Posted on June 13, 2012 11:49 AM   |   Permanent Link   

This Bill proposes a small number of focused changes to company law in the interests of maintaining a flexible operating environment particularly for companies, particularly those companies who bring foreign direct investment to Ireland. These changes are in keeping with the spirit and tradition of responsiveness of company law to continually evolving corporate circumstances. The body of company law at this time comprises some 15 Companies Acts.

The Bill before us today amends those provisions of the Companies (Miscellaneous Provisions) Act 2009 which permit the use of US accounting standards -- referred to as "US GAAP" in the preparation of the accounts of a specified category of company and allow for the prescription of the use of other internationally recognised accounting standards. Without changing the eligibility criteria, the Bill extends both the timescales relating to the availability for use of US accounting standards and the period for which an individual company can avail of this provision. There was a sunset clause and a maximum period that companies could use, both of which are being amended. It also correspondingly extends the periods in respect of the provision in that Act for prescription of other internationally recognised accounting standards.

The present measure can be seen in the context of the Government's policy of encouragement and facilitation of foreign direct investment. The importance of foreign direct investment to the economy remains highly significant. FDI accounts for a total of 250,000 jobs, which is one in every seven, in Ireland. The immediate outlook for Ireland's foreign investment portfolio is exceptionally good. To date in 2012 there have been 25 investment announcements with the potential to create more than 4,000 jobs. It is encouraging to note that notwithstanding the economic downturn, Ireland continues to be an attractive location for foreign direct investment and that so many companies are prepared to undertake and announce these investments in Ireland.

FDI has a major role to play in the current situation where Ireland is in the process of emerging from a period of unprecedented financial turbulence and where critical stages in that process still lie ahead. However, there is widespread acknowledgement of and admiration for the progress we have made on this difficult recovery. This Government has been operating on a wide variety of fronts in addressing the task of repairing our economy and restoring our international reputation. We are engaging with our European colleagues, the United States and many other countries to demonstrate that Ireland is squaring up to its economic difficulties, and has the intent, resolve and imagination to overcome them.

Ireland, as a member of the European Union offers international investors a stable political and economic environment and a sophisticated, well-developed corporate, legal and regulatory environment. The quality of our economic regulation is a significant factor in our competitiveness and growth. It is critical, therefore, that we have the capacity to respond to economic circumstances as they unfold in a way that is both strategic and reflective of the evolving needs of business and investors. Those companies with a presence in Ireland and availing of the US GAAP facility under the 2009 Act provide significant employment here which the present measure should help to consolidate, with the possibility of further jobs being created, particularly if the economic situation in export markets picks up over time. These companies are involved across a range of industry sectors, including health care, technology and services.

With regards to my own constituency of Dublin North East, there was an announcement in April of 280 new jobs in Baldoyle, thanks to Mylan, a key member of the Irish pharmaceutical sector, providing high quality generic pharmaceuticals and over the counter medicines around the world. This was a very welcome announcement for Baldoyle and for Dublin generally. It is a further sign that Ireland is attractive as a location for investment and it serves to demonstrate why legislation such as this is important. At a time when unemployment is at very high levels, the Mylan announcement, and other announcements from US companies, such as Amgen, Apple, Twitter and PayPal among others, shows that Ireland is able to entice investment and the creation of jobs along with that investment. Jobs and investment are the only way that our economy will ever properly recover. The legislation before us today serves to show multinational companies that Ireland is a good place in which to do business.
On a related matter, I understand that Minister Bruton's Department is currently involved with a major legislative project on the reform and consolidation of company law, which I think is very important - company law is massively complex, contains a lot of legislation and it needs to become easier to keep track of.

I understand that the new Bill will run to over 2,000 sections and will consolidate existing Irish company legislation dating from 1963 and introduce several reforms. The proposed Bill will consolidate the existing 15 Companies Acts, or 16 when the Bill currently before the House becomes law, dating from 1963, as well as other regulations and common law provisions relating to the incorporation and operation of companies, into a single Act, which is expected to comprise some 1,400 sections.

Parts 1 to 15 of the Companies Bill contain all of the law relating to the most common company type in Ireland, the private company limited by shares. These Parts comprise some 952 sections, together with 6 Schedules, and represent over two-thirds of the entire Companies Bill. In summary, the provisions of the Bill cover the incorporation of companies, corporate governance duties of directors and secretaries, financial statements and auditors, receivers, reorganisations, examinerships, windings-up and compliance and enforcement. The provisions are brought together in a coherent structure which will facilitate business people in incorporating and operating companies on a day-to-day basis.

The Bill also modernises company law to reflect modern business practice. Given that almost 90% of companies in Ireland today are in the form of a private company limited by shares, the Bill sets out all of the provisions relating to that type of company in sequential Parts. In subsequent Parts the provisions for the private company limited by shares are modified for other company types such as public limited companies, PLCs, and guarantee companies. Furthermore, to promote compliance with the law and to protect members and creditors, the Bill also sets out clearly the duties of, for example, directors, company secretaries and auditors, including corporate governance duties. The Bill also sets out the functions of the Companies Registration Office, the Office of the Director of Corporate Enforcement and the Irish Auditing and Accounting Supervisory Authority in ensuring compliance with the law and brings together the provisions relating to compliance and enforcement such as company investigations, compliance and protective orders, disclosure orders, disqualification and restriction of directors and prosecution, offences and evidential matters.