Bill will stifle business - banker

A leading banker warned yesterday that legislation which would increase company directors' legal liabilities would drive up costs, discourage investment and damage competitiveness.

Anglo Irish Bank chief executive Mr Sean Fitzpatrick told the Institute of Directors that the Companies Bill 2003 would stifle business with over-regulation.

The Bill, which begins committee stage in the Oireachtas today, proposes that company directors to sign compliance statements in their annual returns.

The statements will require directors to vouch for their companies' systems for ensuring that they comply with all the business's legal obligations, and makes them liable for any break down in compliance.

Mr Fitzpatrick predicted the majority of shareholders would not welcome the measure if it were enacted. "These demands would take up an inordinate amount of directors' time," he said. "It would deter the brighter candidates from accepting board positions and it would reduce board activity to endless procedural debate." He added that it would switch directors' focus from driving shareholder value to self-protection.

Mr Fitzpatrick warned that such legislation would create "a more hostile environment for business, greater costs of compliance, including systems, people, management time and external consultations. The end result would be reduced competitiveness for Irish business".

Mr Fitzpatrick said the answer was not extra regulation, but less regulation with better enforcement. "We need to legislate to the necessary minimum, supplemented by codes of corporate governance and good business practice," he said.

He told the monthly institute lunch that business leaders should demand greater consultation with legislators.