Select Committee on Enterprise, Trade and Employment debate -
Wednesday, 9 Oct 2024

I thank members and witnesses for participating in the meeting. We have not received any apologies.

Today's meeting has been convened to consider the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024, which was referred to the select committee by order of the Dáil on 25 September 2024. The purpose of the Bill is to provide for the conduct of, and participation in, general meetings of a company or industrial and provident society by the use of electronic communications technology and to amend certain provisions of the Companies Act 2014, Registration of Business Names Act 1963 and the Industrial and Provident Societies Act 1893 in respect of various matters relating to the corporate governance enforcement and regulatory provisions. I therefore welcome the Minister of State with special responsibility for trade promotion and digital transformation, Deputy Calleary, who is accompanied by his officials.

I propose that we try to complete our consideration of Committee Stage of this Bill today. Is that agreed? Agreed.

Gabhaim buíochas leis an gCathaoirleach, an gcléireach agus an gcoiste as an deis a thabhairt dúinn an Bille tábhachtach seo a phlé. I thank the Chair, committee and secretariat for making time this morning. I was not able to attend the Second Stage debate so I thank the Minister of State, Deputy Emer Higgins, for taking it and acknowledge her and Deputy O'Reilly's forbearance when that debate strayed into issues that had nothing to do with the Bill. I thank Deputies for their support of the Bill. I note that no amendments have been put forward.

This is an important Bill which does not seek to reshape the 2014 Companies Act, but will refine and enhance what is generally acknowledged internationally to be a world class companies code. It does this primarily in the areas of corporate governance, enforcement and supervision, administration and insolvency. The Bill arises out of regular reviews of Ireland’s company legislation routinely carried out by my Department to ensure that Ireland’s company law remains fit for purpose and reflects developments, both nationally and internationally.

I highlight again the extensive and productive stakeholder engagement which was carried out in developing this legislation and all legislation in this space. This Bill is a product of our engagement with enterprise, the relevant statutory bodies and the Company Law Review Group, that gives considerably of its time. We also had a detailed public consultation.

The Institute for Management Development’s World Competitiveness Yearbook 2024 ranks Ireland as the most competitive country in the euro area. Our strong reputation as a stable country in which to do business is underpinned by an effective, proportionate and enforceable regulatory framework, for both indigenous enterprises and foreign direct investment. Therefore, sustaining and growing our competitiveness is a fundamental tenet of the Government’s White Paper on enterprise. Regulations establish the rules of the game with a strong regulatory regime ensuring that businesses can all operate on a level playing field. This can help to foster economic growth, innovation and enterprise support and can be a competitive advantage. The Bill represents another important step in this regard and I look forward to our discussion today.

My intention is to move forward this Bill swiftly so that the benefits of this legislation can be brought to bear, especially for small companies with regard to the introduction of the graduated audit regime, and for all companies to have the option to hold virtual meetings.

I have a general remark to make.

I thank the Minister of State and his officials. I hope it was noted that everyone who spoke on the Bill in the Dáil thanked the officials for their work. This is largely technical.

I had some concerns, which I outlined and hope we can address during the course of this debate. During the banking crisis, we saw the power of in-person AGMs and EGMs. I have a small concern that the provision of online meetings will dilute it. It was a powerful source of accountability as we may remember. Not only that, but there would be reduced accountability if things move and stay online unnecessarily when sometimes, while an in-person meeting might be a bit fiery, it might be what is required. It is quite hard to have a fiery exchange - I am not saying all exchanges have to be fiery - in an online environment. I hope this cannot be used to stifle debate. Will the Minister comment on that?

I agree that for large companies, that element of public accountability is needed. We have had virtual and hybrid meetings in effect for almost four years, since the start of the pandemic. We have had very few significant issues in that space and we have been watching for them. There is regulation making power in section 176A (9) which will allow the Minister to make regulations around: the convening and conduct of the meetings; attendance at the meetings; and access to, and participation, including voting, in the meetings. This includes saying that people have the right to vote at meetings. I will continue to ask the corporate enforcement agency, CEA, to watch this space and if any companies are using the provision to avoid responsibility or prevent the participation of shareholders, the Minister of the day will have the power to intervene.

The additional powers for the CEA have been broadly welcomed and I would not take away from that. Will resources match them as there will be an extra requirement for them to do this? It is important and I urge the Minister of State to make it clear that the expectation is that this will be watched. No one wants to see something that is efficient, passes the SME test and so forth and could work out quite well for people highjacked and used as an instrument to smother debate. In that regard, I hope additional resources will be provided to match the additional responsibilities.

Absolutely, I am focused on the CEA's resources. Since legislation for the CEA was first proposed in 2018, its resources have been doubled. We also have good arrangements with An Garda Síochána for secondments. Budget 2024 gave a 14% increase on budget 2023 and budget 2025 will increase that again to €11.5 million. However, I will be straight. It is difficult for the CEA and the Competition and Consumer Protection Commission, CCPC, to get and retain staff in the current market. They are highly specialised and the organisations are so good to work for that their staff are in demand. We are constantly working with Mr. Ian Drennan and his team who do amazing work to make sure they have the staff and resources are not an issue.

The requirement applies to any company. Any company seeking to register with the registrar would have to provide documentation. The registrar will have the power and scope to seek further documentation, particularly with regard to registration address. I know where the Deputy is coming from. There are many virtual offices and workspaces now but the registrar is very well attuned to and acquainted with that, particularly in the context of the last number of years. We are trying to strike a balance. We want to have the regulation but we do not want it to be onerous, particularly for SMEs. That is a constant balancing act.

I thank the officials from my Department who are with me. They have worked incredibly hard on this. I am not sure I am going to be back before this particular select committee, although I hope I will be, so I will thank the Cathaoirleach and the various members of the secretariat over the last year. It has always been a good committee to come to. I acknowledge Deputies Bruton and Stanton who have had the sense to move on to their next chapters. I particularly acknowledge Deputy Bruton because the bones of this Bill are the Companies Act 2014, which he drove. That Bill has stood us in enormously good stead since so I particularly want to acknowledge him for his work at that time.

I thank the Minister of State for his kind words directed towards Deputies, particularly towards our two colleagues who are definitely leaving. I am not sure whether the other three of us will be back. I also thank the Minister of State and his officials for attending today's meeting. I look forward to the Bill being enacted and implemented as soon as possible.