Speech on Companies (Miscellaneous Provisions) (Covid-19) Bill 2020
24 July 2020
I also welcome the Minister of State to the House and I wish him well in his new portfolio on behalf of the Labour group of Senators. Like others, we are supportive of the Bill and we accept the need for urgency. As the Minister of State has pointed out, there is urgency regarding the difficulties being faced by SMEs. Many companies and co-operatives are considering delaying annual general meetings, AGMs, because of concerns about potential technical breaches of the companies legislation arising from the Covid-19 crisis. We accept that.
We also note that the Bill is largely technical and makes operational changes to the companies legislation to allow for regulatory compliance during what is referred to in the Bill as the "interim period". That is something of a euphemism and it sounds a little like "The Emergency" because such serious challenges, threats and dangers are being faced by all of us in society. We accept that and we welcome the provisions regarding, for example, the enabling of general meetings to be held electronically, the extension of examinerships and the increase in the amount a company can owe a creditor before an action to wind up can be taken.
I note Senator McDowell's comments on his amendments. I support the spirit of those amendments, although I know he is not going to press them. There is an important point, however, in the amendments, in keeping with the spirit of the legislation, regarding this Bill being about reducing administrative burdens on companies at a particularly challenging and difficult time. As Senator Gavan said, we know there are immense existential threats to the existence of some companies. We are, therefore, seeking to reduce the administrative burden on companies, yet in this Bill we are putting new provisions into what is already cumbersome and complex companies legislation. There have been some welcome attempts to codify the legislation and I have spoken on those previously. I used to teach company law many years ago, so I know how difficult it is, particularly for small companies, to navigate this complex legislation.
From a drafting point of view and from the perspective of those seeking to implement the legislation, it would have been preferable to have included an automatic lapse provision in the Bill. I say that because from my reading of the Bill, all but two of its 29 sections refer to the "interim period". I read sections 17 and 26 as both having permanent amending effect, albeit of a technical nature, to the companies code.
There might have been a preferable way of drafting it. I very much welcome that the Bill is being introduced in the Seanad because it gives time for the Minister of State and his officials to look at whether that would have been possible. It may be too late to do it. I accept the huge time constraints under which officials are working to draft all this legislation in such a short timeframe but it might be possible to examine, even in the context of other legislation, whether there are better and less cumbersome ways of providing for measures in this interim period.
Looking at some of the briefings on the Bill, there was an indication that there would be another permanent provision included, which I do not see in it, which would have codified the directors' duty to creditors as a company approaches insolvency. This is a duty already existing at common law and its placement on a statutory footing was recommended by the Company Law Review Group in its report on the protection of employees and unsecured creditors. Can the Minister of State say whether that provision is to be placed in some other legislation or whether I have simply missed its inclusion in this Bill?
As the Minister of State said, there has been input into the Bill from stakeholders, including the Company Law Review Group, which I welcome. It is very helpful and important for us to know there has been that level of input, even in such a rushed timeframe. I see from briefings we have received that the Bill has been welcomed by stakeholders, solicitors' firms and so on. We are all cognisant that most of the measures in it are temporary, but there is an indication, certainly in some of the commentaries on the Bill, that there might be potential to place some of these measures on a more permanent footing. As we are all looking at ways in which working from home, for example, can be continued on where it benefits employees, some of the provisions around the holding of electronic meetings, similarly, could well be made more permanent to facilitate the smooth running of small businesses in particular and reduce the administrative burden.
While I agree with Senator McDowell that an automatic lapse provision would be useful, I can see there could be potential for extending some of these provisions into the future well beyond any interim period in order to facilitate small companies in complying with regulatory requirements through electronic means. The holding of physical AGMs, for instance, can be very cumbersome for small business. I was on the justice committee some years ago when it heard representations from the Law Society and others concerning a move to electronic means for conveyancing. That process had been hugely cumbersome and difficult because it was all paper-based. When we are seeing moves throughout the legal and political system to a less paper-based model, we should also be looking at moving to that sort of model within the company regulatory network.
Finally, I want to address some of Senator Gavan's comments and to support him wholeheartedly in what he said about facilitating the creation of co-operatives. That is an eminently sensible suggestion and we could work on a cross-party basis to produce legislation to address it. I accept that this is not the Bill in which to do it. It is much a bigger issue and it certainly should be addressed. Senator Gavan also referred rightly to real concerns around worker protection and the health and safety of workers in particular sectors. I support his comments on this point, particularly in regard to the situation at Debenhams. Like many colleagues in this House, I met and spoke to some of the Debenhams workers when they were outside Leinster House. They told us that they are, in effect, facing into a Clerys mark 2 situation unless they get a decent redundancy deal. They have been campaigning for that but, as we have heard, there is no legislation coming before the House in this urgent period to address their predicament. We are very cognisant of that and I appeal to the Minister of State to look at ways in which we can avoid Clerys mark 3 and mark 4 situations. Senator Gavan has put in amendments on this issue but I accept that the Bill is not directly relevant to it. However, it is a really pressing issue for the many individuals who are facing redundancy and job losses. The difficulty with some of the amendments proposed by Senator Gavan, it seems to me, may be that there is a requirement in them that workers would have to prove fraud before they can get a remedy. That may be setting the bar too high and there may be other ways of dealing with it. It is an urgent matter for many people and we should be addressing it.
I reiterate our support for the Bill and the easing of the regulatory burden that it represents.