Private Members Business – Companies Amendment Bill (2014)

PaulConnaughton-2-150x150

Dáil Éireann 4 February 2014

This Bill aims to secure the future of Ireland’s small businesses via the examiner process and, while there are many laudable aspects of this proposed piece of legislation, there are others that will be impractical given the short interval that an examiner has to work within and that’s why I will be unable to support the legislation as it stands.

Deputy Donnelly has correctly highlighted the need to reduce the costs of entering examinership and is attempting to remove some of the current barriers to business, barriers that are causing otherwise viable companies to falter in the prevailing economic conditions.

Proof that the Government recognises this need to reduce examinership costs is contained in the Companies (Miscellaneous Provisions) Bill 2013, which will permit small businesses to apply for examinership in the Circuit Court, where costs are significantly lower, in fact up to one third lower.  While this is welcome, I believe that we should look at a structure that would suit even smaller businesses.  For example the legislation defines small companies as those having less than 50 employees and a turnover not exceeding €8.8 million.  I believe that we should look at providing a different framework for companies with less than ten employees, and a turnover of less than one million euro.

As employment levels rise and so too economic prospects on the domestic front, often what these small or micro companies need is time, time to recuperate and build resources and capacity, before re-engaging with their debts. High rents are one reason why the ‘small’ companies as defined in last year’s legislation, are seeking the protection of examinership, but the micro companies that I speak of also face this problem, but are often dissuaded from entering examinership by prohibitive, albeit reduced, court costs.

 

Problems with the Bill currently before the house include the removal of obligatory court oversight and the prospect of allowing an examiner to assume the power of directors if it is believed that directors were trying to stymie the examiner process. This would result in an examiner acting as judge and jury and would leave no avenue for appeal open to directors.

Requirements that the examiner report to the Director of Corporate Enforcement are, I believe, unworkable and would effectively change the nature of examinership and broaden its remit significantly beyond that which is currently intended.

Valid issues are raised as part of the Bill, including the need for a more effective rescue system for ailing businesses. However, small businesses are inter-dependant and allowing firms easier access to writing down debt will in turn damage many viable firms both now and for years to come. Similarly, the provision in this Bill which states that creditors should bear their own costs is contrary to common law and again could place unforeseen and unwanted costs on many small companies whose debtors enter the examinership process.

This Government is committed to supporting job creation and to helping companies of all sizes to survive the downturn of recent years and to avail of opportunities as the economic climate, locally, nationally and globally, improves.

Much of the focus of this Government over the past three years has been on reducing costs for businesses and an emphasis on building an economy which is based on enterprise, innovation and exports.  It is only through a focused enterprise culture that Ireland can prompt the innovation that is so necessary for companies of all sizes in today’s rapidly changing economic climate.

The focus on jobs has been intense and efforts by Minister Bruton and his Department have borne significant fruit, improving the country’s competitiveness and placing all the necessary back-up infrastructure at the disposal of Ireland’s export companies. In fact, Ireland has gained seven places in terms of world competitiveness in the past two years, proof that real steps are being taken to cut the cost of doing business in Ireland and that this is increasingly being recognised on a global level.

A number of innovative measures have been put in place to allow small and medium sized companies greater access to finance, including the Credit Guarantee Scheme and the Microenterprise Loan Fund. To date, over €10 million has been approved through the Credit Guarantee Scheme alone, a very significant injection of funds for companies, which in turn has helped create and maintain over 650 jobs.

While this Bill does highlight areas that need to be addressed, I don’t believe that it is the answer for Ireland’s small businesses and therefore I am unable to support it.