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Dáil Éireann debate -
Wednesday, 14 Nov 1962

Vol. 197 No. 7

Companies Bill, 1962— Second Stage.

I move that the Bill be now read a Second Time. The purpose of this Bill is to amend the law relating to companies, which is at present laid down in the Companies Acts, 1908 to 1959. In 1958 the report of a Committee (now known as the Company Law Reform Committee) which had been appointed by the Attorney General to examine the need for changes in our system of company law, was published, and copies were circulated to members of both Houses of the Oireachtas. As an interim measure, a limited number of the more important changes recommended by the Committee were dealt with in a special Bill which is now on the Statute Book as the Companies Act, 1959. At that time I explained that the preparation of a second Bill to carry through the remaining changes in the law which were deemed to be necessary would be a very complex and formidable task and that some time would be needed to prepare a comprehensive and carefully thought out measure.

In the event, the preparation of this second Bill has taken rather longer than I expected, but this was due to a large extent to circumstances beyond my control. The principal problem was that while the preparation of the Bill was in progress, two further investigations into company law were commenced, one in the Six Counties and the other in Britain. We cannot, in framing our legislation, ignore any changes which may be contemplated in the Six Counties or Britain, with each of which we have such close commercial ties. In this connection I would refer to the recommendation of the Company Law Reform committee that company legislation in this country should not depart too far in its general principles from that in operation in Britain and the Six Counties.

The Committee drew attention to the fact that company law as it exists in Britain is familiar to business and commercial circles in the United States and in the countries of Continental Europe. They also referred to the fact that the encouragement of outside investors is part of our public policy, and they thought that a system of company law corresponding broadly with that in force in other countries would be a material inducement to investment here. These points have been borne in mind in drawing up the provisions which are contained in the present Bill.

On the question of alignment with the law in neighbouring countries, a peculiar difficulty has now arisen. The Six Counties legislation was enacted as recently as 1960, and it will differ substantially from British law if the recommendations of a recent Committee of Enquiry which reported in Britain are accepted, as they seem likely to be. It is, of course, not possible to bring our law into line with two enactments differing considerably from each other. I am, however, quite satisfied that subject to a number of amendments which I propose to introduce at the Committee Stage, the provisions contained in the Bill now before the House will deal adequately with the circumstances of our own particular case and that, if enacted. they will bring about a very considerable improvement in this particular branch of the law.

It has been suggested that we should wait until British company law has been amended following the recommendations of the recent Committee which reported there, but I am quite convinced that no useful purpose would be served in so doing. Our company law is seriously out of date and successive Ministers have over the last 30 years been endeavouring to secure the opportunity of putting it right; now that we have gone this far and have prepared a Bill which I regard as perfectly suitable for Irish conditions there should be no going back, and I hope that Deputies will agree with this view.

This is, I believe, the biggest piece of legislation which has been put before the Oireachtas since the establishment of the State. With its 400 sections and 13 schedules it is so all-embracing that it is rather difficult to give a satisfactory summary of its contents. An explanatory Memorandum giving some brief information about the principal changes which are now being made has been circulated to Deputies, and I hope that they will find it useful in considering the measure; if any further information of a more detailed nature is required I will be glad to provide it during the Committee Stage. In what follows I propose to mention only the major provisions in the Bill.

First of all, I would like to refer to the provisions relating to accounts, which are set out in Sections 147-159 of the Bill. The existing requirements in regard to accounts are scanty in the extreme, and there has for a long time been a demand that more comprehensive information should be statutorily required. The better-run companies have, of course, even in the absence of statutory requirements, made a practice of preparing informative accounts which are useful both to their own shareholders and to persons having business dealings with them. There have, unfortunately, also been a number of "black sheep", who have persisted in the preparation of accounts designed more to conceal the true position rather than to provide an accurate indication of the state of their finances. It is now proposed to place a specific obligation on every company to keep proper books of account and to prepare each year a profit and loss account and balance sheet which, apart from giving a true and fair view, must also comply with the detailed requirements of the Sixth Schedule.

In the case of holding companies, there will in future be an obligation to prepare group accounts, the effect of which will be to give a concise picture of the financial position of the holding company and its subsidiaries considered as a single undertaking. As recommended by the Company Law Reform Committee, however, it is considered unnecessary to apply the latter provision to private companies, but as Deputies will see from Section 154, the interests of shareholders in private holding companies are being adequately safeguarded in another manner. Any directors who do not adequately attend to their duties in regard to the keeping of books of account and the preparation of the profit and loss account and balance sheet, will render themselves liable to the very severe penalties set out in Sections 147 and 148 of the Bill.

The directors of every company will be required not merely to lay the detailed accounts before each annual general meeting, but also, in compliance with Section 159, to send them to shareholders and debenture-holders three weeks beforehand. In order to ensure that the interests of creditors and other persons are safeguarded, Section 128 imposes on every public company the obligation to file these accounts with the annual return which is sent to the registrar of companies each year and which is available for public inspection.

The obligation to file accounts for public inspection will not, however, apply to private companies. This does no more than continue a privilege which private companies have enjoyed for very many years, and is in conformity with the recommendations of the Company Law Reform Committee. I do not think it necessary to set out in detail here the various arguments for and against the continuation of this privilege, and I think I can do no better than to refer Deputies to paragraphs 110 to 120 inclusive of the report of the Company Law Reform Committee, which I think deals adequately with the point. Deputies are probably aware that this privilege was partially withdrawn in Britain in 1948 and that its total withdrawal has now been recommended; the situation in the Six Counties is, of course, the same as that which obtains here.

I should like to emphasise that conditions as regards company organisation in Britain differ considerably from those prevailing here in Ireland, and the arguments which might be put forward for the publication of the accounts of private companies in Britain would not necessarily apply here. The vast majority of private companies established here are family concerns essentially of a private nature in which outside interests play little or no part and this, I think, is the principal reason why we should not impose on them the altogether new requirement that they should file their accounts.

Since I am on the subject of accounts, I think it no harm to refer to the fact that the report recently published in Britain recommended a considerable number of changes in the British provisions relating to the form and content of the profit and loss account and balance sheet. Generally speaking, the effect of these recommendations, if adopted, will be to require disclosure of certain matters in rather greater detail. I think there is probably a good deal to be said for many of the recommendations which have been put forward, at least in relation to the larger type of company.

It would, however, be impossible to say at this stage whether all these recommendations will be accepted, and, if so, in precisely what form effect will be given to them. I think it would be most unwise to impose on our companies more onerous obligations in regard to disclosure of their financial affairs than those which prevail in neighbouring countries, since this would place them at a competitive disadvantage. It was, however, always my intention that the accounting provisions of the new Act should be drafted in such a way that improvements might be introduced by a simple procedure from time to time. To this end, Section 396 enables me to make Orders altering the provisions of the Act in relation to accounts, and in particular the provisions of the Sixth Schedule. If at any time in the future it is considered desirable, after consultation with the professional bodies concerned, to make any changes in this respect, there should be no difficulty in taking the appropriate action.

In so far as insurance companies are concerned, the position after the enactment of this legislation will, I think, be regarded by them as rather unsatisfactory, inasmuch as their statutory accounting obligations will be dealt with by two seperate, though related, branches of the law—the Insurance Acts and the Companies Acts. I do not think there is anything we can do just at the moment to rectify this difficulty as it is very desirable that, in so far as accounts are concerned, they should receive treatment similar to that of their British competitors, and I have little doubt that the companies agree with this view. It is my intention, however, to give some further thought to this matter and it may be possible before very long to bring all the accounting requirements relating to such companies together either in the Insurance Acts or in the Companies Acts. There are ample powers to make the necessary Orders under both sets of legislation.

Some important changes are also being made in regard to the winding up of companies. Deputies are probably aware that the law in relation to voluntary winding up in particular, has been most unsatisfactory for many years, especially in the case of insolvent companies. There have been quite a number of cases in which due regard was not had to the legitimate interests of the creditors of such companies and the winding up was conducted as if it were the concern only of the shareholders. As the law stands at present, the members of a company which is being wound up voluntarily have control over the liquidation; this may be logical enough in the case of a company which is in a position to meet all its financial obligations but it is quite inequitable in cases where some creditors are likely to be left unpaid.

In order to implement some recommendations on this point by the Company Law Reform Committee, it is proposed, therefore, to provide that, in future, voluntary winding up will be divided into two classes, namely, members' voluntary winding up and creditors' voluntary winding up. If the directors of a company wish to have the liquidation carried out as a members' voluntary winding up, they must prepare a declaration that the company will be able to meet its debts in full within a period not exceeding one year. There are a number of safeguards to ensure that the procedure involving the making of this declaration is not abused. Where directors are not in a position to make this declaration, i.e. where the company is insolvent, then the liquidation must proceed as a creditors' voluntary winding up, and in that event substantial control of the proceedings passes to the creditors whose interests are to a large extent given precedence over those of the members of the company. I think Deputies will agree that the new arrangements which are proposed in Sections 257 to 273 are both fair and sensible.

Section 285 of the Bill is designed to effect some changes in the law relating to the payment of debts in a winding up, and I feel sure that the commercial community in general and small traders in particular will regard certain provisions of this Section as being most welcome. The position in regard to the priority afforded to State debts is explained in the Memorandum which has been circulated with the Bill, and may be summarised by saying that, after claims secured by fixed charges have been met, State debts have first call on the assets of a company which is being wound up. There are no consequences of any practical importance arising out of this preference in cases where the company concerned is in a position to meet all its commitments, but it operates most harshly where the company is insolvent. In that case, the entire assets of the company may have to be set aside to meet the claims of the State and there may be nothing left to pay the debts of unsecured creditors.

Both the Bankruptcy Committee which reported in 1930 and the more recent Company Law Reform Committee were in favour of a diminution of preference in respect of State debts, on the grounds that it is most inequitable to give priority to the State, which can carry on without difficulty if its claims are not met, over a small trader who may be placed in a very serious predicament by failure to secure payment for his debts. Section 285 provides, therefore, for the abolition of all preferences enjoyed by the State, except in relation to twelve months' assessment of taxes. The Company Law Reform Committee (but not the Bankruptcy Committee) were in favour of the abolition of the twelve months' tax preference also, but I think there is something to be said for retaining this.

As will be seen from the explanatory Memorandum, Section 285 also introduces a number of important changes to protect the interests of employees in a winding up. Insofar as arrears of pay are concerned all clerks, servants and workmen will in future be entitled to preference in respect of services for the period of four months preceding the winding up, while the existing ceilings of £50 for clerks and servants and £25 for workmen are being raised to £200 all round. These employees will also be entitled to preference for all accrued holiday pay. The existing provisions relating to preference for workmen's compensation payments are also being amended to strengthen the position of any injured workers to whom the company may have obligations. There is also an entirely new provision giving preference to amounts due from a company in respect of its liability to employees for accidents, other than liability under the Workmen's Compensation Acts.

Generally speaking, it is in the course of winding up a company that most offences by fraudulent directors and promoters come to light. The existing provisions for the prosecution and punishment of such persons are unsatisfactory and this situation is now being rectified. Section 293 of the Bill contains a long list of actions which will in future be regarded as misdemeanours and sets out substantial penalties by way of fine and imprisonment. This section in effect applies the same provisions to the winding up of companies as are applied by the Debtors Act (Ireland), 1872, to the bankruptcy of individuals. Section 245 incorporates a number of improvements which will render more effective the powers of the Court to examine suspect persons.

Further new provisions to deal with offences coming to light during winding up are set out in Sections 295, 296, 297 and 299; the object of all these provisions is to ensure that wherever possible, persons who have acted dishonestly will not go unpunished. These provisions should not cause any difficulty for upright directors and promoters, but I hope that they will be an effective deterrent to fraudulent activities by unscrupulous persons. In order to provide further safeguards for both the shareholders and creditors of companies changes are also being introduced in Sections 286, 288, and 289, to deal with fraudulent preferences.

As Deputies are probably aware, about 95 per cent. of the companies registered in this country are private. Because of the nature of their constitution, and the way in which their internal affairs are regulated, it is sometimes possible for the majority of the shareholders in such companies to act unfairly towards the minority. The Company Law Reform Committee referred to practices of this kind in paragraphs 123 and 124 of their Report, and as the existing remedies are not effective, they recommended the enactment of special provisions designed to protect minorities from ill-treatment of this kind. Rather elaborate provisions to this end are set out in Section 205 of the Bill. It will be noted that no attempt was made to specify the type of activity which is to be regarded as unfair or oppressive; I consider it preferable that the Courts should be allowed to exercise the widest discretion in this matter both as regards the determination of what falls within the Section and as regards the prescription of remedies.

There are a number of other provisions also in the Bill designed to protect minority shareholders. Section 166 enables the Minister for Industry and Commerce to appoint an inspector to carry out an investigation into the affairs of a company if he is satisfied that any of the shareholders are being oppressed, and Section 170 empowers him to petition the Court either for a winding up order or an oppression order if the report of the inspector indicates that the suspicions were well founded. In Section 213 it is provided that a company may be wound up compulsorily if the Court is satisfied that there is oppression. I should like to mention in this connection that a petition for winding up on this ground, and also a petition for an order under Section 205, may be submitted not only by members of a company but also by personal representatives, trustees, or persons who are beneficially interested in shares by virtue of a will or intestacy. The reason why special provision is made for such persons is that most cases of oppression arise where a shareholder dies and the directors are not prepared to act fairly and equitably towards those persons who become entitled to the shares. A further provision of the Bill which is of interest in this connection is Section 78, the purpose of which is to protect shareholders against any unfair variation in their rights. Under this section also the court is given the widest powers to deal with whatever situation may be presented to it. Any variation of rights which the court feels is unfairly prejudicial to the interests of any shareholders may be set aside by it.

Prospectuses inviting members of the public to subscribe for securities are not commonly issued in this country, for the reason that only public companies, of which there are comparatively few registered here, may finance their activities in this way. It has been considered desirable, nevertheless, to review the law relating to prospectuses and similar documents, and a number of changes, having as their object the protection of the public, have been provided for in Sections 43 to 58 inclusive. In drawing up these provisions I have had to ensure, first of all, that adequate protection for prospective investors was provided, but care was also taken not to impose any unreasonable burdens on companies which might hamper them in their lawful activity of seeking finance from the public. It would be possible to introduce all sorts of onerous requirements in connection with the contents of prospectuses, but I feel sure that in this Bill we have gone far enough.

Strangely enough, there are at present no provisions in the Companies Acts insofar as prospectuses of foreign companies are concerned. This omission is now being rectified by Part XII of the Bill which deals with the prospectuses of such companies whether or not they have established places of business in this State. The requirements in relation to such prospectuses are much the same as those which are applicable to the prospectuses of Irish companies.

Every company is owned by its shareholders and the directors merely act as stewards of the business on their behalf. It has, therefore, been the practice for very many years to include in the Companies Acts various provisions designed to facilitate the coming together of the general body of proprietors for the purpose of reviewing the company's affairs. Insofar as the present Bill is concerned the relevant provisions are set out in Sections 131 to 146 inclusive, and these represent a considerable elaboration and improvement on the existing law.

One of the principal changes which is being made is in regard to the length of notice which must be given for calling meetings, which is dealt with by Section 133. The object of the new requirements is to ensure that any member who might wish to attend a meeting or to appoint a proxy will have reasonable notice thereof and will, therefore, be in a better position to make the necessary arrangements. Important changes are also being made in Section 136, in regard to the appointment of proxies and, generally, that section implements the recommendations of the Company Law Reform Committee. If a member cannot attend personally at a meeting it is only right that he should have the power to appoint another person to represent him and to speak and vote on his behalf. Section 136 contains suitable provisions to this end. A further change which is being made is that the existing provisions in relation to extraordinary resolutions are being discontinued. In future there will be only two types of resolution, viz. ordinary and special. Section 141 provides that any references to extraordinary resolutions contained in existing Acts and other documents shall be deemed to be references to special resolutions.

Further changes designed to protect shareholders and other persons have been made in Sections 165 to 173 which relate to the appointment of inspectors to investigate the affairs of companies. I have already made a reference to some of these changes in my earlier remarks about the protection of minorities. However, I should like to emphasise that my policy in regard to the utilisation of these powers of inspection will remain much the same as it has always been with successive Ministers of my Department. The appointment of an inspector to investigate the affairs of a company is of its very nature something which cannot be kept secret and as soon as it becomes public knowledge some damage is inevitably done to the commercial reputation of the company in question, even if it is subsequently found that there was nothing amiss. In the past it has always been the practice in considering applications for the appointment of Inspectors to bear this point particularly in mind, and, so far as I myself am concerned at any rate, there will be no change in this respect in the future.

In the Companies Act, 1959, provisions were for the first time introduced in our law to enable companies to issue redeemable preference shares. During the passing of that measure through the Oireachtas, the suggestion was put forward that companies should also be given the right to attach redeemable rights to shares which had been issued as irredeemable preference shares, subject, of course, to the appropriate consent of the members of the company and of the shareholders of the class concerned. I undertook to give some thought to this idea, and if it were found practicable to devise a workable formula, to introduce a suitable provision in the Bill which is now before the House. This matter has been given the most careful consideration, and I think that Section 65 of the Bill can be regarded as meeting all reasonable requirements in this respect.

It would be rather dangerous to provide unduly wide powers to convert shares in this manner to all companies, and it is for that reason that the section is hedged about by a number of safeguards designed to prevent abuses. In the first place, it will be noted that the section is confined to public companies. The possibilities of abuse are, I am afraid, too great to permit of the extension of the concession to private companies, where it could be manipulated fairly easily by unscrupulous persons to their own profit with little or no danger of public comment. Secondly, the section applies only to preference shares which were issued before the 5th May, 1959; the reason for this is that as from the date in question it was permissible under the Companies Act, for any company limited by shares to issue redeemable preference shares, and there could, therefore, be little justification for allowing them to convert preference shares issued after that date in irredeemable form. Thirdly, it is provided that nothing in Section 65 will oblige any shareholder to accept redemption of his shares. It may well be, of course, that the terms on which a shareholder accepted his shares oblige him to be bound by the decision of a certain majority of his fellow shareholders and any provisions of that kind will continue to operate. I understand that there may well be cases where the redemption of preference shares under the provisions of this section would be a happy release for the shareholders concerned provided the transaction can be arranged on acceptable terms, and for that reason I feel sure that its enactment will be generally welcome.

The interests of shareholders may be adversely affected by unreasonable or reckless actions on the part of a company's officers in connection with the transfer of shares. A number of provisions are being introduced in Part III to provide additional protection for shareholders in this field. Examples of such provisions are Section 84 which obliges a company to give notice of refusal to register a transfer within two months after lodgment, and Section 85 which imposes certain obligations on a company in connection with the certification of transfers. I might also refer to Section 86 which requires a company to complete and have ready for delivery the certificates of securities within two months after lodgment of the transfer documents; under the existing law the period of two months runs from the date of registration of the transfer, which might not, of course, be effected for a considerable time after lodgment.

On this subject of the registration of shares I would like also to refer to Section 80 which discharges companies in certain circumstances, form the obligation to number shares. I feel sure that this concession, which was recommended by the Company Law Reform Committee, will be very welcome to the commercial community. A general dispensation as regards numbering cannot, however, be given as the interests of shareholders demand that shares should be readily distinguishable from one another in cases where they are not fully paid up or do not rank pari passu for all purposes.

Quite a number of new provisions are being introduced in the Bill in connection with directors. There is, at present, no obligation on any company to have directors and this is now being rectified by Section 174, which requires that every company must have at least two. As every company must have not less than two members, this requirement should not cause any problem; it is desirable in any event that a specific obligation of this kind should be imposed since the directors of a company are charged with numerous responsibilities under the Bill. For that reason also it is desirable that the directors of a company should be physical persons, and Section 176 provides therefore that a body corporate may not in future be a director; companies which at present have bodies corporate acting in the capacity of directors are being given a period of three months to replace them by physical persons.

A number of provisions are also included in the Bill with the object of bringing the activities of directors more closely under the control of the shareholders; for example, Section 181 requires that the appointment of directors must be voted on individually, while Section 182 will make it easier in future for shareholders to dispense with the services of any director with whom they are not satisfied before the expiry of his period of office.

Sections 186, 187 and 188 contain provisions requiring shareholders' consent for payments to directors for loss of office in connection with the take-over of the shares or business of a company. There is also in Section 185 a prohibition on tax-free payments to directors, while Sections 191 and 192 require that particulars of directors' salaries, loans and other payments, must be shown in the annual accounts.

There has been a good deal of comment in recent years about the rights and duties of directors in relation to their companies and it has been suggested that these rights and duties might be set out in some detail in the Companies Acts. I have come to the conclusion that it would be extremely difficult to draw up any general provisions of this kind which would be suitable for application to all companies and I think that sufficient guidance in these matters is provided by case law rather than by statutory enactment. I think it is desirable, however, to enact provisions designed to bring to the light of day dealings by directors in the shares of their companies, and also their interests in contracts which their companies enter into with other parties; suitable provisions to this end are included in Sections 190 and 194.

Since a director is, as a general rule, appointed by the shareholders, it is desirable that the assignment by him of his office to another person should be subject to control, and Section 191 deals with this matter. Section 200 is designed to ensure that directors and other officers of a company will be answerable to shareholders for neglect of their duties and cannot disclaim responsibility by virtue of unreasonable escape clauses contained in articles of association or other documents.

Two further provisions of interest under the heading of directors are Sections 183 and 184; the former contains a prohibition on undischarged bankrupts acting as directors, while the latter enables the Court to restrain persons convicted of certain offences from acting as directors.

In the Companies Act, 1959, a provision was introduced with the object of facilitating mergers which had the approval of the vast majority of the shareholders concerned and which might fall through because of the intransigence of a small minority. Although I have had no complaints about the manner in which this section has worked in practice, it has been found on re-examination that it could, perhaps, be drafted in more precise terms. The more elaborate provisions are now contained in Section 204 of this Bill and I feel sure that this will meet all reasonable requirements, providing as it does suitable facilities for the acquisition of the shares of dissentients and at the same time giving those persons adequate protection against abuses.

In Part VII of the Bill a number of new provisions are being introduced in connection with receivers. The object of these is to protect the members of the company in respect of which a receiver is appointed, and to safeguard the interests of its creditors and other persons doing business with it. A number of clauses to assist receivers in dealing with certain difficulties which may arise for them are also included.

Part IV of the Bill continues, in improved form, the provisions of the existing law relating to the registration of charges. The object of these requirements is to ensure that persons doing business with a company will have a readily available means of ascertaining how far its assets have been charged as security for debts. Apart from the additional obligations now being imposed on Irish companies in this respect, foreign companies having places of business here are now, for the first time, being bound by these requirements as to registration of charges.

Now that we are imposing rather comprehensive obligations on companies in the matter of accounts, it is important to ensure that the law in regard to auditing is satisfactory. It would, I think, be quite illogical to enact all these detailed requirements about the contents of accounts and at the same time to allow any person, no matter how much or how little he knows about accountancy, to act as auditor. In Section 162 of the Bill it is proposed, therefore, to provide that, subject to certain exceptions, only persons having recognised professional qualifications can audit the accounts of companies.

Other provisions of the Bill to which I would like to make some reference are Section 8—modification of ultra vires rule—Section 10—altering the objects of a company—Section 22— trading under names other than corporate names—Section 37—pre-incorporation contracts—Section 62—share premiums—and Section 63—issue of shares at a discount. It is not necessary for me to go into any detail about these matters but I would draw the attention of Deputies to the relevant notes in the explanatory memorandum.

I feel sure that some Deputies will have views to offer on the question of requiring disclosure of beneficial ownership of shares. A requirement of this kind, but of rather limited application, was recommended by the recent Committee of Inquiry in Britain. In so far as we are concerned, however, I am satisfied that no provisions of this nature are required. The Company Law Reform Committee examined this matter in some detail in paragraphs 103 to 108 of their report and came to the conclusion that such provisions, however carefully drafted, would be easy to evade. They pointed out in any event that in the great majority of cases in this country shares are registered in the names of nominees for legitimate commercial reasons.

As Deputies will see from page 6 of the explanatory memorandum, it is not proposed to accept the recommendation of the Company Law Reform Committee that the issue of shares of no par value should be permitted in this country. There does not seem to be any general demand for the legalisation of such shares, and as far as I can see the question has been given more importance than it deserves. I have noticed that the most recent Committee of Enquiry in Britain has recommended that provisions should be enacted permitting the issue of shares of no par value in that country.

I see no reason, however, to follow suit here as there is no evidence that those concerned with the administration of company affairs would wish to see a change of this kind effected, nor is there any reason to believe that any difficulties which may arise for investors in connection with the present system of nominal value shares would thereby be eliminated. I should like to make it clear, however, that if at any stage it becomes clear that it would be desirable to amend the law in this respect, I would be prepared to seek the Government's approval for the introduction of the necessary legislation. Amendments to legislation other than the Companies Acts would, probably, also be required.

Deputies may also wish to know why we have no legislative provisions dealing with unit trusts. Some years ago an inter-departmental working party looked into this question of unit trusts and found that there was no need for legislation to control the activities of promoters of this investment medium. In fact, no Irish unit trust has, to my knowledge, been established and so far as foreign trusts are concerned. I have had no complaints about their rather limited operations here. It may also be asked why we have no legislation specifically dealing with "share-pushing" such as that which has been passed in neighbouring countries. The fact is that we have had very little trouble from share pushers in this country and controlling legislation is not called for. It is probable that a recent case in which very large amounts of money were involved will spring to the minds of Deputies, but I should like to point out that branches of the law other than the Companies Acts were primarily concerned in that case.

There would, of course, be little point in imposing obligations on companies and their officers unless suitable provision were made for the prosecution of offenders. A good deal of attention has been given to this matter and a number of new provisions designed to facilitate prosecutions are included in Part XV. I should like to refer in particular to Section 385 which will remove certain difficulties which have arisen in the past in connection with summary proceedings; it is not always possible to bring proceedings within six months after the commission of an offence as the law at present requires and for that reason a period of three years is now being provided for. Section 386 provides for a minimum fine for second or subsequent offences, and its principal purpose is to deal with persons who have been in persistent default of their obligations under the Companies Acts.

I think it is undesirable that persons who are guilty of offences under this branch of the law should have the protection of the Probation of Offenders Act, and accordingly, Section 387 excludes such offences from the scope of that Act. There is also a very useful provision in Section 384 which will make it easier for the police to procure evidence of offences from the books of a company where suspicions have been aroused. Section 382 is also of some interest; the existing law does not contain any suitable provision for the prosecution of companies on indictment and this omission is now being rectified.

Apart from these special provisions under the heading of "Offences", I should like to point out that particular attention was paid to the insertion of suitable penalty clauses in the appropriate sections throughout this Bill. Entirely new penalties were provided for where none existed up to this, while in other cases the penalties by way of fine or imprisonment set out in the existing Acts were substantially increased wherever the nature of the offence seemed to require it.

On this question of offences, I should like to advert to the recommendations of the Company Law Reform Committee that the enforcement of the requirements of the Companies Acts should be regarded as a matter of major importance. As the Committee pointed out, incorporation under the Companies Acts is a privilege, and the terms on which it is granted should be observed. I should like to avail of this opportunity to make it clear that I accept the Committee's recommendation unreservedly, and that, to the extent which our resources permit, steps will be taken to ensure that the requirements of the law are complied with, and that offenders are punished.

The Bill is, of course, a consolidation as well as an amending measure and it contains many provisions which simply repeat existing requirements with little or no change. I think it unnecessary to make any reference to the sections which come within this category but I would like to assure the House that all the provisions of the Bill, both new and old, have been the subject of the most careful consideration. It is more than 50 years since the last major Companies Act became law. It would probably be too much to expect that anything we enact now will give such long service but I am confident that the present Bill will meet our needs for a considerable time to come and that it is well deserving of the support of the House.

I might point out, in conclusion, that as I mentioned earlier, this is probably the biggest Bill ever to be introduced in the Oireachtas and therefore, not simply because of that but because of its very nature, it might be better to refer the Committee Stage to a Special Committee. I am in the hands of the House in that respect. If the House agrees, I will move the necessary motion at the appropriate time.

On the suggestion which has just been made, there should be general agreement. Because of the complex nature of this measure and the fact that physically the Bill is so large and will in Committee absorb a good deal of time, it seems an eminently suitable measure to refer to a Special Committee.

I should like at the outset to pay tribute to the work of the Company Law Reform Committee which was set up by the inter-Party Government in 1951 and which reported in February, 1958. This complicated and difficult matter was the subject of lengthy and careful consideration, eventuating in the report presented to the Attorney General. As a result of that report, this Bill has been prepared. The members of that Committee were so appointed as to represent the interests best qualified and most intimately concerned with the complexities of company law. The Committee consisted, in the main, of lawyers and accountants and had available evidence from many other bodies and persons.

I should also like to express appreciation to the Minister and his Department for the rather full memorandum which was circulated with the Bill and which indicates the various changes proposed and refers to the recommendations which have been adopted from the Company Law Reform Committee. It also refers, where appropriate, to where the Bill departs from these recommendations. This memorandum has been extremely helpful. It would have been even more so if it had been possible to include in it references to the appropriate sections of the 1908 Act. Because of the very size of this measure and the large number of sections in it, it is very difficult to follow in detail in the various sections where alterations and variations are made. The fact that that is so emphasises the desirability of referring this measure to a Special Committee. It is a specialist subject and it is essential that the law should be brought up to date and made as clear as possible.

The Jenkins Report which was published in the summer of this year expressed the view in an early part that this was a field of legislation in which finality was not to be expected and while that is true, nevertheless, in the light of the very big changes that have taken place in this country, and, of course, so far as they are concerned in Britain and elsewhere, the Companies Acts passed many years ago required to be amended. The report of the Company Law Reform Committee is an exhaustive one and is an indication that law reform is a continuous process.

While much has been accomplished since the law reform programme was initiated some years ago by the inter-Party Government, and continued by the present Government, the need to press on with reforms is ever present and time and care is required in undertaking that task. Much of the work can be undertaken only by experts and specialists in a particular sphere. While it is generally accepted that reform should be pressed forward as rapidly as possible, nevertheless, some of the reforms must evolve as a result of experience and not appear to be the result of a hurried effort to make changes merely for the sake of change.

The Committee which was appointed and which considered this question was appointed on the basis that it would be qualified and informed to give this matter full and careful consideration. The very great economic changes, the industrial progress since the foundation of the State and the growth in the number of private companies from 1,088 companies in 1925 to 7,385 in 1956 indicate the need for a modern Companies Act.

Company law is a specialised sphere of legal work not practised to any great extent in this country by most lawyers. On the other hand, in Britain, which has had a highly industrialised economy for a considerable time, company law is a remunerative and specialised branch in which many are engaged.

With the increase in industrialisation and the great increase in the number of companies, the legal work here in this branch of the law will likely grow. The need to bring the law up to date has been evident for a considerable time but, in particular, since the 1948 Companies Act in Britain.

This Bill, as the Minister said, follows, in the main, the recommendations made by the Company Law Reform Committee. Because of the very extensive and careful consideration given by that Committee to this problem, I believe that wherever the Bill departs from these recommendations the strongest possible case in so far as any major change is concerned should be made to justify that departure.

There will undoubtedly be general agreement with and approval for the decisions on which the Committee based their recommendations and the reasons for the general approach to this matter which the report follows. In the main, commercial practice is either the same as or similar to that obtaining in Britain. At the same time, our system is a good deal less complex and the same complex provisions which are contained in the British Companies Act, 1948, are hardly appropriate or necessary in this country.

The important guiding headline to be followed here is that the law should be definite, as simple as possible and flexible. It must provide adequate safeguard and protection for the public, shareholders, employees and others who are concerned. This aspect of company law is paramount and is of importance not only to the categories mentioned but in order to safeguard the commercial reputation of the country.

Fortunately, the number of cases where dishonest trading or practices occur in this country are few but the publicity attendant on these cases can do, and has done, considerable damage. The provision included in the Bill, which gives the High Court power to restrain certain persons from acting as directors or from managing companies, is necessary, if the commercial reputation of companies, traders and the country is to be maintained. Most of these provisions will be more appropriate for consideration on Committee Stage but certain matters fall to be referred to on the Second Stage.

One particular aspect of the economy here which is not directly referred to in the Bill, although to some extent I imagine it will come within the ambit of the changes being made, is the position of State Companies, semi-State and statutory bodies. These undertakings have generally operated on somewhat different lines from public or private companies.

It is, I think, appropriate to consider whether these State companies should adopt, as some of them do, a different system of accounting from that operated in the case of public or private companies. It is true that these bodies are set up to perform a specific function and to serve the community as a whole. While most of them present their accounts in a form similar to that hitherto adopted by public and private companies, not all of them present their accounts in a sufficiently detailed manner for a proper understanding of the financial and trading position of the company concerned.

Under the existing Section 113 of the 1908 Act, the accounts which were presented to accountants and the details furnished to accountants were comparatively meagre. The changes being made in this Bill are not merely desirable but will generally be welcomed. It is, I believe, important, therefore, that State Companies and semi-State bodies should supply similar information and that the same obligation will therefore, in the future, rest on these companies as will rest on public or private companies, so far as the changes proposed are concerned.

It is recognised that a State company is selected and appointed either in pursuance of a statutory obligation or under the Companies Act, with financial backing from the appropriate Minister or with funds provided by the Industrial Credit Company, or whatever the manner in which these companies have in many cases been formed. Nevertheless, it is in the interests of the company and of the country that, consistent with the ordinary requirement that no unnecessary trading information would be divulged which would operate to the disadvantage of the company concerned, full and accurate accounts should be presented to the House in order that the House and the country may see accurately its financial and trading position.

The proposals contained in the present Bill, commencing at Section 147, and which are based on the paragraphs and recommendations in the Company Law Reform Committee Report, will generally be welcomed. This report adverted to the fact, in paragraph 170 and subsequent paragraphs, that at present, under existing law, there is no obligation on a company or its directors to keep proper accounts, proper records or proper books of account. The result is that in many cases the accounts presented do not give an accurate or full picture.

While this report wisely goes on to state that there are many misconceptions about the function and nature of a balance sheet and indeed about the function and nature of the actual details which should be presented either in the accounts or in the balance sheet, nevertheless, the position as it has existed is such that it has given rise on many occasions to adverse comments by accountants, lawyers and by shareholders and others whose interests were affected. It is, therefore, a matter on which there will be general agreement with the proposed changes so far as accounts and accountancy are concerned.

There are aspects of this matter which, I think, probably go a little too far from the point of view of placing onerous responsibilities and duties on companies and their accountants. In the main, as the Committee stated, most of the companies in this country are small companies. Many are family business and a great many are small companies. In some cases, there is the usual practice of a family having a director in a particular company and when the question of auditing the accounts of that company arises another member of the family comes in and carries out the audit. Under Section 162 of this Bill as now drafted, that position will no longer operate.

I think there is no objection in principle to a member of a firm coming in to audit the accounts. Of course, it would be wrong to have an accountant who is a director of the firm acting as auditor but small companies could be put to considerable expense and trouble if a member of the firm is unable to act as auditor. I feel that the obligation as set out in Section 162 is onerous and difficult to justify. In the event of any person acting improperly, he would be liable whether a member of the firm or not.

The Minister referred to the fact that it is not proposed to accept the recommendation contained in the Company Law Reform Committee's report at paragraph 63 dealing with the issue of shares of no par value. I would like to know what the reason is for not accepting that recommendation. The Minister did say that there does not appear to be any general demand for it. However, I feel that where this Bill departs in any material respect from the recommendations of the Company Law Reform Committee, strong reasons should be advanced for such departure. Admittedly, the Committee did not give many reasons except the one reason that the system has been in operation in Canada and the United States for about 50 years and that in view of the growth of external investments here, we should fall into line with the practice in these countries. The Committee did say in paragraph 65 of its report "We consider that a very strong case for the introduction of shares of no par value has been made and we recommend that companies in this State should be permitted to create and issue such shares." However, this is a matter which we can consider on the Committee Stage.

One important change being made is that dealing with prospectuses. The important change is in Part III of the Bill which seeks to safeguard the investing public. This change is long overdue and should obviate some of the losses incurred by investors in the past because of claims made in prospectuses. It is a desirable thing to include foreign companies in these changes. As the Minister said in his introductory speech, it has been desirable to review the law relating to the issue of prospectuses. It is also desirable that whilst adequate protection should be given to prospective investors, onerous obligations should not be imposed on companies which would hamper them in their normal activities of seeking public subscriptions. The change whereby certificates of experts will require to be furnished and the obligations which are imposed on those furnishing them should obviate a recurrence of any of the things which have happened previously.

Another change is that dealing with inspections. I believe in this part of the Bill and I was glad to hear the Minister say that he proposed to continue the policy which has been operated by Ministers for Industry and Commerce since the State was set up, that this power would be used only where it was justified by the information available to him and only in the last resort. It would also seem right that the Bill should provide for some minimum qualifications for inspectors. As the Bill is framed, no qualifications are laid down and it ought to be possible to provide certain minimum qualifications on appointment, either experience in trade or certain rank in the Civil Service and a certain number of years service. I feel we should try to frame the section so as to provide for a certain minimum of qualification.

One of the matters in that connection which could pose a difficulty is the section which, while designed to provide protection for the shareholder, could also create difficulty for those responsible for the management of the company. Under Section 66, the Minister may appoint an inspector in cases where members of a company consider they have not been given all the information relating to its affairs which they might reasonably expect. I have heard of a case where a question was asked at a company meeting by a person who was engaged in the same business as the company. The Chairman refused to give the information and that person said he had endeavoured to force the company to do it.

As the Bill is drafted, Paragraph (b) (3) of Section 156 seems to me unduly wide and might operate to the detriment of the company concerned because in any case of this sort there might well be a divergence of opinion, not merely between the chairman and directors but even between one shareholder and another, as to what information a shareholder could reasonably expect. I believe that the accounts as they are will now have to be given in such a way as to ensure that a full and fair picture of the finances of the company will be available, that where these accounts give these details, it ought not be left to an individual shareholder, because it can well happen that a crank or a person with a bee in his bonnet about a certain aspect of company administration could raise difficulties to the detriment of the company which he might want to exploit for his own individual reasons. This section as drafted seems to me so wide that such a person could cause difficulties for a company, with possible resultant damage to the company and the other shareholders.

The proviso in Section 119 dealing with a list of shareholders also seems unduly onerous, at least so far as big companies are concerned with long registers of shareholders. While it is desirable that a full opportunity to inspect the register should be provided, the period allowed for the information required seems inadequate and the physical problem of supplying lists of shareholders might be very difficult for certain firms. There should be some alteration in that section in order to afford, on the one hand, adequate opportunity to those who wish to inspect the lists and, at the same time, not to impose an unduly burdensome liability on the company or companies concerned.

Section 65 confines the issue of redeemable preference shares to public companies whose shares are quoted on the stock exchange and continues the provisions here included in the amending Act of 1959. Consideration should be given to extending this to public companies not quoted on the stock exchange, and indeed to private companies. There seems to be no great reason why this proviso might not be extended and it is certainly worthy of further consideration.

A matter which is dealt with in the Bill is the question of transfers, and Section 81 prevents transfers without an instrument of transfer. While this provision may be necessary, stamp duties on transfers should be reduced to nominal amounts in order to make shares more attractive as a means of investment and to stimulate a greater interest by the general public in stocks, shares and debentures of public and private companies.

One of the desirable developments in this country, and one which has grown over the years, has been the interest of the small investors, the growth of the number of small investors, investing out of savings in companies and any onerous liability such as heavy stamp duties has a particularly deterring effect on such an investor. As a method of inducing small investors to put their savings into companies, the rate of stamp duty should be kept to the minimum possible and I believe that any incentive which we can provide for small investors should be so provided.

The least satisfactory feature of the company law reform is that dealing with winding up. This, I think, is due to a considerable extent to the fact that although the matter was given prolonged consideration by the Committee, the Committee found it impossible to reach unanimity on this point and have, in paragraphs 197(a) to 197(c) of the report, given the views of certain members, and in paragraphs 198(a) to 198(c) supplied the views of the other members of the Committee who took a different attitude.

The law at present on this matter is unsatisfactory and the connection between winding up and bankruptcy law is so close that both must to an extent be considered together. The changes which are proposed in Sections 257 to 273 appear to be an improvement on the law as it has existed up to the present. The urgent need for reform in bankruptcy law has been recognised. Indeed, as long ago as March, 1927, the Minister for Industry and Commerce appointed a Committee which reported in 1930 on the winding up of companies and societies, and recently a new committee has been appointed. I hope the Committee which is considering this matter will report as quickly as possible because of the close connection between the two matters, and the Committee which reported on the company law adverted to the fact that they were not asked to report on bankruptcy law, that it was outside their terms of reference.

On the other hand, the close connection between winding-up procedure and bankruptcy law makes it obvious to some extent that the changes made should be made in the light of the experience in both spheres of legal activity. Although the Company Law Reform Committee did not reach agreement on the changes which should be made, it does seem that the changes contained in the Bill are an improvement on the position as it has existed up to the present. I believe there will be general approval for the penalties provided for in Section 293 for breaches of the law by directors or others and for the changes which are made in respect of persons found guilty of misdemeanours. I was indeed somewhat surprised that offences of this sort would be so lightly described as misdemeanours, but I take it that it is the appropriate description.

A most welcome change is that contained in Section 285. I believe it is one that will be welcomed generally, based as it is on the recommendations made by this Committee. It is the proviso dealing with the State's priority in the matter of debts. This has been the subject of comment on many occasions. It is a relic of a situation which existed in the past, giving the State a prior right. As far as this country is concerned, it is a relic from the Crown precedence which was granted in the time of British occupation. The change is not only overdue but equitable and I feel that the Minister might even consider going as far as some people had thought he would, that is, to wipe out even the year which is being allowed under the present changes.

The last matter I wish to refer to is the question of take-over procedure. Some opinions have been expressed that there should be included in this Bill provisions dealing with, even in general terms, the question of take-over procedure. This is undoubtedly a matter which has attracted far more attention and interest in Britain, and probably elsewhere, than it has here. It was adverted to by the Jenkins Committee in the report published last June. Even here, we had over the past few years occasion to notice some of the circumstances in which that take-over procedure was adopted. This is undoubtedly a question in which there may be conflicting interests but, nevertheless, it is a matter which should receive some consideration. It may be possible to frame, between now and consideration of the Bill in Committee, appropriate requirements governing any action taken by those interested in take-over bids to acquire the shares or portion of the shares of a company.

At any rate, in view of the development of industrialisation, the advent of the European Economic Community and our likely adherence to that body, the prospect of take-over procedure being invoked in the future is much more likely than it was previously. We ought, if it is possible to do so, profit by the experience elsewhere and so frame legislation as to avoid the dangers inherent in that procedure when applied in certain circumstances. I believe it would be helpful if the Minister could, in advance of the meeting of the Select Committee, circulate his amendments so that we could consider them. That will also enable other bodies who are interested, chambers of commerce, individual traders or companies and bodies such as the Bar Council, the Incorporated Law Society, the Association of Chartered Accountants or other bodies to offer their views in order to have them considered and, if agreed, incorporated on the Committee Stage.

There is one other matter to which I should like to advert, that is, the qualification of accountants. I think there will be general agreement that, in the main, properly qualified chartered or professional accountants, members of an association of certified and corporate accountants, are the appropriate people to audit and present accounts for companies. Nevertheless, as the Bill stands, it recognises the position of non-qualified accountants who are practising up to a certain date.

It goes further and gives the Minister the right to decide who is or who is not qualified. I feel that in a matter of this sort, it is an invidious obligation and open to objection to give the Minister, or any Minister, the final say on the qualifications or otherwise of a person. Indeed, one of the duties which fell, and falls, to the Minister in the Department of Industry and Commerce is to supply or approve of a list of public auditors. It always seemed to me in the past that it was a difficult and invidious task, because in some cases the names of persons with full professional qualifications were not inscribed on that list and others who had no professional qualifications were put in. They probably had a prior application in and were included in it.

I believe these are matter which undoubtedly are best left to the bodies concerned. While there will be general approval of any measure to safeguard professional standards, it appears to me that in so far as legislation dealing with accountancy is concerned, it should be in a separate measure and not introduced as a sidewind into a measure of this sort. These are matters which we can consider more fully on the Committee Stage.

Subject to that, I believe this measure is an improvement on the Act which has been so long on the Statute Book. The members of the Committee who gave consideration, time and effort to the preparation of the report deserve not merely the best thanks of those of us who are charged here with the responsibility of endeavouring to enact the best measure possible, but also the thanks and gratitude of the community for the work, effort, knowledge and experience they devoted to their task in the interests of the commercial reputation of the country.

This is, as the Minister indicated, a very technical and a very complex Bill. It lends itself to discussion more on Committee Stage than on Second Reading. For that reason, therefore, I propose to reserve any comments that I should like to make on the details of the Bill until such time as the Committee Stage is reached.

There are certain observations one is entitled to make at this stage. It is 55 years since the previous Act dealing with company law was introduced. That Act has held the stage over a long period, a period which has seen many changes not merely in the company law of our neighbouring countries but in the whole industrial structure of the world. I have here some statistics which indicate that in 1925 there were fewer than 1,500 companies, that is, public and private. By 1957, the number had grown to over 8,000, so that during that period of 32 years, the number of companies registered in the country had increased over seven-fold. That accounts for only 32 of the 55 years which have passed since the existing Act was introduced. I have no doubt that the numbers since 1957 have also increased considerably.

Therefore, it is not to be wondered at that we need a Bill to-day which will take note of the far-reaching social and economic changes that have taken place since the first decade of this century—the radical change in the public attitude towards the ownership and control of industrial and commercial concerns; the application of a policy of tariff protection; the growth of monopoly; the divorce between ownership and control, which indicate that not only is a searching review of company law desirable but that reforms must be introduced which will have the effect of protecting the public in a much more positive way than they are protected under the existing company law which was introduced in the days of free enterprise and which gave the entrepreneur of the day as much freedom as he could wish for himself, while at the same time not providing the adequate protection which the modern state finds necessary in order to protect the shareholders and those with whom the companies trade.

In any scheme of company law here, I think it is very obvious we must be careful, while maintaining our own independence and safeguarding what is best in our own interests, to have regard to the legislative proposals which govern British company law and Six Counties company law because commercial relations between these three areas are so interwoven that it is a national advantage to us, as it is to the other two areas, that all three trading areas should know the conditions on which companies operate, should know as trading units the protection they have under the company law of the other country and should be familiar with the methods which can be used, should it ever be necessary to seek the protection of the courts for the purpose of satisfying legitimate demands.

In our approach to this amending Bill, therefore, our concern ought to be to mould it as nearly as we can to the comparable law which obtains in countries with which we do most trading, while, at the same time, maintaining and safeguarding our own fundamental rights. It seems from examination of this Bill and the British Act that the British Act has been taken as the basis here and there is a good deal of what we might call convoying between the two countries in our approach to the problem of companies. As a further consideration, now that the European Economic Community has appeared on the horizon and if, as anticipated, we become members of E.E.C. and if, as we hope, we will be engaged in close and significant trade relations with them, a knowledge of company law will be useful, particularly to companies here that trade with continental firms as, likewise, knowledge of our law will be useful to them.

I am not sure whether there is any committee of the Council of Europe or of the Common Market countries sitting on the question of an attempt at providing for the Europeanisation of company law. I know the matter was discussed once at Strasbourg by the Council of Europe. Whether it has proceeded to a more positive stage of evolution, I cannot say but there is much to be gained by our association with any type of European committee which seeks to give an international code of company law which can be understood so that language means the same in one country as in the other and those who engage in trade will know what their rights are.

The Minister has said that this is an amending and consolidating Bill and that we are not likely to tackle a Bill of this kind for many years again until this House is much older. Therefore, I think we ought to endeavour to inject into the Bill the most modern and most reasonable thoughts in respect of company law that we can formulate. For that reason, I hope there will be general agreement to refer this matter to a committee. There are no political issues involved. It is a pedestrian task of trying to do the right thing in a whole variety of circumstances for the proper regulation of company law and the protection of investors and traders.

When the last company law Bill was introduced in 1908, there were relatively few public companies in the country, relatively few private companies. At that time, the industrial stage was represented by the personally-owned company where a man or his family owned a business that they had inherited from their predecessors and which they hoped to pass on to their successors. The old concept of personal management of industry has been largely superseded by the joint stock company or by the type of private company in which there is very little personal ownership but rather ownership based on the investment of money and the motivating influence is not so much the success of the personal enterprise as the return of dividends to shareholders.

In the old concept of the family-owned industry, the owner was probably proud of the part which industry played in providing employment and producing goods and that was his business. The modern approach to the ownership of industry is: what is the return on the capital invested? To-day, because of this policy, you may find a person is part-owner of a rubber plantation in Malaya and next week he may sell his shares there and buy tea shares in Ceylon. The following week he may decide to buy copper shares in Rhodesia. He may change his mind again and say he knows of a good mine in Canada. That is the new type of ownership of industry.

The old type of private, personally-owned enterprise has very largely—not altogether—gone into the limbo of history. It is because of the emergence of the new private or public company that it becomes necessary to amend our law and provide the necessary protection for the investors or share-holders—in many cases, people of very small means—and for the traders who trade with these companies.

The main considerations will be to ensure that the companies operate fairly and that those who are entitled to see company accounts will be given sufficient information to enable them to understand the accounts. Most people who are familiar with published accounts—many of them of public companies—find it impossible to get adequate knowledge of the precise position of the company if they have to rely solely on the information provided in the published accounts. I hope that, subject to preserving the reasonable secrecy which the small private companies are entitled to expect—and nobody desires to ruin a small privately-owned, struggling company by turning the searchlight on it—reasonable information is made available, particularly where the private company is one which engages in very extensive activities and where its financial collapse might involve considerable hardship for small traders and investors.

There are two other points to which I should like to refer, although, as I said, I could wait for the Committee Stage, but I merely want to put a question mark in the Minister's mind. He said in the course of his speech that we have no legislation dealing with the small unit trust here. If that is so, I do not know what the present law in the matter is. I think the Minister might have a look at that again. These unit trusts have been making very rapid progress in Britain. Millions of people in Britain now belong to them and hold shares in them. More and more of them are being established and, in the main, the investor is the small man in England, not the well-to-do man, but the small man of thrifty habit who is in a regular job and has a pretty fair income. Perhaps he would like to save something each week and put it into a trust where he can invest with plenty of facility and hope that by the time he comes to retire, he will have accumulated a fair sum of money which will help him in the autumn and winter of life.

It would not surprise me if one of these days we woke up and saw an advertisement in the newspapers announcing the establishment of "The Shamrock Trust" or "The Harp Unit Trust" and were told that this is the thing, that if you want to make sure that the winter of your life will be marked by roses and honey, you have got to invest in the unit trust. I do not object to these unit trusts. I think they are good for thrifty people and that it is better to see money spent in that way than in the optimistic hopes that some old horse will pass 50 others at the winning post and that we will get wealth in that speedy and miraculous way. But if we have no legislation dealing with unit trusts, having regard to the fact that they are operating across the Border on a fairly substantial scale, I understand, and in Britain, it surely is time we had a look at the matter to see at this stage, as we are dealing with company law, whether we ought not to take some power to deal with the problem. At all events, it should be examined, that is, on the assumption that we still have no legislative powers to deal with it. If we have not, then because of its rapid and successful development in Britain, it would be advantageous if we were to have some legislation to deal with the subject today.

The second point I want to raise is in relation to the small creditor. Where a company becomes insolvent, under existing company law, the State can move in and sweep into its arms everything owing to it and people to whom money is owed simply get the fragments if any fragments are left. This procedure comes down from the old kingly right that whatever the king wanted, he had to get and whatever money was owed to him must be paid. I am glad that the Bill has shed a lot of what one might call the "lootful" habits which were operated by the State up to the present but the Minister in the new legislation is keeping the right to collect in relation to the 12 months assessment of taxes.

In 1962, the Minister should abandon that. After all, the State, wealthy as it is, and with the resources it has and its ability to tax every citizen, if it has not got sufficient money, should not claim a greater priority than any of the very small traders and very small investors who will be looking for a portion, and only a portion probably, of what they have invested in a company and what is due to them from the insolvent company. The Minister would do this legislation good if he were to adopt the attitude that the State would take its place with the rest of the people because it does not desire to get out of an insolvent undertaking any more than the ordinary citizens, who comprise the State, get out of it proportionately. Perhaps the Minister will see his way to deleting the remnant of the provision which he is retaining in the Bill and put the State in the same position as any other person entitled to claim against the assets of the insolvent company.

Might I make one suggestion which I think will help the Minister's Committee? A committee may well go through a Bill of this kind and produce for him an agreed measure in a shorter period than if the Bill were the subject of contention and stubbornness across both sides of the House. The Minister will come in on the Committee Stage, in ordinary circumstances, with a brief which will give him details about each section and about the variations in the new sections from the sections in the old Bill. He is familiar with the kind of brief he gets. Would it be possible for him to prepare a few copies of such a brief to be made available at least to groups in the Committee so that one would have a knowledge nearly akin to the Minister's of this complex and highly technical matter? The more we understand the Bill, the better it will be for the ultimate legislation and the speedier will be the consideration of it. If the Minister would agree to such a proposal, it would help him to get his Bill through and contribute to an intelligent understanding of the Bill. As I said, this will probably be the last Bill on company law that this House will enact for many years.

I join in the welcome extended to this Bill which has been so very long awaited. It is not a very exciting measure but it is certainly a very bold one and I congratulate the Minister on its introduction. Its object, as I see it, is to restore the relation between management and ownership of limited companies and to bring within the ambit of company law the old companies and subsidiary companies which are such an important feature of commercial organisation to-day. The greatest merit of the Bill is that it will ensure publication of most of the information which shareholders need in order to appreciate the value of their property. It will bring about great improvements in the presentation of company information. The Bill has, however, social implications which should be adverted to.

Debate adjourned.