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Business law agenda Back  
The D?il resumes at the end of September. A key aspect of the legislative agenda for finance managers are bills and statutory instruments in preparation at the Department of Enterprise Trade and Employment. Finance obtained a progress report.
CONSUMER CREDIT BILL, 2000

Purpose: To amend the Consumer Credit Act, 1995 and to implement EC Directive 98/7/EC
Effects: No Bill has yet been published and no ‘head’ has been considered by the Government as yet.

Directive 98/7/EC, when implemented, will introduce throughout the Community a single method of calculating the annual percentage rate (APR) for consumer credit.

April 2000 is the deadline for implementation of 98/7/EC. No decision has been taken, as yet, as to whether the directive will be implemented by regulations or by primary legislation. For reasons of time the directive may be implemented by regulations in advance of any revision of the consumer credit Act.

Issues: A review of the Consumer Credit Act, 1995 is currently underway. This is a major piece of legislation and the exercise will take some time.

So far one of the main issues identified is that under the law as it stands it is possible for individuals or companies to act as mortgage lenders without a licence or authorisation from any authority. Other issues are also being examined and the exercise is ongoing.

COMPANIES (AMENDMENT)
(NO. 2) BILL, 1999

Purpose: To amend the Companies (Amendment) Act 1990 relating to examinership (Part II of the Bill); to remove the requirement for a statutory audit for companies with a low turnover (Part III of the Bill); to tackle the problems created by Irish Registered non Resident Companies (IRNR’s), to amend provisions of sections 21(3), 240 and Part XIII of the Companies Act 1990 and section 16 of the Investment Limited Partnerships Act, 1994.(Part IV of the Bill)

Effects: In relation to Examinership, the main proposal will require the court to be satisfied that there is a “reasonable prospect” for survival of a company as opposed to the present test, where “some prospect” of survival was sufficient. To facilitate this, the Court will now have to be provided with the report of an independent accountant before it decides if an examiner should be appointed.

(Part II)
The Bill also contains provisions to exempt certain small private limited companies that meet the specified criteria from the obligation to have their accounts audited. These would apply to companies satisfying certain criteria such as turnover not exceeding ?250,000 per annum and a balance sheet total not exceeding ?1.5m. (Part III)

The IRNR measures represent the company law part of the package of measures approved by Government earlier this year which along with tax measures already introduced in the Finance Act 1999 are designed to address the problems created by certain IRNR’s.

Section 21(3) of the Companies Act 1990 defines the parties who are entitled to receive information, books or documents relating to a body, which has been the subject of examination under sections 14, 15 or 19 of the 1990 Act. Essentially, these would be persons appointed by the Minister of the day to conduct examination of companies affairs under the relevant provisions of Part II of the Companies Act 1990. The purpose of the proposed amendment is essentially to widen the definition of competent authority for the purposes of section 21(3).

The purpose of the proposed amendment to section 240 of the Companies Act, 1990 is to provide, inter alia, that summary proceedings can be taken within three years of the discovery rather than the commission of the offence.

Part XIII of the Companies Act 1990, makes specific provision for investment companies. Essentially, on the basis that such companies are authorised and supervised by the Central Bank, certain basic provisions of company law are disapplied. A range of amendments are proposed in respect of Part XIII companies.

The purpose of the proposed amendment to section 40 of the Investment Limited Partnerships Act, 1994 is to remove an auditor’s exposure to unlimited liability at present provided for in section 16 of that Act.

Deadline: It is envisaged that the Bill would be enacted before the end of 1999.

Issues : While the Minister did not accept any of the opposition Committee Stage Amendments a number of matters are being reviewed arising from the debate on these and related matters which could result in possible amendments at Report Stage. A specific case in point is section 26 of the Bill (one of the Examinership provisions) which the Minister undertook to review in light of the debate on the desirability of protecting the position of lessors as provided for in that section.
Progress : The Bill passed Committee Stage on 21st July 1999 - considered by Dail Select Committee on Enterprise and Small Business. No date has yet been set for Report Stage but the objective is to have it taken as soon as possible after the Dail resumes at the end of September 1999. The Bill has yet to be considered by the Seanad.

The main amendments taken on board at Committee Stage were as follows:

l Amendment of the turnover threshold for audit (increased to ?250,000 from ?100,000).
l Section 46 of the Bill substitutes a new section 12 in the Companies (Amendment) Act 1982 in relation to the striking off of companies which fail to make annual returns. The Committee Stage amendment to this section enhances the strike off provisions the purpose of which is to enable the registrar of companies to move to strike off companies from the register where they fail to provide the requisite information to the Revenue Commissioners.

POSTING OF WORKERS BILL 96/71/EC

Purpose: To guarantee workers posted to another Member State the terms and conditions of the host State

Effect: The Directive requires that workers posted to another Member State are afforded the protection of the employment legislation of the host country (i.e. the country to which they are posted). For Irish employees who are posted to another Member State, this will mean that the legislation of that other Member State will consequently be applicable to them for the duration of the posting. Irish employers will, similarly, have to comply with the labour legislation of the other Member State to which they post workers.

Deadline: 16 December 1999 is the date specified in the Directive itself as the date by which Member States must transpose the Directive into their respective national legal systems. This is usual practice for Directives.

Issues: In accordance with normal practice, the Department consults with the social partners to ascertain their views on the implementation of the Directive.

Progress: Government approval of the General Scheme of the Bill will be sought shortly. The Draft Bill will then be forwarded to the Attorney General’s Office for drafting.

EC HARMONISATION OF EXPORT CREDIT INSURANCE REGULATIONS (98/29/EC)
S.I. No. 203 of 1999.

Purpose: To implement the EC directive on medium to long term cover for export credit insurance. The purpose of the Statutory Instrument was to give effect, in Irish law, to Council Directive 98/29/EC on the harmonisation of the main provisions concerning export credit insurance for transactions with medium and long-term cover. The Council Directive was adopted in order to lessen distortions created by differences in the export credit insurance systems operated by the different Member States.

Effect: The Directive requires Member States to ensure that State supported export credit insurance, guarantees or refinancing are provided in accordance with the provisions set out in the Annex to the Directive. The Annex deals with four main issues:

l constituents of cover;
l premiums;
l country cover policy; and
l notification procedures.

Deadline: The deadline for compliance with the Directive was 1 April 1999. This date was specified in the Directive.

Issues: As Ireland no longer operates a State supported exported credit insurance scheme, the Directive has no practical implications for this country, other than a requirement to make certain routine notifications.

Progress:The Statutory Instrument, formally transposing the terms of the Directive into Irish legislation, was signed on 5 July 1999.

EC (SUPPLEMENTARY SUPERVISION OF INSURANCE UNDERTAKINGS IN AN INSURANCE GROUP) REGULATIONS 1999

Purpose: To implement amending EC directive 98/78/EC supervision of an insurance group.

Effects: Supplementary supervisory information and additional solvency calculations will be
required from Irish authorised non-life insurance undertakings and life assurance undertakings which are part of insurance groups, as defined by the following categories:

(I) Any insurance undertaking which is a participating undertaking in, at least, one insurance undertaking, reinsurance undertaking or non-EU insurance undertaking.
(ii) Every insurance undertaking, the parent of which is an insurance holding company, a reinsurance undertaking or a non-EU insurance undertaking.
(iii) Every insurance undertaking, the parent of which is a mixed-activity insurance holding company (other than an insurance undertaking, a reinsurance undertaking, a non-EU insurance undertaking or an insurance holding company) having, at least, one insurance undertaking among its subsidiaries.

The primary objective of the EC Directive, and the proposed implementing Regulations, is to provide insurance supervisors with the necessary information to ascertain if the activities of insurance groups or insurance related groups might have an adverse effect on the solvency of insurance undertakings which form part of such groups.

Deadline: 5/6/2000. The deadline for implementation is contained in the EC Directive - 98/78/EC - which was published in the Official Journal of the European Communities on 5 December, 1998 (O.J. No. L330). A period of 18 months has, therefore, been allowed for implementation after the publication date.

Issues: Some representations have been received from the insurance industry and are still under consideration. However, the Directive does not allow for a significant deviation from the framework prescribed.

Progress: Draft Regulations are, at present, with the office of the Parliamentary Draftsman. It is anticipated that the Regulations will come into force before the deadline.

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