I move amendment No. 20:
In page 45, subsection (8), lines 1 and 2, to delete ", but not exceeding £500 in total".
Companies (Amendment) Bill, 1982 [Seanad]: Committee Stage (Resumed) and Final Stages.
Question again proposed: "That section 40 stand part of the Bill".
Question put and agreed to.
Sections 41 and 42 agreed to.
SECTION 43.
This amendment has been discussed with other amendments. Is the amendment being pressed?
Yes.
Question: "That the words proposed to be deleted stand" put and agreed to.
Amendment declared lost.
I move amendment No. 21:
In page 45, subsection (11), line 16, to delete "sufficient evidence until the contrary is shown" and substitute "conclusive evidence".
Amendment put and agreed to.
Section 43, as amended, agreed to.
Section 44 agreed to.
SECTION 45.
Question proposed: "That section 45 stand part of the Bill".
I raised this matter on the Second Stage speech and perhaps the Minister might now be in a position to clarify the definition of the word "available" in so far as it applies to section 45. I made the case that if the director was to make an unlawful distribution of the profits, it is not apparent from the wording of the section that there is any stated liability or penalty that might be attached to the said director. There is no penalty outlined in the Bill and perhaps the Minister could clarify that point.
There are three rules involved: (1) A distribution may only be made of profits available for the purpose. (2) Profits available for distribution are a company's accumulated realised profits so far as not previously utilised by distribution or capitalisation, less its accumulated realised losses so far as not previously written off in a reduction or reorganisation of capital duty made. (3) An unrealised profit should not be applied in the paying up of debentures or any amount unpaid on any of the company's issued shares. These rules and those in subsections (1), (2) and (3) of this section are supplemented by the remaining five subsections which set out the meaning to be assigned to some of the terms used. A definition in section 51(4) provides that the reference to profits and losses is to both capital and revenue profits and losses. Did the Deputy ask for some other information?
I am aware of the distribution of profits as outlined by the Minister. If a director made an unlawful and fraudulent distribution of profits, is there any way of bringing him to justice and is there any penalty outlined in the Bill which would attach to him?
He would be in breach of the law if he went outside the stipulated definition of profits for distribution. Penalties could be imposed by the courts in those circumstances. So far as I am aware, the penalties to be applied would be those we discussed earlier in relation to other matters and would be up to a maximum of £500.
Under section 40 certain people are named and it is stated that a person shall be guilty of an offence if he breaches a particular section. That might have been a suitable section for an addendum as it concerns the distribution of available profits.
Section 50 provides that distributions of profits which have been made unlawfully must be returned to the company and the company should suffer no loss.
Is it stated in section 50 — I do not think it is — that, if the said distribution is made illegally and moneys have to be reimbursed, the director or the directors who made the authorisation of the distribution will be responsible for the reimbursement?
The director involved would be responsible but, if the others had consent and knowledge of the unlawful act, they would also be responsible.
As under section 40, I take it that the director who became aware of an unlawful distribution together with his co-directors would be liable collectively for the reimbursement of the unlawful distribution.
It would be the shareholder who had received the unlawful distribution who would have to return it.
Question put and agreed to.
Sections 46 to 51, inclusive, agreed to.
SECTION 52.
Amendment No. 22 in the name of the Minister has already been discussed. Is it agreed that the amendment be made?
I move amendment No. 22.
In page 56, subsection (5), line 12, to delete "sufficient evidence until the contrary is shown" and substitute "conclusive evidence".
Amendment agreed to.
Section 52, as amended, agreed to.
SECTION 53.
Amendment No. 23 in the name of the Minister has already been discussed. Is it agreed that the amendment be made?
I move amendment No. 23:
In page 57, subsection (5), line 26, to delete "sufficient evidence until the contrary is shown" and substitute "conclusive evidence".
Amendment agreed to.
Section 53, as amended, agreed to.
Sections 54 and 55 agreed to.
SECTION 56.
I move amendment No. 24:
In page 59, between lines 36 and 37, to insert the following subsection:
"(4) Subsection (1) shall not apply to any company—
(a) to which Part XI of the Principal Act applies; and
(b) which has provisions in its constitution that would entitle it to rank as a public limited company if it had been registered in the State.".
This amendment arises from representations received recently which drew attention to a problem which section 56 creates for certain foreign companies operating in the State. That section makes it an offence for any person who is not a public limited company, as defined in section 2 of the Bill, to carry on business under a name which ends with "public limited company" or PLC or the Irish equivalent. The problem is that a company incorporated outside the State, for example under UK legislation, may be a legitimate public limited company and obliged to style itself as such.
While it may establish a place of business within the State under section 6 of the Companies Act, 1963, without being incorporated here, it would be technically in breach of section 56 of this Bill by using the designation "public limited company" or the initials PLC as the last part of its name. The requirements in Part VI of the 1963 Act are sufficient to prevent fraudulent registration or misleading names being used by foreign companies which establish a place of business here, and the procedures set out therein have worked well over the years. Accordingly, it would be inappropriate to include public limited companies incorporated elsewhere and operating in the State within the scope of the offences created by section 56 of the Bill.
Amendment agreed to.
Amendment No. 25 in the names of Deputy Mac Giolla and Deputy De Rossa has already been discussed with amendment No. 6. Is the amendment pressed?
Amendment No. 25 not moved.
Section 56, as amended, agreed to.
Sections 57 to 61, inclusive, agreed to.
FIRST SCHEDULE.
I move amendment No. 26:
In page 61, before paragraph 1, to insert the following paragraph:
"1. Section 2 of the Principal Act is hereby amended in subsection (1), in the definition of `articles', by substituting `a resolution of the company' for `special resolution'.".
This amendment is necessary because of the provision in subsection (6) of section 20 of the Bill that a resolution of a company to give, vary, revoke or renew the directors' authority to allot relevant securities, although it alters the articles of the company, may be an ordinary resolution, for example, passed by a simple majority. Ordinarily under section 15 of the Principal Act, the article may be altered only by a special resolution, for example, a resolution approved by a majority of 75 per cent. The effect of this amendment is that, instead of referring to the articles as altered by special resolution, the definition now refers to them as altered by resolution of the company.
Amendment agreed to.
I move amendment No. 27:
In page 65, paragraph 20, lines 39 and 40, to delete "sufficient evidence until the contrary is shown" and substitute "conclusive evidence".
This amendment has already been discussed with amendment No. 1.
Amendment agreed to.
First Schedule, as amended, agreed to.
Second and Third Schedules agreed to.
Bill reported with amendments and passed.
This Bill, which is considered by virtue of Article 20.2.2º of the Constitution as a Bill initiated in the Dáil, will be sent to the Seanad.