On Tuesday 31 March 2009, the Government announced proposals to introduce urgent legislation to amend the Companies Acts.
It is expected that the proposed new Bill will remove provisions that currently allow banks to avail of a different disclosure regime to non-banking companies. According to the Department of Enterprise, Trade and Employment (the DETE), the annual accounts of financial companies will, in future, have to disclose loans made to named directors, rather than using the aggregate form as applies at present, which will improve transparency in the dealings of financial companies. They will also have to show the maximum amounts of each director's liability during the year, rather than the outstanding balance at the end of the financial year. Earlier in March, the Financial Regulator introduced new obligations with regard to the disclosure of information regarding directors' loans in the annual accounts of Irish banks and buildings societies (see our previous ezine on this of 3 March). These new rules effectively extended the disclosure requirements in this area to bring them more in line with disclosure requirements applicable to non-banking companies in the Companies Acts. We presume that it is intended that the new Bill will bolster these rules and put them on a statutory footing.
The Bill is also expected to contain a number of amendments sought by the Director of Corporate Enforcement (the Director). Specifically, it will clarify the right of access of the Office of Director of Corporate Enforcement to certain records of the company under investigation and to certain related third party records. It will lighten the evidential requirement on the Director so that he will not have to prove a director was wilfully in breach of the loans to directors provisions of Company Law. Currently, under Section 40 of the Companies Act 1990, the Director must prove that the director in question authorised a breach of the directors' loans requirements, knowing or having reasonable cause to believe that the breach was a contravention of the Companies Acts.
It is also expected that the Bill will strengthen the provisions dealing with search warrants and will provide a mechanism for the Irish courts to determine whether or not legal professional privilege attaches to some seized material.
Comment: The DETE have indicated that a draft of the Bill is being finalised at the moment and that although no firm date for publication has been set, it is expected to be available in the coming days or weeks. More information on the proposals and the likely consequences of the legislation will be provided when the Bill is published.