Dáil Éireann debate -
Wednesday, 7 Dec 1988

Vol. 385 No. 3

Companies (No. 2) Bill, 1987 [Seanad]: Committee Stage (Resumed).

Question again proposed: "That section 7, as amended, stand part of the Bill."

Mr. J. Bruton

Section 7 concerns the power to have what are known as investigations into a company's affairs. These investigations must be agreed to by a court before they can take place and a variety of people can apply for investigations. There is no result from such investigations other than simply a report presented by the person responsible for the investigation. It may be that the contents of the report lead to prosecutions being initiated or to the winding up of a company but if the law were properly applied independently of the investigations it is possible for the company to be wound up under the normal winding up procedure and for persons to be prosecuted for offences against company law by means of the normal process of prosecution, either on the basis of a report from the liquidator on the winding up of a company or on the basis of information obtained by the Minister in another way, apart from the court ordered investigation provided for in section 7 of this Bill.

I have criticised this section because it does not demonstrate the purpose that will be served by an investigation of this kind. The fact that the investigation procedures provided in the 1963 Act have not been used is evidence that there is no need for this separate legal process. Those who might have been expected to have used the investigating procedure have invariably sought to have the company wound up and have their problems remedied in that fashion rather than by using this investigation procedure. The fact that section 7 does not provide any criteria, guidelines, or stated purposes for investigations which would indicate to the court the circumstances in which they might order such an investigation, is itself an indication that this section is there, and has been there in another form, for no particular purpose and is in fact a waste of time.

I have been trying to pursue with the Minister the reasons this process is being maintained and the only answer he gave me — admittedly it was in the form of a response to an interjection — was so that there might be prosecutions. If that is the case, there are ample sections elsewhere in this Bill which enable the Minister to get information preliminary to an investigation. If those sections are there and if the Minister has power to prosecute, why not prosecute? Why have an investigation of this kind at all? If nobody else is prepared to do it and if the Minister suspects that a company's affairs are being conducted with the intent to defraud, or if he suspects that persons connected with the formation or the management of a company have been guilty of fraud, misfeasance or other conduct, the remedy is for the Minister to petition for the winding up of the company, not for this cumbersome, lengthy and unused procedure of an investigation.

I agree with Deputy McCreevy that if there is a need for investigations they should be conducted in the same way as a normal investigation of any crime, in other words, by normal detection work, by seeking information and by searching for documents and obtaining them in the same way as the Fraud Squad investigate the activities of an individual preliminary to taking criminal proceedings, or deciding not to take criminal proceedings as the case may be.

I do not see the purpose of this process in section 7 and I am not alone in being sceptical about the value or purpose of this section. As I said, Mr. Justice Keane, the leading published authority on company law in the Republic of Ireland — he published a textbook on the subject — has said that the history of this investigation procedure does not "inspire much confidence in such proposals as providing a more effective remedy for abuses in company law".

An Ceann Comhairle

Perhaps the Deputy would give the full reference.

Mr. J. Bruton

"Company Law in the Republic of Ireland" by Justice Ronan Keane and published by Butterworths, 1985.

Minister of State at the Department of Industry and Commerce (Mr. S. Brennan)

It is great to be a law student.

Mr. J. Bruton

I am not a law student. I got a present of this book.

Tomás Mac Giolla

The farmers are up to everything.

Mr. J. Bruton

I got this book in my capacity as the then Minister.

Mr. G. Mitchell

I will be happy to give the Deputy a present of another book tomorrow.

Mr. J. Bruton

I know all the answers in that book as well.

Mr. S. Brennan

The Deputy must have had that book when he drafted the Bill.

Mr. J. Bruton

I will not be drawn into this argument. I am on a very high plain of argument and I do not want any frivolous interruptions which might cause me to lose my train of thought.

Commonsense and Mr. Justice Keane both suggest that there is no need for this provision, that there is little or no need for most of this part of the Bill, that it will just add a lot more weight to what people have to read about company law and that it will serve little or no purpose. A much neater, simpler and more effective solution to the investigation of company affairs with a view to prosecution would be to adopt the following procedure. Let the Minister investigate companies in the same way crime is investigated and initiate prosecutions, or let liquidators investigate as they are obliged to do and recommend prosecution arising out of their reports and give the Minister power to petition for the winding up of companies, if other people do not do so rather than get involved in this unnecessary procedure.

In a sense, section 7 is very much to company law what the appendix is to the human body. It is there but nobody has ever discovered its purpose and nobody has bothered to remove it because it has not caused harm to anybody, it has not been used and it serves no useful purpose. To my mind that is not the way to make law. I would urge the House to remove section 7 from the Bill, and keep section 8 which serves a purpose, strengthen the Minister's powers to petition for winding up and, if necessary, strengthen his power to obtain information about companies in the normal way, by the normal process of investigation, and not by the formalised process set out here.

Mr. McDowell

I accept what Deputy Bruton has said that the present system of investigations has been a somewhat atrophied element of the company law code, atrophied due to lack of use. However two things strike me arising from his remarks. First, investigations are not only confined to situations where criminality is suspected or indeed established. Second, investigation is something short of the all-out step which is involved in applying to a court for the winding up of a company. For instance there could be quite a profitable company with a large workforce being run wrongly or unfairly by management, and to say that the only real non-ministerial remedy available to any person interested in the affairs of the company or affected by them is to petition to the court to wind up that company, is like saying that you should not have a police force but that you should have a nuclear bomb, and that the only thing you can do is to destroy a company, or hold this ultimate sanction over them as a means of making sure that their affairs are conducted properly.

I believe there is a need for some step to allow people who are being excluded unfairly from knowing what is happening in a company or who want to establish as a matter of public record misconduct, short of criminality or even criminality itelf. There should be a mechanism whereby they can, without seeking the winding up of the company, preserve that company's existence and apply to the court for the purpose of having such an investigation carried out by an inspector. I believe it is correct to extend the right of initiating the investigation to persons other than the Minister. It is a happy situation that the right will now be available to those who are not simply in a position to persuade the Minister that such an investigation should take place.

If we look to sections 7 and 8, it seems to me that an investigatory procedure is a good one. It may not be used often, but because remedies are not used often does not mean they do not have their effects. If the investigatory mechanism was effectively got rid of, the effect would be that people who knew that it was politically, economically or socially undesirable to wind up a company could effectively trample on minority shareholders in that company, because they would know that no court would dare, for instance, to wind up a large financial institution. Let us suppose a large financial institution was facing an investigation of this kind, it should be capable of investigation without somebody going to the High Court petitioning for its winding up and it should not depend on the Minister to initiate an investigation. If somebody is willing to put their money where their mouth is by way of security to cover the costs of such an investigation, I believe they should have that remedy available to them.

Mr. McCreevy

This morning I was arguing somewhat on the lines of Deputy Bruton. In theory one could hardly disagree with what Deputy McDowell has said, and in one sense I can see the necessity of retaining powers which already exist in the 1963 Act regarding investigations. But as we discussed earlier this morning, the powers which were available to the Minister for Industry and Commerce under the 1963 Act are now being transferred to the courts — the Minister for Industry and Commerce is getting rid of this potato which he always had but never used. As it turns out there have been no investigations under the powers of the 1963 Act and there has never been a case under which the Minister has exercised those powers. In my short time in this House, I remember instances in regard to a number of companies, and one in particular in my own constituency which finally went into liquidation and was sold off but in the period before that happened information came to light to the then Minister that there was something not ad idem with what had been stated to the Department because special allocations had been given to the company. It was asked that an investigation take place under the powers given to the Minister in the 1963 Act but the investigation never took place. In fact, no Minister has ever exercised this power.

Deputy McDowell is absolutely correct in saying that in broad theory it is as well to retain those powers, but no one could deny that it is most unlikely to envisage a situation where anybody will apply to have this investigation carried out under the section because there is an extreme cost involved and the person making the application will be asked to put up a sum in security not less than £200,000——

Mr. McDowell

It is not more than £200,000.

Mr. McCreevy

——not exceeding £200,000. I see the general theory behind retaining the provisions of the 1963 Act, but I think — and I know we can do something on Report Stage—the matter should have been tackled differently. Section 8 of the Bill gives powers to the Minister for Industry and Commerce to petition himself on behalf of the court, but as I said this morning when the Minister had such powers under the 1963 Act, he never investigated the collapse of companies or appointed inspectors to investigate such collapses down through the years. Under section 8, we are giving the Minister powers to go to the court and ask the court the same as other people——

Mr. J. Bruton

It will become more complicated.

Mr. McCreevy

But why will the Minister now use these powers? I accept what the Minister said this morning that one of the reasons there were never investigations under the 1963 Act is that there were procedural and legal difficulties and I can readily understand that there were reasons why the powers were never used, but I am still prepared to bet that the Minister will not use these powers very frequently.

I would have dealt with this whole Part of the Bill differently. I would have appointed an officer called an "official investigator" which Deputy Bruton referred to. This would be a similar appointment to the Director of Consumer Affairs and this officer would be given all the powers under Part II of the Bill and the ordinary person could apply to the official investigator when things were going wrong in a company and he could decide to utilise his powers and apply to the court and bear the costs of same. This official would be the equivalent of the Director of Public Prosecutions except that he would be acting in company affairs. I imagine that would have been the approach I would have adopted with regard to the whole area of investigation. The powers have not been utilised in the past and I would agree with Deputy Bruton that the provisions of sections 7 and 8 are superfluous, but having said that, I believe there is merit in Deputy McDowell's suggestion and, since we cannot look into the future, perhaps these provisions will be useful in the years to come.

From my analysis this morning, I can only see one area where anybody will be prepared to operate under this section. I rule out the Minister initiating an investigation under section 8 because I do not think the Minister would be prepared to carry it out, when he was not prepared to do it when he had the direct powers to do so. Where major companies have shareholdings in other major companies —and £200,000 is neither here nor there to them — they would be prepared to put up the money for an investigation. However, if things are going that badly they probably would not bother with that course of action and would use other means available to them. The official investigator or whatever title we may give him will be the person to do this. I am opposed to creating new branches of bureaucracy but if we are to have investigations that is the correct approach. I cannot see the purpose of the whole area of investigation. Probably it is necessary to leave it there. Under other sections of the Bill other things can be done in this regard, but I ask the Minister to consider the idea I have put forward.

Tomás Mac Giolla

We will be here for a long time if Deputies are to discuss amendments which they have not even put down. Deputy McCreevy says what he thinks should be in the Bill but he has no amendment down to that effect, proposing a special investigator or whatever. You can go on all day saying all sorts of things about what you think should be in the Bill but if we are not tied to something like amendments put down we could go on forever. It is a pity the debate has deteriorated into saying this whole section should not be in the Bill at all. It is an improvement on the 1965 Act but the 1965 Act has been around for the past 23 years, and according to Deputy Bruton there should never have been an amendment in the 1965 Act. What did he do about it all the time he was Minister? It is there in the 1965 Act and if it is not in this Bill we are still operating under the 1965 Act system.

Mr. J. Bruton

The 1963 Act.

Tomás Mac Giolla

The 1963 Act or whatever it was. This is an improvement on that Act.

Mr. J. Bruton

It is not.

Tomás Mac Giolla

It is a great improvement. It is far better that the courts appoint the inspector than that the Minister appoint the inspector. Furthermore, the Minister now under this Part of the Bill can require information from companies without going through formal investigation procedures. I think that is a great improvement. There is a number of improvements here and section 7 is an improvement. It is very cumbersome still. Possibly there are simpler systems of an investigator or whatever, but it is a great improvement. Deputy Bruton and I have amendments down and certainly the purpose of mine is to try to make it easier for people to require an investigation, which nobody did under the 1963 Act. There was no restriction on costs; it could cost a fortune and that was one reason nobody would go into the business. I still thought £200,000 would be rather frightening and that is the maximum but you could go up to that amount. My amendment was to reduce that to £50,000. Obviously, Deputy Bruton similarly thought paying the whole of the cost would be unfair to a person requiring an investigation and he put down an amendment that the person would be required to pay only half the cost. I was pleased that Deputies thought it was good to try to improve this and make sure people involved in a company as members with certain shareholdings or for whatever reason could go to court and ask for an investigation to be carried out and if the courts agreed it should be carried out they would have to bear part of the cost. A later section provides that the courts can assure that the cost is divided up between different parties, be it the company themselves or whoever. The section is good and essential. We should move on from it. We did the best we could to improve it. The Minister accepted one amendment and did not accept the other two. We should accept the section now. This is a huge Bill and we want to move on. It is now 5.35 p.m.

Mr. J. Bruton

I am sorry to have to disagree with Deputy Mac Giolla. It was not my intention to do so but I hope he will accept that the points made here are made genuinely. It was not possible for either Deputy McCreevy or me to put down an amendment for the appointment of an official investigator because such an amendment would be ruled out of order by the Ceann Comhairle on the grounds that it would involve a potential charge on the Exchequer.

Tomás Mac Giolla

It would be cheaper——

Mr. J. Bruton

It would but it is accretion to this Bill as it stands and would represent a potential charge. For that reason I did not put down such an amendment. I am sorry to have to disagree with Deputy McDowell on a matter of law, but adequate remedies are available to people who are oppressed minorities within a company other than the cumbersome procedure of investigation. I refer the House to section 205 of the Companies Act, 1963 which will remain in force after the enactment of this Bill, which provides that a person can petition a court if he feels he is in the position of being an oppressed minority and the court may make such order as it thinks fit whether directing or prohibiting any act or cancelling or varying any transactions or regulating the conduct of the company's affairs in future. Therefore, there are adequate provisions for going to court——

Mr. McDowell

For oppressed minorities, not for the company themselves.

Mr. J. Bruton

This is an investigation of the company.

Mr. McDowell

The company themselves are entitled to apply for investigation under this section.

Mr. J. Bruton

It is unlikely that a company who would act by majority vote would be unable to investigate their own affairs or the activities of their own officers who are their employees and that they would require a court order for investigation to deal with the situation. The point made by Deputy McDowell justifying this investigative procedure referred to minorities and there is already more than adequate protection in section 205 of the Principal Act for minorities without going through the process of investigation. Furthermore, even if investigation threw up some evidence of oppression of minorities, the report of the inspector would not solve the problem because the minority would then have to go to court to get an order under section 12 arising out of the inspector's report. Therefore, it would end up in court anyway. Again, any oppressed minority would use section 205 to deal with the problem rather than this process. For this reason I think this is an unnecessary section.

I accept the need for the section 8 provisions in regard to the Minister obtaining preliminary information but I believe he should be using it for the possible initiation of winding up proceedings or prosecutions rather than for the initiation of an investigation. I would leave section 8 there in the sense that it might be necessary as a long stop. I see no need at all for section 7 which is essentially the initiation of investigations by persons other than the Minister. We should get rid of section 7.

Mr. S. Brennan

What I am doing by putting in this section instead of the 1963 Act is simply to give another avenue to applicants who wish to have a company investigated. It is a total of 15 lines in a Bill that runs to 153 pages. I do not accept it is the enormous burden Deputy Bruton seems to think it is or that it is clogging up the legislation. Far from it, it is another remedy and I think a sensible one. I am not saying it is going to solve all the difficulties of company investigations, but we should give it an opportunity to work.

The major innovation in this section is transferring from the Minister to the court the functions of appointing inspectors. We felt it necessary to do that because of severe difficulties encountered by inspectors appointed in recent years. An investigation under section 165 or section 166 of the 1963 Act, that is by the inspectors appointed by the Minister, is in many ways akin to a judicial process and the constitutional and legal problems which this created were quite substantial. While no action has been appealed to the High Court under the existing investigation provisions, the two most recent investigations instituted proved quite inconclusive, as a result of legal points raised. Among the legal points raised were, for example, the possibility that advance notification should be given to those who were to be investigated prior to the commencement of an investigation.

A second legal point raised was that as no detailed procedures for the conduct of investigations were outlined it was felt that the provision of natural justice might be contravened in not allowing the prime persons involved in the investigation to cross-examine witnesses, to obtain legal advice and to make rebutting evidence. That is just an example of a second area of legal difficulty in regard to the old system. Another cause for concern was that the publication of the report would in itself be a very severe sanction and might jeopardise a person's livelihood. There are others.

The point that Deputy Bruton and I have difficulty in reconciling is that appointment of inspectors by the court should — there is no guarantee — overcome most of the legal problems that were raised in the past, since the inspector will now be an officer of the court and will have all the authority of the court behind him. Furthermore, following the enactment of this Bill, the bare bones of part 2 will be fleshed out by a series of rules, procedures and so on prepared by the Superior Court's Rules Committee which would hopefully obviate some of the procedural obstacles raised in previous investigations.

I would appeal to Deputy Bruton to give this an opportunity to work. It is an attempt to tackle some of the things that prevented the 1963 version playing a major role. It also opens up new avenues for persons to establish the facts in regard to a company. The purpose, after all, is to allow the facts to be established in major cases. I said this morning, and it is worth repeating, that this is not meant to be a "quickie" method of finding out what is happening in a company. Under section 19 the Minister can get his hands on documentation and books and so on in a summary fashion; but that would not be suitable at all in circumstances where a fully fledged dress rehearsal investigation of a major company is sought, perhaps by another company. Where that sort of investigation is required it would not be sufficient at all for the Minister just to write looking for books and information. We might greatly regret removing a weapon like this from Statutes. Who knows but that the fact that it is there and will now be much easier to use is a deterrent to would-be delinquent directors. It is not heavy baggage to carry. It is a useful weapon to have in our armoury in case it is needed. We are now simplifying the procedure somewhat. I cannot guarantee that it will work either, but I think it is a genuine attempt and we would be very foolish indeed to disarm ourselves of a formal mechanism to have a fully fledged investigation of a company's affairs. There are other remedies. One can wrap up a company or seek information from the Minister but if we were to take this out of our legislation we would be taking out a formal mechanism of laying out all the information about a company's affairs, and we might regret not having that in our legislation in the future. It is not great baggage to carry and therefore we should hang on to it.

The idea of an official investigator seems like a neat idea, but it is not something that is on the political agenda at the moment in regard to this Bill because we are not in the business at the moment of building additional empires within the State service. This is a better solution because it leaves it very much to the market, to companies, to take on each other with the court acting as referee. I appeal to Deputy Bruton to reconsider his view on this section. It is a weapon we would be foolish to throw away because it might now be used more sensibly. Given the legal difficulties I referred to in this area, Deputy McDowell is right about the other options in this area.

Mr. G. Mitchell

I have just one point on the section. If I wanted to undermine an individual for whatever purpose and had the power that is open to an individual under this Act it would probably be defamatory to go through the formula of becoming a creditor and applying for an investigation of that individual's affairs; a company cannot be defamed but can be undermined, and if I wanted to undermine a limited company I could meet the various requirements in this Bill by becoming a creditor of that company and then applying to the court for an investigation of the company's affairs with the view in mind of putting the word around that I was having this company investigated, or that the company was being investigated because a creditor had sought such an investigation from the courts, or that there was likely to be an investigation. This is a very wide power to give to the creditor. Even the right to apply to the court is a wide power in these circumstances. This section, as wide as it is, could cause difficulties which the Minister has not considered. I would ask the Minister in the House to give consideration to this. If he is not prepared to accept what has been put forward here by Deputy Bruton today, perhaps he would rethink that and come back on Report Stage.

The whole idea of limited liability, the whole idea of incorporation is to allow a new entity to conduct affairs with limited liability. Whereas one cannot defame a limited company, one can undermine it. The idea of limited liability is to encourage trade, to encourage people to take risks, to get involved in enterprise. This is a formula for undermining and there will be people who are very skilled in doing that not just in corporate raids but in determining opposition. I doubt if the Minister has given that the depth of consideration the House might expect and I would ask him to do so.

Mr. McCreevy

Given that we are prepared to accept the Minister's position that this section might be useful in the future, I would like to make a point on the section. I understand that under subsection (1) (a), (b), (c) and (d) a number of people can apply to the court for this inspector to be appointed, including people holding more than 10 per cent of the share capital, creditors etc; but there are thousands of companies with directors that do not hold share capital in the company at all, people such as ex-Members of this House, ex-European Commissioners, ex-Taoisigh and so on. If it were to come to such a director's notice that the company were engaged in criminal activity or that there were things going on that should not be going on, would it not be better that that director would also be entitled to look for an investigation? Under paragraphs (a), (b), (c) and (d) such a director may not qualify. Would the section not be better if these types of directors were included?

Mr. S. Brennan

That is an interesting idea and I will certainly look at it. One slight worry I have about it is the corporate responsibility of the board of directors acting jointly. However, it is an interesting idea.

Mr. McCreevy

For example, it may be that one share would qualify a person as a director of a company but such a person may not be involved in the executive running of the company. Such a person may be there for his goodwill or expertise in certain areas. It is more likely that executive directors will go to the court and say that it has come to their attention that things were being run very badly at the company and request the court to appoint an inspector. The Minister should consider adding that category on Report Stage. Those type of upright individuals would, if anything came to their attention, want to bring the matter to the public attention and seek to have an inspector appointed. We should consider including them if they are not referred to elsewhere in the Bill.

Mr. S. Brennan

That is an interesting idea and I will see if I can find a formula for it. However, I have the residual worry about splitting up the directors but I will give the matter some thought between now and Report Stage. I should like to thank the Deputy for raising the matter. Deputy Mitchell's point is shared by many people in industry. I am referring to the notion that if one goes after a company there is somehow an allegation in that move, a fear that one undermines a company if one goes after it. However, if we travelled that road we would not go after any company on the basis that we might undermine it. We have ensured that we can go after a company if we smell a rat but quite an amount of security is required, up to £200,000, by a person making an application.

Mr. J. Bruton

If the investigation can take place.

Mr. S. Brennan

Yes. The point I wish to make is that nobody can lightly or frivolously make such an application. Deputy Bruton's amendment which was moved this morning takes away some of the difficulties in that the minimum figure for such an application is £500. The danger of people frivolously going through this heavy procedure, which I admit it is, to undermine a company in unlikely. It would be a silly thing for any person to do because that person might end up with a lot of egg on his or face. It should be remembered that a creditor of a company who is owed as little as £50 can apply to the High Court for a winding up of the company. Arguably, that is a greater undermining jump than what is envisaged in the Bill. I accept the Deputy's concern but in my view the balance is right.

Mr. J. Bruton

It is not simply a question of getting rid of section 7. If we do that and confine the investigations to those initiated by the Minister under section 8 we will be getting rid of all the necessity about contributions to the cost of the investigation and a lot of the formalities and problems we were discussing earlier. I would also argue that we should retain sections 19 and 20 which give the Minister very wide powers to get information about companies without the necessity of a formal investigation. That would enable him to initiate prosecutions directly. The Minister may go straight to the court with a prosecution or a petition to wind up a company without the need for all this time consuming and expensive investigation. That is why I consider section 7 to be a waste of time.

Mr. S. Brennan

It is optional and not mandatory.

Mr. J. Bruton

I know it is optional but in my view it is a confusion to have it in the Bill. There are ample alternative procedures available.

Tomás Mac Giolla

It upholds the right of the individual.

Mr. McCreevy

Subsection (1) (a) states:

in the case of a company having a share capital, on the application either of not less than 100 members or of a member or members holding not less than one-tenth of the paid up share capital of the company;

I can think of companies whose shareholding is broken down into different categories of shares, A and B shares, founding shares and so on. The control of some companies is held by shareholders with a special category of shares — like in the case of a well known company in this city — and there are other shares for the ordinary public subscriber. There are also debenture holders. What is the definition of a company member? Are we talking about the total share capital and not less than one-tenth of that? Some companies state that the members are those who own particular shares and I should like to know if the section covers them.

Mr. S. Brennan

The section is clear enough. It refers to not less than one-tenth of the paid up share capital of the company.

Mr. McCreevy

Ordinary share capital?

Mr. S. Brennan

No, the paid up share capital.

Mr. J. Mitchell

Does that include preference shares?

Mr. S. Brennan

Yes, because it does not say ordinary share capital but refers to the paid up share capital. Preference shares are part of the paid up share capital of a company and to that extent they are included in the calculation.

Mr. McCreevy

And there is no reason to worry about the debenture holder because that person has separate rights?

Mr. S. Brennan

That is correct.

Question put.

The Committee divided: Tá, 93; Níl, 43.

Tá

• Abbott, Henry.
• Ahern, Bertie.
• Ahern, Dermot.
• Ahern, Michael.
• Andrews, David.
• Aylward, Liam.
• Barrett, Michael.
• Bell, Michael.
• Brady, Gerard.
• Brady, Vincent.
• Brennan, Matthew.
• Brennan, Séamus.
• Browne, John.
• Burke, Ray.
• Byrne, Hugh.
• Calleary, Seán.
• Colley, Anne.
• Conaghan, Hugh.
• Connolly, Ger.
• Coughlan, Mary T.
• Cowen, Brian.
• Daly, Brendan.
• Kavanagh, Liam.
• Kemmy, Jim.
• Kirk, Séamus.
• Kitt, Michael P.
• Kitt, Tom.
• Lawlor, Liam.
• Leonard, Jimmy.
• Leyden, Terry.
• Lynch, Michael.
• Lyons, Denis.
• McCartan, Pat.
• McCreevy, Charlie.
• McDowell, Michael.
• Mac Giolla, Tomás.
• MacSharry, Ray.
• Mooney, Mary.
• Morley, P.J.
• Moynihan, Donal.
• Nolan, M.J.
• Noonan, Michael J. (Limerick West).
• O'Dea, William Gerard.
• O'Donoghue, John.
• O'Hanlon, Rory.
• O'Keeffe, Batt.
• Davern, Noel.
• Dempsey, Noel.
• Dennehy, John.
• De Rossa, Proinsias.
• Desmond, Barry.
• de Valera, Síle.
• Doherty, Seán.
• Ellis, John.
• Fahey, Frank.
• Fahey, Jackie.
• Fitzgerald, Liam.
• Flood, Chris.
• Flynn, Pádraig.
• Foley, Denis.
• Gallagher, Denis.
• Gallagher, Pat the Cope.
• Geoghegan-Quinn, Máire.
• Harney, Mary.
• Higgins, Michael D.
• Hilliard, Colm Michael.
• Hyland, Liam.
• Jacob, Joe.
• O'Keeffe, Ned.
• O'Kennedy, Michael.
• O'Leary, John.
• O'Rourke, Mary.
• O'Sullivan, Toddy.
• Pattison, Séamus.
• Power, Paddy.
• Quill, Máirín.
• Quinn, Ruairí.
• Reynolds, Albert.
• Roche, Dick.
• Sherlock, Joe.
• Smith, Michael.
• Spring, Dick.
• Stafford, John.
• Stagg, Emmet.
• Swift, Brian.
• Taylor, Mervyn.
• Treacy, Noel.
• Tunney, Jim.
• Wallace, Dan.
• Walsh, Joe.
• Walsh, Seán.
• Woods, Michael.
• Wright, G.V.

Níl

• Barrett, Seán.
• Barry, Peter.
• Begley, Michael.
• Boland, John.
• Boylan, Andrew.
• Bruton, John.
• Bruton, Richard.
• Burke, Liam.
• Carey, Donal.
• Connaughton, Paul.
• Cooney, Patrick Mark.
• Cosgrave, Michael Joe.
• Creed, Donal.
• Crotty, Kieran.
• Crowley, Frank.
• Deasy, Austin.
• Deenihan, Jimmy.
• Doyle, Avril.
• Dukes, Alan.
• Durkan, Bernard.
• Enright, Thomas.
• Farrelly, John V.
• FitzGerald, Garret.
• Flaherty, Mary.
• Flanagan, Charles.
• Griffin, Brendan.
• Hegarty, Paddy.
• Higgins, Jim.
• Hussey, Gemma.
• Kelly, John.
• Kenny, Enda.
• Lowry, Michael.
• McGahon, Brendan.
• McGinley, Dinny.
• Mitchell, Gay.
• Naughten, Liam.
• Nealon, Ted.
• Noonan, Michael (Limerick East).
• O'Brien, Fergus.
• O'Keeffe, Jim.
• Shatter, Alan.
• Taylor-Quinn, Madeleine.
• Yates, Ivan.

Tellers: Tá, Deputies V. Brady and Browne; Níl, Deputies J. Higgins and Boylan.

Question declared carried.

SECTION 8.

Question proposed: "That section 8 stand part of the Bill."

Mr. J. Bruton

I query the need for the inclusion of subsection (1) (c) in section 8. The undertaking of an investigation is very expensive and it seems very spurious to launch an investigation simply because the members of a company have not been given all the information relating to the affairs of the company they might reasonably expect to receive. I would have thought it should have been possible to come up with a more simple and quick method to ensure that the member of a company get the information they require on the way in which the company is being run without the Minister having to take the initiative of launching an investigation under section 8. If it is deemed that the provision in regard to information being given to the members of the company relating to the affairs of the company which they might reasonably expect to receive is considered to be a necessary ground for the carrying out of an investigation, which I question, it would appear that that should be one of the criteria under which an investigation might be sought under section 7, subsection (1) (b), by one-fifth of the members rather than there being a requirement on the members to go to the Minister to initiate an investigation. I believe that he should not use this procedure but I can certainly see justification for the Minister to launch an investigation on the grounds of fraud, misfeasance or other misconduct. It would be proper that the Minister would carry out an investigation on those grounds but I do not see any need for the inclusion of subsection (1) (c). I believe that if it is needed it should be included in section 7.

Mr. McCreevy

Section 8 is fairly close to being an exact replica of section 166 of the Companies Act, 1963. Section 6 of this Bill is going to repeal all of the provisions contained in section 165 to 173, inclusive, of the Principal Act. While I do not have section 166 of the Companies Act, 1963 in front of me I think section 8 is more or less ad idem with that section except in one respect. Subsection (2) (a) of section 8 states:

The power conferred by subsection (1) shall be exercisable with respect to a body corporate notwithstanding that it is in course of being voluntarily wound up.

If in the course of a company being voluntarily wound up some malpractice comes to light I do not think the Minister has the power under section 166 to investigate it. Therefore, that is an important addition.

Mr. J. Bruton

To do what?

Mr. McCreevy

I do not think under the 1963 Act the Minister has the power to appoint these inspectors. Under the 1963 Act, if in the course of a company being voluntarily wound up some malpractice comes to light I do not think the Minister has the power to appoint inspectors. If we are going to have all of these sections perhaps it is good that we have this addition. Would the Minister of State like to comment on this? Perhaps the Minister of State would also tell me if section 8 is more or less at one with section 166 of the 1963 Act before I go any further as the answer to that question is relevant to the points I would like to make?

Mr. J. Bruton

It is a replica of section 166.

Mr. McCreevy

We are changing the emphasis in section 7 so as to give the court the power to appoint these inspectors. Section 7 (2) states that the application shall be supported by such evidence as the court may require. Section 8 gives the Minister the power to apply to the court for the appointment of an inspector to investigate the affairs of a company but he must apply under certain criteria and these are listed in paragraphs (a), (b) and (c) of section 8 (1). I wonder if it is necessary to replicate the provisions of section 166 of the Act in section 8 considering that these are provided for in section 7 of the Bill. Because section 7 (2) of the Bill states that the application shall be supported by such evidence as the court may require, is it not superfluous to give the Minister these powers under section 8? I would only give the Minister power under section 8 to appoint inspectors under the new Act and include a provision about voluntary winding-up.

If the Minister wishes to appoint an inspector under section 8 there are certain grounds on which he will have to base his application to the court. The hardest point he will have to prove is, as provided for in section 8 (1) (a), the intent to defraud. This is very difficult to prove in a court. Section 8 (1) (a) states "... that its affairs are being or have been conducted with intent to defraud its creditors or the creditors of any other person ...". I am not a lawyer but this is an extremely difficult point to prove. I know it does not limit the Minister's powers in this regard because he has powers under the other subsections to make application but I wonder if most of section 8 is superfluous given the powers available in section 7. However, because this is a replica of section 166 of the Act perhaps it is necessary to have this provision in this Bill.

Mr. S. Brennan

Paragraph (a) is a new provision which makes it clear that the court's powers under section 166 (2) of the 1963 Act may be exercised even where the body concerned is in voluntary liquidation, which I think is the point made by Deputy McCreevy. The reason for allowing investigations in these cases lies in the grounds listed in subsection (1) on which the Minister can apply to the courts for an investigation which, as the Deputy said, have to do with suggestions of fraud, oppression, etc. in a company. In cases which are regarded as serious the Deputy will appreciate that it is considered that the Minister should have the right to apply to the court to have the company investigated in the public interest as well as in the interests of creditors, members and so on, even if the company is being wound up. Giving the Minister such a power should help to counteract any inclination by a company to wind up in order to prevent an investigation taking place which, of course, would be a temptation for a company at any stage. I do not think it is necessary to extend the powers still further to cases of court winding-ups since I think it is accepted that one of the functions of the official liquidator in such cases is to investigate the affairs of the company so as to ensure that no fraud has occurred prior to a winding-up.

Deputy Bruton referred to paragraph (c) which, as I think he is aware, corresponds to section 166 (b) (iii) of the 1963 Act. This paragraph provides that the court may authorise an investigation where the members of the company have been denied certain material information about the affairs of the company. Examples of this might be, say, the improper placing of contracts to the detriment of a company or the diversion of some of the company's business to another company privately owned by the director of the last company. Those are examples of two cases in which members might claim they have not been given all the information.

I am not sure if I understand the Deputy's remarks in relation to paragraph (c) when he suggested that this provision might not be appropriate in this section. Was Deputy Bruton suggesting that this was a useful ground to have when members might feel they had not been given all the information but perhaps it should be in section 7 where they could use the provision themselves instead of having to go through the Minister?

Mr. J. Bruton

Yes, that is one point I made.

Mr. S. Brennan

I will take a look at that point. The Deputy will, of course, recall that if they use the provision in section 7 they will be in the £200,000 area because they are using that procedure, whereas if they use the provisions under section 8 they can initiate the proceedings through the Minister. I will certainly think about that point but I would want to include a provision in the Bill where if a view is taken that members are not given all the information, they might have recourse to the procedure in section 8.

Mr. J. Bruton

The Minister made a persuasive point when he said that by moving the reference in section 8 (1) (a) to section 7 this would involve people in the costs of security and so on. My basic argument is that it would be better if methods of getting this information which did not involve this formalised court order procedure could be provided because of the costs which are inherent in that. I wonder if the Minister could possibly deal with the matter contained in paragraph (c) by the use of the powers he has under section 19 of the Bill, which is the section dealing with the production of documents and obtaining information. That is probably an easier way of dealing with this matter and obviously if he does not get any assistance from a company in providing the documents he has power under section 20 to enter the premises to get that information. That might be an easier way for an oppressed minority to get information which they could not get. If they got the Minister's help he could use his powers under section 19 rather than those under section 8 which involve the very formal establishment of an inquiry, something which has not happened for the past 25 or 30 years.

Mr. S. Brennan

I understand the Deputy's line of thinking in the use of section 19 but I might have difficulties with this because section 19 enables the Minister to require the production of documents and what is involved in the Deputy's suggestion is that the Minister would get the information which the members are unable to get and obviously he would pass it on to them. This might place the Minister in a very difficult position as a "getter" and "passer on" of information to members. If one wanted to go that road one would need to build some procedures into the Bill because the Minister could not run around handing over information to members just because some members wrote to him asking for the information. It may be confidential information and it may not be wise for the Minister to pass it on. It may be better for the members to use a court procedure so as to ensure they are entitled to the information. It has a superficial attractiveness—let the Minister get all the information and pass it on to the members — but I would not be in a position to do any more than look at the proposal.

Mr. J. Bruton

I am worried that this provision in the Bill will be so cumbersome that it will not be used, as has been the practice.

Mr. McDowell

What harm if it is not used.

Mr. J. Bruton

It does not do any good for this House to pass legislation which it knows is not going to be used and is simply put in for symbolic value. Unless we get an administratively efficient method of getting this sort of information we might as well not bother dealing with this aspect of the Bill at all. If the case is that this power should exist, perhaps the answer would be to extend the provisions in section 20 where a court is involved, and in this case the District Court, so that under section 19 the Minister could seek information for members of a company but if that information is not provided he could apply to the District Justice in the same way as is provided for in section 20. This would be a relatively speedy way of getting the information: the District Justice would say yes or no and that would be the end of the matter. In this way one would not have to go to court, which presumably would be the Circuit Court——

Mr. McDowell

The High Court.

Mr. J. Bruton

If they had to go to the High Court they would be into bigger bucks immediately. You would not even get the information at that point. An official investigator would have to be appointed who would present a report. I would urge the Minister to look at sections 19 and 20 as a method of dealing with this. By all means leave paragraph (c) in this section, but try to deal with the problem addressed by paragraph (c) in another way as well. We should try to deal with the issue in sections 19 and 20.

Mr. McCreevy

The Minister has powers to require a company to furnish him with certain information, books documents etc. Presumably he would only use section 8 if the information he received was not satisfactory and he would then apply to the court for an appointment of an inspector. I doubt that we will see the Minister for Industry and Commerce applying to the courts for the appointment of inspectors. He has other powers in the Bill which will enable him to form an opinion. I suppose it is better to have this provision included. A further point to note is that under section 7 (3), the court may also require the Minister for Industry and Commerce to put forward security of an amount not exceeding £200,000. Section 7 (3) states:

Where an application is made under this section or section 8, the court may require the applicant or applicants to give security, to an amount not exceeding £200,000, for payment of the costs of the investigation.

The reference to section 8 is superfluous.

Mr. McDowell

It should be taken out.

Mr. McCreevy

If the Minister applies under section 8, he is the same as an ordinary individual going before the court. Under section 13, the costs of the court investigation are borne by the Minister for Justice.

Mr. McDowell

I would say it is a remnant of something else.

Mr. J. Bruton

I think it is a good principle. I do not think Ministers should be exempt.

Mr. McDowell

It looks as if the applicant may be insolvent. If the Minister is saying that the State is in such a parlous situation, it is a bit of an insult.

Mr. McCreevy

Perhaps at Report Stage it could be left out. It is ridiculous to include it.

Mr. S. Brennan

Our objective is that the Minister should have the same hoops to go through as an ordinary applicant. Security is not necessarily money. Arguably a court will take a letter from a Minister or a commitment from a Department. I do not think we need to alter this subsection.

Mr. McCreevy

The Minister for Industry and Commerce may decide to apply under section 7 to have an inspector appointed by the High Court. Under subsection (3) of section 7 he may be asked by the court to provide security in an amount not exceeding £200,000. It appears to be an error in drafting. The court would have to take section 7 into consideration. Perhaps there is some reason for leaving in this wording. I bow to superior wisdom.

Mr. J. Bruton

That is most uncharacteristic.

Mr. McCreevy

At the end of the day the costs are borne by the Minister for Justice under section 13, no matter who applies to have the inspector appointed.

Mr. McDowell

There could be a Coalition Government.

Mr. McCreevy

Each Department of State has its own budget and they would be fighting with each other. The court might decide not to deal with one Department because they considered it insolvent but they might take the bond of the Minister for Industry and Commerce because his Department was considered to be solvent. This is a matter which should be examined on Report Stage.

Mr. S. Brennan

We will take a look at it.

Question put and agreed to.

SECTION 9.

Question proposed: "That section 9 stand part of the Bill."

Mr. J. Bruton

At what point would this happen? Does a related company mean a wholly-owned subsidiary or a company which is the whole owner of the company being investigated? Could the Minister give an indication of the likely scope of this section and how this extension would be triggered and whether further authorisation would be required?

Mr. S. Brennan

This section effectively re-enacts section 167 of the 1963 Act, with one substantive change, that is, the substitution of the word, "court" for the word "Minister". This amendment is consequential on the changes being introduced in sections 7 and 8, under which inspectors will now be appointed by the court and not by the Minister as heretofore. The section now provides that where an inspector considers it necessary, for the purpose of his investigation into a company, to investigate a subsidiary or a holding company he will need the approval of the court to do so and not of the Minister as previously. It is clearly vital for an inspector to be able to extend his investigation into other companies which might not have been mentioned in his original terms of reference and to be able to follow up any trails which may emerge during the investigation. Behind a simple looking company group structure, a veritable labyrinth of further group companies can exist whose association with the group may be cloaked by nominee holdings and so on. Section 9 is designed to enable the inspector to follow that trail.

Mr. McCreevy

I agree with the Minister as to the importance of section 9. It would be ridiculous to appoint an inspector to investigate the affairs of one company when he might discover a whole series of other companies existing behind it. I remember being manager of an audit in this city and we spent six months putting together the number of companies which had been created over the years, some of which were dormant. Section 9 contains an important provision. Since the passing of the 1963 Act, company affairs have become more complex. Most big companies have a myriad of subsidiary companies and if an inspector had to get the approval of the court to investigate each of them, he would spend a lot of time going in and out of court, even though it might be only a matter of form. When the 1963 Act was passed, matters relating to companies were not as complex as they are now. I wonder if we could make some improvement so that the inspector will not have to go back and forward to court looking for approval.

Mr. McDowell

He could get it in advance.

Mr. McCreevy

Yes, that is what I am saying. Matters are much more complex now than they were at the time of the passing of the 1963 Act. At that time there was very little growth in the industrial economy and there were only a few large companies in the State. There were very few public or private companies. As Deputy McDowell has suggested, would it be possible to give prior approval? What would happen if an investigator who is appointed to investigate a company found subsidiary companies incorporated in other States such as Saudi Arabia or Libya? Would he extend the investigation to that country?

Mr. J. Bruton

Section 17 deals with that.

Mr. McCreevy

This problem also arises with offshore holding companies. I know the intention of the section is good but I wonder how would the investigator get his hands on companies held in trust in, for example, the Cayman Islands or some such place. He would not be able to exercise his powers outside this jurisdiction. If people go to the trouble of setting up companies with the intention of defrauding, they will cover their tracks in such a way that nobody will find out about them.

Mr. S. Brennan

In regard to the point about going back to court, that is just a check on the inspector. He will go back to court to get permission to investigate a subsidiary or a holding company. I would not envisage a major court hearing in that regard but rather a reasonably short quick procedure. The alternative might be difficult. If we did not make it necessary for the inspector to go back to court to get permission to investigate other companies in the group we would be giving him a blank cheque to inspect every company that might or might not be involved.

Mr. J. Bruton

He is confined to subsidiaries.

Mr. McCreevy

From my experience every time someone has to go to court and engage a person of the calibre of Deputy McDowell it is a "monkey" a throw at least or maybe £1,000 a throw. The cost would be very high.

Mr. McDowell

The Deputy underestimates me.

Mr. McCreevy

He might only have to say: "I apply, my Lord" and he would then send out a bill for £500 to the unfortunate liquidator.

Mr. S. Brennan

On the point of foreign ownership, as Deputy Bruton rightly said section 17 covers this matter. The whole question of a company which is incorporated outside the State is a very broad one. We will deal with that matter on section 17. Basically we are trying to catch any company incorporated outside the State who are carrying on business in the State. Perhaps we should postpone the debate on that until we come to section 17.

Mr. J. Bruton

Deputy McCreevy has raised a valid point. A common theme in this debate has been the fact that this procedure has not been used because it is so expensive. Anything that renders the investigation procedure less expensive is likely to make it more useful in practice. The Minister expressed a fear that to take out the words "with the approval of the court" from the section, which is what would be involved, would be to give too wide a power to the investigator. It is fair to say that section 155, which has been drawn to my attention by Deputy McDowell, which defines what is a subsidiary and what is a holding company is fairly precise. It states that a company shall be deemed to be the subsidiary of another company if, but only if, that other company is a member of it and controls the composition of its board of directors or holds more than half the nominal value of its equity share capital or holds more than half, in nominal value, of its shares, carrying voting rights. In practice the investigator could only investigate a company which fulfilled one of those three requirements. Therefore I do not think he would be holding a blank cheque. He would not be able to go beyond the precise terms laid down in section 155 of the Principal Act.

Perhaps the Minister may be wrong in his worries. Maybe he could look at that provision again to see if the words "with the approval of the court" could be removed from the section, in deference to the point made by Deputy McCreevy. If that does not satisfy the case perhaps he might look at the procedure I am suggesting in amendment No. 20 which provides for the court to lay down terms of reference of inspectors. What I am saying is that the terms of reference shall be such as to enable the court to complete its investigations as quickly and as inexpensively as possible. Perhaps one could add to that the words "and to give such authority to the inspector in regard to the investigation of related companies in advance as is necessary for the expeditious completion of the investigation" or some such phraseology. That might solve the problem.

Mr. McDowell

I wish to clarify the matter in case Deputy Bruton and Deputy McCreevy are worried about it. What would probably happen is that an inspector would be appointed by a court. In 99 cases out of 100 he would say there are subsidiaries and whoever is making the application, either he or his solicitor, would tell the court that he is applying for authority to investigate them. The court would then give permission by way of an ancillary order. There would not be huge expense involved. An inspector would say that he needs all these powers and he would be given them. When liquidators are appointed they frequently get extra powers on the day on their appointment. It does not mean a lot of money to barristers.

Mr. J. Bruton

At the initiation of an investigation would the applicant or the Minister know the identity of all the subsidiaries?

Mr. McDowell

He might not.

Mr. J. Bruton

Would he need to get specific authority in respect of named subsidiaries or would he be able to get a general authority which would cover all known and unknown subsidiaries?

Mr. McCreevy

I can understand the purpose of the section and I can see both sides of the argument. On the one hand, the investigator must get the approval of the court because otherwise he could investigate all kinds of things that relate to a company. On the other hand, there is the cost factor and the loss of time involved. Would it not be possible to leave out the words "with the approval of the court" so that the section would then read "he shall have power to do so"? Why not insert a subsection later to the effect that any aggrieved person or company could apply to the court to prove why he should not go into a particular subsidiary. In other words, give an inspector wider powers, with the proviso that a person objecting to his investigating a further subsidiary, holding company or whatever, could apply to the court. That would be approaching the problem from another direction. These provisions merely constitute a replica of section 167 of the Principal Act of 1963. That Act was passed 25 years ago and many things have changed in the interim. Why not give him wider-ranging powers but with a proviso within the Bill that a company that would not want him to investigate would be protected, so that a person, company or whoever could say that he must have the approval of the court to do so? Such approval would obtain unless someone objected and then the court would have to decide the issue. It might be a speedier way of doing so. It is looking at the problem from a different perspective.

Mr. S. Brennan

All we are endeavouring to do here is ensure that an inspector gets clearance from the court if he is going into a company other than the one he has been appointed to inspect. As Deputy McDowell said, in most cases, such an inspector will have a full list of subsidiaries when the question of his appointment first arises; he will know the subsidiaries. But, in the event of his coming across one later of which he was not aware at the beginning, then we are giving him the facility to go back into court. I would envisage that being a very quick procedure, not by any means a full court hearing. That is necessary because we are talking here about a very formal, high-powered investigation into a company's affairs, not a quick collation of information. Because we are talking about that quick formal investigation of a company's affairs, we should not lightly allow an inspector jump into a subsidiary.

Mr. McCreevy

I agree.

Mr. S. Brennan

That could happen if we did not insert these few words for the court. For example, a subsidiary may be totally at arms length other than the shareholding, and there are subsidiaries and subsidiaries. A subsidiary may be totally at arms length and, if it is, an inspector could run in there without having to check with the court. The sheer fact that an inspector does that could cause havoc in that company whereas, had it been done in a somewhat calmer fashion, the court procedure having been gone through quickly, it would have been better. Of course we are also talking about the costs involved in this whole area. The circumstances should not arise that frequently because more inspectors being appointed, as Deputy McDowell rightly said, will also seek appointment to the subsidiaries. I understand that is what happens in the case of receiverships and liquidations generally and I imagine is what will happen here.

As I said a moment ago, such an inspector will know most of the names. Almost certainly he will check what is publicly available before the first appointment which will not happen at ten minutes notice. Therefore, he can check what is publicly available, have a list of subsidiaries and the holding company. Subsequently if one turns up about which he did not know then it would be legitimate to dash back to the court and seek approval. The alternative would be to allow him go in without that approval or agreement; it may be a perfectly innocent company and may not warrant that sudden decision on the part of an inspector. We should remember that we complained earlier that this procedure would not be resorted to anyway. I would agree that it will be used lightly——

Mr. J. Bruton

Infrequently.

Mr. S. Brennan

Therefore, we are not talking about clogging up the courts. We are worrying here about inspectors dashing in and out of courts every five minutes getting all this additional information. We have already agreed between us that it is a heavy formal procedure — a full dress rehearsal as we described it earlier. It is most unlikely that this small matter of going back to court will make a major difference, particularly when an inspector will almost certainly have received authorisation on day one.

Mr. McCreevy

I asked a long time ago what type of person it is generally envisaged will be appointed an inspector?

Mr. S. Brennan

Obviously that is a matter for the court. My view would be that one is talking about private sector accountants, lawyers, consultants, various professional people that would be available, in the same mould as receivers and liquidators.

Mr. McCreevy

The reason I raised this point on other sections was——

Mr. S. Brennan

I should tell the Deputy that I cannot give any names.

Mr. McCreevy

Under the provisions of the Principal Act of 1963 relating to the appointment of inspectors, which was the responsibility of the Minister for Industry and Commerce, it was assumed that the Minister would appoint a person, probably from within his Department, to investigate such matters. In the case of liquidations it is a totally different matter because usually a creditor asks that somebody be appointed, or it is agreed beforehand by the banks, as the case may be. This is a totally different matter. I can envisage a High Court judge sitting there saying: "I will appoint an inspector, who do I know? I know Deputy McDowell, perhaps I will appoint him, or Deputy McCreevy", as the case may be. For example, will there be a panel of qualified people to act as inspectors. Who will decide who should be eligible because I do not think a High Court judge would want a job of appointing an individual person. It is different when a Minister is appointing an inspector because he will have a panel of names available to him and will decide that in the case of, say, company X, Mr. Y should carry out this investigation. I want to ascertain how that will operate in practice.

Mr. S. Brennan

I do not see this as a problem because it is already covered in the case of receiverships and liquidations. There is never a difficulty experienced at court level when a court appoints a receiver, liquidator or indeed an administrator for that matter. There is never any great difficulty in finding suitable people to undertake the task. In fact quite the contrary is the case, there is quite a queue of people known to the court to be available — accountants, lawyers, consultants, various professional people — who are available for such posts. The courts do not experience any difficulty in the case of receiverships or liquidations. I do not see why they should experience any difficulty in this area either.

Mr. McCreevy

No, this will be a different investigation altogether. I do not agree at all. For example, in the case of a receivership, the bank will be putting in someone on behalf of some creditor, debenture holder or whoever, who will usually have a person in mind he will recommend to the court. If it is an application for liquidation the petitioning creditor usually states in his application who will be appointed liquidator. This is a totally different matter. I do not forsee that any of those people will have a specific person in mind, nor is there any provision in these sections that they will name them in their applications unless there is recourse to the superior court rules to cover this. The Minister is correct in saying that even in the case of voluntary liquidations, there will be queues of people fighting outside as to who will be appointed liquidator but I do not foresee the same thing happening in this instance.

Mr. S. Brennan

The applicant probably will put forward a name but that is not suitable for inclusion in legislation. My view would be that an applicant would put forward a name.

Question put and agreed to.

SECTION 10.

Mr. McDowell

I move amendment No. 7:

In page 14, lines 48 to 51, to delete subsection (4), and substitute the following:

"(4) An inspector may examine on oath, either by word of mouth or on written interrogatories the officers and agents of the company or other body corporate and such person as is mentioned in subsection (2) in relation to its affairs and may—

(a) administer an oath accordingly.

(b) reduce the answers of such person to writing and require him to sign them.".

Perhaps amendments Nos. 7 and 8 could be discussed together because they both relate to the same issue.

These amendments propose, first, to give an inspector the right to give written questions to an officer or agent of a company he is entitled to examine and to require the officer or agent to sign the statement. This is not something that has been thought up off the top of our heads. The reason it is proposed is that very frequently it is important to have a written agreed version of what a person actually said to an inspector for clarity afterwards, so that the inspector would be entitled to oblige the person to sign a transcript of his examination.

The second point I would put to the Minister is that it is reasonable to make answers given to an inspector non-admissible against a person, especially when section 105 of this Bill replicating section 245 of the 1963 Act makes similar answers given in the course of a winding up investigation by the court non-admissible, and also in the light of the provisions of section 19 (6) which come into play. It is reasonable in those circumstances to grant immunity to somebody who is examined on oath by an inspector where the court carrying out its own investigation under a similar and parallel procedure would have to grant such immunity. I would ask the Minister to look at those two sections and see whether or not there is merit in Deputy Cullen's amendment.

An Ceann Comhairle

We are moving on now to other business.

Mr. S. Brennan

Just before we do that, can I clear up something? I an anxious not to take those two amendments together. The impression may have been given that I agreed to that.

An Ceann Comhairle

I was anxious to have that matter clarified, and that is why I was intervening.

Mr. McDowell

I was trying to get them dealt with before 7 o'clock.

An Ceann Comhairle

We shall proceed then to deal with amendment No. 7 separately. Will Deputy McDowell report progress?

Progress reported; Committee to sit again.