A new Bill to regulate company directors and business should be deferred because it would result in a major increase in costs for employers and undermine foreign direct investment, an industry group said yesterday.

The technology lobby group ICT Ireland said the Companies (Auditing and Accountancy) Bill 2003 was flawed and would make the Republic one of the most regulated economies in the world.

Mr Peter McManamon, chairman of the ICT Ireland Taxation working group and a founder of the chip design firm ParthusCeva, said a proposal in the Bill to require all company directors to prepare an annual compliance statement was impractical, unnecessary and would carry a heavy price tag.

"The cost of this proposal will be significant, as it will involve hiring expensive legal and other expertise to help put together the compliance statement ...

"The proposals are considerably more onerous than those applying in many other jurisdictions," he said.

In essence to ask all directors to sign a compliance statement covering every aspect of the company's operations is unfair and impractical. Every director could not be expected to be fully familiar with every activity of the business, said Mr McManamon.

To challenge the vast majority of compliant companies with yet more regulation was, in the view of ICT Ireland, ridiculous, he added. Mr McManamon said the requirement was also unnecessary given the extent of recent reforms, such as the establishment of the Office of the Director of Corporate Enforcement and other compliance legislation.

ICT Ireland also criticised a proposal to establish audit committees in plc's and private firms, describing the measure as counterproductive.

This would impose significant new duties on non executive directors, many of whom would not have the necessary accounting skills required to sit on the audit committee, he said.

"The bottom line is that while the availability of non executive directors is already limited the new proposals will make a bad situation worse," said ICT Ireland. The lobby group said it had written to the Tánaiste, Ms Harney, on the issue setting out its concerns.

"It is ICT Ireland's view that the Bill while 'well intentioned' is seriously flawed and should therefore be deferred and a regulatory impact assessment undertaken to determine the appropriateness of the legislation."