The Minister for Enterprise, Trade and Employment recently published the Companies (Amendment) Bill 2009. This Bill is aimed at increasing the transparency of certain transactions between banks and their directors (and those connected with them). The Bill enhances the powers of the Director of Corporate Enforcement (the ODCE) and makes certain amendments to existing provisions requiring companies to have at least one Irish resident director, to address concerns of the EU Commission.

The Bill includes the following main proposals:

• Where a company makes a loan to directors (or connected persons) in breach of companies’ legislation all officers of that company will be guilty of an offence. Previously only those directors who were in wilful default and authorised or permitted the loans committed an offence;
• The disclosure requirements in annual accounts of loans made by a company to its directors (or to connected persons) will be substantially amended. The Bill provides that disclosure in the company accounts of loans to directors of companies that are licensed banks are to be treated in the same way as non-banking companies. All loans above a certain threshold to individual directors will have to be disclosed separately in the annual accounts and must include the maximum amount outstanding during the period covered by the accounts (and not simply the amount outstanding at the end of the financial period). With regard to connected persons, the aggregated disclosure requirement will continue but maximum amounts outstanding during the reporting period will also have to be disclosed;
• Currently directors of a company are under a duty to declare their interests in transactions with the company. The Bill proposes to give the ODCE a specific right of access to the company statutory registers that record a director’s declaration of interest;
• The ODCE will have the power to require the production of books and records from third parties, where those records relate to the business of a company under investigation;
• Search warrants, under which the ODCE may enter and search a company premises and which are usually valid for a period of one month, may be extended upon application by the ODCE to the District Court; 
• Papers and electronic information may be removed from the premises for subsequent examination elsewhere, to determine their relevance to the matters under investigation;
• Information which may be privileged may be seized on a “sealed” basis and either the ODCE or any person affected may apply to the court for a determination of matters relating to the privilege. The court may appoint a suitably qualified independent person to assist in determining whether or not the information is privileged; and
• The Bill proposes an amendment to the requirement for companies to have an Irish resident director. Every Irish registered company must have at least one director resident in a Member State of the European Economic Area, thus ensuring Irish company law is compatible with the EC Treaty.
  Due to the recent publicity surrounding the disclosure requirements of loans to directors, it is understood that the Companies (Amendment) Bill 2009 will be fast-tracked and is likely to become law soon.

Earlier this year, the Financial Regulator issued to all banks and building societies incorporated or established in Ireland new disclosure requirements relating to directors’ loans and loans to persons connected to a director. Such banks and building societies are now required to note in their audited annual financial statements the principal and interest owed by each director or connected person at the beginning and end of the period covered by the financial statements, the maximum amount of the liability during the period, the amount of any unpaid interest, and the amount of any provision that has been made in respect of any failure, or anticipated failure, to repay all or part of the loan. In addition, a register of all such loans must be maintained at the credit institution’s registered office for review by shareholders.