On 3 March 2009 the Financial Regulator published its Report into the Examination of Loans to Directors and connected parties at the following credit institutions which are covered by the Government Guarantee Scheme for the period December 2005 to December 2008 - Allied Irish Banks, Bank of Ireland, EBS Building Society, Irish Life and Permanent plc, Irish Nationwide Building Society and Postbank Ireland Limited. This review followed the discovery of issues surrounding directors' loans at Anglo Irish Bank. The report does not cover Anglo Irish Bank which is the subject of a separate, on-going investigation by the Financial Regulator.

The Financial Regulator has also introduced new obligations with regard to the disclosure of information regarding directors' loans in the annual accounts of Irish banks and buildings societies.

We understand that the new requirements will take the form of a condition to be imposed on each individual credit institution licence and building society. In the case of banks, the condition can be imposed under Section 10 of the Central Bank Act 1971. This provides that when the Financial Regulator proposes to impose a condition in relation to a licence, or to amend, or add to the conditions, that it shall send a written notification to the relevant institution advising them of this. The institution then has a period of 21 days within which to respond and make representations. The corresponding procedure for building societies, which is a little different, is covered by Part 7 of the Building Societies Act 1989, Section 77(8).

Further, the new disclosure requirements with regard to directors' loans will have as statutory footing as 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.

The Bill is also expected to contain a number of amendments sought by the Director of Corporate Enforcement. 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 willfully 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.