Wednesday, 15 November 2006
Dáil Eireann Debate
82. Ms Shortall asked the Minister for Enterprise, Trade and Employment if he has received representations on any matter from directors or representatives of a company (details supplied) since his appointment; if he has received representations from directors or representatives of the companies regarding the current investigations; and if he will make a statement on the matter. [37722/06]
112. Ms Shortall asked the Minister for Enterprise, Trade and Employment the persons, agents or agencies that brought to his attention the situation that led to the commencement of investigations into companies (details supplied). [37723/06]
137. Mr. Rabbitte asked the Minister for Enterprise, Trade and Employment if his Department or any agency under its aegis has been requested by the Employment Appeals Tribunal to provide information regarding the winding up of a company (details supplied); if so, if they have complied with these requests; the status of the investigations being undertaken by various agencies under the aegis of his Department into the company; if he will introduce new legislation or regulations to prevent the phoenix company scenario occurring again; and if he will make a statement on the matter. [37721/06]
As indicated in replies to previous questions, matters relating to the liquidation of the company concerned are currently the subject of attention by the Office of the Director of Corporate Enforcement and the Employment Appeals Tribunal. Each of these bodies is independent in the performance of its functions and it would not be appropriate for me to comment further on the matters concerned at this stage.
To the best of my recollection, I have not received any representations from directors or representatives of any of the companies referred to since my appointment. The situation regarding the company in liquidation was brought to my attention in May 2006 by the insolvency payments section of my Department in connection with the preparation of a reply to Parliamentary Question No. 138 of 17 May 2006.
As regards new legislation relating to “phoenix” situations, I would draw attention to the changes introduced by Part 5 of the Company Law Enforcement Act 2001, which address problems and issues connected with business failure.
Mr. Quinn: I thank the Minister for his reply and I appreciate that when there are ongoing investigations the Minister is circumscribed as to what he can say. If we can talk about the generality of such cases, however, is the Minister prepared to ensure that once those cases are brought to his attention a monitoring process will be put in place by the relevant company supervision sections of his Department? That would ensure that potential beneficiaries of what appears to be an abuse of loopholes in company law will be able to continue to operate either as company directors or to trade in the marketplace in a way that enables them to evade the sort of responsibilities that other compliant company directors and operating companies must bear. Without prejudice to the outcome of the final case, it would appear that certain practices were engaged in, some of which may have been legal, though sharp. They enabled companies to evade their responsibilities, although we must await the outcome of the judgment; I am not specifically mentioning any particular case. In a buoyant economy, which we all welcome, and at a time of great demand for the provision of services, when competition can be difficult to regulate fairly, it is incumbent upon the Department and agencies under the Minister’s aegis to ensure that a level playing pitch exists for all legitimate players, rather than a field day for all the cowboys.
Mr. Martin: I share the sentiments expressed by the Deputy. I wish to put on the record the main company law provisions in Ireland dealing with such companies. Companies that fail and re-engage in trading under a new name are addressed under the Companies Acts 1963-2005 and, in particular, under the provisions of Part 5 of the Company Law Enforcement Act 2001. Under section 56 of the latter Act, a new reporting regime to the Director of Corporate Enforcement was introduced in respect of all insolvent liquidations, under which the circumstances of the insolvency and the conduct of the company’s directors are scrutinised and reported on by the liquidators. Liquidators of such companies are legally obliged to bring proceedings for the restriction of directors unless relieved of this obligation by the Director of Corporate Enforcement. To date, in excess of 650 company directors have been restricted. Powers are also available to the director to pursue directors of insolvent companies which have not been placed into liquidation. While we accept that business failure is an unfortunate part of life, the changes introduced in Part 5 of the Company Law Enforcement Act 2001, in particular, are intended to address problems and issues connected with business failure, including what has been referred to as the “phoenix” syndrome.
Company law is also under continuing review, particularly through the work of the company law review group. I will undertake to revert to that group within the Department to examine this case and ascertain whether lessons can be learned about plugging loopholes. A review of the legislation will determine whether we need to amend it further.
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