail the directors but we would ask if the directors knew or, if they did not know, why they did not know and who knew.

I will not go into that issue because I am talking about revenue, tax and company law today. I am touching on the other issues into which one could go. There is a view that company directors believe they are not responsible for anything. I do not know for what they are responsible if they are not responsible for telling me they are compliant with the law of the land and that they have put a structure in place.

Two months ago there were discussions about auditors in the Members' bar, in the Houses and in pubs. What were auditors doing? As I said to the Minister on Committee Stage, the business of auditing is not the business of being a bloodhound but of being a watchdog. The auditor watches for things. One cannot stop fraud. If people want to act fraudulently, they will find a way. That is not what this is about. This is about allowing honest people to ensure their company conducts its affairs honestly and compliantly and that there is a level playing pitch for everybody.

On Second Stage, Senator Callely commented on heavy regulation and it irritated me. In retrospect, I probably over-reacted in the point I made but we have had enough light touch regulation. I have always been in the middle in this argument. I do not like heavy regulation nor do I like light touch regulation. The regulation should meet the needs and no more. It should be fit for purpose and no more. It should be easily and properly met. For instance, the level of regulation on Members of the Houses in terms of the list of things we must fill out each January is too much but we are stuck with it and we get on with it.

I want company directors and the Minister of State to remember the outrage about offshore accounts. In the late 1980s, people tightened their belts only to find there were millions of pounds in offshore accounts even though they were told there was no money in the country. They should also remember the outrage a couple of months ago. All I ask is that directors put in place a structure which will do the business as far as they know, that they take reports so many times in the past year, that they review the structure in the past year and that they ask auditors to ensure that is done.

I support the Bill but one of the flaws in it is that it comes under the American influence of being rules based. This legislation deals with loans to directors. As I said on Second Stage, I come from the county of Daniel O'Connell and we are very good at giving a different name to the same thing, which is what company law does all the time. There are various ways to give money to people other than by way of loans. I believe people will get around this. People must act honourably.

The system in this country, the UK and most of Europe is principles based. Put in simple terms, people must act honestly, must make decisions on that basis and must be compliant. There are 24,000 rules in the American system and they tick the box if they have followed every one of them. None of the rules refers to what happens when an elephant walks into the front office because that is not expected. That is what happened in the case of Enron. The legislation brought in after the Enron disaster in the US was the Surbanes-Oxley Act under which the chief finance officer and, I believe, the chief executive officer can be committed to jail for not doing the things about which I am talking but it is done on the basis of rules.

I ask that the company director looks at what he or she has done in the past year and states that he or she is confident that something fit for purpose has been put in place which will do the business, that he or she has checked and reviewed it, he or she has got reports and he or she is signing off on it on that basis. The company's external auditor also signs off on it. If that was put in place, with all the other issues dealt with in the 2003 and 1990 Acts, including internal auditors, audit committees and the role of independent directors, one would have in place something that works.

Two or three months ago, the auditor of a bank appeared before the Oireachtas Joint Committee on Economic Regulatory Affairs. That is what led to the row in 2000 about the offshore accounts. The internal auditor of AIB was not listened to, was sacked and lost his reputation. I thought I would never again see a situation where an internal auditor of a large bank would come before a committee to say he was not listened to. That reflects a weakness in the legislation for which I take responsibility. We looked at the legislation at the time and thought we had closed the loopholes but clearly we did not do that.

The issues I have put before the House have arisen from our previous experience with offshore accounts, including the importance of limited liability and light touch regulation. I say to Senator Callely, in particular - perhaps this is a better articulated response than that which I made to his Second Stage speech - that I am not asking people to fill out a load of forms. I ask that people say they have been to ten directors' meetings in the past year, that they have put something in place, that they believe it works and that they are signing off on it. That is neither light touch nor heavy touch regulation.

One of the arguments made against such a system is that it would require the engagement of an entire sheaf of consultants. That is what the "big five" companies have claimed, and that it will thus cost billions of euro to implement. If it takes an external person to come in to tell the director how well he or she is performing, then he or she is not performing well. I am a director of a company. I spent an hour and a half this morning dealing with a report to me and the chairman of the company, taking us through some of the issues we have just discussed. We were satisfied with what we heard. This does not mean we could not have been misled by somebody, but that is not the issue. The point is that we followed a process to ensure we were compliant, we are satisfied with the outcome and are signing off on it. This is not about a process of form-filling. It is not about engaging consultants to tell me I am compliant with the law of the land. The structures which we as directors have put in place should be structures which will deliver compliance so long as everybody concerned acts honourably. We have checked that and gone through it.

What I am proposing is what emerged from the audit review group, of which I was chairman, which was established by the Committee of Public Accounts following the controversy regarding offshore accounts. What I am proposing was put forward in the report to the Committee of Public Accounts in 2002, and it is what emerged in the 2003 legislation in its original form before being softened. Bank directors were able to play ducks and drakes with the legislation last year. My amendment encompasses the proposal put forward by the Director of Corporate Enforcement to the company law review group. The latter was in a previous life the boss of the secretariat when I chaired the Committee of Public Accounts. He has been through the system on all sides. He worked at an earlier stage in the same role as the adviser seated directly behind the Minister of State and held various other positions within the Department. He is on the board of the Irish Auditing and Accounting Supervisory Authority, as am I. My proposal mirrors exactly his proposal to the company law review group, because I would not attempt to second guess the Director of Corporate Enforcement.

I conclude by offering some advice to the Minister of State, without wishing to be smart. If I were being grilled in front of a committee, court or elsewhere in the future about what was done to tackle these issues, I would like to be able to say that I followed the advice of the Director of Corporate Enforcement in order to safeguard the interest of the public. I ask the Minister of State to accept my proposal.

Ciarán Cannon (Progressive Democrats)
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I second the amendment.

Ivor Callely (Fianna Fail)
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I listened with interest to Senator O'Toole's contribution. He asked why the Minister of State does not simply proceed to implement the advice of the Director of Corporate Enforcement. Just because a person in authority, whether the Director of Corporate Enforcement or otherwise, says we should do something, that alone is not sufficient reason for doing so.

In the course of his contribution, Senator O'Toole eloquently put forward a support base for his proposal. He spoke about the aftermath of events at Enron in 2002 and urged that we be proactive. I support his view in this regard. If this proposal has been on the table since 2002, what consideration has it received since then and why has no amendment been made to incorporate it into legislation? I read a newspaper editorial in recent days which made the case that Ministers should make decisions rather than seek reports. I understand the company law review group is due to report but I am not sure whether that means it will be in three months or 18 months. I do not know how long the issue has been under consideration and when it is likely to report.

Senator O'Toole is correct that when the entire financial debacle surrounding Anglo Irish Bank and Irish Life & Permanent emerged, there was a general view among the public that some of those involved in what was seen as shady and unethical behaviour should have been taken out in handcuffs. I will not go into that in detail today. I understand there is a quite senior Minister who is somewhat saddened that she made a comment on one occasion about a former senior Irish officeholder being put behind bars. As a consequence of her statements, that person probably avoided what may or may not have been his deserved fate. We must be cautious when we talk of people who have allegedly done wrong. There must be due process.

Senator O'Toole spoke about earlier, draconian times when people who did wrong were hung outside their doors. He went on to speak about limited liability and the benefit of this to company directors. If I understood the Senator correctly, he seemed to suggest that limited liability affords company directors carte blanche in respect of financial burdens, compliance or the law of the land. That is not my understanding of limited liability. Many directors have found that while it may have offered some level of protection in the past, it has, more recently, been of little use. I am sure Senator O'Toole is aware that limited liability might in the past have given company directors a certain comfort regarding bank loans, for example. Now, however, they are usually requested by financial institutions to provide personal guarantees in this regard. I make this point because Senator O'Toole seemed to indicate there was a certain blessing for company directors in regard to their responsibilities. Perhaps the Minister of State will clarify this in his response.

In general, the argument made by Senator O'Toole merits consideration, particularly in light of the position in which we find ourselves following recent experiences in financial circles. The Minister of State is as aware as any of us that there is great annoyance among the general public at what is perceived to be wrongdoing by senior players in financial institutions. Congratulations are due to the Minister for Finance in bringing pressure to bear in influencing the former chief executive officer of one particular building society to surrender a bonus payment in the region of €1 million. However, that development was achieved as a result of leverage as opposed to the use of a legislative mechanism.

While canvassing during the recent election campaign, I obtained from members of the public an impression that they were annoyed with the former chief executive of a particular financial institution, which has been nationalised. It was clear that they were also annoyed with the pension payments made to the former chief executives of building societies or whatever. However, they are equally annoyed that huge amounts of taxpayers' money is being used to bail out the banks. People are aware that this money does not relate to one individual. They are also aware that it is not a question of responsibilities, compliance etc. and that it is a much broader issue. If we were to discuss the issue of compliance, members of the public would probably sign up to the proposal Senator O'Toole has put forward.

In my capacity as an elected local public representative, for a number of years I was a member of a board and that board received a breviate from the financial controller which contained the information he felt it was appropriate to provide. Other information was also relayed to board members by various other professionals - those operating in the areas of technical support, health and safety or whatever. The board members received those reports and, in the hope that they were factual and correct, adopted them accordingly. Very little of the information in those reports was challenged and perhaps there were not many board members who were qualified to make such challenges. People might have been qualified to challenge information relating to particular aspects but they may not have been in a position to challenge the reports to which I refer in their entirety.

I do not wish to disagree with Senator O'Toole. I wholeheartedly support a great deal of what he said during his contribution and I look forward with interest to hearing what the Minister of State may have to say in reply. However, we must consider how we might deal with some of the issues that will arise as a result of legislation that will have to be introduced to deal with other matters. This is an extremely complex subject. Senator O'Toole and I may have expressed different opinions on Committee Stage but I am inclined to sign up to what he is proposing now, particularly if this can be achieved. It will be interesting to hear what the Minister of State has to say with regard to the deliberations of the company law review group.

Billy Kelleher (Cork North Central, Fianna Fail)
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I commend the Senators on the comments they made in respect of this matter. Senator O'Toole tabled amendments on this matter on Committee Stage. As promised at that point, the Tánaiste reflected on the inclusion of a provision in the Bill to require that directors' compliance statements be provided. Section 45 of the Companies (Auditing and Accounting) Act 2003 provided for the insertion of sections 205C and 205F into the Companies Act 1990. This would have imposed such a requirement on certain companies, namely, all public limited companies and large private companies with a turnover of greater than €15.2 million and a balance sheet of greater than €7.5 million. Following the enactment, this provision was not commenced pending the preparation of guidance as to how the requirements could be complied with. During the development of this guidance, which was led by the Office of the Director of Corporate Enforcement, ODCE, differing views emerged with regard to the obligations to be imposed and the procedures that would be required to comply with the provisions. This gave rise to concerns in respect of the potential cost of compliance.

This matter was discussed, including in the context of the proposals put forward by the Director of Corporate Enforcement, by the company law review group and differing views were expressed. Eventually, it was the majority view of the company law review group that was accepted.

Joe O'Toole (Independent)
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Is the Minister of State indicating that the provision to which he refers was never initiated?

Billy Kelleher (Cork North Central, Fianna Fail)
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It is not as if it was never discussed. It was discussed.

Joe O'Toole (Independent)
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Was it ever initiated?

Billy Kelleher (Cork North Central, Fianna Fail)
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Is the Senator inquiring if it has been commenced?

Joe O'Toole (Independent)
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Yes.

Billy Kelleher (Cork North Central, Fianna Fail)
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No, it has not been commenced. The company law review group was requested to examine the matter. Its report of July 2005, which included a detailed cost benefit analysis and a screening regulatory impact assessment, resulted in the majority of the review group recommending a requirement for the provision of mitigated directors' compliance statements. One of the dissenting voices in respect of this recommendation was that of the Director of Corporate Enforcement, who questioned some of the assumptions put forward by the majority of the group and who proposed an alternative provision. The latter retained more of the elements of provision relating to directors' compliance statements originally put forward in the 2003 Act than contained in the recommendation advocated by the majority of the company law review group.

The matter was then considered by the Government, which decided in late 2005, on the recommendation of the then Minister of Enterprise, Trade and Employment, to accept the proposal put forward by the majority of the company law review group. The Government also decided that the provision should be included in the company law consolidation and reform Bill. As Senators are aware, a massive project is being undertaken in the Department at present in respect of that Bill.

The Tánaiste indicated on Committee Stage that this was the approach she had decided to pursue. From Senator O'Toole's perspective, unfortunately that is still the course we intend to follow. I urge him to accept our bona fides when I inform him that we are conscious of the points he is making. However, the company law review group has discussed this matter and a decision on how to proceed has been made by the Government. In consultation with the OCDE, it has been acknowledged that the Government, in conjunction with the Oireachtas, will be obliged to decide on the introduction of legislation.

Officials from the Department have been in contact with the Director of Corporate Enforcement, who accepts that it is a matter for the Government to decide when it should legislate and that it should do so at a time of its choosing.

Joe O'Toole (Independent)
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That was a major statement on the part of the director.

Ivor Callely (Fianna Fail)
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Has something changed?

Billy Kelleher (Cork North Central, Fianna Fail)
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We took the Senator's views on board and they were discussed and brought to the attention of the Director of Corporate Enforcement, who accepts-----

Joe O'Toole (Independent)
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Who accepts the Government's right to legislate.

Billy Kelleher (Cork North Central, Fianna Fail)
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-----it is a matter for Government to legislate. The director also confirmed that his proposals to seek amendment of certain provisions in Parts 2 and 3 of the Companies Act 1990, which form the main part of the Bill before the House, arose directly from a number of specific weaknesses in the current legislation. The latter were brought sharply into focus by current investigations and, in the view of the director, they require urgent attention in order not to hamper the ODCE's further investigative capacities. In light of this, it is intended to proceed as originally decided. As a result, we will be dealing with the matter in the context of the company law consolidation and reform Bill.

There is another issue of which we must be conscious. Senator O'Toole referred to limited liability. Such liability is a privilege which is afforded not only to directors but also to shareholders. Most directors are also shareholders. I was not present for the Committee Stage debate but appropriate regulation is required. If there is to be an increase in regulation to ensure that everything is acceptable, it must not be heavy regulation but rather appropriate regulation. Regardless of the importance of this House, I am of the view that Members may speak freely with regard to Enron because there is a good chance that said company would not be able to use what they might say to avoid prosecutions elsewhere. However, we must be sensitive in our comments on credit institutions in this State. As Senator O'Toole pointed out, these matters were discussed by society in general. However, we must be extremely careful when discussing specifics. Unfortunately, I cannot accept this amendment but Senator O'Toole appreciates we intend to bring forward mitigated proposals in the context of reform of company legislation.

Joe O'Toole (Independent)
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I am disappointed with the response. I accept the Minister of State spoke to a number of people and gave it some thought. The Minister of State and Senator Callely referred to limited liability and I want to clarify why it is a gift and a privilege. It is not just because of the limited nature of the liability. It exists to encourage entrepreneurship. If I am running a company I may decide to advance and develop the company by taking a risk that might go wrong and cost a lot of money. By ensuring I can still do this without losing my house and everything behind me, limited liability ensures entrepreneurs and companies can develop without being put personally at risk beyond the limited liability of the company. It is crucial and I would be the first to defend it.

We had to deal with this in the 1990 Act. In the late 1980s, the equivalent of "Prime Time" produced a number of programmes on companies closing and setting up with a similar name or the same address where they were clearly the same entity. We introduced the concept of reckless trading to ensure limited liability was protected. This is an example for Senator Callely. We have dealt with this on a number of occasions.

Senator Callely asked a question, which is why I interrupted the Minister of State, for which I apologise. Very wisely and logically, Senator Callely asked why we did not amend this measure if it had been in place since 2002 and was not working. The answer is that it was recommended in 2002, introduced into the Bill in 2003, passed by the Houses at the end of 2003 but has never been commenced. That is disgraceful. The reason is that certain members of the groups referred to by the Minister of State used their influence quietly to block the measure. What I suggest is what was proposed by the Office of the Director of Corporate Enforcement, recommended by the audit review group and accepted by the Committee of Public Accounts of these Houses. That is the validation of my amendment.

Why should we listen to the Director of Corporate Enforcement? The only person mentioned in the Long Title of this Bill is the Director of Corporate Enforcement because the Bill gives him additional powers. The director would not thank me if the record showed his response as being that he agreed the Government was entitled to legislate. I would be doing him a disservice. I refer to what he said when asked a question by the Company Law Review Group, which I understand is still his view. He stated: "as the body responsible for encouraging compliance with company law including the preparation of books of account which give a 'true and fair' view of a company's state of affairs, the ODCE finds unacceptable a proposal which omits reporting on obligations 'that may materially affect the company's financial statements'". That is what he says; nothing could be clearer.

If Senator Callely receives representations on this, part of the argument will be based on the cost. Senator Callely's example was good. A person who is a director of a company approves the books when they come in. Prior to that, the finance sub-committee of the board, two of which I chair, or the audit committee will have ensured the structures are in place to ensure the books are right. We still cannot stop fraud, however. There must be trust and confidence and one way to build that is by taking decisions.

The big companies will say they will need teams of consultants to comply. The Director of Corporate Enforcement has responded to that point by stating: "the proposal that a company may rely, at the directors' discretion, on internal or external advisers to help secure compliance is unnecessary". That would be heavy regulation and there is an attempt to present it as that. Company directors make their judgments as they see fit.

The Director of Corporate Enforcement states: "the provision for auditor review of the directors compliance statement has been entirely deleted". This does not refer to the legislation we are debating but to a Bill proposed for the spring. The reason is that the ODCE states:

[T]he proposal that a company has in place 'appropriate arrangements or structures' to secure compliance is unclear. It appears possible that an appropriate 'structure' can be independent of any arrangements or procedures for securing compliance and that it could be a designated compliance officer[.]

That is why he is opposed to it, as well as the fact that: "the proposed definition of 'material compliance' no longer requires that the 'arrangements or structures' in place must be reasonably effective".

The answer to the question posed is that a person can say they have put in place something they believe is effective and they can give various reasons for that belief. In effect, this is about acting honestly. That person may be wrong but it does not commit them to jail or to handcuffs, in the words of the Minister of State, if they have acted honestly and honourably. I do not want to be misrepresented as trying to bury, hang or jail company directors. I want them to act honourably, openly and easily, and to say they have done their job, examined the results and are satisfied they are compliant. They might be wrong but only if we find out they knew something that was material, such as a director receiving €110 million, would they be in trouble.

I refer to the consolidated Bill, with 1,250 sections. No doubt it is growing by the day and will get bigger and bigger.

Billy Kelleher (Cork North Central, Fianna Fail)
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It is shrinking. We are consolidating legislation.

Joe O'Toole (Independent)
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The last time we tried to do that was in 1990. I was a Member of this House on the occasion and it took so long that we had to come back in the middle of the summer to pass sections 7 and 8 dealing with the beef business. The adviser to the Minister of State, the Director of Corporate Enforcement, states: "the inclusion of the CLRG proposal as part of the planned consolidation of the Companies Acts would be likely to give rise to substantial delay given the size of the new Bill". He wants it done now. We have done all that.

My amendment raises the threshold so that some small and medium-sized enterprises are not required to do this. It is only for larger companies. This makes it easier for small and medium-sized enterprises.

We had great discussions on the job done and not done by the Financial Regulator. There was much misinformation about the regulator who became the scapegoat and whipping boy. In a radio interview, the Green Party spokesperson on finance gave the example that the regulator did not act to block 110% mortgages. I challenged him on this afterwards. He and I, as well as any of us who cared to read the legislation, know the reason for this was very simple. We never gave the regulator the power to do that. We absolutely and determinedly prevented the regulator from interfering with any financial product on sale. It could speak about it and give advice and guidance but it could not block such products.

There were people on both sides of both Houses, from Fianna Fáil, Fine Gael, Labour and Independent backgrounds, talking about the regulator not doing its job. When the business came through the House five or ten years ago, we did not follow it through. Representatives from the regulator's office came before the Joint Committee on Economic Regulatory Affairs and we had all the hard men from the Dáil and Seanad flexing their muscles and having a go at these public servants one way or another for what they did or did not do right. I sent this to the committee two weeks ago and told it that this was what was wanted to force the directors to say they were compliant, or take action to be compliant. It would also ensure that auditors of companies make sure a true and fair reflection is made.

I am asking that directors of banks and other places say at the end of a year that during the course of the year they put in place the proper structures adequate to ensure they were compliant with revenue and tax laws, that the company traded properly and clearly, and that anything which is important is reflected in the accounts. That did not happen with Anglo Irish Bank. This is a way in which such action can be blocked.

The Minister of State has not objected to the points I have made but he has said he will not accept the amendment. Perhaps it will be like St. Augustine's prayer, and he will say "not yet". He may accept it in the spring or some time close to that. If the amendment is good it should be implemented now. There were three groups with a problem, including the company law review group and the Revenue Commissioners.

I have put a proposal to the Minister of State and Government, on the same side as the Office of the Director of Corporate Enforcement, which is there for the people to ensure bankers and others act honourably and carefully or go to jail if they do not, and I am having trouble convincing people. Are we on the same planet at all? I cannot understand why the Minister of State will not accept a very simple proposal.

I will go back to where I began. Limited liability in a company, company directorship and the business of trading is something that must be done honourably and fairly. We must not fetter entrepreneurship and we should not put significant burdens on honourable people. I do not know one honourable, decent company director who would feel threatened by putting his or her hand up at the end of the year and saying the company acted in compliance with the laws of the land, paid its taxes and would sign off on that basis. This is written into the pertinent section of the 2003 Act. One cannot blame an auditor for failing to come to a conclusion on information that was not made available but we can blame the people who did not make the material available in the first place.

What comes from the company law review group, although it may not be the intention, means that a company could get Joe O'Toole to be a compliance officer in the same way that a company has an FOI, bullying or safety officer. The matter could then be dumped with such a person. We cannot do that as we live in a democracy and we want to ensure company directors act honourably, observe the law, pay their taxes and do what ordinary people are asking.

There will be no report on this discussion. We could have a media that looked closely at what was going on in the world but the Government is lucky there are not financial correspondents to look at what I am saying. I could not imagine one interested commentator anywhere disagreeing with what I propose. I regret the Minister of State will not accept my proposal, although I will not detain the House longer. I have rehearsed, replayed, restated and re-enacted my points, which are on the record. I propose that the amendment be accepted.

Ivor Callely (Fianna Fail)
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Well done.

Paul Bradford (Fine Gael)
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Amendments Nos. 2, 3, 5 and 7 are related and amendment No. 6 is an alternative to amendment No. 5. Amendments Nos. 2 to 7, inclusive, will be discussed together by agreement.

Government amendment No. 2:

In page 5, line 37, to delete "subsections (2D) to (2F)" and substitute "subsections (2D) to (2G)".

Billy Kelleher (Cork North Central, Fianna Fail)
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The Tánaiste and Minister for Enterprise, Trade and Employment gave an undertaking on Committee Stage to reflect on Fine Gael's proposal to amend section 5 by inserting new subsections 2(F) and 2(G) into section 20 of the Companies Act 1990. The essence of the proposal was to introduce timelines within which terminations and separations should be made once the proposed new extended powers of seizure had been employed. Contributors from all sides of the House supported such an approach during the Committee Stage debate. These timeframes also are the essence of the amendment I propose today and, in common with the amendment proposed by Fine Gael, the Government amendments provide for the following time limits. There will be three months to decide on the materiality of seized information and to separate material information from immaterial information. In addition, there will be seven days to return records which are found to be immaterial to the party from whom they were taken. Each of these time limits could be extended or reduced by the court.

Members will note the amendment also contains some additional features designed to ensure further the extended power of seizure operates effectively. Specifically, the proposed new subsection 2(I) provides for a specific right to adjust the prescribed timeframes by means of a ministerial regulation. It also will be noted that the directions that may be given by the court are spelled out in greater detail in the proposed new subsection 2(G). I believe this will be helpful to any court in the consideration of such applications as it might be asked to consider. Moreover, Members will note this subsection provides that before giving directions, the court shall have particular regard to any submissions made on behalf of the Director of Corporate Enforcement with regard to the progress of his investigations. A court direction order for return of records to the person from whom they were seized under this subsection also may include a condition allowing the Office of the Director of Corporate Enforcement to retake and retain possession of those records during a specific subsequent period. In other words, maximum flexibility is provided to the court in respect of the directions it can give.

Members also will note that the proposed new subsection 2(H) includes the ability for the court to hear matters other than in public. This could be especially important when the content of confidential company information is being discussed.

Amendment No. 5 proposes a new subsection 2(J), which will retain the ability of the Minister to make regulations to address any supplementary, consequential or incidental matters as may arise in the operation of these new provisions. I commend these amendments to the House.

The Government gave a commitment on Committee Stage that it would take on board the views that were being expressed by Fine Gael. While these amendments have gone further, they also incorporate everything that was requested by Fine Gael.

Ciarán Cannon (Progressive Democrats)
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I welcome the Minister of State, Deputy Kelleher, to the House and thank him and his colleague, the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Coughlan, for the spirit of co-operation that has endured throughout the debate on this legislation. Fine Gael welcomes the amendment that seeks to attach greater urgency to the process whereby documents are separated and decisions are taken as to what documentation is incriminating and what is not. It also welcomes the inclusion of the three-month limit because the party was concerned the phrase, "as far as is practicable", somehow left it open-ended. People's past experiences of dealing with public bodies suggested that efficiency and urgency in dealing with certain issues was not always a hallmark of such bodies. Fine Gael is pleased with this three-month limit as well as the seven-day limit that will be imposed upon the director's office in returning material that is deemed not to be incriminating.

I also suggest that Fine Gael's concern in respect of the Data Protection Acts has been addressed somewhat by these amendments in that they allow, in some cases, hearings to take place away from public scrutiny. Fine Gael had expressed concerns that sensitive personal information held in company records might inadvertently find its way into the public domain. Again, the amendment proposed by the Government in this regard goes a long way towards addressing this and I again thank the Minister of State.

Billy Kelleher (Cork North Central, Fianna Fail)
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The issue regarding the Data Protection Acts will be dealt with separately as amendment No. 4.

Ciarán Cannon (Progressive Democrats)
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Very well.

Ciarán Cannon (Progressive Democrats)
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I move amendment No. 4:

In page 6, after line 47, to insert the following:

"(vii) the rights of any person who is the subject of the information under the Data Protection Acts 1988 to 2003.".

The issue of concern to the Fine Gael Party is that sensitive data held within company records could inadvertently find its way into the public domain. On Committee Stage, the Tánaiste undertook to have this matter examined and to bring it back to the House. I await with interest the Minister of State's comments in this regard.

Billy Kelleher (Cork North Central, Fianna Fail)
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During the Committee Stage debate, the Tánaiste informed Senator Cannon that she would consider further his comments on the data protection rights attached to information seized by the Office of the Director of Corporate Enforcement, ODCE, under the extended power of seizure mechanism provided for in section 5. In further examination of this matter, the views of the ODCE and the Data Protection Commissioner's office were elicited to ensure no inadvertent consequences arose from this Bill. I am informed the Data Protection Acts recognise that data, which would otherwise enjoy protection under those Acts, can be obtained by authorities where this is necessary for enforcing compliance with statutory codes. This would include record-seizing powers available to the ODCE when investigating breaches of the Companies Acts.

Obviously the amendments discussed previously bring clarity to the issue raised earlier by the Senator. I acknowledge the extended power of seizure being given to the ODCE in this Bill is wide-ranging and could have the effect of allowing it to seize documents that later may prove to contain personal information that is irrelevant to its investigations. I assume that a fear such information somehow might be disclosed is the basis for Senator Cannon's concerns. In general, the previously discussed amendments, in the context of the Data Protection Acts, address the Senator's concerns.

Paul Bradford (Fine Gael)
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In the absence of a seconder, amendment No. 4 lapses.

Government amendment No. 5:

In page 8, to delete lines 3 to 20 and substitute the following:

"(2F) Where an extended power of seizure is exercised, it shall be the duty of the officer—

(a) to carry out the determination or separation concerned as soon as practicable, and, in any event, subject to subsection (2G), within the prescribed period, after its exercise, and

(b) as respects anything seized in exercise of the power found not to be material information or, as the case may be, anything separated from another thing in the exercise of the power that is not material information, to return, as soon as practicable, and, in any event, subject to subsection (2G), within the prescribed period, after that finding or separation, the thing to its owner or the person appearing to the officer to be lawfully entitled to the custody or possession of it.

(2G) On application to the court by the Director or any person affected by the exercise of an extended power of seizure, the court may, if it thinks fit and having had regard, in particular, to any submissions made on behalf of the Director with regard to the progress of any investigation being carried on by the Director for the purpose of which the powers under this section had been exercised, give one or more of the following:

(a) a direction that the doing of an act referred to in subsection (2F)(a) or (b) shall be done within such lesser or greater period of time than that specified in that provision as the court determines,

(b) a direction with respect to the making, variation or operation of arrangements referred to in subsection (2D)(a) to (c) in relation to a thing concerned or a direction that such arrangements as the court provides for in the direction shall have effect in place of any such arrangements that have been or were proposed to be made,

(c) a direction of any other kind that the court considers it just to give for the purpose of further securing the rights of any person affected by the exercise of an extended power of seizure, including, if the exceptional circumstances of the case warrant doing so, a direction that a thing seized be returned to its owner or the person appearing to the court to be lawfully entitled to the custody or possession of it, notwithstanding that the determination or separation concerned has not occurred,

and any such direction may—

(i) relate to some or all of the things the subject of the exercise of the extended power of seizure,

(ii) be expressed to operate subject to such terms and conditions as the court specifies, including, in the case of a direction under paragraph (c), a condition that an officer of the Director be permitted, during a specified subsequent period, to re-take and retain possession of the thing returned for the purpose of carrying out the determination or separation concerned (and, retain after the expiry of that period, that which is found to be material information or is material information).

(2H) An application under subsection (2G) shall be by motion and may, if the court directs, be heard otherwise than in public.

(2I) In subsection (2F) 'prescribed period' means—

(a) in the case of paragraph (a) of it—

(i) unless subparagraph (ii) applies, 3 months, or

(ii) such other period as the Minister prescribes in consequence of a review that may, from time to time, be carried out by or on behalf of the Minister of the operation and implementation of the amendments effected by section 5 of the Companies (Amendment) Act 2009,

(b) in the case of paragraph (b) of it—

(i) unless subparagraph (ii) applies, 7 days, or

(ii) such other period as the Minister prescribes in consequence of such a review that may, from time to time, be carried out by or on behalf of the Minister,

but no regulations made to prescribe such a period shall be read as operating to affect any direction given by the court under subsection (2G)(a) in force on the commencement of those regulations.

(2J) The Minister may make regulations providing for such supplementary, consequential and incidental matters to or in respect of subsections (2A) to (2F) as he considers necessary or expedient.";".

Billy Kelleher (Cork North Central, Fianna Fail)
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I thank the staff of the Seanad and I thank the Members for their contributions, support and co-operation in getting this legislation through. While it is primarily technical legislation, it is very important. I am new to the position of having responsibility for trade and commerce but the Government likes to be co-operative. When ideas come from the Opposition or Government sides in Seanad debates, they genuinely are taken back into the Department and officials are asked to consider Senators' views or concerns. I thank the Acting Chairman, the Seanad staff and the sources of wisdom to my left, that is, the departmental staff.

Ivor Callely (Fianna Fail)
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I thank my good friend and colleague, the Minister of State, Deputy Kelleher, for bringing Members through this technical and detailed legislation. Together with him, I congratulate the team from his Department who accompanied him, my colleagues who participated and the Seanad support staff. Senator O'Toole made a very interesting point about compliance in the context of this legislation. Perhaps the Department will consider keeping those of us who have been involved in today's debate informed about how this issue, which has prompted many things to happen in recent times, is being addressed. One would question why the argument made by Senator O'Toole cannot be accommodated at this time. We all recognise that there are usually very good reasons for that. The comment made by the Director of Corporate Enforcement needs to be considered. I am sure there are balancing arguments on the other side. We should not be getting into this type of debate at this stage because we have already had it. I would like to be kept informed of what is being done in the compliance area. I am sure Senators O'Toole and Cannon will agree with me when I say that the Department should take note of that.

Ciarán Cannon (Progressive Democrats)
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A few weeks ago, we started to try to strike a good balance between conferring on the Director of Corporate Enforcement the sort of powers he needs to do his job correctly and ensuring that those who get involved in entrepreneurial effort in this country - people who become company directors, for example - do not encounter disincentives. I think that balance has been almost achieved at this stage. It was my first time to be involved in the shepherding of a Bill through the Seanad and I enjoyed the process immensely. I found it interesting and enlightening. I congratulate the Government on showing such major co-operation. I look forward to seeing further activity of this nature in the future.