An expert group on company law has recommended significant changes to proposed new regulatory obligations for company directors.

The obligations, which form part of the Companies Act 2003, require directors to furnish statements of compliance showing they have systems in place to prevent major company law breaches.

The Taoiseach, Bertie Ahern, referred the legislation to the Company Law Review Group (CLRG) in April, after concerted lobbying from business groups.

The report of the group - which is due to be brought to Cabinet next week by the Minister for Enterprise Trade and Employment, Micheál Martin - has recommended several changes, including raising significantly the threshold above which a company's directors must make an annual compliance statement.

They have also said that the scope of the legislation with which directors must declare compliance be narrowed and that directors only be required to state that they have in place procedures appropriate to their company's circumstances.

In addition, the group says that it is not necessary for companies' auditors to asses the reasonableness of compliance statements and that their introduction should be delayed to 2007.

The recommendations - if adopted by Cabinet - will amount to a significant dilution of the legislation, which was introduced in the wake of a number of high profile business scandals.

A common thread to the scandals - including the widespread facilitation by banks of the non-payment of Dirt tax - was the failure of companies to comply with basic company law.

The Companies Act 2003 was brought in by the Tánaiste Mary Harney, who was then minister for enterprise, trade and employment.

It set a threshold of a turnover of €15.2 million or a balance sheet of €7.6 million before companies have to comply.

The recommendation of the CLRG is that this be increased to a turnover of €25 million or a balance sheet of €12.5 million.

The group has also said that the proposal that directors certify compliance with all tax and company law be changed to encompass only material tax law and serious company law offences.

The original legislation required directors to certify that the procedures they had in place to ensure compliance were effective. The CLRG says this should be changed to directors only being required to certify that the company has procedures in place that are in their opinion appropriate.

The legislation also envisioned that the company's auditors should asses the reasonableness of the directors' compliance statement each year. The CLRG wants this requirement removed.

The final significant recommendation is that the requirement for compliance statements be put back to 2007. It was originally intended to be 2004.

When Mr Ahern referred the legislation to the CLRG, he said that he was not going to allow standards to be diluted.

"Our determination to ensure the highest standards of governance in business remains firm. We cannot go back, we cannot be faced again with the type of practices which gave rise to the PAC Dirt inquiry and which led to this legislation," he said.

The groups that lobbied against the legislation included employers' group Ibec, the Institute of Chartered Accountants and the Institute of Certified Public Accountants.

Ibec - which represents a wide range of businesses - had complained that the statements of compliance could impose considerable extra burdens and costs on business. The group also said that the statements are not required in most countries.

Main proposals

Main recommendations of the Company Law Review Group with regard to directors' compliance statements:

Exemption thresholds for companies should be raised from a turnover of €15.2 million or balance sheet of €7.6 million to a turnover of €25 million or balance sheet of €12.5 million.

Obligations under which directors must certify compliance should be restricted to material tax law and serious company law offences.

Compliance policy statement should only cover procedures

and arrangement that are appropriate to the company's circumstances in the opinion of the directors.

Auditors should not be required to assess the reasonableness of this statement.

Introduction of the requirement for complaince statements be put back to 2007.