Earlier this year the Irish Government nationalised Anglo Irish Bank. In explaining its decision to nationalise the bank, the Government cited the bank's weak funding position and the reputational damage suffered by it in respect of "unacceptable corporate governance practices". These practices included the removal of directors' loans from the company's books for several weeks each year in order to avoid disclosure to the company's shareholders. Reform is underway. At the end of last week, Ireland's Tánaiste and Minister for Enterprise, Trade and Employment Ms. Mary Coughlan T.D. announced the publication of the Companies (Amendment) Bill 2009. The Bill has three broad purposes as explained in the accompanying press release:
- To improve the transparency of loans made by companies that are banks to their directors and to persons connected with them.
- To support the Director of Corporate Enforcement in his efforts to enforce compliance with company law whether the company being investigated is a bank or not.
- To amend some existing provisions relating to Irish registered non-resident companies to meet EU Commission concerns.
[1] Ireland's Financial Regulator published a report last month setting out the results of its examination of the disclosure of loans to directors by Allied Irish Banks p.l.c., Bank of Ireland, EBS Building Society, Irish Life and Permanent plc, Irish Nationwide Building Society and Postbank Ireland Limited. No evidence was found of the reduction or removal of directors' loans at the year end in order to avoid disclosure but some errors were found in the published financial statements.
[2] The nationalisation of Anglo Irish Bank was effected by the Anglo Irish Bank Corporation Act 2009.
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