Dáil Éireann debate -
Tuesday, 18 Jun 1963

Vol. 203 No. 8

Taiscí Stáit Teoranta Bill, 1963— Report and Final Stages.

Mr. Sweetman

I move amendment No. 1:

In page 2, after line 43, to insert: " `company' means a public Company within the meaning of the Companies Acts, 1908 to 1924."

On Committee Stage, we had some quite considerable discussion in reference to the manner in which the company would exercise the functions allotted to it under Section 3. One of the difficulties that has arisen in any effort made to investigate whether taxpayers' moneys have been expended in a proper way has all too often been the fact that the company to which such moneys were made available was not a public company within the meaning of the Companies Acts, 1908 to 1959. If a company is not a public company within the meaning of those Acts, then an investigation in the Companies Office by any person anxious to trace what has transpired in relation to taxpayers' money expended by the State is bound to be brought to a most unsatisfactory conclusion. If a company is not a public company, the only information in the Companies Office consists of the names of the directors, the names of the shareholders and particulars of actual mortgages, debentures or other charges.

If State money is being made available under this Bill to any particular company, it is highly desirable, not merely in the interests of probity— about which I make no suggestions— but in the interests of the company concerned, that the whole payments should be made in a clear and above-board way. The only way in which that can be done is if the company receiving the benefit files in the Companies Office, and is under an obligation so to file, its balance sheet and its profit and loss accounts. If it is filing in the Companies Office its balance sheet and its profit and loss accounts, then it is possible for anyone to inspect those accounts and to see whether the ratio of private enterprise money, on the one hand, and the money that is being put up by this new company, on the other, bears a proper relationship to the proprieties of expenditure by the State.

The possibility of such inspection negatives unnecessary rumours, negatives wild rumours, and will ensure beyond question that the matter will be seen in its true and proper perspective.

I see no reason whatever why a company that is going to receive the substantial State assistance envisaged in this Bill should shy away from having its profit and loss account and balance sheet filed in the Companies Office in the ordinary manner. The effect of that could be achieved in another way but the simplest way of all, in my view, to do it is to provide that it will be only public companies which will be assisted under this Bill by the company that the Minister is setting up.

Minister for Finance (Dr. Ryan)

As the Deputy has pointed out, the object of this amendment is to ensure that information can be got in the Companies Office with regard to a company that would receive any concessions from Taiscí Stáit. I can understand the Deputy's anxiety to have information about the financial affairs of any company benefiting as a result of the passage of this Bill but, having considered this matter again since the Committee Stage, I am afraid I cannot agree with the Deputy that that is the only way that this matter can be approached and the only way in which sufficient information can be given to the public of the transactions of any company that may get a loan or subscribed capital from Taiscí Stáit.

We must visualise that a company that will get this loan will have had comprehensive negotiations with both An Foras Tionscal and the Industrial Credit Company. There will be negotitions with regard to a grant, first of all and, secondly, with regard to a loan, whether by way of an ordinary loan or by way of capital subscribed to the new company.

I think we all agree that during those negotiations it would be unwise to look for any kind of publicity whatsoever but we have to go a little further because even when the negotiations have concluded and when it looks as if everything has been fixed so that the applicant company will go ahead with its business here, there may be a little time before everything is fairly certain. The first risk we run, therefore, by bringing in publication is that the company might not go on for one reason or another and it would have done damage both to ourselves and to the applicant company that publication should have taken place before that decision was taken by the company.

But, even if it does go ahead, Deputies will agree that in its formative years or, at least, for a period after it has got agreement on the loan and while the factory is being built, it would not welcome any kind of publicity. For one thing, my experience and, I am sure, the experience of all Deputies here is that these companies that intend setting up business here are rather secretive until they have got a site and a contract, perhaps, for the building and all those other things that must be got before any great publicity is given. They are afraid, naturally, that prices will be put up on them if they have to give prior publicity. That means that we must wait a little longer at any rate before any publicity can be given.

I should like to make this point also: An Foras Tionscal is giving grants, some of them substantial, to companies coming in here and we have been satisfied here with the publicity that is given to these grants by a yearly report of An Foras Tionscal of its activities. I do not think we should ask for more here because if we are satisfied with a report of its activities for the year from An Foras Tionscal where an outright, non-repayable grant is given, in this case we are giving a loan which would be repaid and which does not cost the State so much as a grant. Therefore, I do not think we should make the provisions more stringent.

Having these things in mind, I would ask the Deputy to agree to a more restricted form of publication of information which I am proposing in a later amendment. It must be remembered that An Foras Tionscal—or it might be An Bord Fáilte—will have given very deep and keen consideration to an application before they will agree to give a grant and the Industrial Credit Company which will be responsible for half the loan will have examined it in detail also. I think we are fairly safe that nothing that might be regarded as slipshod or dangerous will happen under these conditions.

I would ask the Deputy, therefore, to withdraw the amendment and let us try to agree on the amendment I have put down with regard to publication of the transactions.

Mr. Sweetman

There is a little bit of slipshod thinking by the Minister in the statement he has just made. First of all, this is not a Bill, in Section 3, to make loans alone. It is a Bill either to make loans or to acquire shares.

Dr. Ryan

Yes, I know.

Mr. Sweetman

The Minister did not explain that. That is a very different thing altogether. We will be coming to amendment No. 3 presently. Without being the least bit offensive about it, let me say in relation to amendment No. 3: "Thanks for nothing." That will be included in the new Companies Bill, where there is a subsidiary. It is only a question of the Minister saying that he will have a copy of the accounts placed on the Table of the Dáil and attach it to the report. Under the new Companies Bill, a company will have to publish its own accounts, the accounts of its subsidiary and the consolidated accounts.

Dr. Ryan

A private company as such does not have to publish a balance sheet.

Mr. Sweetman

I admit I am discussing amendment No. 3 because the Minister has thrown it out as an alternative to amendment No. 1. Where a private company is a subsidiary of a public company—and Taiscí Stáit is a public company—it has to publish its consolidated accounts and the accounts of the subsidiary. There was very considerable discussion on this point, as the Minister will see in the report of the Companies Bill Committee. It was made very clear at that Committee that a public company could not be permitted to hive off secretly some of its affairs in the privately poly-owned subsidiary.

Amendment No. 3 contains, in effect, what will have to be done under the Companies Bill. Let me say quite frankly that although I say: "Thanks for nothing" to amendment No. 3 because it will be in the Companies Bill, at the same time, I think it is an improvement because it shows a change of view. It is desirable in this type of transaction that the maximum amount of information that can be made available without harm should be made available. It is even more desirable in a case such as this where a company will operate—and correctly operate— under Ministerial direction rather than by bringing indirect pressure to bear and then coming to the House and saying that the Board have made up their minds as if it were a commercially viable undertaking.

Amendment, by leave, withdrawn.

Mr. Sweetman

I move amendment No. 2:

In page 2, after line 43, to insert a new subsection as follows:

"(4) The Minister shall lay on the Table of the Dail a copy of each direction given by him under subsection (2) (a) hereof, and such copy shall be so laid as soon as possible after it has been given."

I do not know whether in his remarks the Minister intended to cover amendment No. 2 as well as amendment No. 1. I cannot see any objection to the Minister saying publicly—and this is the easiest way of saying it publicly: "I have given a direction that such and such shall be done."

An Ceann Comhairle

Could we take amendments Nos. 2 and 4 together?

Mr. Sweetman

Yes, certainly, if you wish. I do not think it is desirable that it should be left until such time as the report comes out at the end of the year for the notification to be made that the direction has issued. As I understand the situation, the fact that such a direction has issued would have to be referred to in the report. If it has not got to be referred to in the report, the sooner we change the method of reporting the better. As I understand it, the report must refer to it. That comes in a matter of perhaps two months or three months after the end of the accounting year of Taisci Stait. I do not think it is desirable that we should have to wait as long as that to know that the direction has been given.

What is the alternative? It is that I would issue a standing order to the Dail Office that on the first sitting day of every month, a question would be put down to the Minister for Finance asking what directions he had given during the preceding month. That would be putting an unnecessary strain on everyone concerned. If I put down the question, the Minister would have to answer it. He has already admitted that he would have to answer and say whether he had given any directions during the month. It seems to me that it would be much better if he would do something such as I have suggested rather than have this cumbersome method of asking regular questions. It has been suggested from time to time that the average cost of a Parliamentary question is about £5. That would be about £60 a year. It would also be a most cumbersome, and unnecessarily cumbersome, method of getting information.

Surely the proper method is for a Minister to come to the Dáil—and when I say "come to the Dáil", I mean give notice to the Clerk of the House which, under the new Standing Orders, will be the appropriate method of placing papers on the Table of the House—and say that he has given a direction. When I say he should do that as soon as may be, I am not suggesting that he should send a sprinter across from the Department of Finance with a copy of the direction. Surely it is a matter of ordinary courtesy that it should be placed on the Table of the House as soon as may be. That would be much more seemly than the method of putting down regular questions which the Minister must answer.

Frankly, I did not go the whole way with the Minister on the last day about giving notice before he made the direction. Indeed, I think the Minister came a long way to meet me. He has revised his opinion since then. The fact remains that whether or not this amendment is accepted I can get the information by putting down a question on the first sitting day of every month. Surely it is not desirable that we should have to go to those lengths?

Dr. Ryan

I do not know about that. I think the Deputy has not read the amendment carefully. He talked about subsidiary companies——

Mr. Sweetman

I was talking about amendment No. 2, not amendment No. 3. Amendment No. 2 deals with a different point.

Dr. Ryan

The Deputy said: "Thanks for nothing", but there is quite a lot in it. It means that a private company which gets either a straight loan, or capital put in by way of shares, will be asked to produce a balance sheet at the end of the year.

Mr. Sweetman

It will have to do that under the Companies Bill, definitely, because it is a subsidiary. The Minister has not made any case against amendment No. 2 at all. The Minister is talking about amendment No. 3, not amendment No. 2.

Dr. Ryan

When I spoke of the difficulty and danger of publication, I was speaking against amendment No. 2.

Mr. Sweetman

The fact is that I can put down a question and the Minister must answer it.

Dr. Ryan

I do not know. We will see about that.

Mr. Sweetman

I do.

An Ceann Comhairle

Is the amendment withdrawn?

Mr. Sweetman

I will not withdraw it.

Amendment put and declared lost.

Mr. Sweetman

I thought two ones were equal. Do I understand that you exercised your casting vote?

Dr. Ryan

I move amendment No. 3:

In page 5, to add the following subsection to section 17:

"(3) (a) Where the Company furnishes a copy of accounts pursuant to subsection (2) of this section, they shall annex thereto—

(i) a copy of the latest balance sheet of each company which is a subsidiary of the Company and a copy of the auditor's report on such balance sheet, and

(ii) as respects each such company which is required to lay a profit and loss account before general meetings, a copy of the latest profit and loss account.

(b) In paragraph (a) of this subsection "company which is a subsidiary of the Company" means a company of which a half or more of the ordinary share capital is owned by the Company.

(c) In paragraph (b) of this subsection "ordinary share capital" means, in relation to a company, all the issued capital (by whatever name called) of such company, other than capital the holders whereof have a right to a dividend at a fixed rate or a rate fluctuating in accordance with the rate of income tax, but have no other right to share in the profits of the company."

Deputies will notice the provision which refers to the parent company holding 50 per cent or more of the ordinary share capital which is, I think, a bit better than the provision in the Companies Bill. I had in mind one company where 50 per cent is held. That is the difference here. It refers to 50 per cent or more, rather than 50 per cent.

Mr. Sweetman

I think the Companies Bill refers to "more than 50 per cent".

Dr. Ryan

We have gone a little further than that. We say the balance sheet will be published. That is what it amounts to.

Mr. Sweetman

The Minister is quite wrong when he says the Companies Bill does not provide this. What the Companies Bill provides or will provide, if the amendments indicated by the Minister for Industry and Commerce are agreed—I cannot remember; I think it is in that Bill but I was bemused by that Bill and the number of reports and sections in it—that if a private company has another private company subsidiary, then it is not bound to publish anything. That is agreed. As I understand it, if a public company has a private company subsidiary, then it is bound, notwithstanding that the subsidiary is a private company, to publish consolidated accounts. That is the difference that is involved. I take it I am right in thinking that this company, Taiscí Stáit, which the Minister is inaugurating will be a public company?

Dr. Ryan

Yes.

Mr. Sweetman

If it owns more than 50 per cent of the capital of another private company, then under the new Companies Bill, even if it holds more than 50 per cent, it would, without this amendment, have to publish consolidated accounts. I think the phrase in the Companies Bill is "more than 50 per cent" and I agree the Minister has gone a little bit of the way by saying "50 per cent or more".

Dr. Ryan

Of course it will hold 50 per cent, never more, because——

Mr. Sweetman

I think that is the indication. It is an improvement on the Bill as it came in but it is not a substitution for amendments Nos. 1 and 2. The Minister will realise at once from his own commercial knowledge that if a public company were not bound to publish the consolidated balance sheet of its wholly-owned subsidiary company, it would be a very simple method of the public company getting around the Companies Bill, and hence the need for this.

Amendment agreed to.

Dr. Ryan

I move amendment No. 4:

In page 5, line 50, to insert ",in such form as he may direct," after "Minister".

An Leas-Cheann Comhairle

Amendment No. 4 has been discussed with amendment No. 2.

Amendment agreed to.

Bill received for final consideration and passed.