Amendment No. 1 is in the name of Deputy Dick Spring. Amendment No. 16, also in the name of the Deputy, is consequential and I suggest we take Nos. 1 and 16 together by agreement. Is that satisfactory?
Companies (Amendment) Bill, 1990: Committee Stage.
SECTION 1.
Yes. I move amendment No. 1:
In page 3, between lines 10 and 11, to insert the following definition:
"‘collective redundancies' has the meaning assigned to it by section 6 of the Protection of Employment Act, 1977;".
Could we have a full list of the amendments?
As you will observe, Sir, the section we are dealing with is a definition section of this Bill and as it stands the Bill defines only the creditors and shareholders of a company as "interested parties" who are entitled to appear at court hearings. The amendment I am proposing includes representatives of the employees in that company in the definition. The definition of "employees' representatives" is based on that contained in the Protection of Employment Act, 1977, and I will be submitting to the Minister for Industry and Commerce that it would be far more appropriate to include that wider definition rather than the definition in the Bill as it stands. The amendment also provides that the definition of "collective redundancies" set out in the 1977 Act shall apply to this Bill. The minimum number of redundancies required by the definition varies with the size of the workforce. In an establishment normally employing 21 to 49 employees collective redundancies take place where at least five are dismissed within 30 days, at least ten in an establishment employing 50 to 99, at least 10 per cent in an establishment employing 100 to 299 and at least 30 persons where 300 or more persons are employed. I say to the Minister in relation to the first amendment that it would be far wiser and far more in keeping with the trends in relation to the Protection of Employment Act, 1977, that we allow the wider protection to be given in the course of the passage of this Bill. I will find it very hard to understand any objections put forward by the Minister or any argument to support any objections, because the Protection of Employment Act, 1977, has served us well and is now well established. I believe we should try to stick to the present situation and that is what I will be asking in this case.
Perhaps the Deputy would consider speaking to his amendment No. 16 also at this stage.
On amendment No. 16 in relation to section 16 of the Bill, I am proposing that we should insert five additional paragraphs into the section as follows:
(a) For the purposes of the Protection of Employment Act, 1977, the examiner of a company shall be deemed to be the employer of the employees of that company.
(b) Collective redundancies shall not be effected in respect of a company under the protection of the court other than by the examiner and with the leave of the court.
(c) The employees' representatives shall be entitled to be heard by the court on any application under paragraph (b) for the creation of collective redundancies.
(d) The appointment of an examiner to a company shall constitute a transfer of the undertaking of that company for the purposes of the European Communities (Safeguarding of Employees' Rights on Transfer of Undertakings) Regulations, 1980, and the provisions of those Regulations shall apply to such appointment accordingly.
One of the very crucial aspects of this legislation which has not been dealt with in any detail on Second Stage is the matters which the examiner must report upon when he goes before the court. I believe it is extremely important, given the background to the problems in particularly the beef sector, that the examiner should state whether information or circumstances have come to his attention in the course of the performance of his functions under the Bill from which it appears to him that any past or present officer or any member of a company may be guilty of an offence in relation to the company for which the person will be criminally liable. This assimilates an examiner to the position of a liquidator who would be obliged to report to the Director of Public Prosecutions in similar circumstances. Secondly, he must report whether in his opinion the whole or any part of the undertaking of the company will be more likely to survive if any or all the directors or other officers of the company are removed from office or any member of the company is required to dispose of his shares. Thirdly, he must report whether in his opinion proper books of account have been kept by the company and have been made available to him for his inspection and whether he has by act or omission been obstructed or hindered in the performance of his functions under the Bill by any officer or member of the company. Fourthly, he must report whether it appears to him that any transaction was entered into by the company during a period in which they were unlikely to be able to pay their debts as they fell due for payment in circumstances which were prejudicial to the interest of creditors of the company. Finally, it is very important that the examiner also report on the steps, if any, taken by him in the discharge of the duties imposed on him by the Protection of Employment Act, 1977. Perhaps the most important aspect of this legislation, given the role and the absolute powers the examiner is going to have, is that we should consider ensuring that the examiner has detailed wide powers and is able to examine and investigate the matters which are referred to in this amendment.
It appears Deputy Spring must have made an error. He was supposed to be dealing with amendment No. 16 but he was dealing with amendment No. 22 to section 16 in what he read out, from what I can understand.
I am sorry. I have dealt, Sir, with amendment No. 1 to section 1 and you invited me to deal with amendment No. 16.
In relation to section 9.
It was my error and I regret that. Amendment No. 16 relates to section 9 and deals with a company's position under the Protection of Employment Act, 1977. We are imposing procedural obligations on employers who propose to create collective redundancies. The purpose of the 1977 Act is to ensure that where an employer dismisses a number of employees within a specified period he must consult with the employees' representatives and notify the relevant State authorities of the impending redundancies. The amendment provides that in relation to a company under the protection of the court the examiner shall be deemed to be the employer of the company's employees for the purposes of the 1977 Act and that collective redundancies can be created only with the leave of the court after the employees' representatives have been heard on the question.
In relation to the amendment, it is extremely important that employees have their rights protected. In the past when liquidators and receivers were appointed to companies, employees were treated harshly and had little by way of recourse to the decision-making that took place. They would have little recourse to the decision making of an examiner carrying out his function. It is important to give them every possible protection and bring this into line with the 1977 Act.
I find it impossible to accept these amendments. I do not think they are necessary or in the interests of the employee. It would alter the status of the employees from being employees of the company, which is a continuing company, and bring their employment by the company to an end and then start up a new employment with the examiner. Under the terms of the Bill the longest period they could be employed for by the examiner is four months whereas they might have had ten or 20 years service with the company. It would be very much to their advantage to remain employees of the company.
There is not really an analogy in this instance between a company in respect of which an examiner is appointed and a company to which a receiver or liquidator is appointed because the company, to all intents and purposes, comes to an end when they go into receivership or liquidation due to insolvency. The whole point of this legislation is to keep the company in existence. There is no point in putting all the obligations proposed in amendment No. 16 onto the examiner. The obligations, in so far as they exist, exist as against the company. The examiner is not there in lieu of the company. He is there to supervise the company and direct them if necessary. Legally the company do not go out of existence. They continue to trade under the examiner's supervision. Therefore, whatever rights exist should, in the employees' interests, continue to exist as against the company and not as against the examiner. As it is not in their interests I cannot accept it. It would put an unnecessary burden on the examiner which would not be of benefit to anyone.
It would appear that the redundancies would have to have the leave of the court. One of the problems with the Bill is that there are too many references to the court in it. The court will be involved in deciding a number of questions and as a result various notices and so on will have to be served which will cause delays. It would be better if it could be dealt with in a package rather than each individually being the subject of a court decision. I am not certain that the interests of employees would be served by having relatively small numbers of redundancies out of a larger workforce being agreed not through the normal process of collective bargaining with unions but after a court hearing. In many cases the survival of a company depends on speedy and flexible decision-making. There is a difficulty with involving the court in an industrial relations matter. Trade unions have been reluctant to see the courts involved in industrial relations. If that is the case, it would be inconsistent to bring the court into this dimension of industrial relations. I can see that it might be better from the point of view of the employees to rely on their representatives. This is all the more reason to encourage workers to be represented by a trade union rather than relying on court proceedings.
I refer to the Minister's reply in relation to the first amendment and to the fact that we are proposing that employees be considered to be interested parties. I am worried that employees have no access to the court. We are trying to widen the scope of the Bill so that employees can gain access to the court. Will the Minister respond to the idea of giving employees, and their representatives, access to the court in the same way as creditors and members of the company have such access?
An employee has access to the court under the main provisions of the Bill, in section 3 (1) (c) where an employee can, if he so chooses, be a petitioner. There are other provisions in the Bill which enable him to be consulted in regard to a proposal that is put up by way of compromise.
Deputy Spring referred to employees as an interested party and I put down an amendment which seeks after line 17 to have them specifically referred to as such but that does not appear to have been included. Perhaps there is a good explanation for that.
The purpose of amendment No. 1 is to seek to have collective redundancies defined and to have assigned to it the meaning provided for in the Protection of Employment Act, 1977. I cannot see any reason the Minister would not take that on board. The purpose of the 1977 Act was to give greater protection to groups of workers confronted by redundancy. It ensures that their representatives would be given at least some notice of impending collective redundancies. I do not agree that that Act has operated very satisfactorily. In fact, it has operated very unsatisfactorily in a great many situations, largely because the penalty applying is completely inadequate. The companies that effected wholesale or collective redundancies have found themselves enabled to do so without observing the provisions of the Act, purely because the penalties applying are minimal.
That does not, however, affect the point that Deputy Spring is seeking to make which relates to the definition to be attached to collective redundancies. If it has done nothing else, the Protection of Employment Act, 1977, has at least assigned a definition, and that definition means that dismissal for redundancy reasons over any period of 30 consecutive days at least, is defined in relation to the number of employees in the particular employment, for example, five persons in an employment normally employing more than 20 or fewer than 50 employees, ten persons in an establishment normally employing at least 50 but fewer than 100 employees, 10 per cent of the employees in an establishment normally employing at least 100 but fewer than 300 employees, and so on. I cannot see why, in this definition area of the Bill, the Minister would not agree to take this on board. It is merely assigning a definition that is well established to the term "collective redundancies".
In regard to amendment No. 16 I might be persuaded by the Minister that it is not desirable that the examiner should be the employer as prescribed in paragraph (a). After that, however, the remaining paragraphs (b), (c) and (d) have a great deal of merit, particularly paragraphs (b) and (c). In a situation where there is a provision that collective redundancies cannot be effected in respect of a particular company under the protection of the court other than by the examiner and with the leave of the court, that is desirable and it is proper that the employees' representatives should be seen to be heard in respect of any such application.
Let me assure Deputy Rabbitte that the amendments to which he referred — Nos. 5, 6 and 26 — will be dealt with on amendment No. 3 which will be coming up shortly.
Thank you.
I would submit to Deputies Spring and Rabbitte that perhaps the problem is dealt with in section 17 (2) (c) where the final proposal is made that any interested party can be heard. That clearly would include employees. Deputy Rabbitte had amendment No. 26 down to make that more explicit by adding "(c) an employee acting solely or through his or her trade union". I would suggest that that probably provides sufficient access to the courts in cases that cannot be settled adequately through collective bargaining without bringing in the courts at an earlier stage.
An employee is, in practice, a creditor of the company even though only for a small amount of money, and therefore he is an interested party as defined in section 1. He, therefore, has, as Deputy Bruton says, a right to be heard under section 17.
Amendment, by leave, withdrawn.
We now come to amendment No. 2 in the names of Deputies Seán Barrett and John Bruton. I observe that amendment No. 9 is related. I, therefore, suggest that we discuss amendments Nos. 2 and 9 together. Is that agreed? Agreed.
I move amendment No. 2:
In page 3, between lines 12 and 13, to insert the following definition:
"‘court' shall have the meaning assigned to it by section 2 of the Principal Act, save that the President of the High Court may, if he deems fit, establish within the High Court a specialised court for dealing with commercial matters;".
Both this morning and during the course of the debate in this special committee I made the point that the many references to the courts in this Bill could lead to high costs and that ultimately fewer small companies would avail of the opportunities afforded by this legislation. The Bill as presented did not, unfortunately, take into account the suggestions that the Circuit Court should deal with these issues. We have decided, therefore, to table this amendment to give the President of the High Court, if he should deem fit, powers to establish, within the High Court, a specialised court for dealing with commercial matters.
There is precedent for having specialised courts. We have family courts which means that marital disputes can be dealt with outside the normal court atmosphere. We should remember that this legislation is about trying to get a consensus among various interested parties, so the less formal the proceedings are the better the opportunity to get that consensus. It is also important that there is consistency as a result of those hearing the cases being au fait with company law language and having an insight into the realities of commercial life and a greater prospect of having the same judge dealing with a case from beginning to end.
I fear that the Bill as presented will lead to different judges hearing the case when an examiner has to go to court. That would be detrimental to the whole procedure. Looking at the affairs of a particular company is a difficult enough process. It would be impossible if different judges dealt with individual hearings. If this is to remain within the High Court, I believe it is in the interests of companies and in the interests of employment and investment here that the President of the High Court would have powers to establish a "company court" or a court dealing with commercial matters.
In his reply to the Second Stage debate, the Minister recognised the point consistently made by Deputy Bruton and me that there is continuous reference to the courts here. Not alone is resorting to the courts expensive, it is time consuming, and in situations like this time is of the essence. I was glad to hear the Minister say he was looking at ways and means of eliminating such frequent mention of the courts and recognised that this could lead to a high level of expense.
In moving this amendment I am asking the Minister to accept the bona fides of our argument and I would ask my colleagues on this side of the House to support our request which I think is a valid one.
I would like to address the amendment in the names of Deputies Barrett and Bruton before moving to amendment No. 9. While they both relate to the courts, they are quite distinct in their direction. I would support the amendment put forward by Deputies Barrett and Bruton, in particular the raison d'être in bringing forward this section of the Companies Bill.
The courts and the examiner are going to find themselves in a huge undertaking, a huge court of inquiry, the likes of which we have never seen in this State. In that respect, and in relation to the already over-burdened situation in our High Court, it would be extremely important that in this instance the President of the High Court would be allowed to assign a specialist judge, indeed to have a specialist court.
We have heard many references today to the weaknesses in our company law and it is being said in defence of this section that it has been referred to many times as an area of major weakness in company law that there is no limbo between difficulties and receivership or liquidation. It is extremely important that we, as quickly as possible, allow a specialist court to be established. As a former practitioner, I say that all judges would have competence in these matters but some would specialise in the area of company law which, as we will discover in the course of the afternoon, is extremely technical and requires specialist knowledge — not just specialist knowledge in an academic sense but also in terms of day-to-day involvement with the practical working of companies.
I support amendment No. 2 and ask the Minister to give it consideration because it has tremendous merit in the context of the difficulties that the courts face on a day-to-day basis and it would be a far more pragmatic way to deal with our business if we were to provide for a specialist court. We will need a specialist court to deal with the scale of the problems that it now looks certain the examiner and the court will have to face in the first referral under this Bill, if it is passed by the House today.
I support the thrust of this amendment. The most compelling argument is the one with regard to expense. The Minister has conceded in his response to the Second Stage debate that, as is the case with Chapter XI in the United States, it is the really big players that will be able to afford to avail of this mechanism. Having regard to the fact that there are very few such companies in this country, we are introducing a mechanism here that will prove too expensive for them to avail of.
I have agonised quite a bit on this point, which I understand Deputy Bruton raised this morning. On the one hand, it seems to be a very sensible and good thing to have a mechanism enshrined in company law which forestalls financial institutions foreclosing on viable companies which have a temporary difficulty. That seems to me to be a very sensible measure and worthy of support. I notice in reading the minutes of the debate of the special committee that the Minister's deputy put forward the argument that this had broad support from the business community. Since this row blew up, I have had representations from a broad cross section of the business community to argue a different point of view, which I would like to hear the Minister address, to the effect that it is not so simple to import a mechanism that is suitable to the American economy into the Irish economy.
In the case of the United States the majority of companies trade within the borders of the United States and raise their loan capital from the domestic market. That is not the case here. The major international trading companies here have to raise their money from the foreign banks. Now that the law has changed, where previously some of those foreign banks were prepared to extend unsecured credit, will they no longer be prepared to do so or will they be a lot more rigid in the terms they will apply? I would like to hear the Minister comment on that in terms of whether it will lead to a tightening of credit, which in turn could have an impact on interest rates and so on.
As somebody who frequently experienced at first hand in the early eighties the receivership phenomenon and liquidation, on balance I think that this is a sensible mechanism to give respite to companies which otherwise might face the prospect of receivership or liquidation, but will the majority of Irish companies be able to afford to avail of it? The thrust of this amendment to cause a special court to be set up would at least allow access to the court and allow the use of this mechanism to be available less expensively to companies who consider they are in need of it.
I would ask the Minister to accept amendment No. 2 on the basis that it is purely a permissive provision. It allows the High Court to set up such a court if the High Court thinks that is sensible. It does not bind the High Court to it. It is a practical amendment designed to give maximum flexibility. In the same vein, I support Deputy Spring's amendment which again allows the High Court a discretion in certain cases to remit a case to the Circuit Court. Given that there is an inherent flexibility in both of these provisions, I hope they can be accepted.
I will speak on amendment No. 9 and I will be very brief. On many occasions in the past, the Minister referred to worries about this aspect, namely, the enormous cost of litigation. It is important in the context of this legislation where facilities are being provided that we should also provide for small companies and businesses. For every large business or industry that get into difficulties, you can be sure there are also small companies getting into difficulties. Small companies whose total liabilities do not exceed £25,000 should not have to incur the enormous expense of facing into an application to the High Court.
The Minister expressed some worries in relation to the long vacations of the Circuit Court but it would be quite practicable, with the co-operation of the Circuit Court, to provide for a facility where the Circuit Court could meet and applications could be made to Circuit Court judges whenever necessary, whether in session or during vacation. I do feel it is necessary when we are providing this new facility in company law that we also consider small companies which are threatened with difficulties but because of liabilities of less than £25,000 could not face the option of going to the High Court. I would urge the Minister to give this consideration, which he seemed to accept in principle this morning.
As I said on Second Stage, I would not normally expect the procedure that is proposed to be established under this Bill when it is enacted to be attractive to very small companies. Amendment No. 9, as drafted, would not be of much use as I do not think they would bother about it, be it in the High Court or the Circuit Court.
In relation to amendment No. 2, we went over much of this ground at the special committee when I undertook to look at the idea of trying to bring in the Circuit Court. We could do this by changing the definition of "court" in the 1963 Act or at least that is what I intended at that time when I assumed, as did the committee, that the whole of the 1987 Bill would be taken together. That is under consideration and it was proposed to put down an amendment on Report Stage to be taken at the end of October when we were satisfied about it but given the speed of events in recent times that has not yet proved possible.
I cannot accept amendment No. 2, even if I were happy about the principle, because one cannot establish a court if a particular judge deems fit. One would have to produce him in court to prove that he deemed fit. A court can only be established by an Act of the Oireachtas and not at the whim of an individual judge. I am a bit loath to have a specialised court or a division of a court because the first thing it would lead to is a demand for more judges and staff, fellows with wigs to walk in front of them and carry their staffs or whatever they do. The thing works quite well in practice because in effect there is a number of judges who are the commercial division of the High Court. At present Mr. Justice Costello plus one or two others deal with all these cases. They are very experienced and very good on these matters. Therefore we have it in practice and we should not set it up separately by statute. Certainly, we could not do it on the basis that the President of the High Court from time to time may deem it fit. That would not be an appropriate way of doing it.
Because I am anxious to bring in the Circuit Court, I would be prepared to accept amendment No. 9 but not on the basis that it is there because I do not think it would be of any value referring as it does to total liabilities of £25,000. That would be an extremely small company. Furthermore, the amendment refers to total liabilities and not net liabilities. There is almost no company in the country who would not have total liabilities of £25,000. Their net liabilities might be a lot less but if we added a nought to the figure and made it £250,000 I would be disposed to accepting amendment No. 9. That would still be a very small company but it would give the Circuit Court some jurisdiction.
Despite what Deputy Spring said there is a difficulty in trying to get things heard in vacation in the Circuit Court. That is why they do not have much jurisdiction when it comes to injunctions and so on which are hardly ever applied for. In the High Court all the judges, for reasons best known to themselves, live in Dublin on the well known basis that if you do not live in Dublin you are not alive. In the Circuit Court, strangely enough, as far as I am aware nearly all the judges live in Dublin too. Very few of them live in their circuits. Given the very long vacations which amount to four and a half months——
Nearly as bad as the Dáil.
——no judge is available in the Circuit Court for much of the time. With that reservation I would be disposed to accepting the amendment even though it may not be as useful as both Deputy Spring and I would wish it to be but I want to make a gesture towards reducing costs and try to decentralise things out of the High Court. I suggest to the Deputy that we do it on the basis of a figure of £250,000. If he is agreeable to amending the figure we could perhaps accept the amendment.
Is amendment No. 9 accepted?
Perhaps we could leave it stand for the moment and come back on Report Stage on the figure. I appreciate that the Minister agrees with the thrust of the amendment and his departmental advisers are closer to the mark in relation to the type and size of companies and their debts and liabilities. Therefore I will accept his advice in that respect. In relation to the difficulty he adverts to in relation to Circuit Court judges perhaps the time has come to make sure that Circuit Court judges are available on their Circuit. The Minister stated, to use his own expression, that if you do not live in Dublin, nothing happens but there should be an obligation on people in those positions to provide a service. We should look at that matter in the context of the Courts Bill.
I have to accept that the Minister's advice is that the wording of the amendment may not be technically correct but this does not get away from the fact that people practising in this area are of the view that this legislation will lead to inconsistency in terms of who is going to hear cases. Let me give one example. Section 7 which deals with powers of an examiner states:
The examiner may apply to the court to determine any question arising in the course of his office, or for the exercise in relation to the company of all or any of the powers which the court may exercise under this Act, upon the application to it of any member, contributory, creditor or director of a company.
One can go back to the court at any given time to seek clarification but there would be no assurance that the judge who heard the case first day would be available to hear technical points relating to a company on a continuous basis. The more intricate the problem the more difficult the matter is going to become for a judge. Delays will also be encountered because as I understand it — I do not profess to have any expert knowledge on the workings of the courts — they will go in to seek a hearing but it may be delayed until the following day or the day after.
I cannot see anything wrong with having a specialised court to deal with issues relating to company law. As I understand it some of the provisions of the Insolvency Act introduced in Britain in 1986 related to the establishment of a company court. Given that the amendments were circulated yesterday I would have thought, if the Minister is of the view that there is some merit in the argument that there could be delays and different judges would hear different aspects of the case, he would have introduced his own amendment to amend the wording he considers defective.
It would not make any difference if we had a special court in this regard. The same judge will hear the case when he is available but he is not going to be available more often in the month of August and if he is on holidays somebody else will have to hear it. It is not unusual to have one net point decided by another judge and it is not necessary to go into the background to the case. One of the advantages of the High Court, as presently constituted, is that all judges have equal jurisdiction, and in vacation one can go to any one of them. If it is some small net point where no detailed knowledge is required, such as to enable an examiner to do something, then any one of the judges can deal with it. In terms of expedition it is probably better to have it as it is rather than to have a special court which is what Deputy Barrett wants. I have already given the reason I think this would not be advisable, that it would lead to demands for staff, premises and so on which simply cannot be provided.
How stands amendment No. 2 in the names of Deputies Barrett and Bruton?
We will need more judges to handle the sort of work that will be placed on judges by this and similar legislation and the Minister's objection to a commercial court being established on the grounds that no extra judges are needed is wrong. However, the particular mechanism we have suggested for establishing such a court may not be the best or the most feasible.
For that mechanical reason we agree not to pursue the amendment at this stage but we may come forward with another amendment on Report Stage to achieve the same result.
Amendment, by leave, withdrawn.
We now come to amendment No. 3 in the name of Deputy Spring. I observe that amendment No. 4 in the name of the same Deputy forms a composite proposal. Amendments Nos. 5, 6, 8 and 26, in the name of Deputy Rabbitte, are related or form alternative amendments and I suggest that we discuss amendments Nos. 3, 4, 5, 6, 8 and 26 together. Is that satisfactory? Agreed.
I move amendment No. 3:
In page 3, between lines 12 and 13, to insert the following definition:
"‘employees representatives' means officials (including shop stewards) of any trade union or staff association to which some or all of the employees of a company belong and with which it has been the practice of the company to conduct collective bargaining negotiations;".
I tabled this amendment because of my concern that there should be access to the courts for employees and, indeed, employees' representatives. It is extremely important, given the difficulties that employees and employees' representatives will face in relation to these applications, that they should be considered as interested parties. These would include applications for the determination of any question arising in the course of the performance by an examiner of his functions or in relation to a company who have already the powers which the court may exercise under the Bill. Even though the Minister said earlier that employees could be considered to be creditors of the company, at the end of the day given the difficulties and the position of employees they should be specifically identified in the legislation so that they can very easily make their applications to the court.
I cannot understand how the Minister might consider this to be onerous or unnecessary because, just as in the definition section we have provided for creditors or members of the company, employees who in many cases will have been involved in the company for many years will be facing extremely uncertain futures and may have little or no assets to rely on. In the case of older employees the chances of re-employment will be very slim. They should be specifically identified in the Bill, as proposed in amendment No. 3.
I take it that amendment No. 3 has been moved and that we are speaking also to amendments Nos. 4, 5, 6, 8 and 26?
That is correct.
On a point of order, is there a reason for not including certain other amendments which seem to be associated with it, Nos. 14, 15, 16, 19, 25 28, 29 and 33? Is there a reason for not including those amendments as well? They seem to be generically similar.
This is the best advice I have in dealing with this matter at this stage. I repeat that we are discussing amendments Nos. 3 — which has been moved — 4, 5, 6, 8 and 26 together. All the amendments, with the exception of amendments Nos. 3 and 4, are in the name of Deputy Rabbitte.
It is unfortunate that we find ourselves, having spent hours and days in the select committee, expected to form a view on the relative merits of any one of these amendments as compared to another more or less on the spur of the moment. Those of us who were members of the select committee know that hours have been devoted — perhaps sometimes tediously — to teasing out the implications of matters such as this. Therefore, I am happy to support the thrust of Deputy Spring's amendment rather than my own. I would be interested to hear whether the Minister thinks one amendment meets the situation better than another.
More important, we are asking the Minister to accept that workers in this situation are interested parties. I know the Minister will say that the definition of "interested party" as it relates to section 2 includes a creditor and that an employee is technically a creditor. While that is technically true an employee is not a creditor in the sense that is envisaged as being the raison d'être of this legislation. It is almost accidental that an employee happens to be co-incidentally a creditor for a very small amount of money. It is necessary to expressly include in the definition section an employee of the company or an employee acting through his or her trade union as an interested party. I can conceive of a number of situations where a trade union might want to exercise the powers conferred by this legislation. They would be distinct and separate from any rights an individual employee may have technically as a creditor.
So far as these six amendments are concerned the issue that is involved in them — and that is clear also from what has been said in regard to them — is the question of trade union recognition. As far as I am concerned this is a companies Bill, it has nothing to do with the recognition or otherwise of trade unions. For that reason I think the amendments are inappropriate. I have already said that so far as employees are concerned they will not just normally but probably it is true to say, invariably, be a creditor. Therefore, the employees are interested parties within the terms of the definition in section 1 and they have to be consulted before any final arrangements are made or agreed by the court. It seems to be perfectly adequate that employees be consulted. It is not necessary to bring trade unions specially into it.
It appears that amendment No. 8 is unnecessary because an employee would not normally be a contingent or prospective creditor, he would, as I said already, almost invariably be an actual creditor. Therefore, the question of giving security for costs on the part of an employee would not arise.
I find it regrettable that the Minister should take a swipe at trade unions in relation to what I consider to be, in mine and Deputy Rabbitte's amendments, constructive contributions. In fact, our amendments offer a method of tidying up representation of workers which can be done perhaps more ably and in a more organised fashion by their trade union officials, including shop stewards, than by every employee seeking to rush off to the courts themselves. I suggest to the Minister that the provisions of our amendments would be constructive, providing a facility whereby the trade unions who would be representing the employees, in the first instance, would be able to represent them collectively in the context of decisions to be taken affecting their futures. I find it regrettable that the Minister, in a disparaging manner, feels that the trade unions, as representatives of employees, should have no right to a hearing in such circumstances.
I should like to hear the Minister expound his views somewhat on this because I do not want to ascribe to him things he did not intend. I am thoroughly bemused by his reference to the fact that this is the Companies Bill, that it has nothing to do with regulation of trade unions. That sounds as though the Minister has in mind the kind of Frank Lorenzo approach in the United States to Chapter 11 which he used very effectively in the case of Texas Air to frustrate the trade unions, cause the strike to be declared illegal, causing workers to break their contracts, as is a phenomonen of Chapter 11 throughout the United States. I do not know whether the Minister is saying that that is what he means by that particular swipe. It seems to me extraordinary to say that this is the Companies Bill and that it has nothing to do with trade unions or workers. In the first instance a company would not be in business without the input of workers and staff at all levels. This seem to do no more than take account of their vested interest in the circumstances and of the fact that it can be done in a more orderly fashion as is proposed in these amendments.
What about a set of circumstances we have seen occur not infrequently in this country when, for whatever reason, company directors may decide, for example, to deliberately run down a company? What about the kinds of activities of certain predators whom I am sure the Leas-Cheann Comhairle would advise me I am not allowed to name in the House who engage in acquiring companies for the purposes of asset-stripping? In those circumstances ought not the right rest with the trade union to take its own action? I cannot understand why the Minister should be hostile to the notion. It seems to me to do no more than tidy up the position, acknowledge the fact that workers have rights in such circumstances in a Bill in which every other body appears to be provided for but where there appears to be very little express consideration given to the interests of workers.
I, too, was surprised at the Minister's remark. I had thought this Bill was all about consensus. If we are to take the view that this is a Companies Bill, that trade unions have not a major role to play in this whole process, then we are in deep trouble. I cannot see how one could possibly obtain consensus without the co-operation of those employed in companies. First employees must be given an assurance that the whole process is about endeavouring to protect their jobs. Surely the whole thrust of this Bill is about the protection of employment?
My party are not here to protect any vested interest. I spoke about the beef industry. In this instance I am speaking about employment, its protection and the creation of additional jobs. It should not be a question of our being solely concerned with somebody who perhaps is losing money deciding to go into business. There are hundreds of thousands of other people who will benefit from the provisions of this Bill. Indeed section 3 does provide that an employee may seek from the court the appointment of an examiner. There may be circumstances in which an employee may request a representative to undertake the task on his or her behalf. Surely there should be discretion allowed in regard to this matter? Let us be frank and honest; there are many people who have never been inside the doors of a court, who do not like going into court, who have a thing about courts. If I cannot nominate somebody to represent me to go into court and present a case on my behalf then I contend there is a flaw in this Bill. It should be made quite clear that an employee seeking the protection of the court can be represented by his or her trade union official, or some other compromise should be reached which would ensure the outcome we all seek.
If we do that, if it goes out from this House that this Bill is about consensus — that it is essential we get the co-operation of not alone creditors but employees, trade unions and all of those engaged in the day-to-day running of businesses — then it is essential that the trade union movement, representing thousands of workers, feel that they would be part of this process.
While section 17 (2) reads:
The following parties shall be entitled to appear and be heard at a hearing under subsection (1)—
(a) the examiner,
(b) the company,
(c) any interested party,
(d) any person who is referred to in the report in relation to the matters mentioned in subsection (1) (d)
I am sure a trade union would regard themselves as an "interested party", so that they could go into court as an "interested party," on behalf of a group of employees to state their case.
For that reason the Minister should endeavour to listen to calls from this side of the House to the effect that if an employee wishes to appoint a representative on his or her behalf, that provision should be included.
I understand the sentiments underlying the amendments in the name of Deputy Spring. However, on reflection, I do not think they are strictly necessary. I do not know that there is anything that would prevent an employee's trade union representative going into court and speaking on his or her behalf in relation to the presentation of a petition in the High Court. There is certainly nothing that would prevent an employee from consulting his or her trade union who, in turn, can get their solicitor or counsel to go into court and argue the case on their behalf.
In relation to the other point made, as the Minister has pointed out, clearly an interested party, includes an employee. It would appear to me to be rather curious that Deputies Spring and Rabbitte should argue in favour of circumstances in which a trade union representative or shop steward, as a representative of employees, should be entitled to be consulted rather than the employees themselves. The Bill seems to me to be much more democratic as it stands, namely, that there is an obligation to consult the employees, as a whole, as interested parties, that is each and every one of them.
The matter has been put well by Deputy O'Dea. Regrettably I have to take the opportunity to put the record straight. I must do this because of the tone adopted, which is familiar to me since, to some extent, we had it at the special committee, when views were attributed to me I never expressed nor did not hold. The view that this Bill was not about trade unions or workers was attributed to me. What I said was that the Bill was not about the principle of trade union recognition. It is very much about workers. As I have pointed out frequently on this Bill, as in the larger one, references to employees appear constantly and, where they did not appear, we put them in on numerous occasions, as Deputies who were members of that special committee will recall. What we refused to do was agree to specific references to trade unions and trade union officials because I regard the employees as the people who count, not the trade union officials. I can understand that some people would wish to have trade union officials rather than employees named in these matters. I do not think so; one's obligations are to the employees.
As Deputy O'Dea has said, there is nothing to prevent any one employee, or more of them, if they want, getting trade unions to represent them in the High Court if they do not want to go in themselves. They can do this through an official or a solicitor and counsel, which regularly happens. As I made abundantly clear, "employees" are interested parties who must be consulted and they are the people about whom we should be concerned, not trade union officials.
In relation to this amendment, there seems to be a certain agreement on the rights of employees. However, the Minister and Deputy O'Dea are not taking cognisance of the reticence, inability and reluctance of employees to approach the court. In the context of the kind of companies about which we are talking approaching the High Court, the employees — individually or otherwise — would be faced with enormous difficulties. The Minister said that there is nothing to stop them being collectively represented, and, therefore, I call on the Minister to accept this amendment and to give the trade unions representing workers the status before the court specifically in this section of the Bill. That would clarify matters and allow for a streamlined application to the court which would be far more acceptable from the point of view of the Minister.
I am surprised that the Minister seems to think he has given a definitive response; perhaps we are at cross-purposes but I certainly do not see it that way. We are discussing a group of amendments and mine specifically states "an employee of the company acting solely or through his or her trade union". Both options are there and I do not accept the view that there is an ultra democratic situation where all the workers have this option if they choose to exercise it individually. The Minister is entitled to his attitude, one I have met frequently, which is that there is an apparent reluctance on the part of some people to acknowledge the wish of workers who choose to join a trade union to have that union representing them. They make the decision freely and voluntarily, nobody obliges or coerces them and, if they make that decision, why can it not be accepted by the company — or the court in this case — that they have a right to make that decision and to be heard collectively through the union? It is an important point, and the manner in which employees are included throughout the Bill is entirely different from the sense at issue here. In these provisions, the role of the trade union should be acknowledged — where it exists — or, as in my amendment, where an employee chooses to act solely or through his or her trade union.
The Minister's remarks implied that amendment No. 4 could be accepted as he is in favour of employees' representatives but did not want to get involved in issues of trade union recognition. Employees' representatives could be accepted as interested parties, and many of the other issues are taken within that and dealt with.
All these amendments relate to the same matter and we had dozens of amendments to this effect throughout Committee Stage, which was very lengthy. All these arguments were made and rejected and I do not see the point in opening up the whole discussion again. If you want to argue that particular classes of creditors should get special rights, I would have thought that unsecured trade creditors are entitled to special representation because they are the weakest and most vulnerable people who normally get clobbered and who lose most in liquidations.
The purpose of this Bill is to try to help them in a situation where a company goes under, where the banks and other secured creditors will all be looked after and where, generally, the employees are also looked after. The worst that can happen to most of them is that they are owed a week's wages but they will still get statutory redundancy and so on. The people who get nothing normally are the unsecured trade creditors, and the trade creditor by definition is virtually unsecured. They get nothing and if there is a class to whom I thought preference should be given it would be them because they are the biggest losers.
This amendment has nothing to do with trade creditors. The Minister should deal with the amendment before the House.
The Chair is of the opinion that the Minister was dealing with it and contrasting it with some other matter. It was perfectly relevant.
The Minister is right; we are dealing with class but not in the sense the Minister uses the term. It is a very serious point. It is amazing that a man with the intelligence of the Minister could say that unsecured trade creditors are the most vulnerable group. He said that if workers lose their jobs they get statutory redundancy payments. We are talking about people possibly losing their livelihoods and a half week's pay per year of service under the Redundancy Payments Acts would not bring them very far in terms of any kind of protection.
One cannot dismiss out of hand the interest of workers who may have a particular input to make and who may have information which the examiner would find very interesting indeed in terms of other sections and which should be put at the disposal of the examiner. They may have a bird's eye view, and to say that they should not be hard because they are well looked after is a ridiculous statement which does not have any regard — as I suspected — to the rights of people who contributed to creating the wealth in any given company, some, as Deputy Spring said, over most of their working lives. If they decide to join a trade union, why should that not be accepted?
As the Minister well knows, individual workers would be very reluctant in the normal course of events to come forward to give information or evidence or to put their necks on the block in circumstances where a petition is envisaged. The fact that a trade union can do it on their behalf depersonalises the whole thing. The case is a compelling one and the Minister has not dealt fairly with it.
The Deputy's reference to future sections encourages me to say that perhaps we have exhausted all the worthwhile and salient points to be made in regard to these amendments. Does Deputy Spring wish me to put the question?
I wish the question to be put in relation to amendment No. 3.
Amendment put.
The Committee divided: Tá, 71; Níl, 80.
Tá
- Ahearn, Therese.
- Allen, Bernard.
- Barrett, Seán.
- Belton, Louis J.
- Boylan, Andrew.
- Bradford, Paul.
- Browne, John.(Carlow-Kilkenny).
- Bruton, John.
- Bruton, Richard.
- Byrne, Eric.
- Carey, Donal.
- Connaughton, Paul.
- Connor, John.
- Cosgrave, Michael Joe.
- Cotter, Bill.
- Crowley, Frank.
- Currie, Austin.
- D'Arcy, Michael.
- Deasy, Austin.
- Deenihan, Jimmy.
- De Rossa, Proinsias.
- Doyle, Joe.
- Dukes, Alan.
- Mac Giolla, Tomás.
- McGrath, Paul.
- Mitchell, Gay.
- Mitchell, Jim.
- Moynihan, Michael.
- Nealon, Ted.
- Noonan, Michael. (Limerick East).
- O'Brien, Fergus.
- O'Keeffe, Jim.
- O'Shea, Brian.
- O'Sullivan, Gerry.
- O'Sullivan, Toddy.
- Durkan, Bernard.
- Enright, Thomas W.
- Ferris, Michael.
- Finucane, Michael.
- FitzGerald, Garret.
- Flaherty, Mary.
- Flanagan, Charles.
- Garland, Roger.
- Gilmore, Eamon.
- Harte, Paddy.
- Higgins, Jim.
- Higgins, Michael D.
- Hogan, Philip.
- Howlin, Brendan.
- Kavanagh, Liam.
- Kemmy, Jim.
- Kenny, Enda.
- Lee, Pat.
- Lowry, Michael.
- McCartan, Pat.
- McCormack, Pádraic.
- McGahon, Brendan.
- McGinley, Dinny.
- Owen, Nora.
- Pattison, Séamus.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Ryan, Seán.
- Shatter, Alan.
- Sheehan, Patrick J.
- Sherlock, Joe.
- Spring, Dick.
- Taylor, Mervyn.
- Taylor-Quinn, Madeleine.
- Timmins, Godfrey.
- Yates, Ivan.
Níl
- Ahern, Bertie.
- Ahern, Dermot.
- Ahern, Michael.
- Andrews, David.
- Aylward, Liam.
- Barrett, Michael.
- Blaney, Neil Terence.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Séamus.
- Briscoe, Ben.
- Browne, John (Wexford).
- Burke, Raphael P.
- Calleary, Seán.
- Callely, Ivor.
- Clohessy, Peadar.
- Collins, Gerard.
- Connolly, Ger.
- Coughlan, Mary Theresa.
- Cowen, Brian.
- Daly, Brendan.
- Davern, Noel.
- Dempsey, Noel.
- Dennehy, John.
- de Valera, Síle.
- Ellis, John.
- Fahey, Frank.
- Fahey, Jackie.
- Fitzgerald, Liam Joseph.
- Fitzpatrick, Dermot.
- Flood, Chris.
- Flynn, Pádraig.
- Gallagher, Pat the Cope.
- Geoghegan-Quinn, Máire.
- Harney, Mary.
- Haughey, Charles J.
- Hilliard, Colm.
- Hyland, Liam.
- Jacob, Joe.
- Kelly, Laurence.
- Kenneally, Brendan.
- Kirk, Séamus.
- Kitt, Michael P.
- Kitt, Tom.
- Lawlor, Liam.
- Lenihan, Brian.
- Leonard, Jimmy.
- Leyden, Terry.
- Lyons, Denis.
- Martin, Micheál.
- McCreevy, Charlie.
- McDaid, Jim.
- McEllistrim, Tom.
- Molloy, Robert.
- Morley, P.J.
- Nolan, M.J.
- Noonan, Michael J. (Limerick West).
- O'Connell, John.
- O'Dea, Willie.
- O'Donoghue, John.
- O'Hanlon, Rory.
- O'Keeffe, Ned.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Malley, Desmond J.
- O'Rourke, Mary.
- O'Toole, Martin Joe.
- Power, Seán.
- Quil, Máirín.
- Reynolds, Albert.
- Stafford, John.
- Treacy, Noel.
- Tunney, Jim.
- Wallace, Dan.
- Wallace, Mary.
- Walsh, Joe.
- Wilson, John P.
- Woods, Michael.
- Wyse, Pearse.
Tellers: Tá, Deputies Howlin and Ferris; Níl, Deputies V. Brady and Clohessy.
Amendment declared lost.
Amendments Nos. 4 and 5 not moved.
Especially bearing in mind how little time we have, let me ask that we concentrate on what is before the House.
Section 1 agreed to.
Section 2 agreed to.
SECTION 3.
Amendment No. 6 not moved.
I move amendment No. 7:
In page 4, subsection (1); between lines 27 and 28, to insert the following paragraph:
"(e) the Minister,".
Companies nowadays sometimes are so large that there is not just an interest in their survival in those who are employed by them, those who owe them money and in the members of the company, but there is also a wider public interest in regard to the companies in question. In order that court protection for a company could be sought in the public interest as distinct from the interests of the creditors or members, this amendment has been framed to allow the Minister to petition for protection for a particular company. We do not envisage that this provision would be used very often but it might be used in some limited circumstances.
The original draft of the Bill contained a provision where Fóir Teoranta could be one of those entities which could apply for a petition. As Fóir Teoranta have been abolished there is no responsible statutory body which can make a petition and it is in that light I am suggesting that the words "the Minister" might be added.
I support this amendment. I believe it has merit, particularly in the instances referred to by Deputy Bruton where there is no statutory body such as Fóir Teoranta. Particularly where companies have been allowed to get into positions which are virtually monopolies the adverse effects on those companies' trading positions or the difficulties in trading may be of such enormous consequences not only to the employees——
(Interruptions.)
I am not allowing Deputy Spring to continue until all opposition discussion and contributions have ceased.
Thank you.
Court protection.
Where companies which have become a massive part of any particular sector, such as the company which may be the first to avail of this legislation, get into difficulty and the consequences have an enormous effect on the economy, the facility of allowing the Minister to make an application by way of petition has merit and would allow him to carry out his obligations. This amendment should be accepted.
I support this amendment. The winding up to Fóir Teoranta was frequently raised during the debate on Committee Stage of the Companies Bill. The debts owed to Fóir Teoranta were also raised. It is important that the Minister be named as the person who can petition the court. We still do not know what will happen in relation to debts due to Fóir Teoranta——
They would be covered as creditors.
There are many instances in which the Minister should have the option in the interests of the company. A whole industry might be affected as in this case or it might be in the national interest — a phrase commonly used for ministerial intervention. I support the amendment.
Unless the Minister has some reason which we have not thought of for rejecting this Greek gift, I hope he will accept it. He and several other Coalition Ministers for Industry and Commerce would have been very happy to have had that power in the mid-seventies, particularly in relation to PMPA. No such power existed and the PMPA continued beyond the point where it was desirable because it was not possible to act. The Minister would have been happy to have had that power.
As regards Deputy FitzGerald's point, the draftsman may have foreseen that because under section 3 (2) only the Minister for Industry and Commerce has the right to present a petition in respect of an insurance company and the Central Bank in respect of a bank. So far as ordinary trading companies are concerned, it would be inappropriate for the Minister to have power to intervene in this way.
Fóir Teoranta were mentioned in earlier drafts of this Bill when they were in existence as a rescue agency. However, I want to make it clear that the Minister for Industry and Commerce is not a rescue agency and I hope he never will be. He has no ambition to be but if this amendment were accepted he would be automatically drawn into the matter with pressures from various interested parties in cases of suspected difficulty or where, as Deputy Spring mentioned, a company had become too big or dominant. It would not be right for the Minister to come in and deal with it in this way. If a company is too big or too dominant and abuses its dominant position, I have a Bill which I hope to introduce in October to deal with that as it is dealt with under Article 86 of the Treaty of Rome. That is the appropriate way to deal with it rather than through this device.
A Minister may have information sooner than any other creditor indicating that something needs to be done to rectify a situation in a company in the public interest. The public interest is not just the employees of the company or those owed money by the company but those who may in the future have to deal with the company or who would have to suffer the consequences if the company went out of business. It would be wise to allow the Minister power to intervene as a last resort. It is to allow him to deal with cases where no one else is prepared to act and it is in such circumstances that we see merit in having the Minister included.
A wide variety of people are entitled to act and if the Minister were added to the list he would not be looked on as a person of last resort but rather as the first port of call. The other people listed would probably want the Minister to take the initiative rather than taking it themselves. I do not think it would be appropriate. Ministers should not intervene in these matters if they can avoid it. I am non-interventionist by nature.
Non-interventionist, except when it comes to insurers. Where is the logic if the Minister has power to intervene when an insurance company gets into difficulty, because presumably it would be in the public interest that he would intervene, as was the case when Deputy Cluskey had to intervene in the public interest.
Insurance companies are totally different.
The Minister should take this power and use it at his or her discretion in the public interest. I know the answer I would get if I went to the Minister and asked him to intervene just because he had the power to do so. He would not be shy about saying no, but there are occasions when it might be in the public interest to avail of this power. I cannot see how the Minister would have power to intervene if an insurance company were involved but if any other kind of company were involved he would not want the power.
Take the present case. It may be in the public interest if no one else were to intervene but the Minister. Is the Minister afraid that if this power were given to him now he might be embarrassed tomorrow morning if he did not intervene? I do not see why there should be embarrassment in one area of commercial life — i.e. insurance companies — and not in others. I am not convinced by the Minister's argument. We have made a reasonable case. I do not see that it would create any difficulties for the Minister to take the power that is being offered to him.
I would imagine that the number of occasions that such a power, if vested in the Minister, would have to be availed of would be very few. It would be a very rare occasion indeed that the Minister would be called upon to use such a power. It could, however, arise. I agree with the Minister that it is not a power he would want to use "if he could at all avoid it". There could perhaps be a very rare situation where it just might not be possible for him to avoid it and where a company might go under unless the Minister stepped in. One could envisage that a company on the slide could be rescued but that the directors and members were just not bothering. If the company was continuing on the downhill slide, and there was quite a lot at stake in the way of employment and goods that might be required by the State, it might then be appropriate for the Minister, as a port of last call rather than as a port of first call, to take the step of going to the courts to put in an independent person to keep the company going if, having examined the situation, the Minister came to the conclusion that it was appropriate for him to do so.
It may be, as the Minister says, that his office would be regarded as the first port of call if he was given that power. That may be so, but I do not think that matters greatly. The question is not whether he would be a first port of call but whether all the ships converging on that port would reach the safe haven of the bay. Basra may be a first port of call for many ships at the moment but not many, apparently, are getting there.
I do not see that it can do any great harm to have that fallback position. I do accept that it would be used rarely but it might just be required and the day could come when this or some future Minister for Industry and Commerce would regret not taking this power when the opportunity presented itself.
Before you put the question, I would like to reply to Deputy Barrett. He asks why, if this power resides in the Minister in regard to insurance, it should not reside in him in regard to other companies. There is a very big difference. The reason it resides in him in regard to insurance is that the Minister is the supervisory authority in respect of insurance companies. Very detailed reports are made to the Minister at least annually but, in practice, far more often than that — quarterly in respect of many of the companies. The Minister for Industry and Commerce is probably the only person who knows whether a company is going well or not. The general public would have no way of knowing that, and the Minister has a particular responsibility in that regard. The Minister is not the supervisory authority in respect of any other companies, and particularly not privately-owned companies. I do not believe it is desirable that he should be the supervisory authority.
Amendment put and declared lost.
I move amendment No. 7a:
In page 5, subsection (4), line 3, to delete "this section" and substitute "section 2".
I tabled this amendment immediately before the Committee Stage started. It is simply a drafting amendment. The reference in section 5, subsection (4) in the first line to this section should in fact be a reference to section 2 which is the section under which the initial petition is lodged.
Amendment agreed to.
Is amendment No. 8, which has already been discussed, withdrawn?
No.
It has already been discussed, Deputy, with amendment No. 3.
I move amendment No. 8:
In page 5, subsection (5), line 14, after "court.", to insert the following:
"The requirement to provide security for costs shall not apply to an employee of the company, acting solely or through his or her trade union.".
I merely want to make the point that in view of the fact that the Minister did not accept that employees could act through trade unions, it is all the more important that this amendment be accepted.
I ask for your co-operation, Deputy. The House has already agreed that this amendment would be discussed with amendment No. 3. That has been done. The Deputy will appreciate now that the Chair can do no more than to ask the mover of the amendment, or someone on his behalf, whether or not he wants me to put the question.
That simply is the point I was making. In view of the changed circumstances of the Minister not having the vote after the discussion has taken place, I am making the point that it is all the more essential that the employee, with nobody helping him, should not now have to give security for costs.
In the previous discussion I said he did not have to.
Deputy Mac Giolla are you pressing the amendment?
Yes.
Amendment put and declared lost.
I move amendment No. 9:
In page 5, between lines 25 and 26, to insert the following subsection:
"(9) (a) Where it appears to the court that the total liabilities of the company (taking into account its contingent and prospective liabilities) do not exceed £25,000, the court may, after making such interim or other orders as it thinks fit, order that the matter be remitted to the judge of the Circuit Court in whose circuit the company has its registered office or principal place of business.".
(b) When an order is made by the court under this subsection the Circuit Court shall have full jurisdiction to excercise all the powers of the court conferred by this Act in relation to the company and every reference to the court in this Act shall be construed accordingly.
(c) Where, in any proceedings under this Act which have been remitted to the Circuit Court by virtue of this subsection, it appears to the Circuit Court that the total liabilities of the company exceed £25,000, it shall make, after making such interim orders as it thinks fit, make an order transferring the matter to the court.
In regard to amendment No. 9 there is a need for clarification. This amendment has already been discussed. The Minister has indicated that if £250,000 is substituted for £25,000 that is acceptable to him. Is the House agreeable to that? Agreed.
Amendment agreed to.
Question proposed: "That section 3, as amended, stand part of the Bill."
I do not wish to be pedantic but I think it is important that the word "only" be put in the right place. In subsection (2) it is governing the verb rather than the subsequent clause. It should read "may be presented only by the Minister" in 2 (a) and "may be presented only by the Central Bank" in 2 (b). It is important in drafting to get that word right.
Could the Deputy indicate the number of the line?
Lines 30 and 36.
I would agree to all those.
It was the biggest single defect I found with the Civil Service when I was a Minister. This is the one they never get right.
Is the transposition of the word "only" as indicated by Deputy FitzGerald agreed to? Agreed.
I believe the societies which are supervised by the Central Bank are protected. Is there any provision for industrial provident societies to obtain protection?
No, they are not companies.
Question put and agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."
This section deals with related companies and provides that where the court appoints an examiner to a company it may, at the same time or at any time thereafter, appoint an examiner to a related company. Subsection (3) of section 4 states that a related company to which an examiner is appointed shall be deemed to be under the protection of the court for the period during which the company to which it is related is under such protection. The initial company is under the protection of the court from the date of the presentation of the petition. If an examiner is appointed to a related company, say, a month after the original petition is presented, how can the property and assets of the related company be retrospectively immune from sequestration, distress, etc?
The period in respect of the related company will end when the period in respect of the original company ends. That was adverted to in the past few days. It was not in the original draft but it is covered now. It may mean that a related company is under protection for a couple of days fewer than the original one, but one has to have finality about it. One could not have them ending on different days.
Why not have the words "for the period during which" deleted and "as long as" substituted?
The point does not relate to when the period of protection ends but when the period of protection commences. If the period of protection commences when a petition is presented on behalf of the original company and if a month after that petition is presented successfully the court decides to appoint an examiner to a related company, as I read it, subsection (3) states that that related company will be under the protection of the court for the same period as the initial company, that is, from the presentation of the original petition. The main consequences of being under the protection of the court are that the property and assets of the company are immune from sequestration, distress etc. What if a receiver has been appointed or if sequestration has been effected against the assets of the related company during the first month?
If the Minister accepted my amendment to delete the words "the period during which" and substitute "as long as", it would meet Deputy O'Dea's point.
It would not. We would still have the problem. It would not meet his point because "as long as the company to which it is related is under such protection" is the same as "the period during which the company...".
No, it is not. It is a matter of semantics. "As long as" seems to me to be governed by the fact that it only starts when the examiner is appointed and goes on until it ceases general protection, whereas "the period during which" specifically relates it back to the full period. Perhaps some other drafting change would meet the point better.
I will look at it before Report Stage. If there is a point it is technical, but if there was execution against a related company before the order was made, there is the possibility that a question would arise as to whether that execution was valid.
Question put and agreed to.
SECTION 5.
I move amendment No. 10:
In page 6, subsection (2), line 28, after "effect", to insert "unless the examiner has consented thereto".
Section 5 (2) states that "For so long as a company is under the protection of the court in a case under this Act, the following provisions shall have effect" and we go on to list the provisions. We are seeking to add the words "unless the examiner has consented thereto." The reason is that there may be occasions when it is in the interest of the company and those related to the company, those involved in the company and those employed in the company, that an examiner should have power to act quickly. While many of the provisions of subsection (2) are in the interest of the company, there may be occasions where the examiner would want to dispose of something quickly without having to go immediately back to the court. That adds to the point the Minister made in reply to the Second Stage when he said he was conscious of the fact that throughout this Bill there were numerous references to referral to the court.
This is an attempt to minimise the need for such referral and to give the examiner some independence if he feels it is in the interests of the company to take certain steps, which otherwise he could not take because of provisions outlined in subsection (2), without going back to the court. I am asking the Minister to accept this amendment in the interest of making the examiner's life easier in dealing with the day-to-day problems I have no doubt he will face, depending on the circumstances of each company. It would be in the interest of the legislation that this amendment be accepted.
It has been represented to us that receiverships work quite well because the receiver has very wide powers, can make quite quick decisions and can dispose of assets quickly. The spirit in which this amendment is proposed is to give an examiner maximum flexibility to make decisions of that kind.
The difficulty is that while Deputy Barrett's proposal may be laudable in as much as he is trying to avoid or prevent the necessity to go back to the court there is no obligation under subsection (2) to go to the court or to get the consent of the court in respect of any of those things. It just says that these things shall not happen. One does not have to go to the court to stop them. They are stopped by law.
For example, I cannot see in this instance how an examiner would consent under subsection (2) (a) to a winding up by somebody else. What is envisaged by the Bill as a whole is that he would go back to the court and would say this company is hopelessly insolvent, he cannot do anything with it and he would ask the court to make an order winding it up. It would not be for him to consent. The Deputy's idea may be a good one, but I think he has applied it to the wrong subsection. There is no obligation on the examiner to go to court for any of these six or seven purposes. It is to stop other people going to court.
The amendment is designed to be helpful. If the Minister does not regard it as helpful, we do not want to press it.
Amendment, by leave, withdrawn.
I move amendment No. 11.
In page 6, subsection (2), line 49 and in page 7, lines 1 to 8, to delete paragraph (f).
One of the consequences of the granting of a petition is that where a third party has given a guarantee to a company which is under court protection in accordance with subsection (2) (f) the third party cannot be pursued for their guarantee. There does not seem to be any need for this. If the purpose of the legislation is to protect companies, then it is sufficient to protect the companies. There is no need to protect third parties who have given guarantees as well.
I believe that this subsection is causing major concern among the banking community. Where they have lent money on the strength of the third party guarantees they can find that is not the company to be put under protection, where they will get their money from the company, but that process on its own, quite independently of any investigation of the circumstances of the third party which is not envisaged in this legislation, will prevent the third party guarantee from being called in as well. There is no need whatever for paragraph (f) and no justification advanced for it.
This could have considerable implications for State guarantees that have been granted to State companies. It is possible for the State to avail of paragraph (f) to avoid its liability under State guarantees where a State company might avail of protection. A State guarantee of a borrowing by a company can be rendered null by paragraph (f). That is a subsidiary point related to one possible instance where this might come in as far as a State guarantee is concerned but if it is not the main point which is that there does not seem to be any need, from the point of view of protection of the company, to protect third parties as well. I cannot understand the purpose of the subsection.
The power to seek the appointment of an examiner rests, among others, with the directors of the company. Directors who have given guarantees might seek to protect their personal positions by having an examiner appointed so that they cannot be got at personally, thereby avoiding their personal guarantees. I cannot understand why we would wish to involve ourselves in that kind of approach.
I do not quite see why the amendment would defeat the intent or purpose of the Bill as it seems to be a quite distinct issue. If there is a guarantor of a company and that company go into receivership or liquidation, the liability of the guarantor is in no way affected. If a person gives a guarantee the guarantee stands even though the company is in receivership or liquidation. Why then should the position logically be any different if the company is under protection? Surely, the same principle ought to apply and the liability of the guarantor is a quite distinct and independent liability from the liability of the company. It would appear that the section, if left untouched, would incorporate the veil of protection and extend it beyond the company into a quite extraneous position and a completely different contract, namely, a contract of guarantee. I would like the Minister to indicate how he can draw a distinction between the position of a company in receivership or liquidation and a company under protection. The guarantee holds good in the case of receivership and liquidation and surely, logically, it should also hold good in the case of protection, perhaps a fortiori should hold good in the case of protection, where the company is soldering on with advantages to it.
I am surprised to hear Deputy Bruton voicing concern about the banks and their rights to personal guarantees. I recall he tabled an amendment on Committee Stage which would have had the effect of making the taking of personal guarantees by banks illegal.
I did not.
The Deputy did. Deputy FitzGerald mentioned that people evade their personal guarantees. They will only be able to evade their personal guarantees for four months at most. As anybody with experience of dealing with companies will know, the sort of people who give personal guarantees to guarantee the debts of a company are usually dominant people within the company. One does not find some small shareholder or employee of a company giving personal guarantees. If during the period of protection we change the legislation to allow people to whom guarantees have been given to personally go after those people, the incentive for those people will be to allow the company to be put into receivership in the hope that there will be sufficient moneys to discharge their liabilities rather than to immediately suffer sequestration of their personal assets. If we were to remove this subsection we would defeat the purpose of the Bill and encourage liquidations and receiverships rather than keeping a company alive, which is the purpose and purport of the legislation.
As Deputy O'Dea will find, if he consults the record, the amendment I put down on Committee Stage proposed to limit the amount of a bank guarantee to a proportion of the debt; it would not have got rid of bank guarantees. I will be reintroducing that amendment on Report Stage when it comes before us again because it is a sensible one. What we are talking about here are guarantees that have already been given, and on foot of which bank money has already been loaned. What we are saying is that, retrospectively, those guarantees can now be set aside in respect of a company under protection. That is changing the rules of the game after the game has begun. Certainly, in the future, as my amendment to the Companies Bill proposed, it will be reasonable to say that no guarantee shall be sought for more than a proportion of the amount loaned. That would restrict the banks' use of guarantees in the future and change the rules of the game that was now starting. In this case we are changing the rules in respect of a game that is half over and I do not think that is a good way to proceed in any form of human activity. It has not been explained to me how personal guarantees cannot be separated from, and are not separate from, the fate of the company.
Is Deputy Bruton suggesting, to use his own words, that the guarantees should be set aside? If the examiner finds he cannot save the company and seeks a winding up order in the courts or the appointment of a receiver, then the personal guarantees will be available to the company. There is no question of the setting aside of guarantees ad infinitum; Deputy Taylor also referred to this fact. If the company goes into receivership or liquidation the personal guarantees will be available to the company and if the company survives they will also be available. The purpose behind appointing an examiner is to allow the examiner proceed——
Why do you need to protect them?
There is no question of setting aside guarantees but perhaps the Deputy is arguing about the period of the examinership. It is misleading to suggest the we are setting aside the personal guarantees of directors or any third party. On the withdrawal of the examiner, they will once again be available to the company.
This seems to be an extraordinary provision for which there must be a better reason than the one we got from the Minister. Perhaps he would explain further why this has been put in. If there is a good reason, fair enough, but we have not heard it. There would need to be a good reason to take such drastic action to protect individuals and companies. Perhaps the intention is, but it is not said here, that "where, under any enactment, any person other than the company is liable to pay all or any part of the debts of the company" no attachment shall be put in place. Perhaps that is what is meant but it does not say that. Perhaps the Minister will help us by clarifying his thoughts and giving better reasons for this or otherwise considering the amendment.
The position is, as I understand it, under subsection (2) (c) one cannot have direct attachment, sequestration, distress or execution against the company, and paragraph (f) proposes that one cannot circumvent that prohibition by doing it indirectly in respect, for example, of a debtor of a company. I have given that example already. If "X" owes £100,000 to a company which is under protection under the provisions of this Bill, it would be inequitable for "Y" to come along, sue "X" and collect the £100,000 from him, "Y" being a creditor of the company, and evade the prohibition in section 5 (2) (c) about direct sequestration by arguing, "I am not sequestering directly against the company, I am doing so against somebody else". The net effect in the heel of the hunt is exactly the same because the £100,000 that "X" owes the company is as much an asset of the company as £100,000 worth of land or other property. This is to prevent the debts due to a company from being sequestered or otherwise obtained by way of equitable execution or in any of those other indirect fashions. For that reason it seems that this makes sense because otherwise there would be an incentive to circumvent the prohibition which is properly contained in subsection (2) (c).
I wish to point out that paragraph (c) has that but paragraph (f) does not. If the grounds for paragraph (f) are to extend the protection in paragraph (c) then surely it is logical that the same words, "except with the consent of the examiner", should be in paragraph (f). Their absence seems very odd indeed. Would the Minister not consider that they ought to be included if he wishes to argue the case effectively for what he is proposing?
Deputies Taylor and Mac Giolla have risen in their places. I will call Deputy Taylor first and then Deputy Mac Giolla.
I have listened carefully to what the Minister has said and I understand him very well. He is absolutely right in what he has said and I support him fully. He is talking about a garnishee and the sentiments he expressed are entirely logical and correct and I agree with him 100 per cent. Perhaps he will agree with me when he looks at paragraph (f) that the net is cast too wide. It covers the situation he is talking about but it covers something different as well which would be entirely inappropriate and that is the guarantee.
Two distinct issues, unfortunately, appear to be caught by paragraph (f). I doubt if it was the Minister's intention to catch the guarantee which would not be appropriate although the garnishee issue is appropriate. It is emotive to put the guarantee issue when talking about banks. Guarantees can be given to people other than banks and one tends not to be unduly sympathetic where banks are concerned and that is understanable. Let us take the case of a farmer considering supplying beef to a company who is worried whether the company are good. The farmer might have an urgent need of a quick cash flow and the absence of it could prove disastrous to him. What does he do? He may go to the main director or promoter of the processing plant and say, "I am not prepared to supply you unless you give me your personal guarantee that I will be paid and that you accept responsibility for the beef which I will supply you and your company". The director may give that guarantee. If the beef processing company are put under protection under the provisions of paragraph (f) the unfortunate small farmer who sent in his beef may be held up for a minimum of four months and his personal guarantee from the director would become useless for at least four months.
Deputy Cowen is right in saying it is only for four months but it could be that those four months could be crucial for a small farmer. The loss of finance for that period could be vital for his farming activities and his business. I do not think a person who gives such a personal guarantee should have a free run for four months simply because the main company are under protection. A new element is being introduced. If the company were in liquidation the guarantee would have full force and effect. Why should that guarantor be let off scot-free for four months with possible disastrous consequences for the person who had the prudence to apply for, get and take the guarantee in the first place? The section is cast too widely and, perhaps, the guarantee question could be excluded at a later stage.
I am baffled by this section. I am not an expert on company law and I have not got much experience of the deviousness of many of our private entrepreneurs in the company business on how to manage debts and so on. It is obvious that we have in three paragraphs, (c), (d) and (e) the words "except with the consent of the examiner is not required in paragraph (f). Since we are here to discuss a Bill in the context of one particular company, I want to know how this is going to affect the company about which we are talking, Goodman International. In this case, the person is the company. Paragraph (f) states: "Where, under any enactment, rule of law or otherwise there is no reference to guarantees] any person other than the company is liable to pay all or any part of the debts of the company—". In this case we are talking about a person other than the company who is liable for practically all the debts of the company, not just any part of the debts of the company. Are we to understand that no attachment, sequestration, distress or execution shall be put into force against the property of this person in respect of the debts of the company or are we to understand that no proceedings of any sort may be commenced against this person in respect of the debts of the company? The consent of the examiner is not required.
I would like to know from the Minister precisely how this affects not just company law in general but the company the Dáil was recalled to deal with. In my view we are dealing with a person rather than a company, that person being the person on whom an examiner would be dependent and on whose assets the examiner would be dependent to save the company. What will the examiner do if he cannot proceed against such a person in respect of the debts of the company? It may be that the Minister can explain that this is covered elsewhere but in this section the consent of the examiner should be inserted in paragraph (f). If the examiner could decide and agree he could prevent other persons from taking such proceedings, attachment or whatever else. The examiner should be able to make a decision and consent to such a case.
Let us not forget that the examiner will be nominated in the first place by the petitioners who is the person in trouble. A director of a company, who may have been the person who gave the guarantee, may be the person who will be nominating the examiner. The examiner is nominated by the petitioner and the court confirms. There is a problem here. Deputies Cowen and O'Dea point out that this protection lasts only four months and strictly speaking, that is true. If one looks at section 17 (3) one will see that it is possible for the court to make any order it wishes at the end of an examinership. It could decide to discharge personal guarantees at the end of an examinership. Likewise, the examiner who, as I pointed out earlier, is somebody who will have been nominated by the petitioner in the first place, could propose as part of his scheme of arrangement that the personal guarantees be set aside. Given that we have put into section 5 the setting aside, at least for the period of the examinership, of personal guarantees, as if that was inter-linked with the affairs of the company, that gives a signal to the judge that he can consider proposals which would deal with guarantees as well. It seems to me to be wider than we need go.
On that logic he could argue that there were no debts and get away with it. That does not make sense.
The Deputy should look at what section 17 (3) says.
In respect of the Companies (Amendment) Bill, 1990, in Committee, as it is now 6 o'clock I am required to put the following question in accordance with the Order of the Dáil of this day.
Was it not to be put at 6.30 p.m.? We started half an hour later.
We moved forward half an hour.
This agreement was made after the time change.
Yes. I repeat: as it is now 6 o'clock I am required to put the following question in accordance with the Order of the Dáil of this day: "That sections 5 to 15, inclusive, are hereby agreed to".
To protect ourselves may I give you notice, Sir, that we may re-enter some amendments on Report Stage.
Question put and declared carried.
SECTION 16.
We proceed now to deal with section 16, amendment No. 19 in the name of Deputy Rabbitte. I observe that amendments Nos. 33 and 35 are related. If it is satisfactory to the House we will take amendments Nos. 19, 33 and 35 together. Is that satisfactory? Agreed.
I move amendment No. 19:
In page 14, paragraph (g), line 35, to delete "and" and substitute "the employees as a whole or".
Section 16 (g) reads:
(g) whether, in his opinion, an attempt to continue the whole or any part of the undertaking of the company would be likely to be more advantageous to the members as a whole and the creditors as a whole, than a winding-up of the company,
This is another case where we believe the employees should be included and, as the Minister said during the discussion on the Companies (No. 2) Bill, 1987, were included on a number of occasions. This is another section where we believe it would be more advantageous to the employees as a whole as well as the credtiors as a whole.
I support Deputy Rabbitte's amendment No. 19. Employees are not adequately consulted or informed of major decisions being taken by their companies. It should be realised that the main thrust of legislation in this area is to place the boards and managements of companies in the position in which they are legally bound to concern themselves solely — and here I emphasise the word "solely"— with maximising profits for their shareholders. In fact, any companies seeking to do otherwise could be sued by a shareholder. That is not dramatising the position; it has happened. Therefore, a fundamental change in company law is needed to acknowledge employees' rights and those of the community and consumers generally.
To proceed from the general to the particular, we all know why we have been recalled from holidays, not to deal with a hypothetical situation. I might remind the House that the Bill before us today basically is a section of the Companies (No. 2) Bill, 1987. It is a sad reflection of the way the Oireachtas carries on its busines that the Committee Stage of the 1987 Bill was concluded only in July last. All parties in the House, with the possible exception of The Workers' Party, must bear responsibility therefore.
Regarding the Goodman Group, we do not want a recurrence of what happened to Irish Shipping, when the company was sunk not through any fault of its employees or normal trading, which was profitable, but rather by speculation by the company at top level. We have a parallel in the case of the Goodman Group where the company has been brought to its knees by Stock Exchange speculation on the part of Mr. Larry Goodman. It would be my hope that the employees of the Goodman Group would receive better treatment from the Government than did Irish Shipping employees if a doomsday position should arise.
Employees are covered in the phrases "creditors as a whole"; they are taken into account there. As far as I know that covers the point.
I did not get the Minister's point there. The whole point of the section is that an examiner will decide whether to wind up; whether it would be in the best interests of certain people to continue the company in existence, as it is, or to close down part and continue another part thereof. In the case we are talking about, this is the very type of decision an examiner will have to be making. In this case, there is a whole series of different companies — I think 14 or 15 different subsidiaries, bits and pieces — that may be kept going while others may be closed down and so on.
This section stipulates that, where the examiner is conducting this examination, he will have to consider whether it would be more advantageous to the members as a whole or the creditors as a whole to continue bits and pieces, or the whole lot, rather than wind-up. What this amendment seeks is that he should take into consideration whether it would be in the interests of the employees as a whole that part of the company be closed down, part kept going, rather than wind up the whole company, paying off creditors. Surely what is most advantageous to the employees as a whole should be taken into consideration by an examiner when taking that type of decision. In this case the Minister need not have an hang-ups; I am not asking him to decide on the trade union movement as a whole, simply on the employees of a company; forget about trade unions. We are simply asking that an examiner must take employees into account.
The point I have made already is a perfectly valid one: for the purposes of this section and the definitions involved, it is quite clear that employees are included in the word "creditors". Therefore, their interests are taken into account in that respect.
The other point I might make in response to Deputy Mac Giolla is that section 16 (g) reads:
Whether, in his opinion, an attempt to continue the whole or any part of the undertaking of the company would be likely to be more advantageous...
Obviously it would be more advantageous in every case from the employees' point of view to continue the undertaking in whole or in part.
For some it might, in part; some would be let go——
They would but if you put in the words that you have to satisfy the employees as a whole you will never get a situation where the examiner could come to the conclusion that the most appropriate thing to do is to continue part of it and to close part of it.
In other words, they need not take them into account.
Is he bound to take into account the interest of all the employees specifically as a sub-group of the creditors? He would then come to the view that he should keep the whole undertaking going even though his feelings might be that as a whole it would be likely to come down but that part of it could be viable if the other part could be disposed of.
The suggestion that "creditors" covers employees is totally mistaken. There seems to be an idea that they are due some money, holiday money and a couple of thousand pounds by way of statutory redundancy. However, the employees would forego all that if they were kept in employment. Their whole livelihood is at stake and the fact that they are creditors for a few thousand pounds is not what constitutes their problem; their job, their future and that of their families is the problem. The Minister is assessing the viability of certain sections of the company and what would be got by selling off the company or sections of it. Under this section the employees and their future are not taken into consideration. He is thinking of the employees as creditors but he is not considering their future and indeed their whole life. If the Minister had any humanity, that should be one of the first things of which he would think. Many examiners are auditors who simply think in figures and not in human terms. We would like to see it in black and white in legislation that he must take their interests into consideration. That is all we are asking. "Employees as a whole" should be inserted in the section as well as "creditors as a whole" and "members as a whole". I ask the Minister to consider that.
It is apparent from the Minister's response to this amendment that employees are totally marginalised in company legislation. They are so marginalised that they are not even mentioned. To say that they are included in the creditors in a very sick joke. The Minister should be man enough to admit that employees are totally disregarded in company legislation and it is time for legislation to be changed.
It is rather unfair of Deputy Garland to state that employees are being deliberately marginalised. The position is that the examiner's report must set out various things and one of them is his opinion as to whether the continuation of all or part of the undertaking would be in the interests of members or creditors as a whole. As the Minister rightly said, if the words "employees as a whole" were inserted it would preclude the examiner from exercising the option of saving part of the company because to do so would not, obviously, be in the interests of the employees as a whole. If you take the interests of employees as opposed to this artificial concept of the employees as a whole, to continue part of the enterprise will obviously be to the advantage of some employees. Therefore, the amendment is unnecessary.
Deputy Rabbitte rose.
I should advise Deputy Rabbitte that we have decided to discuss together amendments Nos. 19, 33 and 35. He is at liberty to address all three amendments.
The Minister's resistance to this amendment is an ideological one, which was demonstrated earlier. I thank Deputy Garland for his contribution and agree with his remarks. The Minister's mistaken position is that he presumes that in all instances the interests of the members and the creditors as a whole will always be compatible and consistent with the interests of the workers as a whole. I submit that that will not always be the case. I honestly do not think that there is much value in persisting in the submission that the employees and creditors are, therefore, included in the section as it stands. Technically, of course, that is true but we know very well that what is intended by the word "creditors" is not designed, except coincidentally, to include employees. That is not the meaning to be ascribed to the word. It may well be that the interests of the workers as a whole will vary from the interests of the members or the creditors as a whole in a given situation. That kind of dilemma has been faced in industry where it might well suit the John Teelings of this world to go in a particular direction which would not suit the workers employed. That is why it is necessary to explicitly include this amendment in the legislation.
I am not prepared to accept the amendment as it is because it would probably make it possible for the examiner and the courts to act. However, to make the fact more explicit I will propose the insertion after the word "whole" in line 35 the words "(including employees)".
I do not want to appear churlish, because the Minister has, untypically, decided to make some gesture to the Opposition.
I have made about four gestures already in spite of the rather colourful language used on occasions.
I was up until 3 a.m. this morning reading some of the Minister's colourful language on this subject a short while ago.
I hope it edified the Deputy.
It was very edifying.
It is extraordinary how I could foresee things.
It was light bedtime reading.
How right I was.
Indeed, how right the Minister was, and to veto some of the other solutions as well.
I do not think that the inclusion of the term, (including employees), will do any more than elaborate on the fact that the word "creditors" is intended to include employees.
It makes it absolutely clear.
It does but that is not the point. We are not talking about employees as creditors; we are talking about employees as workers in a particular enterprise who may have an interest which on occasion differs from the interests of the members of the company or the creditors. This amendment is asking the examiner to do no more than express an opinion. Under section 16 (g) the examiner's report shall state, "whether, in his opinion, an attempt to continue the whole or any part of the undertaking of the company would be likely to be more advantageous to the members as a whole...." He is only being required to include in the report an opinion on whether or not the interests of the workers in the sense I mean here are included. I do not understand how this would impose an additional difficulty on the examiner. Surely he will have formed an opinion in any event on whether measures he might contemplate are in the best interests of the workers. I am sure that is an opinion he will have readily formed and it escapes me why the Minister should object to it being comprised in his report. It may be that I misunderstood the Minister's position.
This argument goes to the mushy heart of this legislation in the sense that the criteria to be used by the court in deciding whether or not debts should be written down are so vaguely phrased as to give no guidance as to what a judge will decide. Essentially, a judge can decide to either agree or disagree to a scheme or arrangement depending on whether he considers it to be in the interests of the members as a whole and the creditors as a whole. This means that people with totally conflicting interests will all be given equal consideration with no guidance being set by the Oireachtas as to the scale of values which should be applied in this case by the judge.
Given that all the creditors as a whole, without guidance as to who is more important, and that all the members of the company, without guidance as to whether they are more important than the creditors, are entitled to have their rights considered without any guidance from the Oireachtas, Deputy Rabbitte is absolutely right in saying that because everybody else is having their interests considered without discrimination or advice from this House employees should be included as well. However, the fact is that the more uncertainty there is by failing to give guidance and including more and more interests that ought to be considered, the harder it will be for companies to borrow money in the future because they simply will not know how this legislation will work out in practice or how judges will interpret it in practice.
We will be moving from a situation where under existing law we have relative certainty as to what one is entitled to into a situation where essentially we are saying, "that is all suspended, the whole thing will be handed over to a court and we will see what it will decide in concrete situations". We will be moving from concrete statute law which sets out various people's rights into a situation where it will in future be case law set out by judges on this legislation over a period of time, the duration of which cannot be foreseen at this stage.
I do not think there is much point in arguing to and fro about the wording of section 16 because even if we include the term "the employees as a whole" we do not know what way a judge will interpret it. The Minister cannot tell us how a judge will interpret that wording because he is not including any criteria as to the guide which should be set by the judge. It is typical of this entire companies Bill that all sorts of things are being handed over to the court without guidance from the Oireachtas. In a sense what we will have under this legislation is judge-made policy. The place for making policy in this country is here and not in the Four Courts. However, because the politicians cannot handle this sort of legislation they are increasingly saying, "we will hand it over to the courts and let them decide because we cannot make up our minds in here about what is right, what should be first, second or third". That is typical of the attitude of politicians here. They are constantly talking about priorities but they never say that anything else should be a posteriority. One cannot have a priority without a posteriority. We are always saying that everything is important but we never say that anything is less important than something else. I am afraid that is the essential mushiness of this legislation.
Question put: "That the word proposed to be deleted stand".
The Committee divided: Tá, 82; Níl, 23.
Tá
- Ahern, Bertie.
- Ahern, Dermot.
- Ahern, Michael.
- Andrews, David.
- Aylward, Liam.
- Barrett, Michael.
- Blaney, Neil Terence.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Séamus.
- Daly, Brendan.
- Davern, Noel.
- Dempsey, Noel.
- Dennehy, John.
- de Valera, Síle.
- Ellis, John.
- Fahey, Frank.
- Fahey, Jackie.
- Fitzgerald, Liam Joseph.
- Fitzpatrick, Dermot.
- Flood, Chris.
- Flynn, Pádraig.
- Gallagher, Pat the Cope.
- Geoghegan-Quinn, Máire.
- Harney, Mary.
- Haughey, Charles J.
- Hillery, Brian.
- Hilliard, Colm.
- Hyland, Liam.
- Jacob, Joe.
- Kelly, Laurence.
- Kenneally, Brendan.
- Kirk, Séamus.
- Kitt, Michael P.
- Kitt, Tom.
- Lawlor, Liam.
- Lenihan, Brian.
- Leonard, Jimmy.
- Leyden, Terry.
- Lyons, Denis.
- Briscoe, Ben.
- Browne, John (Wexford).
- Burke, Raphael P.
- Calleary, Seán.
- Callely, Ivor.
- Clohessy, Peadar.
- Collins, Gerard.
- Connolly, Ger.
- Coughlan, Mary Theresa.
- Cowen, Brian.
- Cullimore, Séamus.
- Martin, Micheál.
- McCreevy, Charlie.
- McDaid, Jim.
- McEllistrim, Tom.
- Molloy, Robert.
- Morley, P. J.
- Nolan, M. J.
- Noonan, Michael J. (Limerick West).
- O'Connell, John.
- O'Dea, Willie.
- O'Donoghue, John.
- O'Hanlon, Rory.
- O'Keeffe, Ned.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Malley, Desmond J.
- O'Rourke, Mary.
- O'Toole, Martin Joe.
- Power, Seán.
- Quill, Máirín.
- Reynolds, Albert.
- Stafford, John.
- Treacy, Noel.
- Tunney, Jim.
- Wallace, Dan.
- Wallace, Mary.
- Walsh, Joe.
- Wilson, John P.
- Woods, Michael.
- Wyse, Pearse.
Níl
- Byrne, Eric.
- De Rossa, Proinsias.
- Ferris, Michael.
- Foxe, Tom.
- Garland, Roger.
- Gilmore, Eamon.
- Higgins, Michael D.
- Howlin, Brendan.
- Kavanagh, Liam.
- Kemmy, Jim.
- Mac Giolla, Tomás.
- Moynihan, Michael.
- O'Shea, Brian.
- O'Sullivan, Gerry.
- O'Sullivan, Toddy.
- Pattison, Séamus.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Ryan, Seán.
- Sherlock, Joe.
- Spring, Dick.
- Stagg, Emmet.
- Taylor, Mervyn.
Tellers: Tá, Deputies V. Brady and Clohessy; Níl, Deputies Byrne and Sherlock.
Question declared carried.
Amendment No. 20 in the names of Deputies Barrett and Bruton. Amendments Nos. 22 and 23 are related. It is proposed to take amendments Nos. 20, 22 and 23 together. Agreed.
I move amendment No. 20:
In page 14, between lines 42 and 43, to insert the following paragraph:
"(j) his opinion as to whether the facts disclosed would warrant further enquiries under sections 33 and 34,".
A company that has been managed in such a fashion and gets into difficulty could, in some circumstances, do so because of fraudulent or reckless trading. Under the Companies Bill, 1987, which is still before the House, it is proposed that there be civil liability for persons concerned with fraudulent trading or reckless trading. This is to be disclosed to the court by a receiver or liquidator when the liquidation or receivership is concluded. If the receiver or liquidator discovers fraudulent or reckless trading he is obliged to disclose that fact. In setting up a new instrument to change the status of companies it is only right that the examiner should have the same obligation in regard to reporting fraudulent or reckless trading as the other two officers — namely, the receiver and the liquidator — will have under the legislation currently before the House.
Section 33 of the Bill, which was not contained in the original Bill as drafted, states:
(1) If in the course of proceedings under this Act it appears that——
(a) any person was, while an officer of the company, knowingly a party to the carrying on of any business of the company in a reckless manner; or
(b) any person was knowingly a party to the carrying on of any business of the company with intent to defraud creditors of the company, or creditors of any other person or for any fraudulent purpose;
the court, on the application of the examiner, or any creditor or contributory of the company, may, if it thinks it proper to do so, declare that such person shall be personally responsible, without any limitation of liability, for all or any part of the debts or other liabilities of the company as the court may direct.
The section is phased rather passively in the sense that if it appears by some happening, for which no one is particularly responsible, such activity is discovered, then the court may take certain action. The purpose of amendment No. 20 is to place a specific responsibility on the examiner to report on whether there were any suggestions which would warrant further inquiries as to the possibility that there was reckless or fraudulent trading. In other words, rather than leaving it to emerge the examiner would have specific responsibility to bring the matter to light in his report. That should be one of the matters upon which he should be required to report under section 16. That is only sensible.
The introduction of court protection for companies is potentially giving company directors a new form of lifeboat which was not available to them before. If the lifeboat is being made available to them the liability should also be imposed on them if they leave the lifeboat as a result of having behaved fraudulently or recklessly. In order to ensure the balance between the advantage to the director of this new protection and the requirement to provide the broader community with an assurance against corporate fraud, this amendment is entirely justified.
Amendment No. 23 relates to an obligation being placed on an examiner to report on whether a company has complied with the reporting requirements imposed on it by the Companies Acts. There are very clear reporting requirements imposed on all companies. Until fairly recently only public companies had to report publicly but under EC legislation private companies now have to report publicly as well. One company required to report publicly was the Goodman International Group. They decided they did not want to report publicly and in order to avoid that they converted themselves into an unlimited company. An unlimited company must be one that is genuinely unlimited and where the directors of the company are fully reported. To obtain the exemption from reporting which is available to unlimited companies without genuinely creating a situation in which the persons directing the company are personally liable would be to defeat the purpose of the legislation.
Suggestions have been made in the House, of which I have no first hand knowledge, by Members who claim to have personal knowledge that a device has been used by this company where the shares in the unlimited company are held by a limited company in another jurisdiction and not by individuals with unlimited liability who could be pursued. In other words, the suggestion is — it may not be correct — that the reporting requirements have been circumvented. It is important that the examiner should investigate that matter. That is the purpose of amendment No. 23 where we require that the examiner would report on compliance with reporting requirements.
I have made clear the intention of the amendment. If the Minister can find a better way of expressing it to make absolutely sure that we do go behind any devices that may have been used to avoid reporting requirements, of course, I would be more than pleased to have a ministerial amendment to substitute for this one to achieve a better wording. I note that Deputy Spring has proposed an amendment in similar vein and again I am not going to be dogmatic about the wording of my amendment as against his or against one the Minister might produce. If the Minister can produce one I presume it would be better than anything either Deputy Spring or I could produce.
I would speak to my amendment in the same spirit as Deputy Bruton who referred to the amendments being put forward in an effort to improve this Bill.
In relation to my amendments to section 16, I consider section 16 to be a very important, if not the most important, part in this legislation. It is important because of the powers we are giving the examiner in relation to his function to report and that we give him a very wide remit. It is in the context of the examiner's report that the information would be provided to the court and that the full situation would be disclosed. It is obviously of major importance that the examiner has the legal entitlement, the resources and the ability to ensure that all the information is put on the table.
Many references were made in discussions in the last session to levelling the playing field in another context. However, I think it is extremely important where the Oireachtas is providing legislation to enable companies, in particular a company, to stave off a very difficult situation for a period of months, that that company — ironically a company which is suing the Minister for Industry and Commerce for £50 million — the directors and the shareholders of that company must, I would insist, be in a position to come forward and make a full disclosure of all the transactions of that company of the accounting and the financial situation and of moneys in and out of that company over the relevant period which will be examined by the examiner.
It has been said, and it is something I believe, that we had weaknesses in our company law in the past and in our existing company law in relation to fraudulent activities. It is well known that there have been many suspicions about certain companies but we were unable to pursue them, although in other jurisdictions the companies which were involved here and in, say Northern Ireland or Britain, were brought before the courts and people were punished. We seem to have an amazing unwillingness to pursue white collar crime. Our Garda, for example, are under-resourced or under-funded when it comes to pursuing white collar crime. In fact, the treatment by people who would be considered to be respectable businessmen and professional people in the city of the fraud squad in the last number of years when they were attempting to pursue and investigate allegations was deplorable. No co-operation was given at any time. In fact, if anything, people stood in the way of investigations and obstructed the conduct of investigations by the Garda Fraud Squad.
It is extremely important that the examiner should be in a position to trace the movement of funds to the company. Where we are looking for full disclosure it should be a prerequisite of this legislation that the examiner should be satisfied prior to offering his protection to the company that he is in possession of all the facts in relation to the directors, the shareholders and the movement of money in and out of the company and in and out of the country. Also, where companies avail of either limited liability or in in this case, unlimited liability, the examiner must be in a position to look behind the status of the company, to look behind the label of unlimited liability because unlimited liability and limited liability are parts of our company law which are there for particular reasons, and where people claim to have unlimited liability, then I believe they must be made to stand over that claim.
Where representations have been made by people to borrow money from numerous banks on the basis of unlimited liability, those people must stand over that claim. I am proposing a number of amendments which I believe — and I would hope that the Minister would take cognisance of this — would strengthen the hands of the examiner and remove the weaknesses in our company law to which I have referred, weaknesses in relation to the pursuit of fraudulent activity and fraudulent or reckless trading. I believe anybody who is familiar with our company law would have to accept that it has been extremely weak.
Second, I propose that the examiner must report whether in his opinion the whole or any part of the undertaking of the company would be more likely to survive if any or all of the directors or other officers of the company were removed from office, or if any member of the company was required to dispose of his shares in the company. I believe this would be a very important power for the examiner to have. The examiner must be in a position where he can make a judgment in relation to the conduct and behaviour of the directors and the officers of a company. There is little point in having an examiner appointed if the day to day management of the company is still in the hands of the previous executives or the previous directors or shareholders because the examiner would be frustrated in his efforts to get full information.
Likewise, it is important that he would express an opinion about whether proper books of accounts have been kept by the company, if they have been made available to him, if there has been any obstruction or if he has been hindered in the performance of his legal functions by any officer or member of the company. I do not think any of us should underestimate what acts people will carry out to avoid presenting proper books for full inspection.
In relation to this legislation, I believe it is extremely important that the examiner would be in a position to report to the court if he has been obstructed or hindered in the carrying out of his duty. If we are serious, and I believe the Minister is serious in his efforts to safeguard companies in difficulties, then we have to give the examiner the powers to which I am referring. If we are not prepared to strengthen the examiner's hand we might as well not be here in this emergency session. There is no point in appointing an examiner for the sake of it, to give the breathing space the Minister has referred to for three or four months. I believe this is a much wider issue. We have to convince the international community, the international lenders, that we are prepared to pursue, by way of the examiner in this instance, companies which have been reckless and which have been involved in fraudulent or irresponsible trading. In that respect it is extremely important that the examiner would have more powers than are being given him in section 16 as it stands.
The Minister will say they are wide powers and indeed they are. We should not stop short, and in that respect the amendments put forward by Deputies Bruton and Barrett are in the same direction as those which I have outlined in some more detail. It is extremely important, as I said at the outset, that the examiner is allowed to get right to the root of all the transactions which have taken place. Likewise if it appears to the examiner that any transactions were entered into by the company during a period when it was unlikely to be able to pay its debts as they fell due in circumstances which were prejudicial to the interest of the creditors of the company, that matter is also one on which he would be reporting. The Houses of the Oireachtas, by the emergency consideration of this legislation, are providing a vehicle for companies in difficulties. There is a very heavy burden and a very heavy responsibility on any company who seek to avail of this legislation, on the directors of those companies, on the executives in particular and on those who run those companies, to come clean with the examiner and to provide assistance to the examiner in relation to the activities of the companies. If the Government and the Houses of the Oireachtas are providing facilities effectively to help companies that cannot trade without the assistance of an examiner or the protection of the courts, there is a huge obligation on the companies involved to reciprocate and to disclose the facts in detail.
I will put these amendments to the Minister in a constructive manner respecting the strength of the examiner's hand which is already provided for in section 16 governing the examiner's report. It is extremely important. One other aspect on which the Minister might be able to elaborate is the examiner's report. Perhaps the Minister could clarify whether the examiner will have the authority to pursue funds of companies based in Ireland which are being transferred outside the jurisdiction.
I support the thrust of the contributions by Deputies Bruton and Spring. It is my opinion that the Minister for Industry and Commerce has considerably improved this Bill — I am referring to the substantive Bill — since it was first published. In terms of dealing with the phenomenon of rogue directors, the phoenix syndrome and a number of other areas, it is considerably improved and at the Special Committee I have consistently supported that more rigorous approach.
There is a compelling case to be made for explicitly including in the legislation something along the lines envisaged by Deputy Bruton's amendment or, alternatively, Deputy Spring's amendment to this critical section 16. Section 16 of the Bill that has been visited upon us by general factors is central to the legislation for the reasons that have been stated. It threatens to undermine the entire examiner experiment if one does not impose this requirement on the examiner. Who is in a better position to have formed an opinion on whether there was, for example, reckless or fraudulent trading in the company than the examiner? This is presuming, of course, that the examiner will be carefully chosen, and I am taking that for granted.
In my experience, notwithstanding the terms of reference, codes of practice and so on, of auditors, I do not think that the lay person or the employee of the company can always rely on auditors to bring to light what they know or what they suspect. Perhaps it will be necessary to provide in the legislation that the examiner will be carefully chosen. If that is the case, as I hope it will be, the examiner will have the competence to tussle with the ramifications of the kind of case, for example, that has precipitated this legislation. Certainly whoever that examiner will be, in the event of his services being sought, he will need considerable competence and tenacity if he is to get to the bottom of what I described this morning as the financial slurry pit that we are dealing with in this case. Why ought the examiner not be required to make an express statement of his suspicion as it relates to sections 33 and 34 of this legislation? Otherwise it threatens to undermine the value of this mechanism, because it means, presumably, that if this experiment is a success and puts a stay on creditors for a sufficient period to allow a company to trade out of their temporary difficulty and be restored to financial health, the bad habits engaged in by the directors of that company can be resumed willy nilly. It is important that there should be an express imposition that he should report whether he has formed an opinion that an inquiry under sections 33 and 34 would be necessary.
This examination to be carried out by the examiner will be most intriguing. As Deputy Bruton has pointed out, it would be disastrous if his inquiries and investigations were challenged by the courts from time to time. The most frightening aspect of this whole episode as far as the general public are concerned is the veil of secrecy which surrounds these companies because of the unlimited nature of public unlimited companies. It is essential that the truth is arrived at. When I say the truth I mean the ownership, the involvement, the sums owed and why such large sums are outstanding.
I refer to the credit insurance scheme which is the centre of so much speculation. The amount owed by the Iraqis is being put as high as £180 million and as low as £50 million. It seems rather extraordinary that one country could owe so much to just one firm. I would like to ask the Minister if the investigation by the examiner will involve companies other than Goodman's chain of companies. I read at the weekend — I think it was in the Sunday Business Post— that another meat company, Caher Meats, are owed something like £50 million. I would like to know if operations like PARC are indemnified by the insurance scheme and if the Government have to fork up if the Iraqis default on that payment. I would like to know how many other companies are covered by the credit insurance scheme in Iraq.
The whole problem may not just be confined to Goodman and his related companies and the sum involved could be considerably greater. The unravelling of the structure of the Goodman companies will obviously be extremely difficult and if this section 16 does not enable the examiner to find out what that structure is exactly, then we will have considerable trouble. This matter could drag through the courts for years. We had the very simple saga in recent times relating to Premier Meats, the ownership of which has been in dispute publicly. Goodman, apparently, denied at all times that he had purchased that company and despite the Minister's investigations, none of us has ever been entirely satisfied that it was in his ownership. Various companies have been located in places such as Lichtenstein, Australia and South America who had a controlling interest but we suspect Goodman has had a controlling interest in those companies. The examiner's report will have to be very thorough and, as this will be the first time such an operation has been carried out here, I hope the examiner can penetrate the veil of secrecy which has surrounded the operations of the Goodman enterprises. It will have to penetrate and ascertain what has been happening.
Accompanied with this we have the rather unsavoury situation of Goodman at present suing the Minister for Industry and Commerce for a considerable sum of money arising out of the withdrawal of the export insurance scheme. That may complicate the matter further. The amount the Government and the Minister are being sued for has been represented in the media to be something like £50 million. There are other alarming reports which indicate that the sum could be as great as £500 million. It is intriguing and frightening and I hope the examiner will have powers which supersede anything the courts might be able to counteract. If the examiner does not have such powers we are going to have a long legal wrangle and may find ourselves in a totally unsatisfactory state. One can call it a slurry pit, a septic tank or whatever but it will be with us for many years. I hope the report will not be as unsatisfactory in its conclusion as the investigation into the Insurance Corporation of Ireland. We never found out exactly who was to blame in that particular instance. It seems as if it was the Ministers in the Fine Gael/Labour Coalition Government who got the blame for the extraordinary mistakes made by the board and executives of AIB. I hope in this case the blame will be laid where it lies and not with the taxpayer and the general public. Let me sound a note of warning that the examiner's powers will have to be immense and override anything the courts might be able to throw back.
In relation to the three amendments, I would in the first instance point out to Deputies, who were anxious to add various additional powers, duties or contents to the report of the examiner under section 16, that paragraph (i) would cover all the matters mentioned. Paragraph (i) reads, "such other matters as the examiner thinks relevant or the court directs". All the matters mentioned would be covered.
Might be.
He could consider any of the matters referred to here relevant or, alternatively, the court may direct him to do so. If something comes up in the course of the report that seems relevant to, say, sections 33 and 34, or to the question of reporting requirements, then the court can direct that it be dealt with. It could be done at the outset before the report is drawn up.
I would counsel Deputies to beware of loading too many requirements and duties on to the examiner's shoulders. The debate on these additional duties and requirements over the last 20 minutes or half an hour seemed to be predicated on the basis that the examiner was some form of policeman. If he is it is only very incidental to his basic duty which is that of rescue of a company who are not irrevocably insolvent. The danger of adding on a whole load of duties of this kind, additionally and specifically, to him is that it will divert him away from his primary rescue role which is what this legislation is about. I agree that he should watch out, in the course of his activities and duties, for improprieties and bring them to the attention of the court or whatever other authorities are relevant.
I think he is covered under paragraph (i) for that. Given the times we live in, and the fact that one of the cowboys in England today got five years whereas in Ireland they tend not to get charged, not alone get five years——
It is just as well we do not have an honours list.
——it might be no harm, as an expression of the views of this House, even though it is not altogether necessary, to accept amendment No. 20 but it would have to be put differently. It should go in as paragraph (i) rather than paragraph (j) because paragraph (i) will have to come at the end. Therefore, the word "and" will have to be deleted before it and the word "and" inserted after the figure 34. I think it is covered by paragraph (i) as it is but it might be no harm, as an expression of the views of the Oireachtas, if the House is agreeable, to have it in.
On the question of amendment No. 23 and reporting requirements, the point Deputy Bruton made was valid enough, if the position remained as it was prior to the last week in June. The House may or may not be aware that in the last week in June, at the last Internal Market Council under the Irish Presidency, a directive was adopted which has the effect of requiring reporting by certain categories of companies, including GMBH's in Germany and unlimited companies here in certain circumstances where they have limited companies among their shareholders. I pushed that rather hard and I am glad to say we got it adopted. I was aware of the fact that within the past 12 months here there was widespread delimiting of a whole range of limited companies — that may not be the word to use but that was the effect of it — in the beef trade, in the supermarket trade and in a couple of other profitable trades. They transposed themselves from being limited to unlimited companies apparently for the purpose of avoiding the disclosure requirements.
The directive adopted in June reimposes this as a matter of European law and we will be reflecting that directive in company legislation here. We may be able to introduce it on Report Stage of the main companies Bill in the autumn but I am not clear if we can do that. We already have four or five of these directives in that Bill and we may be able to do it. If we cannot do so in the autumn, we will certainly do so at the earliest opportunity. It will be European law on 1 January 1992. The reason I do not think that paragraph (j) is necessary is because the position has changed since the end of June and this will be covered. It is very unsatisfactory that people, if they consider themselves big enough and strong enough, can avoid the requirements of disclosure by transforming themselves into unlimited companies whereas a relatively small trader, who is a limited company, has to make fairly significant disclosures about his affairs when they are not really relevant to the public good. They may be of some relevance to his creditors or those he trades with but they are not of any real relevance to the public welfare. The affairs of a company that turns over £1 billion is relevant not just to those who directly trade with them but, perhaps, to hundreds of thousands of people in the country. I am glad that point is covered and for that reason I do not think amendment No. 23 is necessary. Amendment No. 22 is covered by Deputy Bruton's first amendment. The other points are covered by other paragraphs in section 16 and particularly in paragraph (i) and also in section 16 (e). I think the point is made by the inclusion of amendment No. 20. If the House is agreeable I suggest we adopt it with the slight modifications I suggested.
The Minister has indicated that he is prepared to accept amendment No. 20 on condition that what is proposed in the paragraph appears before paragraph (i).
It will become paragraph (i) rather than paragraph (j).
The word "and" before it would be deleted.
I would like to express my appreciation of the fact that amendment No. 20 is being accepted. It is an indication of the force of the arguments made by Deputy Barrett and I and also by Deputy Spring. However, I am not convinced of the Minister's reasons for his reluctance to accept amendment No. 23. The argument he makes is that, as we are improving the reporting requirements for unlimited companies for the future, there is no need to require the examiner to report on non-compliance with existing reporting requirements. To my mind they are two separate events and there is no logical connection between them. The fact is that Deputy Spring has made certain serious allegations in this House in regard to the use of a shareholding by a limited company in an unlimited company as a means of avoiding existing reporting requirements. It would appear that that is not a legally correct process to have adopted. That is something that ought to be investigated. Amendment No. 23 would require the examiner to investigate it and report on it, in this or in any other circumstance. Obviously, amendment No. 23 would have the advantage that, when the new legislation, to which the Minister has referred, is enacted it will require the examiner to report on the compliance with the new improved legislation as well. It is entirely consistent with what the Minister is saying. What he is saying is in no sense an argument against implementing amendment No. 23.
While the Minister is making some gesture he is availing of the minimalist approach when we should go to the other extreme because of the seriousness of the situation. I would prefer that everything was in rather than a global phrase such as the present paragraph (i) which will become paragraph (j). Paragraph (j) will read:
such other matters as the examiner thinks relevant or the court directs.
I am glad to hear the Minister's acknowledgement that companies have been setting out to circumvent the responsibilities of unlimited liability but I am a little disturbed that the Minister feels that that solves the problem. It is extremely important that any solution we are proposing, any examination which will be made, complies with the requirements of existing company law. I did put a question to the Minister in relation to assets transferred outside the State and what powers the examiner might have to pursue that. Perhaps the Minister of State, Deputy Leyden, could respond to that point. The position will be different and there will be more regulations after 1992 in relation to the European Directive which the Minister informed us has been passed. That is all very well post-1992 but we are dealing with a very serious situation now. I would like to have some assurances from the Minister of State that the powers outlined to the examiner for the process of his reporting that will allow him to pursue companies where it becomes obvious that they have circumvented what is normally understood by the concept of unlimited liability. If that has happened people should be brought before the courts. That is something we are particularly bad at in this country. It is the reason I proposed the amendments. It is unfortunate that the Minister is going for the minimalist global paragraph (i). It does not go as far as my own amendment No. 22 to section 16 which contains far more clarity than what the Minister is saying and which I believe is warranted by the situation now confronting us in relation to the difficulties facing the beef sector. Perhaps the Minister of State can give me some clarification on what authority if any the examiner will have to pursue shareholders or company holders who have sold their creditworthiness on the basis of unlimited liability and who by clever, but devious device, have no liability at the end of the day. Perhaps the Minister of State would clarify what powers the examiner has in relation to the pursuit of that and also in relation to section 16 (d) which states:
whether in the opinion of the examiner any deficiency between the assets and liabilities of the company has been satisfactorily accounted for or, if not, whether there is evidence of a substantial disappearance of property that is not adequately accounted for.
What powers does the examiner have to pursue any traces of the removal of property or the removal of cash from this country to countries abroad?
Deputy Spring may be misinterpreting the role of the examiner in this case. During the Committee Stage of the Bill which we debated prior to this new Bill, Deputy Bruton, Deputy Barrett and I had many discussions in relation to the role of the examiner. Unfortunately Deputy Spring was not there at the particular time to hear the points raised. If he had been present then he might be more aware of the role of the examiner.
Answer the points that were raised.
The role is to save a particular company that is sick at a particular time.
Sickness had not been invented then.
Listening to the contributions from certain elements of the House I may be forgiven for saying that a certain amount of gloating is going on. I am referring to comments made by The Workers' Party and, perhaps, the Labour Party.
That is nonsense.
I am only giving my own view on it.
It is a limited debate.
The examiner is there to save a company that is sick. He is not there as a policeman. His job is to report back to the courts. He is free to report back on any aspect of the company involved. In relation to saving the company and the jobs the examiner's role is very specific. The Minister made it clear that he did not see the role of the examiner as being a policeman. There are many sections which have reporting requirements of all kinds. The Minister has given leeway to the Opposition in accepting the amendment put down and has gone a long way to facilitating the points put forward.
With the greatest respect, Sir, while I found the Minister of State's contribution very interesting I am even more interested in his answer to the two questions put very specifically by Deputy Spring, that is, what power the examiner will have between the passage of this Bill and 1 January 1992, to which the Minister referred, and the question of transfers outside this jurisdiction. It might be of great advantage to us in understanding the role of the examiner — as the Minister of State is so anxious that we do — if we had very definite replies to these questions.
I might add a question of my own as well. Before leaving the Minister referred to the fact that it had become known in his Department that there had been widespread delimiting of companies. Perhaps he might give the House information as to the number of companies they came up with and in what sectors of Irish industry they were located.
Now, Sir, try that one.
I did not hear the full extent of Deputy Spring's contribution, but to answer his last point first, in relation to the powers of the examiner to pursue the people about whom he is concerned, if he looks at section 33 (1) he will see that it reads:
If in the course of proceedings under this Act it appears that—
(a) any person was, while an officer of the company, knowingly a party to the carrying on of any business of the company in a reckless manner; or
(b) any person was knowingly a party to the carrying on of any business of the company with intent to defraud creditors of the company, or creditors of any other person or for any fraudulent purpose;
the court, on the application of the examiner, or any creditor or contributory of the company, may, if it thinks it proper to do so, declare that such person shall be personally responsible, without any limitation of liability, for all or any part of the debts or other liabilities of the company as the court may direct.
It would seem to me that that is a fairly substantial power. I might also point out that the report of the examiner will indicate to the creditors whether they would have a right personally — whether by virtue of this section or of section 297 of the 1963 Companies Act which is being extended, I think, by section 116 of the Companies (No. 2) Bill, 1987 — to pursue the responsible officers or directors. From that point of view the role of the examiner would act as quite an impetus to pursuing people who have hitherto endeavoured to hide behind the veil of incorporation or behind the concept of limited liability.
I do not know what was the other point about transfers outside this jurisdiction. It would appear to me that if the examiner's report contains evidence of substantial disappearance of property from the company which is not readily accounted for, the officers in charge of the company at the time — if they cannot explain this occurrence — will be brought within the ambit of the provisions of section 298 of the Companies Act, 1963, being extended by section 116 of the Companies (No. 2) Bill, 1987.
In relation to the points raised by Deputy M. Higgins with regard to the delimiting of companies, the position is that it does not arise under this Bill. That is not the legislation with which we are dealing in this House today.
The Minister himself brought it up.
It is being raised in the context of this Bill and developments which took place at the Council of Ministers in Europe under our enlightened Presidency will bring about the position that will obtain on 1 January 1992. In the meantime, in relation to the main Bill those issues can be addressed at that stage. The question of delimiting of companies does not arise in relation to this Bill.
May I revert to that point? Throughout the day there was what I would consider to have been a fairly constructive passage of this Bill. The Minister for Industry and Commerce in response to a point raised by Deputy Bruton and me — and I think Deputy Deasy — adverted to the fact that he and his Department were aware of the fact that many companies were using this device basically to run away from their responsibilities. The Minister was able to inform us further that he welcomed the fact that the Council of Ministers had moved to do something about that. Because of the fact that the Minister himself has informed the House of this fact, which is relevant — we did not object to the information as being irrelevant — I would put it to the Minister of State very strongly that there is now an obligation on him, acting for the Minister who has ultimate responsibility in this area, not only to inform the House but to criculate in the House a copy of all the companies which have been brought to the attention of his Department in the past 12 to 18 months which have availed of this invidious process. I believe that would be in the best interest of this House in relation to the serious undertaking we are pursuing here today.
May I take it that there is a large measure of agreement on the adoption of amendment No. 20 in the names of Deputies S. Barrett and Bruton?
It is agreed.
Amendment agreed to.
Let us then proceed to amendment No. 21 in the names of the same Deputies. I observe that amendment No. 29 is related. I suggest that we discuss amendments Nos. 21 and 29 together.
We have also been discussing amendment No. 22.
We will come to that when we have disposed of amendment No. 21.
I would like a response from the Minister of State in relation to my request for information which might be helpful to all of us in relation to this matter.
I will allow that question on amendment No.22 when we come to it.
I move amendment No. 21:
In page 14, between lines 42 and 43, to insert the following:
"(k) his opinion as to whether his work would be assisted by a direction of the court enhancing the powers, or extending the membership, of the creditors committee under section 21 of this Act.".
I might refer the House to section 21 which relates to the appointment of a committee of creditors, subsections (1) and (2) of which read:
21.—(1) An examiner may, and if so directed by the court shall, appoint a committee of creditors to assist him in the performance of his functions.
(2) Save as otherwise directed by the court, a committee appointed under subsection (1) shall consist of not more than five members and shall include the holders of the three largest unsecured claims who are willing to serve.
In other words, the examiner has very little discretion in relation to the composition and work of the committee of creditors except in circumstances in which the court will direct other than what is contained in this section. What we are attempting to do here — in addition to other items on which the examiner would be reporting — is to ensure he would also have an opportunity of giving his opinion as to whether his work would be assisted by a direction of the court enhancing the powers or extending the membership of the creditors' committee under section 21 of this Bill. It is highly unlikely that a court would extend the membership or the powers of the committee of creditors without the direction of the examiner. Therefore, we feel it would be beneficial to add this additional subsection to section 16 clearly outlining what is intended.
The Minister of State may give the House more information but, as I understand it, the success of the Chapter 11 mechanism in the United States is due to the fact that a committee of creditors technically run a company as long as that company is under the protection of the courts.
We spoke earlier of the need for consensus, for agreement, in order to have the provisions of this Bill properly implemented. It is important that there be flexibility for the examiner, in regard to the composition of the committee of creditors and the work that committee should undertake under his guidance and direction. Therefore, I would ask the Minister of State to accept this amendment which would be in the best interests of the Bill as a whole. I hope that my colleagues on this side of the House will also support this amendment.
I strongly support Deputy Barrett in regard to this amendment. The whole idea should be to get agreement between all the creditors. At the moment the committee of creditors which is to be established will consist of only the five largest creditors. In any company, particularly the one about which we are talking at the moment, there is a larger number of creditors than that and, if you get consensus, the biggest five will not necessarily speak for them all. It should be possible to provide a flexible mechanism of extending the committee of creditors to work with the examiner to get an agreement thrashed out quickly rather than having them object to it in court. The argument should be in a committee setting where the tendency is towards agreement rather than an adversarial type of relationship.
It is in order that the examiner would be specifically requested to say to the court in his initial report whether the thought it would be a good idea to extend the committee of creditors by a court direction that we tabled this amendment. I hope it will be accepted because it is designed to achieve what the Minister wants — and what we all want — to minimise court conflict and to maximise consensus.
I will speak briefly on this amendment which I support because it has considerable merit which is magnified in the context of the company to which this Bill relates. There are so many creditors that it would be very unsatisfactory if we relied on section 21. It would be more businesslike and efficient if the amendment was accepted because it would enhance and strengthen the position of the examiner. It would also go a long way towards achieving some unity of purpose if the business is to be saved. In this instance, there are many smaller creditors, indeed many of the smaller creditors are institutions in their own right but they will take a severe beating in relation to their Irish operation. It is extremely important to allow them to have access to the creditors' meetings by way of this amendment. It would strengthen the Bill and if the Minister is serious about providing the powers and the authority to the examiner, he should accept this amendment.
May I move amendment No. 29?
You may speak to it, Deputy. There is an amendment before the House and that is all we can deal with specifically. Amendment No. 29 may be moved only when we come to it. We are now discussing amendment No. 21.
Will the Deputies elaborate further on the word "enhancing" in relation to what they envisage would be the power the court would give to the examiner in regard to the creditors' committee?
It may be that, in regard to some of the matters the examiner is deciding on his own, he might consider sharing responsibility for them with the creditors' committee of his own accord and voluntarily if he felt that that would be conducive to getting their agreement to a scheme of arrangement, for instance, perhaps in regard to the disposal of assets. Instead of taking the decision on his own he might feel he had a better chance of getting them to agree to the whole package if he said that he would not dispose of anything without consulting the creditors' committee. Of course, to do that he would need court agreement to give the creditors' committee a responsibility in that area which they do not currently have. Nothing could happen, of course, without the agreement of the court and the examiner suggesting it. However, the examiner might feel that he had a better chance of getting agreement through power sharing than through a solo operation.
We are asking to have the examiner's opinion included in the report as to whether his work would be assisted by a direction of the court cancelling the powers. The section says "save as otherwise directed by the court", in other words, the court would already have power to change the composition of the membership of the committee but we are saying that the report should include the examiner's opinion so that it is there for everybody to see. Perhaps in the course of his discussions with various creditors leading up to the presentation of his report, he might feel he could get a compromise or consensus if he could persuade the court to enhance the powers or extend the membership of the creditors' committee. The more interest groups represented on the creditors' committee the greater the chance there is of getting consensus, agreement and resolution to a problem.
The proposals of Deputies Barrett and Bruton are vague in relation to new powers. Nevertheless, I am generally in favour of their amendment and I should like to look at the wording for Report Stage if that is agreeable.
Amendment, by leave, withdrawn.
I move amendment No. 22:
In page 14, between lines 42 and 43, to insert the following paragraphs:
"(j) whether information or circumstances have come to his attention in the course of the performance of his functions under this Act from which it appears to him that any past or present officer, or any member, of the company may be guilty of any offence in relation to the company for which that person would be criminally liable;
(k) whether in his opinion the whole or any part of the undertaking of the company would be more likely to be capable of survival if any or all of the directors or other officers of the company were removed from office or any member of the company were required to dispose of his shares in the company;
(l) whether, in his opinion, proper books of account have been kept by the company and have been made available to him for his inspection, and whether he has, by act or omission, been obstructed or hindered in the performance of his functions under this Act by any officer or member of the company;
(m) whether it appears to him that any transaction was entered into by the company during a period in which it was unlikely to be able to pay its debts as they fell due for payment (taking into account the contigent and prospective liabilities of the company) in circumstances which were prejudicial to the interests of any creditor or creditors (whether secured or unsecured, and including prospective and contingent creditors) of the company;
(n) a statement as to any steps taken by him in discharge of the duties imposed on him by the Protection of Employment Act, 1977, and the European Communities (Safeguarding of Employees' Rights on Transfer of Undertakings) Regulations, 1980.
I hope the Minister will give a fulsome reply to my question regarding the information already before the Department. Will he make that information available to Members of the Oireachtas because it is extremely important that it is made available to us in relation to the responsibilities we share in regard to this legislation?
Deputy Spring is going back on a discussion that took place before the Minister, Deputy O'Malley, left, in relation to the question of delimiting limited companies. This has created a certain amount of concern. The Minister clearly indicated the position in regard to this issue and he also said, in relation to company legislation, that he would consider this matter in the overall Companies Bill which deals with other vitally important aspects and which will also have to come before the Oireachtas.
The Minister wondered whether he could introduce an amendment on Committee Stage in relation to unlimited companies in the context of the European decision which was taken during the Irish Presidency in June and which will be implemented on 1 January 1992. This amendment cannot be incorporated in this Bill at this stage. We are dealing specifically with a vehicle for the rescue of companies and the appointment of an examiner. I do not think the Minister indicated that he would include the amendment in this legislation.
In relation to the information being sought by Deputy Spring about specific companies which have recently taken a particular avenue, that information is available in the Companies Office. I think the Deputy is anxious that we would make that information available to the House. I do not think information could be given about specific companies because they may have certain reasons for taking a particular course of action which may not be related to the company. The Deputy may be prejudging the retionale behind their decisions. As the Minister has pointed out, there have been certain developments in this regard and as President of the Council of Ministers he suggested this requirement at the Council meeting in Brussels. We would not have the opportunity of getting the information Deputy Spring is seeking at this point in time. The Minister is aware of Deputy Spring's request and he can put down a question at the appropriate time in relation to the number of companies involved.
I take the Minister of State's point about the Minister not being able to do anything at this stage of the Bill. The Minister referred to this point, completely unsolicited to an extent, and I got the impression that he had the information at hand. Perhaps the Minister and his advisers could see whether they could make that information available to us on Report State this evening. I do not mean any disrespect to the Minister of State but I do not think he appreciates the seriousness of the debate which has taken place here today. This is a very central part of the discussion which has taken place in relation to the avenues being used by companies to avoid their responsibilities. I believe that information is on the Minister's desk and would be of help to the rest of us, the public and the bankers who are listening to this debate.
Amendment, by leave, withdrawn.
I move amendment No. 23:
In page 14, between lines 42 and 43, to insert the following paragraph:
"(j) his opinion as to whether the company has, in the course of its operations, complied in full with the reporting requirements imposed on it by the Companies Acts.".
I will withdraw this amendment solely on the basis that it may be introduced on Report Stage in view of the Minister's intransigent attitude.
Amendment, by leave, withdrawn.
I move amendment No. 24:
In page 14, between lines 42 and 43, to insert the following paragraph:
"(k) the extent to which the company availed of the provisions of section 25 of the Finance Act, 1987, for the purposes of raising finance.".
This amendment is related specifically to Goodman International. As the House will recollect, in December 1987 the Taoiseach summoned a press conference to announce the details of a package of assistance for a large number of new processing plants and expansions which were to take place under the aegis of Goodman International. I understand that the IDA decision to facilitate that package had been rushed through the IDA at the behest of the Taoiseach and under pressure from him. I understand also that the pressure to facilitate that package came more from the Taoiseach's office than from Goodman International. In fact, it was the Taoiseach rather than Goodman International who were concerned at having it rushed through so quickly.
As the House is well aware, the extra jobs and processing capacity promised at that elaborate press conference never happened and, in fairness, none of the specific grants promised to be paid out by the IDA has been paid to Goodman International either. I am not saying that the IDA gave the Goodman Group money that they ought not to have got but part of the package which was not announced on that occasions but which I believe was part of the agreement was a change in the Finance Act. That change in the Finance Act was part of the deal and without it the deal would not have occurred and the Goodman Group would not have committed themselves to the expansion. That part of the deal was delivered by the enactment of section 25 of the Finance Act, 1987, which involved exempting food companies from a general provision which had been made the year before in section 52 of the Finance Act, 1986. The Finance Act, 1986, said that, where a company received a grant from the IDA towards the cost of a machine, they should be able to claim a capital allowance only in respect of the cost of the machine to which they had contributed from their own funds. They could not claim a capital allowance against taxes in respect of the money they had got from the taxpayer in the first place through the IDA, on the sensible basis that that would be essentially double accounting.
For some unexplained reason the Goodman Group felt, and the Minister agreed, that food companies should be exempted from that very sensible general requirement. It would appear that section 25 of the Finance Act, 1987, was introduced specifically in order to facilitate the agreement of the Goodman Group to this elaborate grant package which the Taoiseach, rather than the Goodman Group, was so anxious should go through and which he, rather than the Minister responsible, was so keen to announce. This was most unusual because during my time as Minister for Industry and Commerce I can never remember the Taoiseach, Deputy Garrett FitzGerald, saying "move over, I want to make this announcement." He did not do so——
Or the Tánaiste.
He made very few good announcements.
He made a hell of a lot more than you.
Deputy Leyden is inherently a distraction which I will not follow in this case——
Let us not personalise the debate.
He was a genuine man and not a dictator.
Deputy Bruton without interruption.
Given that the package of expansions did not go ahead and no grant money was paid, I should like to know in the facilities contained in section 25 of the 1987 Finance Act which were put in order to get agreement to the deal were used by the group as a basis for financing other activities, some of which may not have been in Ireland. Obviously, if an amendment to a Finance Bill which was introduced specifically to facilitate a package and designed to promote employment creation in Ireland was used to fund activities overseas while the investment activities in Ireland did not take place, that would be wrong, and we are entitled to know and have in the report of the examiner a clear statement as to whether that happened. The purpose of amendment No.24 is to ensure that the examiner's report contains that specific information. It is important that that be dealt with definitively. It should not be a matter for innuendo or discussion in this House or anything like that. Let it be put into the examiner's report and let us have the facts once and for all.
I rise to support amendment No. 24 in the names of Deputies Barrett and Bruton. Deputy Bruton has articulated very succinctly the background to this amendment and I agree with his concluding remarks. Over the years I have had a far more jaundiced view of section 84 leasing, as Deputy Bruton will remember.
I did not keep a note of it.
Deputy Bruton moved to cut off what was an obvious loophole, something that could not be defended in relation to the double tax break that had cropped up. Mysteriously, or not, this came back in by virtue of section 25 of the Finance Act, 1987. We have referred on many occasions today to the press conference and the attempts by the Taoiseach to launch a big programme and, effectively, put Mr. Goodman in charge of the development of the Irish beef sector in toto.
As has been said, there were IDA grants for various projects around the country that never materialised. This amendment warrants inclusion in what is required in the examiner's report. That will take this whole area out of political argy-bargy. This amendment is the best and most clinical way of dealing with our business. If the Minister of State has any strenuous objection to including it the suspicion will still lie there in relation to the motivation. It would be far better in relation to the way we do our business in this House if the Minister of State, and the Minister for Industry and Commerce, would accept this amendment because we would be nailing this down once and for all with no more messing or beating around the bush. I am inclined to say when things are alleged and not denied in this House that then they stand, and, indeed, many things are standing as of now because they have not been denied.
The Minister has an opportunity to establish his bona fides in relation to this transaction. Let us remove the doubt, the shadow of doubt which will persist if the Minister resists Deputy Bruton's and Deputy Barrett's efforts to include this amendment which I believe is well founded. It offers a possibility for this House to establish the facts with no messing around the place.
I am sorry to have missed the initial part of this discussion. Earlier in this debate I complimented the Minister for Industry and Commerce on the overhaul he has done on the wider companies Bill much of which I agree with, but if the Minister wants to maintain his untranished reputation it is incumbent on him in the context of this legislation to take this amendment on board.
In my contribution on Second Stage I dealt at some length with information that has come into my possession which impinges centrally on the implications of this amendment. It is possible to argue that we cannot enact legislation designed to meet the exigencies of one company, but then, of course, this is not legislation introduced in normal times or circumstances. Since we are all agreed in this House on who is likely to be or may be the first beneficiary — if that is the word — of this legislation, and having regard to the information I laid before the House this morning concerning the abuse and misuse of section 84 lending, it is imperative that this amendment be taken on board. If it is true — and it was not denied — that a substantial part of the package of section 84 lending was drawn down for purpose other than those approved by the Government in the package that has been referred to, then it is all the more important that this is taken on board.
I welcome the Minister's advice when replying concerning the procedure to be adopted now and on counselling the banks if they consider they have a case for wrongful use, if the section 84 facility was misleadingly availed of or if they were told less than the whole truth and how they should go about putting things right. That is all very well, but it does not get to the heart of the issue that is being raised here.
A scandal of this proportion in the US would be on the front page of every newspaper for weeks. In the context of our small economy a group of companies who claim to account for 4 to 5 per cent of the GNP of the State is enormous. The taxpayer, and the public, are entitled to know to what extent these companies availed of the section 84 facility that was included in an extremely generous and, in my view, partisan package by the then Fianna Fáil Government that resulted in all our eggs in the beef sector effectively being put into the Goodman basket and being drawn down and utilised for purposes other than were approved. Therefore, I consider Deputy Bruton's amendment is necessary in the context of the reasons the Dáil has been reconvened and it is imperative that the Minister take it on board.
Deputies Bruton, and others, who have contributed to the debate on this section are getting away from the overall thrust of the Bill which is the appointment of an examiner to save ailing companies. Deputies are making allegations about a specific company being discussed, I suppose, outside this House.
That is specifically why we are here.
Deputy FitzGerald, I hope, is aware that the Bill will be available to assist companies who may get into difficulties now or in the future. This Bill will assist in the saving of many jobs in the future. Deputies who debated the Committee Stage of the main Bill are aware of the general acceptance of this section in the main Bill. It was welcomed by all sides at that time.
The policing or monitoring of aspects of the Finance Acts is not an appropriate duty for the examiner. His duty is to see how the rehabilitation of the company can be achieved. Placing other duties on the examiner that are not central to his role can only hinder him in the attainment of his objective. Whatever provisions are placed in the Finance Acts should be monitored, if necessary, by appropriate arrangements. It is not a duty, however, that should be placed on the examiner. The examiner should not spend the precious time available going down certain avenues in relation to the Finance Acts, and how they were dealt with by a company. I do not think that is appropriate to this Bill.
The Minister of State could not be serious.
In the course of the examination certain information will come to light, more than likely, about the affairs of a specific company. I want to make it clear that as far as I am concerned I am not accepting the amendment because it is taking from the main thrust of the Bill which is to allow to examiner to rescue companies in difficulties now and in the future. It is not his or her job to examine the implementation of sections of the Finance Acts at particular times or how they were used by a company. We are taking away from the responsibility of the examiner which is to rescue the company and ensure that jobs are retained. It is not his responsibility to become involved in following the allegations made about a specific company which is not mentioned in the legislation and which may or may not avail of this legislation.
The Minister is not serious. There may be a reason for refusing the amendment but the Minister has not produced it.
On reflection, Deputies may decide not to pursue this amendment. Their hearts are not in it.
Go away out of that. The Minister of State is no de Valera who can look into his own heart never mind look into mine.
I have no doubt, from the contribution the Deputy made on Committee Stage of the original Bill, that the would not expect the examiner to carry out this function. The examiner's function is to save jobs. There are other Acts which he may be required to look into when he takes over the responsibilities given to him by the court in relation to the examination of a company. No doubt information will come to the examiner in the course of his examination of a company and that is normal. It is not part of the examiner's job to go into the background of a particular section of a particular Act to see how a company availed of certain facilities which were available to them. I am not accepting the amendment.
We should stop fooling ourselves. This is 28 August. The Dáil would not be sitting only that Goodman International is in serious financial difficulty. Let us cut out the codswallop about the fact that we are dealing with normal legislation. It is an utter joke to try to persuade the public and Members of this House that we are dealing with normal legislation. The Government have decided that this is a vehicle to deal with a major problem facing the beef industry and in particular with Goodman International. This morning I challenged the Taoiseach to answer some questions but none of them has been answered. The Minister for Industry and Commerce disappeared from the Chamber when this amendment came up for discussion.
That is not true. That is unfair.
It is now 8.15 p.m. and Committee Stage ends at 8.30 p.m. The Minister should give us credit for some level of intelligence. When his party were in Government in 1987 they did everything possible to encourage Goodman International into Iraq. They did everything possible by way of grant facilities and the Hollywood style launch with the IDA, with the Taoiseach sitting in the middle smiling at us all and Mr. Goodman——
Communing with nature.
Tell me about any other legislation which contains a provision such as that contained in section 25 of the Finance Act, 1987 to the effect that the provisions of subsection (1) of section 52 of the Finance Act, 1986 shall not apply and shall be deemed never to have applied. Can anyone remember ever seeing a section in a Finance Act which not only revokes a provision in a previous year's Finance Act but actually says it never applied?
A sweetheart deal of the first order.
Who is fooling whom? All we are doing here, because we are dealing with the Goodman problem — and let us not pretend that we are not — is asking the extent to which the company availed of the provisions of section 25 of the 1987 Finance Act for the purpose of raising finance. That will only apply to one or two companies. If it is put into the legislation it will not impose any massive burden on the examiner. It will apply only to companies involved in food processing who received grants. I do not know how the Minister of State can say this amendment is not suitable for this legislation. This is 28 August. It is very suitable for the case before us which is that we allow legislation to be passed in order to deal with a major problem in the Goodman Group. We are still awaiting answers from the Taoiseach and the Ministers for Industry and Commerce and Finance as to what sort of deals were done in relation to the restoration of export credit insurance for this company. Taxpayers are exposed to laibilities in excess of £100 million as a result of a deal which was worked out. Part of that deal is contained in section 25 of the 1987 Finance Act and part of it was displayed on television when a so-called expansion package was launched.
We live in a democracy and the people who elect us expect us to answer truthfully questions which are raised when decisions taken by a Government have caused serious problems to thousands of people. Thousands of people depend on the beef industry and we deserve better than waffle from the Minister of State at the Department of Industry and Commerce in reply to a simple amendment which is clearly seen to be defending some behind-the-scenes agreement that took place in 1987.
I am glad to see that the Minister for Industry and Commerce has arrived back in the Chamber. I would like to hear what he has to say about this amendment and why it cannot be included in this.
The Minister of State's reaction to this amendment — the Minister has not had a chance to speak on it yet — is a good test of the sincerity of the Government in regard to this legislation and the Minister's sense of freedom of action. The Minister of State, who spoke in a rather extraordinary way, described the Bill as one to rescue companies and save jobs. This Bills is to amend the Companies Acts, of which this is an ad hoc extract to meet particular urgent needs, which are designed, among other things, to ensure against malpractice of various kinds, and it is appropriate that the legislation before us should ensure that, where an examiner is appointed to a company, all information of the kind that is normally required under the Companies Acts should be extracted. I hope the Minister shares this view and is genuinely concerned that these matters are brought out into the light of day and are not covered up. Everything in his record so far has shown that that is his wish, and I would be very disappointed if he took a different line on this occasion.
The Minister of State's reply was very disappointing. I make a last appeal to the Minister on the basis that a refusal to accept this amendment would leave a shadow of doubt all over the place. Where as the Minister of State tried to say that it was not the function of the examiner to clarify these matters in relation to section 25 of the 1987 Finance Act, I say that it is central to the whole debate. There is an obligation on the examiner in relation to companies in difficulty to establish that they have done everything by the book otherwise. The Minister has expressed grave dissatisfaction with this type of business. Now there is an opportunity once and for all to clarify the matter. I would appeal to the Minister to allow this amendment to stand.
I understand the Minister of State has dealt with this matter. He has explained that the monitoring or policing of sections of Finance Acts is not a matter for the examiner. There are other people to do that. Before I went out for a break I sought to caution the House in respect of a number of these amendments against loading too many duties on then examiner which were extraneous to his central role under this legislation of trying to rescue companies.
Many of the Deputies who have been speaking over the last hour or two are, foremost, anxious to have some sort of policing in respect of companies or the directors of companies that are in trouble rather than trying to rescue the companies, and I think that is wrong. I am all for policing. If anybody has abused the terms of the Finance Act, 1987, then let him be brought to book for it.
How do you find out?
I do not think this legislation is appropriate for it.
This is 28 August and we are dealing with legislation because of a particular problem.
Let us hear the Minister out.
Let us have whatever law reform or legislation is appropriate. I am not trying to defend anybody, if any particular person has abused these functions, but I do not think that we can write into the general law of the land what is being put before this House for the purpose of trying to rescue companies that are not irrevocably insolvent and that are potentially viable. We cannot write into legislation all kinds of policing aspects related to Finance Acts and other things like that. I am not trying to defend anyone and I will not defend anyone. My record in this House is such that I cannot be accused of ever having cought, whether in Opposition or in Government, to defend anybody. This is no opportunity to do anything.
(Interruptions.)
Let us have an orderly debate. The Minister, without interruptions.
The Minister should come down off his high horse.
Deputy Barrett, this is a Committee Stage debate and the Deputy may intervene as often as he likes, but he will give due regard to another Member who is entitled to speak.
Whatever horse I was on in the months of February, March April and May of 1989 when I raised these matters in this House first, I got fairly limited support and I have no apologies to make to anybody. I see no reason to disagree with what the Minister of State has said on this occasion. In fact, it accords with what I have said, that to load a long list of policing duties on to the examiner will only distract him from the central duties he will have under this Bill, when it is enacted, to try to rescue companies.
I am ready to show my good faith in this matter, to express my agreement that anything untoward should not in any sense be protected or covered up. I accepted amendment No. 20 in the names of Deputies Bruton and Barrett to the effect that if any facts are disclosed which would warrant any further inquiries under section 33 or 34 they had to be included in the examiner's report. I think that would cover matters the present amendment seeks to cover just as well as general, criminal or civil liability matters. That is perfectly broad.
I would again point out to Deputies, as I did before I went out, that paragraph (i) of this section says "such other matters as the examiner thinks relevant or the court directs". I cannot imagine a paragraph that could be wider in its effect than that and there is no activity which either the examiner or the court might think in any way improper that they are not entitled to report and comment on and refer to their relevant authorities under that paragraph. I really think that people should not, therefore, be making an unnecessary song and dance about this because any impropriety that allegedly may or may not have happened under this section of this Finance Act — and I do not know whether it did or not — is clearly covered by the amendment I have already accepted as well as by paragraph (i) of section 16.
I am surprised that the Minister would not want a report to be presented on whether a particular company availed of a peculiar piece of legislation which was section 25 of the Finance Act, 1987, a piece of legislation that was enacted when he was in Opposition and for which he had no responsibility. All that this requires is the publication of information about whether it availed of this. It does not involve any suggestions of malpractice or anything like that, simply the publication of information. I am surprised that Deputy O'Malley would not want that. However, we have heard this debate up and down and it is time to vote on it so that the matter can be decided by the House one way or the other.
I misunderstood that. I thought that a breach of this section was involved. In fact, it is not even a breach of it; it is that he has to report on whether the company availed of it or not, and availed of it apparently quite lawfully. I certainly do not think that is a matter that the examiner should be called upon to report on. Why not have any other section of any other Finance Bill in it? Why not have whether they complied with or availed of section 84 or sections relating to VAT, PAYE, PRSI or anything else?
The Minister missed the debate.
The reasons were given.
I see now that it is not even a breach that is alleged but ordinary lawful compliance with the section.
If the Deputies think the section should not have been put in there and want to know why it was let them ask the relevant people, but let them not put the duty of finding out on an examiner who will be established in respect of, perhaps, a number of companies or many examiners in a number of companies over a long number of years. It is quite an inappropriate way of trying to find out. There is another way.
This cannot impose enormous obligations on examiners because it can apply only to one or two companies.
I am very suspicious of any proposal that seems to be directed specifically at one company.
What is this Bill about?
By Deputy Bruton's own admission this proposal seems to be directed specifically at just one company. I do not think this is the way to write law.
We have to look at what the function of the examiner is. It is to decide, in the first 21 days of his stewardship if a company can be saved, how it can be saved and whether an arrangement can be put in place to save the company. That is a difficult, arduous task. He has a short 21 days to do it. I would like to know whether a company paid their rates, whether they paid their employees' holiday pay, whether they complied with the law on pollution control etc., but I do not think that all these matters or compliance with section 25 of the Finance Act are properly the function of an examiner. If there has been some abuse of that section, the Revenue Commissioners have extensive powers to investigate fully in the fullness of time.
The examiner has a specific function. He has a very short period of time, particularly when compared with the United States legislation, to carry out a thorough examination of the financial affairs of a company and make recommendations as to whether that company should be saved. It is inappropriate and illogical to load a whole lot of extraneous duties and functions on the examiner. We would all like to find out about these matters but it is not the function of a company examiner to pursue them, to give opinions on them or to report on them.
I move that the question be now put.
In respect of Item No. 3, the Companies (Amendment) Bill, 1990 in Committee, as it is now 8.30 I am required to put the following question in accordance with the order of the Dáil of this day: "That the sections undisposed of and the Title are hereby agreed to and that the Bill, as amended, is hereby reported to the House."
The Committee divided: Tá, 80; Níl, 72.
Tá
- Ahern, Bertie.
- Ahern, Dermot.
- Ahern, Michael.
- Aylward, Liam.
- Barrett, Michael.
- Brady, Gerard.
- Brady, Vincent.
- Brennan, Mattie.
- Brennan, Séamus.
- Briscoe, Ben.
- Browne, John (Wexford).
- Burke, Raphael P.
- Calleary, Seán.
- Callely, Ivor.
- Clohessy, Peadar.
- Collins, Gerard.
- Connolly, Ger.
- Coughlan, Mary Theresa.
- Cowen, Brian.
- Daly, Brendan.
- Davern, Noel.
- Dempsey, Noel.
- Dennehy, John.
- de Valera, Síle.
- Ellis, John.
- Fahey, Frank.
- Fahey, Jackie.
- Fitzgerald, Liam Joseph.
- Fitzpatrick, Dermot.
- Flood, Chris.
- Flynn, Pádraig.
- Foxe, Tom.
- Gallagher, Pat the Cope.
- Geoghegan-Quinn, Máire.
- Harney, Mary.
- Haughey, Charles J.
- Hillery, Brian.
- Hilliard, Colm.
- Hyland, Liam.
- Jacob, Joe.
- Kelly, Laurence.
- Kenneally, Brendan.
- Kirk, Séamus.
- Kitt, Michael P.
- Kitt, Tom.
- Lawlor, Liam.
- Lenihan, Brian.
- Leonard, Jimmy.
- Leyden, Terry.
- Lyons, Denis.
- Martin, Micheál.
- McCreevy, Charlie.
- McDaid, Jim.
- McEllistrim, Tom.
- Molloy, Robert.
- Morley, P. J.
- Nolan, M. J.
- Noonan, Michael J. (Limerick West).
- O'Connell, John.
- O'Dea, Willie.
- O'Donoghue, John.
- O'Hanlon, Rory.
- O'Keeffe, Ned.
- O'Kennedy, Michael.
- O'Leary, John.
- O'Malley, Desmond J.
- O'Rourke, Mary.
- O'Toole, Martin Joe.
- Power, Seán.
- Quill, Máirín.
- Reynolds, Albert.
- Stafford, John.
- Treacy, Noel.
- Tunney, Jim.
- Wallace, Dan.
- Wallace, Mary.
- Walsh, Joe.
- Wilson, John P.
- Woods, Michael.
- Wyse, Pearse.
Níl
- Ahearn, Therese.
- Allen, Bernard.
- Barrett, Seán.
- Belton, Louis J.
- Boylan, Andrew.
- Bradford, Paul.
- Browne, John (Carlow-Kilkenny).
- Bruton, John.
- Bruton, Richard.
- Byrne, Eric.
- Carey, Donal.
- Connaughton, Paul.
- Connor, John.
- Cosgrave, Michael Joe.
- Cotter, Bill.
- Crowley, Frank.
- Currie, Austin.
- D'Arcy, Michael.
- Deasy, Austin.
- Deenihan, Jimmy.
- De Rossa, Proinsias.
- Doyle, Joe.
- Dukes, Alan.
- Durkan, Bernard.
- Enright, Thomas W.
- Ferris, Michael.
- Finucane, Michael.
- FitzGerald, Garret.
- Flaherty, Mary.
- Flanagan, Charles.
- Garland, Roger.
- Gilmore, Eamon.
- Harte, Paddy.
- Higgins, Jim.
- Higgins, Michael D.
- Hogan, Philip.
- Howlin, Brendan.
- Kavanagh, Liam.
- Kemmy, Jim.
- Kenny, Enda.
- Lee, Pat.
- Lowry, Michael.
- McCartan, Pat.
- McCormack, Pádraic.
- McGahon, Brendan.
- McGinley, Dinny.
- Mac Giolla, Tomás.
- McGrath, Paul.
- Mitchell, Gay.
- Mitchell, Jim.
- Moynihan, Michael.
- Nealon, Ted.
- Noonan, Michael (Limerick East).
- O'Brien, Fergus.
- O'Keeffe, Jim.
- O'Shea, Brian.
- O'Sullivan, Gerry.
- O'Sullivan, Toddy.
- Owen, Nora.
- Pattison, Séamus.
- Quinn, Ruairí.
- Rabbitte, Pat.
- Ryan, Seán.
- Shatter, Alan.
- Sheehan, Patrick J.
- Sherlock, Joe.
- Spring, Dick.
- Stagg, Emmet.
- Taylor, Mervyn.
- Taylor-Quinn, Madeleine.
- Timmins, Godfrey.
- Yates, Ivan.
Tellers: Tá, Deputies V. Brady and Clohessy; Níl, Deputies J. Higgins and Boylan.
Question declared carried.