Vol. 402 No. 9
I move amendment No. 15:
In page 16, line 42, after "expect" to insert the following:
"and the court is also satisfied that there is no other appropriate means available, either through civil or criminal proceedings, to achieve the stated purposes of the investigation".
I am afraid I would have to reject this amendment on principle, since the clear implication of it is that the court would be required to prejudge the guilt, innocence or civil liability of the company concerned, or persons connected with it, in relation to matters which had not even been investigated.
The amendment also implies, indeed, that the Minister would embark on an application to the court, for what may turn out to be a complex investigation, as some sort of "line of least resistance" instead of, say, bringing a criminal prosecution. I would have to reject these implications and, I am afraid, for that reason the amendment.
Amendment No. 16 is out of order.
On what grounds?
I am sure this information has already been conveyed to the Deputy, as is usual.
It has not been conveyed to me.
I shall have to look into that matter. Usually such information is conveyed to the Deputies concerned. It is out of order because it does not arise out of Committee proceedings.
I should make the point that during the course of the debate on Part IX of this Bill reference was made to the need for investigations where companies have got themselves into difficulties and an examiner will be used. My apologies——
I must advise the Deputy also, in fairness——
——I totally misunderstood the last amendment. I was looking at amendment No. 15.
On the other hand I must advise the House and the Deputy that in respect of an amendment of this kind, which is deemed to be out of order by me on grounds that it does not arise out of Committee proceedings, it may be brought back into the House on a recommittal basis, if that is agreed and if pressed the Chair would permit an explanatory statement for reasons for such recommital from the Member who moved the amendment and a statement from the Member who opposes it. In fairness to the Deputy the procedure is there but if he accepts that it is out of order on the grounds I have intimated, we shall move to the next amendment.
Perhaps I could make a point to the Minister in relation to amendment No. 16. We have had the experience, Sir, of the use of the Companies (Amendment) Act, 1990, particularly in relation to the Goodman affair and how that legislation is working. It is obvious that the load that was placed on the shoulders of the examiner in relation to the Goodman Group was a very heavy one to carry. To sort out the mess of the Goodman Group is a task that one individual would find extremely difficult. My amendment No. 16 would be of great benefit to society as a whole if that same individual were asked to pursue areas where fraudulent activities could have taken place in a similar situation.
I want to assist Deputy Barrett but at the moment his amendment is deemed out of order in that it does not arise out of Committee proceedings. I am affording him the opportunity to move that his amendment be recommitted now, but that is a matter for the House to decide. If the Deputy wants to discuss his amendment he must move that it be recommitted.
I must ask if that is agreed or if it is opposed. The Chair will afford the Minister an opportunity of saying whether he wishes to have it recommitted or to oppose it.
I have no objection to a recommital in principle but I would respectfully ask the House to bear in mind that there are a great many amendments which could be recommitted; clearly there are some which will have to be recommitted. It will enormously prolong the debate and the House has agreed to complete Part IV by 10 p.m. tonight. While I have no objection in principle it might be more useful if we could do it in relation to amendments which I felt I could accept. I would say briefly to the Deputy in relation to this amendment — there are many amendments I will accept — that I would not be in a position to accept this one. In that sense a discussion might be regarded as somewhat futile given that we have a tight time schedule. I have no objection in principle to it and clearly on this long Report Stage there will have to be recommittals.
That is obvious. We have a number of amendments for recommittal before us today. Does Deputy Barrett wish to proceed?
I move amendment No. 16:
In page 16, between lines 42 and 43, to insert the following:
"(d) an application has been made to appoint an examiner to the company under section 2 of the Companies (Amendment) Act, 1990.".
I will not delay the House. I want to make a point. I totally accept the need of the Minister to take powers in relation to investigations of companies affairs. There is one obvious circumstance where the Minister should have this power, whether or not he ever uses it. I do not see how it could affect the situation in any way if the Minister sees fit, in certain circumstances, to use the powers given to him, under the provisions of section 8 of this Bill, to investigate a company that would have had, or sought to have, an examiner appointed. It is obvious that the powers to appoint an examiner as set out in the Companies (Amendment) Act, 1990, could be a means to abuse normal trading practices. I am not saying that will be the case but it could be. While the examiner does have power to report any fraudulent activities he may come across in the course of his duties, we must remember that the examiner in the case of the Companies (Amendment) Act, 1990, will have been appointed at the request of the owners of the company being examined. As a director or a shareholder of a company it is a peculiar situation to find oneself in where you ask that an examiner be appointed to sort out the problems in your company and that person will investigate whether there were any fraudulent activities.
The tremendous amount of work to be done by the examiner in the case of the Goodman Group case would lead me to believe that it would be worthwhile to have an independent inspector look into the affairs in this circumstance. I am asking that the Minister take powers which he could use, if he so wishes, to have an inspector appointed where it may be felt it is in the public interest that certain activities be investigated.
I am not forcing the issue, but it would be wise for the Minister to accept these powers. I would like to hear from my colleagues on this side of the House whether they think there is merit in this proposal. I do not see how it would weaken the legislation in any way; in fact, it would give more power to a Minister. It must be accepted that a Minister will not use powers afforded to him, under section 8, unless he or she thinks it is in the public interest that it should be done. We learn as we go along, and I think we have learned a considerable amount over the past couple of months from the work done by the examiner in the case of the Goodman Group.
I fail to see how we can have a situation where, as in the Goodman Group, an examiner was appointed at the request of the director and shareholder of that group, and that that same person has to carry a huge load and deal with all the other provisions in the Bill. It would be better, if necessary, for the Minister to appoint an independent inspector to investigate certain activities.
I am afraid I cannot accept this amendment because it is based primarily on the assumption that because an examiner has been appointed to a company that implies there has been wrongdoing in the company concerned. While it may be that there has been wrongdoing in such a company, as much as in any other company, I do not accept that the fact that an examiner has been appointed is a ground or reason of itself for the appointment of an inspector. In fact, it would be a complete misunderstanding as to what the whole concept of the examiner and indeed what company rehabilitation is about.
It really boils down to whether in the circumstances of each case, the Minister of the day has reason to believe that an investigation should be undertaken — in my view, the fact that an examiner has been appointed is irrelevant to that. If there were a case in which an examiner had been appointed and certain matters came to light and the Minister thought it appropriate to appoint an inspector to pursue some other aspects further, the time for him to do it would be after the examinership is over. Therefore, the amendment would only allow him to do it while the examinership was still on. I think it would be wrong to have two investigations going on in parallel, given in particular that the examiner is already required by the Companies (Amendment) Act, 1990, to give an opinion as to whether further inquiries should be made regarding either reckless trading or fraudulent trading. If he were to so decide then that matter would be pursued by the court. If the Minister were to pursue it he should do it afterwards when the examinership is over, not in the currency of it.
If the Deputy looks at the three headings in section 8 (1) he will see there are three matters about which the court has to be satisfied — that there are circumstances suggesting that the affairs of the company were conducted with intent to defraud its creditors; that the persons connected with its formation or management have been guilty of fraud, misfeasance or other misconduct or that its members have not been given all the information relating to its affairs which they might reasonably expect.
The appointment of an examiner simpliciter does not lie easily with the three of those matters. It will be a great discouragement to people to apply for the appointment of an examiner if it is seen as a ground the same as alleged fraud for the appointment of an inspector. It is a different thing and the appropriate time to do it would be afterwards. Under section 8, as it stands, the Minister would have power to make the application after the end of the examinership in any event. For that reason I ask the Deputy not to press his amendment.
I move amendment No. 16a:
In page 16, line 43, to delete "subsection (1)", and substitute "section 7 or this section".
Section 8 (2) (a) as it now stands makes it clear that the court's power to appoint an inspector under section 8 is exercisable notwithstanding the fact that the company concerned may be in the course of being wound up and, following the adoption of amendment No. 17 which was discussed with amendment No. 14 the last day, this will apply whether the winding-up is compulsory or voluntary.
However, the very existence of subsection (2) (a) in section 8 seems to cast doubt as to whether the court has a similar power to act in these circumstances under section 7 — in other words, on the application to it of a creditor, the company itself and so on. I would obviously be very concerned if section 7 could only be used in respect of a "live" company, since the liquidation of a company is often the first indication to creditors or shareholders of the company that there are matters which require investigation.
This amendment is intended to provide conclusively that the court's power under section 7 is also exercisable notwithstanding that it is in the course of being wound up, whether voluntarily or by the court.
This is a reasonable amendment which I think was put down by the Minister in response to the discussion on Committee Stage. It will strengthen the section and I support it.
Amendment No. 17 in the name of the Minister. I observe that this amendment was discussed with amendment No. 14 earlier. It is sufficient for the Minister to formally move this amendment.
I move amendment No. 17:
In page 16, line 45, to delete "voluntarily".
I move amendment No. 18:
In page 17, lines 9 to 11, to delete "which is or has at any relevant time been the company's subsidiary or holding company or a subsidiary of its holding company or a holding company of its subsidiary", and substitute "which is related to such company".
When this section was discussed on Committee Stage, there was a wide-ranging debate about the extent of the powers we were giving inspectors under section 9, how far into a group of companies they should be allowed to go, and so on. Having considered the matter further in the meantime, I think the section does not, in fact, go far enough, since it confines the additional companies which may be included in the investigation to any body corporate which is: "the company's subsidiary or holding company, or a subsidiary of its holding company, or a holding company of its subsidiary". I do not think this is wide enough, particularly since we have a wider definition of related company for other purposes in the Bill and, indeed, in the Companies (Amendment) Act, 1990, as well. The specific definition I have in mind appears in section 138, in Part VI of the Bill, and is somewhat wider than the more restrictive wording we have in section 9 here.
In a nutshell, I think we should adopt the wider definition for the purposes of section 9, and that is what this amendment would do. The mention of a related company in the amendment means that the definition in section 138 will automatically apply here, since the term "related company" is signposted in the "General Definitions" section of the Bill, section 3.
We now come to amendment No. 19 in the name of the Minister. I observe that amendment No. 20 is consequential. I am, therefore, suggesting that we discuss amendments Nos. 19 and 20 together. Is that satisfactory? Agreed.
I move amendment No. 19:
In page 17, line 33, to delete ", or past director,".
Amendments Nos. 19 and 20 are designed to widen the possible scope of inquiry under section 10 (3), and thus to close off a possible loophole in the present text, identified by Deputies O'Dea and McCreevy on Committee Stage. The main idea is to ensure that full information can be obtained regarding bank accounts operated, not just by directors, but by people connected with them, within the meaning of section 25 of the Bill, in much the same way as subsection (2) will enable documents and information to be obtained from persons other than officers under subsection (1).
Going further, I think the inspector should also be able to examine the accounts of shadow directors, who may not, of course, be "connected", as that term is defined in section 25, as well as past connected persons and past shadow directors.
The insertion of a definition of "director", for the purposes of subsection (3), should achieve this aim and I have chosen to insert such a definition here to avoid the many complicated references there would otherwise have to be in the subsection to connected persons, shadow directors and so on.
I move amendment No. 20:
In page 18, line 9, after "Act", to insert the following:
", and ‘director' includes any present or past director or any person connected, within the meaning of section 25, with such director, and any present or past shadow director".
I move amendment No. 21:
In page 18, between lines 28 and 29, to insert the following:
"(6) Without prejudice to its power under subsection (5), the court may, after a hearing under that subsection, make any order or direction it thinks fit, including a direction to the person concerned to attend or re-attend before the inspector or produce particular books or documents or answer particular questions put to him by the inspector, or a direction that the person concerned need not produce a particular book or document or answer a particular question put to him by the inspector.".
This amendment arises from the Committee Stage debate on section 10 (5) and, in particular, from comments made by Deputy Bruton. The Deputy's essential point was that where an inspector fails to get information or responses to questions and he reports the matter to the court, the court's only remedy seemed to be contempt of court — the court could not, for example, direct that the person concerned need not produce the documents or whatever or alternatively direct that the person should actually answer the question asked by the inspector. I agree with Deputy Bruton that it would be desirable that, in addition to the alternative of contempt, the court should have these other options and that is what this amendment seeks to provide.
A somewhat analagous set of options already exists in section 116 (4)-(8) of the Bill, as amended in Committee.
I move amendment No. 22:
In page 19, line 6, to delete "(including an employee)" and substitute "(including an employee, or a trade union representing employees".
We have just been talking about how a court may appoint an inspector under either section 7 or section 8. This amendment relates to whom the court may issue a copy of its report or reports from time to time. Specifically, section 11 (3) (b) (v) refers to the freedom of the court, if it thinks fit, to issue the report to any other person, including an employee. My amendment seeks to substitute for the words "including an employee" the words "including an employee, or a trade union representing employees".
Without wishing to raise the hackles of the Minister, I cannot appreciate any reason other than an ideological one why he should resist this amendment. A trade union may feel more free or more competent to consider the impact or significance of any such report. The forwarding by the court of a copy of the report is qualified by the phrase "if it thinks fit" in subsection (3). If the court considers for any reason that the report ought not be passed to a trade union representing employees, presumably it will make that decision. In the very nature of the powers conferred by sections 7 and 8, it is important that a trade union should have the freedom to evaluate the significance of any report rather than the onus being put on an employee in circumstances where it may be felt that it would be better dealt with by the trade union.
I heartily support the thrust of this amendment. All the trade unions and congress have been calling for this type of legislation to give the right to trade unions to get the type of information they want. This has been denied to representatives of workers over the years in regard to the closure of companies in difficulties. The point is well made by Deputy Rabbitte. Most of the unions, at least the larger ones, will have the type of expertise required to carry out an examination of the affairs of a company, with particular reference to payments made or not made to workers' pension schemes and so on. It is appropriate that the trade union movement should be recognised in a formal way in the Bill.
I cannot see anything wrong with this amendment. We should face up to reality. In situations of this type an employee on his own would not be capable of dealing with the matter. We have a responsible trade union movement who would look to the interests of their members. There is no acceptable reason for refusing this amendment. It would be a step forward to recognise the role of the trade union movement.
This amendment relates to a report made by inspectors appointed to a company under sections 7 or 8. Section 11 (3) provides that the court may furnish a copy of the inspector's report to certain persons set out in the subsection. In particular subparagraph (v) of paragraph (b) of the subsection provides that the court may, if it thinks fit and if requested to do so, furnish a copy of the report to an employee where the court is of the opinion that the employee's financial interests are affected by the matter dealt with in the report.
The question of the inclusion of a trade union as a party that should be given copies of reports relating to companies whose employees they represent has been debated continually on numerous occasions during the passage of this Bill through the Seanad and on Committee Stage in this House. In response to these debates I have specifically made provision for employees to be able to obtain such reports where this was not originally provided for. That has been as far as I have been prepared to go.
There is no way in which it can be said that a trade union has been directly affected by the activities of a company. Clearly some members of the trade union who are employees of the company may be affected and in the case of an insolvency they will often be very badly affected. The employees have the right to request a copy of the inspector's report and undoubtedly they would use this right where appropriate.
Having reflected further on the matter, I am satisfied, within the context of companies legislation, that this is the appropriate approach and in the circumstances I am not prepared to accept this amendment. I would remind the House that the words in brackets in subparagraph (v) were inserted as an amendment in the Seanad, at the request of the Opposition, to make it clear that employees would get these reports. I have made that change numerous times in the Special Committee and I do not want to encourage the belief that we should go back and re-amend the amendments. We had the same debate on the 1990 Act and the House accepted that if the employees are given the report that is perfectly adequate and reasonable.
In introducing the amendment I may have said that I was referring to an amendment to subsection (5). I was referring to an amendment to subsection (3), paragraph (v).
I am very disappointed with the Minister's response. Notwithstanding what he said, I find it difficult to understand his reasoning. The distinction he seeks to draw between the members of a union and the union itself is an entirely jesuitical one. Surely if the interests of the employees could, as he concedes, be affected, it follows that the union which represents them is involved and affected. Arguably, some of the matters which the inspector may be investigating may concern the trade union directly. The union may be owed moneys for a number of reasons.
I cannot understand, in a country where the trade union movement is so long established, why the Minister should resist throughout the Bill enshrining the recognition that trade unions represent a majority of the workforce. All we are seeking is an acknowledgement of that fact. In many instances trade union expertise and professional back-up would be necessary to evaluate the significance of any report issuing from the court under subsection (3). Employees may in certain circumstances not have that professional competence and even if they have they would want their trade union to do the job for them. In very many situations, where an employee would qualify for a report he or she would probably go hot foot to the union with the report. Why the Minister should resist enshrining that entitlement to a trade union per se escapes me. Nothing that has happened in the Seanad or on Committee Stage should change that. I ask the Minister to reconsider.
I move amendment No. 23:
In page 19, line 22, after "report" to insert the following:
"for the purpose of remedying any disabilities suffered by any parties whose interests were adversely affected by the conduct of the company, provided that such orders shall not disadvantage other parties who were in no way responsible for the conduct of the company".
Section 12 as it stands at present provides that "having considered a report made under section 11, the court may make such order as it deems fit in relation to matters arising from that report including an order of its own motion for the winding up of a body corporate". As that section is worded it gives wide powers to the court to do what it sees fit to do, given what is contained in the report. In this amendment I am attempting to include after "report" the words "for the purpose of remedying any disabilities suffered by any parties whose interests were adversely affected by the conduct of the company,"— and this is the important part —"provided that such orders shall not disadvantage other parties who were in no way responsible for the conduct of the company".
I am stating here a general principle. It is grand to be afforded rights under this legislation as a particular group, class or person, whether it is the company themselves or whatever, to have an investigation carried out and seek a remedy for perhaps something that was done not in accordance with the law, and the court will have the power to make such an order. However, there are groups of people who could be affected by this order who were in no way responsible for anything. I want to ensure in this legislation that the court is aware that when making its decision it is conscious of the fact that that decision could affect somebody else or another group who were no way involved in anything other than normal trade.
I do not think the legislation is clear enough in many respects when it says that the court may do what it deems fit but in no way gives a guideline to the court that it should be aware of other parties who could be injured as a result of the decision of the court but who were in no way responsible for the activity which brought about that decision of the court. We see it in the Companies (Amendment) Act, 1990, in a scheme of arrangement. A majority of a class of creditors may come together and agree on something. A wide group of people who will have no say could be seriously affected as a result of that. In relation to this legislation, I am stating a principle and asking the Minister to incorporate into this section that general principle that in making a decision the court will be conscious at all times that there are other people who could be affected who were in no way responsible in the first place.
I am agreeable in principle to this amendment as the Deputy requested, but I think it should be framed in a wider way. For example, I do not think it is clear from the amendment as drafted by the Deputy that the court would still be free to make a winding up order of its own motion as the present text of the section would allow. It is important that the court continue to have this power which would be taken away from it by the amendment as drafted.
However, I can accept that the purpose set out in the amendment could be one of the purposes for which the court might make an order here. If the House is agreeable to this approach and to a somewhat modified wording, I suggest that the amendment be recast, when I would be in a position to agree to it, and it would read as follows: ‘In page 19 to delete lines 22 and 23 and substitute the following:
from that report including (a) an order of its own motion for the winding up of a body corporate, or (b) an order for the purpose of remedying any disability suffered by any person whose interests were adversely affected by the conduct of the affairs of the company, provided that in making any such order the court shall have regard to the interests of any other person who may be adversely affected by the order.
May I take it that the substitute amendment as outlined by the Minister is acceptable?
Yes.
We now come to amendment No. 23a in the name of Deputy Pat Rabbitte. I observe that amendment No. 24 is an alternative. We might discuss Nos. 23a and 24 together, with separate decisions if required.
I move amendment No. 23a:
In page 19, line 44, to delete "£200,000" and substitute "£50,000".
This relates to the power of the court in certain circumstances to recoup the expenses of the investigation up to a ceiling of £200,000. The contention behind my amendment, and I suspect behind the amendment from Deputies Bruton and Barrett, is that that ceiling could, in certain circumstances be excessive, indeed punitive or, in other circumstances, make an investigation impossible.
Section 13 (2) provides that where it has been found that a prosecution was necessary and somebody was convicted, the court may, in the same action, ensure that it makes an order as to the expenses. In those circumstances, therefore, if there is a bona fide applicant, for example a creditor, who seeks to have the investigation he could face a liability for the expenses to a figure as high as an aggregate of £200,000. The contention is that that is excessive, that it ought to have regard to the status of company as well as the scale of company, that it could be a deterrent in certain circumstances and that a figure of £50,000 is more reasonable. I note the alternative construction being submitted by Deputies Bruton and Barrett. I am not sure but that in the interests of uniformity we ought not agree a figure of £100,000 maximum which I previously agreed to on section 7 (3).
On a point of clarification, I assume that we are taking the two amendments together. On the wording of Deputy Barrett's amendment No. 24, would he be satisfied that expenses could, in particular cases, be more than £200,000?
On the last day we amended section 7 (3) to £100,000. Is that correct?
Yes.
I imagine that when the Bill was being drafted the figure of £200,000 was put in section 13 for the sake of consistency since it was in section 7. I do not wish to barter with the Minister in relation to an issue like this. I accept that one has to pick a figure and I would hope that the court would use its discretion and be wise in making its decision when it comes to apportioning the costs to be levied on an applicant or applicants. If one has not got a bob it will not make a whole lot of difference whether the maximum figure is £100,000 or £200,000. One will not be able to pay it any way. There is a need to look at the maximum that should apply and both Deputy Bruton and I, in tabling our amendment, thought that half the costs of the investigation would be a reasonable figure to insert. I have been waiting to hear from the Minister as to whether he will stick with the £100,000 that is now in section 7 and, if so, perhaps that would be reasonable. Again, the court, in an instance like this, should take into account the ability to pay.
I see this amendment in the same light as amendment No. 11 to section 7, also tabled by Deputy Rabbitte. My reason is the same as then applied, but I agree to reduce the amount of the security that a court can require an applicant to put up before ordering an investigation under section 7. For that same reason, and for the sake of consistency, I am prepared to accept amendment No. 23a, subject to the substitution of £100,000 for £50,000.
I have to repeat that this sum of £100,000 is a maximum that an applicant or applicants can be required to pay, and under subsection (3) the inspector may, on his own initiative, and shall if directed by the court, include in his report his recommendations as to the directions the court should take in regard to the contribution which an applicant should be required to make towards the cost of the investigation.
Because of my acceptance of amendment No. 23a, as amended, reducing the maximum amount an applicant can be required to contribute to £100,000, I do not feel it necessary to introduce a further computation, as set out in amendment No. 24, to be made by the court by reference to half the actual cost of the investigation in question to determine the total amount which an applicant or applicants would be required to pay. In all this it has to be remembered that the party other than the applicant or applicants can be required to contribute to the cost of the investigation. Moreover, subject only to the maximum new limit of £100,000, the court is free to require the applicant to pay whatever sum it considers appropriate, and in deciding this matter the court may have the recommendation of the inspector available to guide it.
I move amendment No. 25:
In page 20, line 2, after "convicted" to insert "on indictment".
This amendment would ensure that it is only where a person has been convicted on indictment of an offence arising from the investigation under this power that he can be ordered to pay all or part of the costs of the investigation. Former Deputy McDowell suggested on Committee Stage that if the provision were left as it was it could be open to constitutional challenge because the person convicted on foot of summary proceedings could be liable for costs beyond what the District Court can impose.
I move amendment No. 26:
In page 20, line 14, after "be" to insert the following:
", and any such order shall not be executed until the person concerned has received his damages or the property has been restored, as the case may be".
This amendment, which was also suggested on Committee Stage, addresses the situation where the court awards damages or orders that property be restored to a person and, in the same proceedings, orders the person to contribute a sum not exceeding 10 per cent of the award towards the cost of the initial investigation. It was pointed out on Committee Stage that there can often be a difficulty in collecting an award made in court and this amendment will ensure that a successful litigant will not have to make his contribution towards the cost of the initial investigation until he collects what was awarded to him. In other words, it will avoid a person having to pay out before he collects.
Amendment No. 27 in the name of the Minister. I observe that amendment No. 32 is cognate. I suggest therefore that we discuss amendments Nos. 27 and 32 together.
I move amendment No. 27:
In page 20, line 26, to delete "satisfied" and substitute "of the opinion".
These two amendments arise from comments made by Deputies Bruton and McDowell on Committee Stage that if the Minister were to depend on the present wording of being "satisfied" he would run the risk of having any investigation he initiated being subjected to judicial review on the technicality that the exercise of his discretion involved an element of objectivity. This could seriously undermine the usefulness of these sections and give rise to all kinds of obstructive tactics which were previously encountered under the investigation procedures which this Part of the Bill is replacing, and the substitution of the phrase "of the opinion" should lessen, indeed hopefully eliminate, the possibility of investigations being frustrated in this way.
Amendment No. 28 in the name of the Minister. Amendments Nos. 29 and 30 form a composite proposal. I suggest therefore that we discuss amendments Nos. 28, 29 and 30 together. Is that satisfactory? Agreed.
I move amendment No. 28:
In page 20, line 44, to delete "and 10 (5)".
I have been reflecting further, since Committee Stage, that the procedures we are proposing should be adopted in the case of ministerial investigations under section 14; as opposed to what might be called general investigations under section 7. In this connection, one aspect of section 14 which I think needs to be strengthened is the question of what happens if attempts are made to frustrate the inquiries undertaken by inspectors appointed by the Minister. Under the Bill as it stands, if a person refuses to answer a question, produce documents to the inspector, or whatever, he will simply commit a criminal offence, which then has to be prosecuted. This is too cumbersome, since what we really ought to be doing is making sure the person concerned answers the questions asked of him or produces the books or documents, as the case may be. There is, in my view, a much better way of making sure of this, and that is to use the mechanism we are already proposing in section 10 (5) of the Bill, as well as subsection (6) of section 10, which we have now added through amendment No. 21.
The effect of the present amendments, therefore, is that the inspector can refer the case of a person refusing to answer questions to the court, who will have a number of options as to what to do. These will include treating the person as being in contempt, or compelling him to answer or, on the other hand, judging that, in the circumstances, he should not have to answer. This would be a much more effective way of proceeding here rather than simply making refusal to answer proper questions an offence, and I feel strongly that the amendments concerned here should be made.
I move amendment No. 29:
In page 21, line 19, after "court", to insert "(except in section 10 (5) and (6)*)".
I move amendment No. 30:
In page 21, to delete lines 21 to 29.
Amendment No. 31 in the name of the Minister. Here I observe that amendments Nos. 35 and 58b are cognate. I suggest therefore that they be discussed together.
I move amendment No. 31:
In page 25, line 5, to delete "1985" and substitute "1990".
These three amendments are identical and simply substitute the up to date collective citation for the Insurance Acts following the enactment of two further Insurance Acts in 1989 and earlier this year.
I move amendment No. 32:
In page 25, line 14, to delete "satisfied" and substitute "of the opinion".
Amendment No. 33 in the name of the Minister. I observe that amendment No. 36 is consequential on amendment No. 33 and therefore they may be discussed together, by agreement.
I move amendment No. 33:
In page 26, between lines 25 and 26, to insert the following:
"(7) Nothing in this section shall prevent the Minister from authorising a person other than an officer of his to exercise the functions which an officer of his may exercise under this section and, where the Minister so authorises, such person shall have the same rights, duties and obligations as if he were such officer.".
On Committee Stage, Deputy Bruton, in particular, rightly identified section 19 as perhaps the most useful in the whole of Part II of the Bill. He said it was the section of which most use would be made. I have put further thought into this aspect of Part II in the meantime, and it struck me that it would be a significant improvement if the Minister were able to authorise not just one of his own officers but any suitable person to undertake these direct requirements on his behalf, and that is what amendment No. 33 would do. In other words, if the Minister felt that any of the circumstances listed in section 19 (2) existed, he would be able to authorise any person to require or inspect the books and documents of the company concerned. The person concerned could be an accountant in some cases, a lawyer in others, an actuary and so on, depending on the type of company involved. It could, of course, still be one of the Minister's own officers.
The corollary of this is that once the books and documents are produced, section 21 lists the people to whom this information may be shown. Here, too, it would be useful if information gathered could be shown to people other than those currently listed in section 21 (3). For example, if the business of the company concerned was primarily related to property it might be useful for the Minister to be assisted by a professional valuer who might not have been the person who obtained the information in the first place. These two amendments would considerably improve the usefulness of section 19 and I commend them to the House accordingly.
I support these amendments. This is a very sensible move. We are all aware of the stress and strain on those who are employed in various Departments. If we can use outside expertise in particular cases that will be of benefit to the community at large, we should do so. This is a very sensible amendment and I have great pleasure in supporting it.
I move amendment No. 34:
In page 26, line 30, before "19", to insert "14, 15 or".
Again, this amendment is intended to strengthen the provisions of Part II of the Bill to make sure they are fully workable. In the current text of the Bill section 20 is tied to section 19 but, on reflection, I think its scope should be expanded. As we have seen where the Minister comes to the view that any of the circumstances listed in section 19 (2) exist he may require the company to produce to him specified books and documents for inspection. Where the Minister's inquiries in this regard are frustrated, section 20 allows him to seek a search warrant from the courts to have the company's premises searched and the books concerned seized or protected. However, it is equally possible that the Minister's inquiries under other sections in Part II could be frustrated in this way, and this amendment would expand the scope of section 20 to enable the Minister to seek a search warrant in those cases too. The sections of Part II mentioned in the amendment are sections 14 and 15, which deal with ministerial investigations and inquiries concerning the real ownership of shareholdings in companies. This would be a useful and effective addition to Part II and I commend it to the House.
I move amendment No. 35:
In page 27, line 17, to delete "1985" and substitute "1990".
I move amendment No. 36:
In page 27, line 33, to delete "an officer", and substitute "a person".
I move amendment No. 37:
In page 27, to delete lines 42 to 45, and substitute the following:
22. —A document purporting to be a copy of a report of an inspector appointed under the provisions of this Part shall be admissible in any civil proceedings as evidence—
(a) of the facts set out therein without further proof unless the contrary is shown, and
(b) of the opinion of the inspector in relation to any matter contained in the report.
Arising from comments made by Deputy McDowell on Committee Stage debate on this section I propose to replace section 22 and in the process make three changes which I am satisfied will improve the section. First, the Deputy suggested that it should not be necessary for the inspector to be required to prove that the copy of his report which was actually before the court is a true copy of the report. Second, the Deputy suggested that where an inspector sets out in his report his opinion on a given matter, that of itself should be admissible as evidence of such opinion. In other words, he should not be required to come into court to verify that it is indeed his opinion. Finally, the Deputy suggested that where an inspector draws a finding of fact in his report it should be admissible as evidence of those facts, subject to contradiction in the court.
Amendment No. 37a has been ruled out of order as it does not arise out of Committee proceedings. If the Deputy wishes, he could move for recommittal.
I am sure the ruling is well based and, therefore, there is not much point in moving for recommittal.
Amendment No. 58a is consequential on amendment No. 37b and they may be taken together.
Amendment No. 37b recommitted.
I move amendment No. 37b.
In page 28, between lines 12 and 13, to insert the following:
"(3) The publication, in pursuance of any provision of this Part, of any report, information, book or document shall be privileged."
Sections 11 and 14 of the Bill provide for the preparation of reports by inspectors appointed by the court and the Minister, respectively, and both sections provide for the omission of parts of the reports before they are made available to the specified interested parties. Similarly, section 21 provides that no information, book or document relating to a body which has been obtained under section 19 or 20 can be published or disclosed, except to a competent authority as defined in the section, without the written consent of the body in question.
Despite these stringent safeguards, and for the avoidance of any doubt in the matter, I am satisfied that the privilege which previously attached to inspectors' reports under section 169 (3) of the 1963 Act should be available to the publication of reports, information, books or documents under the provisions I have just mentioned, and that is what amendment 37b will do.
Amendment 58a arises from, and is consequential on, amendment No. 37b. The same considerations apply to any report published under section 65; hence the necessity for this amendment.
I move amendment No. 38:
In page 28, between lines 12 and 13, to insert the following:
24. —(1) If, in any respect, any difficulty arises in bringing any provision of this Part into operation or in relation to the operation of any such provision, the Minister may by regulations do anything which appears to him to be necessary or expedient for removing that difficulty, for bringing the provision into operation, or for securing or facilitating its operation, and any such regulations may modify any provision of this Part so far as may be necessary or expedient for carrying such provision into effect for the purposes aforesaid.
(2) Every regulation made by the Minister under this section shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the regulation is passed by either House within the next 21 days on which that House has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.".
This amendment would enable the Minister to make regulations to overcome any difficulty which may arise from the implementation of the new procedures being introduced under Part II of the Bill. While the immediate need for it became apparent on the Committee Stage debate on section 13, it would seem useful for the Minister to have this sort of power under Part II generally.
Under section 13 specifically, for example, the situations where ministerial regulations might arise could include how the expenses of investigations should be met as an investigation is actually proceeding or if practical difficulties arise between the different courts which decide who has to bear the cost of the investigation and how reimbursements are made if other parties are subsequently ordered to meet part of the costs and so on. Of course I cannot give the House examples of difficulties which might arise under other provisions of Part II. Indeed, if I could I would, no doubt, be taking amendments now to get over them. Suffice it to say that I am very anxious to see these provisions working effectively and it would be a pity if the Minister were not to have the opportunity to iron out, by way of regulations, any procedural or practical difficulties which appear subsequently.
This amendment is based on section 4 of the Building Societies Act, 1989, and has in fact already been adopted under another Part of this Bill. The appropriate reference here is section 227 of the Bill as amended in Committee.
I am always a little worried about the question of regulations but I am pleased to note in the amendment that the Minister indicated any such regulations would come before, and would be subject to, a motion of the House. On that basis I will support it.
My reading of subsection (2) is that it is the direct opposite and a regulation will not have to be brought before the House. It says "... shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the regulation is passed by either House within the next 21 days ...". The onus is on a Member of the group to put down a motion annulling the regulation.
I spent four years as Government Whip and I always felt that Opposition parties who wished to discuss regulations made by the Minister in the House were treated extremely unfairly and that it was undemocratic. We did not afford time for regulations to be debated in this House and it is common practice that, in Government, the Whip will say that Private Members' time can be used to discuss a particular regulation. However, we all know that Private Members' time is not easily available within the period to discuss regulations. There are various things which Ministers will have to do from time to time, of a minor technical nature, such as laying a regulation before the House and, unless it is annulled within 21 days, it is probably a reasonable way of dealing with it. However, when a Minister is taking extensive powers, something should be written into the legislation. I do not say that every regulation has to be brought before the House but there should be a provision in the amendment which says that, if requested, time must be given for debating the resolution within the period in question so that the Opposition — whoever they are — are guaranteed such time. That would be democratic and in the best interests of this House. Every Minister knows — and I am not saying I would be different if I was in the Minister's seat — that it is very convenient to have this provision but I still believe it is wrong that an Opposition party are denied the opportunity of debating a regulation.
Instead of voting against this amendment as a means of putting my objections on record, I ask the Minister to include in subsection (2) wording which would give a guarantee that if an appropriate request was made, time must be afforded to debate a regulation within the period in question. That would satisfy everyone. The other is a sham and we should recognise it as such. We must try to find a compromise. Every regulation does not have to be debated here but there are occasions when regulations should be debated. Often the public are concerned about something and we, in the elected Assembly, do not have an opportunity to voice our opinion before the regulation is made. That is not democratic and this position should not be tolerated any longer. I put on record that as Government Whip I felt a sense of guilt when I had to use the tactic of saying a Deputy could use his Private Members' time when Private Members' time is divided between three parties in opposition. We are denying a political party the opportunity to do something that is their democratic right and their duty. It must not be tolerated any longer and it could be resolved if we inserted the appropriate wording that if a request is made time must be given to debate such a regulation.
The Workers' Party have consistently put down amendments to provide for this. It is not proper that regulations are placed in the Library and almost creep through the House by stealth. In addition, a Deputy may not ask the Taoiseach about a particular regulation on the Order of Business. The rules governing the Order of Business expressly exclude questions concerning the making of regulations. I agree entirely that if there are unforseen possibilities of frustrating the bringing into operation of any provision of this part of the Bill, the Minister ought to take whatever reasonable steps are open to him to provide for them. It is prudent that he should do so. Subsection (1) gives him the power to remove whatever obstacle there is to bringing in this provision. He said he cannot envisage what these difficulties might be but, for example, the section gives him power to bring in a regulation that may modify any provisions of this part of the Bill.
I refer the Minister to section 23. He said he could not envisage any such difficulty but I will pose one for him. Does he see any possibility that section 23 could be used to frustrate the operation of any provision in Part II? Under section 23 it is possible to plead on the grounds of legal professional privilege and not produce any document or come forward with information that the inspector may consider essential. There are all kinds of abuses of the system, for example, using the banks as nominees to conceal the real ownership of companies or subsidiary companies. In the Goodman affair we saw the extraordinary lengths to which people went to conceal real ownership. If section 23 created such a difficulty could the Minister, by order, remove that difficulty?
I support my colleague Deputy Barrett in relation to the importance of regulations. As any civil servant will tell you, an Act is read in conjunction with the regulations which very often can be far reaching and have a considerable impact on the legislation. It is fine to place regulations in the Library but the likeihood of an annulment of such regulations is quite slim unless in the case of an emergency. I have no doubt but that if there were an emergency it could be done. It would be a good idea to encourage the Minister to introduce a facility which would allow a debate of such regulations in the House on an ongoing basis. There is not much sense in having the provision in the Bill unless there is provision for an annulment as well. I am not suggesting that an annulment will be necessary, but in the event of an emergency we would have to go through the procedure as stated here. From experience, we know the likelihood of such a debate taking place except in Private Members' time is very slim. The Minister should take on board the suggestions made by Deputy Barrett.
Deputy Bell rose.
Deputy Bell has already spoken on this amendment. The Deputy is only allowed to speak once.
I have noted what has been said in relation to the question of the annulment of the regulation and the opportunity that might be given to the House to annual it. The vast majority of regulations have to be made in these terms. One of the reasons is that if you are waiting for an opportunity to have them affirmatively made or passed by the House you could be waiting for six months. In this part of the Bill we are trying to deal with fraudulent persons and similar matters, and it would be disadvantageous if that were the position.
The Deputy made a point in regard to regulations generally and I am sure there is validity in what he said. Rather than trying to make special provision for it in each Bill where the question of the Minister making regulations arises, it would be better to deal with it in the Committee on Procedure and Privileges. There was a complaint that topical matters could not be raised on the day they arose. Provision has not been made for them to be raised each day. A Deputy can refer to the matter either for five minutes or for one minute. Ministers are taking pairs so that——
Not on the basis of topicality.
Rather than writing it into each section, the correct approach would be to make some arrangement whereby for half an hour on a particular day, even if it were only once a month, it would be open to a Member to move for the disallowance or annulment of a regulation. It would be better to approach it that way.
These are not normal regulations. They are described in the amendment as supplementary. They are designed to try to get over an emergency. We have had examples of this to quite some extent in the last few years, examples of obstruction of investigations, concealment of information to which one would expect public authorities to be entitled, and extraordinary lengths have been resorted to to conceal the ownership of companies and shares. I have been greatly frustrated by the lengths that have been gone to, the absolute denials about ownership of certain compaines, to the extent that I was threatened with yet another writ for saying that somebody owned a particular group of companies. I see this group of companies now listed among the person's assets in a current proceeding. For that reason it is necessary that we should go further than normal in these matters to enable the Minister to try to prevent the kind of obstruction that goes on on the part of some people.
Deputy Rabbitte asked in particular whether section 23 might be used for such obstructive purposes. We cannot do away with the right to claim privilege. If we do away with that, we would do away with all sorts of privileged relationships and the public at large will lose out. If privileged relationships are to be abolished, people who are in difficulty cannot resort to certain other skilled or professional people for advice or guidance in their difficulty. If the public at large cannot do that, the public good will suffer. We have to protect a privileged relationship and the information that passes in a privileged relationship up to a point. A lot depends on the attitude of the practitioners concerned. If they are bona fide in protecting privileged relationship they could not be regarded as abusing their position or as obstructing. On the other hand, if the professional persons concerned went beyond that and unnecessarily obstructed the inquiries that are being made under this guise, I would regard that as an abuse. If somebody were in doubt about that situation one would have to bring it before the court and let the court adjudicate whether it was an abuse.
We have has such examples.
If a very small minority of professional people are prepared on occasions to facilitate the activities of somebody who is slightly disreputable, I would deplore that. It is a matter that should be brought to the court for adjudication. The House should not abolish the fact of privilege just because a small miniority of people may abuse it. The cost to the bona fide members of the public and people in genuine difficulties would be too great. For that reason we should leave section 23 there. It will not be possible under these regulations to get around section 23. That would be wrong, but if there are specific elements of abuse then under these regulations it might be possible to deal with them. I would not like to speculate on that because a lot would depend on the nature of the case.
In the circumstances, I would ask the House to agree to amendment No. 38, which gives power to make these regulations. There is not one Member in the House who would disagree with the making of the regulations. The points that rose were in regard to the mechanics of how to deal with them afterwards.
May I ask the Minister a question?
The Minister has replied to the debate.
I just want to ask a question.
Deputy, the Minister has replied. Is the amendment agreed?
Yes, with reservations about subsection (2) which I will talk about at a later stage.
We will now move to amendment No. 38a in the name of Deputy Seán Barrett. Amendment No. 65 is an alternative so amendments Nos. 38a and No. 55 can be discussed together.
I move amendment No. 38a:
In page 30 between lines 10 and 11, to insert the following:
"25.—The directors of a company shall have regard, in the performance of their duties, to the interests of the members of the company as a whole, and to the interests of the company's employees as a whole.".
The purpose of this amendment is to make directors under company law aware of the need to take account of the interests not alone of the shareholders but of employees of the company. It has been the general practice in company law for directors to take account of the interests of their shareholders. This is an antiquated viewpoint in this day and age when we are encouraging more and more participation by employees, whether through share options schemes, profit sharing or through accepting responsibility to be part of the whole operation. Many people invest many years of their lives working for a particular group of companies and, by and large, there has not been an obligation——
On a point of order, perhaps the Deputy did not hear the Chair say that amendment No. 55 would be taken with amendment No. 38a. Amendment No. 55 meets the point the Deputy is making. The Deputy might not have heard the Chair and might not realise that his point is covered.
I am delighted the Minister is accepting the principle here, that it is time in company law that there was provision for directors to take into account the interests of those employed in the company. I accept that my amendment is covered by the Minister's amendment and I am happy that we are making progress.
Is the Deputy pressing his amendment?
I am just moving it at the moment. We will be taking the other amendment in conjunction with it.
Just one moment, as it arises now it must be taken——
It has to be taken with amendment No. 55.
I am in the Chair at the moment. What we are discussing is amendment No. 38a. Amendment No. 55 is an alternative and they can be discussed together but Deputy Barrett has moved No. 38a. Nobody else has spoken to it. I have asked if the amendment is being pressed.
On a point of order, I would like some guidance on this. It appears to me that what is contained in amendment No. 55 is effectively what is being said in amendment No. 38a.
The main point is that as Chairman I am putting amendment No. 38a as that amendment is the one we are now debating and that has been duly moved.
You know the old saying — a bird in the hand is worth two in the bush. Could I hear from the Minister in reply to amendment No. 38a before the question is put?
That is what I trying to do. There may be a misunderstanding on the part of the Chair.
Just a moment, Deputy. When Deputy Barrett moved his amendment, I stated clearly that amendment No. 55 is an alternative and that both were being taken together. Anybody who now wishes to speak to amendment No. 38a and amendment No. 55 is welcome to do so.
Amendment No. 55, which proposes to insert a new section, is an alternative to amendment No. 38a, which has been tabled by Deputy Barrett and which is almost identical to one he moved in the Special Committee. The Deputy's amendment is too far-reaching, and when the matter was discussed in the Special Committee I undertook to consider introducing a more moderate one along the lines of a corresponding British company law provision. That is the basis of my proposed amendment.
The thrust of the new section is to state for the first time in Irish company legislation that in addition to taking into account the interests of the shareholders of the company, the directors will be under a general duty to have regard also to the interests of their employees. When Deputies Barrett and Bruton put forward their amendment on Committee Stage, I was very fearful of its open-ended effect and indeed that it could have led to widespread disruption and divisiveness in commercial affairs. There is no point in reopening the Committee Stage debate; suffice it to say that, having considered the matter in the meantime, I have now come forward with a proposed new section for insertion in Part III of the Bill, which is along the lines I undertook to consider, and I commend it to the House accordingly.
I thank and congratulate the Minister for taking on board the principle of the amendment put down by Deputy Barrett on Committee Stage which has been re-tabled here. Having considered the matter further, the Minister now recognises that the points made on Committee Stage were valid and this is obvious from the fact that the Minister is now incorporating them in the Bill.
I wish to join my colleagues in pointing out that it is time one legislation recognised the responsibility directors have to their employees. There is no point in raking up the past but there have long been serious problems in this area and, as a result, huge divisions between companies and trade unions in particular. The insertion of amendment No. 55 should lead to employees having more confidence in their companies. That would be a good thing.
I, too, welcome this amendment from the Minister. As has been said, up to now company law seemed to have been there for the protection of members, the members being the shareholders. The workforce were rarely recognised in company law, so this is a step forward. In other more progressive European countries the phrase used instead of "the protection of members" is "for the protection of stake-holders", who are clearly understood to be the workforce as well as shareholders. Therefore, section 51 represents a major improvement on what we have had and the enshrining of this amendment, amendment No. 55, in the legislation is welcome.
Deputy Barrett to reply.
In reply to the debate on amendment No. 38a in my name, let me say that I am very pleased the Minister has accepted the principle that I and my colleague, Deputy Bruton, endeavoured to establish with amendment No. 38a on Committee Stage. Great credit is due to the Irish Congress of Trade Unions for the mature approach which has been developed during the years in the relationship between employer and employee. This has done nothing but good in terms of the protection of jobs and employment. Their participation in the Programme for National Recovery has done nothing but good and I wish them well in their further negotiations on the next agreement. The fact that the Minister has come into the House to accept and incorporate into company law a principle we have been endeavouring to have established for a number of months is a sign that there has been a move forward in this direction. I sincerely hope, given the Minister's willingness to accept the principle of my amendment and incorporate it in his own amendment, that it will do nothing but good for industrial relations in the future and the development of industry.
We should all be conscious of the fact that in a company the person on the shop floor who, on a daily basis, works for a wage or salary but who is part and parcel of the activity is just as important as everybody else. The principle we are incorporating for the first time in company law recognises the obligation on directors to take into account the interests of their employees. This represents a major step forward and I congratulate the Minister for accepting this principle, which we endeavoured to establish during the course of the debate on Committee Stage.
May I ask if the Deputy is withdrawing the amendment?
I withdraw it in favour of the wording of amendment No. 55.
May I remind the Minister that all he need do when we reach amendment No. 55 is move it in accordance with the procedures of the House.
I move amendment No. 39:
In page 35, line 6, to delete "a listing", and substitute "dealing facilities".
This is straightforward drafting amendment which is consequential on an amendment made on Committee Stage. The general intention of section 29 is to prevent speculative dealing by company directors in their company's share options. On Committee Stage in the definition of "relevant shares" in subsection (2) (a) we substituted a reference to dealing facilities for the word "listing", since the latter was to restrictive for the purposes of the section. An identical amendment should have been made consequentially in subsection (2) (b), which defines relevant debentures, but this was not done on Committe stage. The present amendment rectifies this.
I move amendment No. 40:
In page 35, line 16, after "interest", to insert the following:
", and any reference to a specified price includes a reference to a specified price range".
This amendment arises from a query raised by Deputy O'Dea in the Special Committee. Section 29 (1) refers throughout to the delivery of shares at a specified price. The Deputy rightly pointed out that this does not cover options which were framed in terms of a specified price range — between 99 pence and £1.02, for example. The amendment before the House tackles this point by interpreting a specified price as including a specified price range.
Amendments Nos. 41 and 42 in the name of the Minister form a composite proposal and amendment No. 42a is related. Therefore, amendments Nos. 41, 42 and 42a may be taken together by agreement. Is that agreed? Agreed.
I move amendment No. 41:
In page 35, between lines 16 and 17, to insert the following:
"(5) This section shall also apply to any person (not being a director of the company) who—
(a) buys a right referred to in subsection (1), and
(b) does so on behalf or at the instigation of a director of the company."
These two related amendments, amendments Nos. 41 and 42, address two issues which arose in the Special Committee debate on a Committee Stage amendment to section 30 of the Bill tabled by Deputies Barrett and Bruton. I note that the same amendment has been retabled by Deputy Barrett, amendment No. 42a. The first of these two issues arose from the terms of the Deputies' amendment itself and involved argument as to the appropriateness of the words "no reason to believe" as a defence to a prosecution under the section rather than the more usual lack of knowledge. Having reflected on the matter, I am prepared to accept the existing wording is not the most appropriate.
The second issue which arose concerned the basic scope of section 30 itself; in other words, should it continue to be confined to spouses and minor children of company directors or should it be extended beyond that. The basic mischief which the section aims to prevent is the possibility of a director getting around the prohibition in section 29 on speculative dealing in company options by the simple device of dealing in the name of the director's spouse or minor child. While I have considered a number of options in the meantime I thought the most direct way to tackle the problem would be to add a further subsection to section 29 in the terms of amendment No. 41, which leaves no doubt as to the mischief which is being tackled, and then to delete section 30 altogether. That is what the two amendments collectively would do. The new subsection (5) which I propose should be inserted in section 29 would extend the scope of what is currently section 30 to any person who buys such options on behalf of or at the instigation of a director of the company concerned. In doing so I agree that it was unsatisfactory to confine the scope of the prohibition merely to the spouses and minor children of directors. In these circumstances I am satisfied that I have addressed the concerns expressed and as section 30 is removed, amendment No. 42a is no longer necessary.
I accept that it is wise to substitute the new section proposed in amendment No. 41 for the existing section 30 to get over the question of people living together as distinct from being married. We discussed this matter on Committee Stage.
I move amendment No. 42:
In page 35, to delete lines 17 to 25.
Amendment No. 43 in the name of the Minister. Amendments Nos. 48 and 49 are related. It is suggested that we take amendments Nos. 43, 48 and 49 together by agreement. Is that agreed? Agreed.
I move amendment No. 43:
In page 36, between lines 16 and 17, to insert the following:
33.—(1) This section applies to a company in respect of which the total amount outstanding under any arrangements referred to in section 32 comes to exceed 10 per cent of the company's relevant assets for any reason, but in particular because the value of those assets has fallen.
(2) Where the directors of a company become aware, or ought reasonably to become aware, that there exists a situation referred to in subsection (1), it shall be the duty of the company, its directors and any persons for whom the arrangements referred to in that subsection were made, to amend, within two months, the terms of the arrangements concerned so that the total amount outstanding under the arrangements again falls within the percentage limit referred to in that subsection.".
These three amendments, Nos. 43, 48 and 49, arise from the debate in the Special Committee on the introduction of what is now section 32 of the Bill, and an example will, I think, best illustrate the point raised.
Suppose the total value of loans made by a company to its directors came to 9 per cent of the company's net assets. In this case, any further loan would be permissible, so long as the new aggregate was still less than 10 per cent of the company's net assets. However, suppose the net asset position then deteriorated later on in the financial year, so that the total value of loans outstanding actually went over the 10 per cent limit — the question was, what is then to happen to outstanding loans — should they be repaid, should the auditors draw attention to the situation, and so on?
In the first of these two amendments — in other words the new section 33 — the solution I am proposing is to require the directors of the company to re-organise or re-negotiate the loans so that they remain within the 10 per cent limit at all times. Incidentally, this would apply where the 10 per cent limit is breached for any reason and not just because the value of the net assets has fallen.
The second amendment I am proposing, under section 41 of the Bill, would require the company's annual accounts to disclose specifically the actual aggregate value of the loans, and so on, which exist at the end of the financial year, together with details of any renegotiation of the loans arising from the need to stay within the 10 per cent limit. As well as requiring disclosure in its own right of these matters, this will mean that the company's auditors will, by virtue of section 45, have the function of monitoring observance of the 10 per cent limit, a point which also arose in the Special Committee debate.
I move amendment No. 44:
In page 36, line 25, to delete "associated", and substitute "connected".
Section 33 is one of five new sections into which the previous section 32 was split by amendments in the Dáil Special Committee. However, while it was appropriate, under the previous text, to refer to a director of a company being "associated" with another company in a group of companies, Deputy O'Dea pointed out that that term is no longer appropriate, since section 25 no longer uses this concept of "association". The proper term would now be "connected", rather than "associated" and this amendment so provides.
I move amendment No. 45:
In page 38, between lines 21 and 22, to insert the following:
"(3) In deciding the extent of any personal liability under this section, the court shall have particular regard to the extent to which the arrangement in question contributed materially to the company's inability to pay its debts or substantially impeded the orderly winding up of the company.".
This amendment arises from the Special Committee debate on the introduction of what is now section 38 of the Bill.
Deputy Bruton made the point that the personal liability provisions of section 38 were too open-ended, and that some degree of limitation should be put on the court's discretion to impose unlimited personal liability on a company director. In this particular case, I agreed that it might, in some cases, be unfair to leave open the possibility of unlimited liability for the company's debts, where the responsibility of the director concerned was arguable or marginal.
In putting forward this amendment, however, I am not proposing an actual limit on liability, as such — what I propose is that the judge in the case should be required to address his mind specifically to the extent to which any loans taken out by the director concerned materially affected the company's solvency; in other words, not just whether there was a material effect, but the extent of that effect. This is as far as I would be prepared to go on this particular point.
The Minister is making progress. We thank him for taking on board the suggestions made on Committee Stage. It is only fair and equitable that the court should take into account the extent of any personal liability having regard to the extent to which the arrangements in question contributed to the company's difficulties. The manner in which the Minister is dealing with this issue is acceptable. The principle we endeavoured to establish on Committee Stage is incorporated in this amendment. For that reason we have great pleasure in supporting it.
Amendments Nos. 46 and 50 are consequential on amendment No. 47. Therefore, I propose that we discuss amendments Nos. 46, 47 and 50 together by agreement. Is that agreed? Agreed.
I move amendment No. 46:
In page 38, lines 33 to 35, to delete "a financial year (‘the relevant period') of the company ending not earlier than six months after the commencement of this section", and substitute "the relevant period".
These three related amendments are of a technical drafting nature and the need for them was pointed out at the Special Committee. There is a need to clarify the phrase "relevant period" in sections 40, 42 and 44 and that is the reason for the amendments. For instance, in section 40 (1) and in section 42 (2) it is clear that "relevant period" refers to group accounts prepared not earlier than six months after the sections concerned come into effect but section 40 (2) and section 42 (5), which are meant to be mirror images for individually prepared company accounts, do not currently provide exactly the same thing. The best way to approach this is to define in a separate subsection in section 40 the meaning of the phrase "relevant period" for the three sections. That is what the second of these related amendments would do. This then gives rise to the other two consequential amendments in section 40 (1) and section 42 (2).
I move amendment No. 47:
In page 40, between lines 19 and 20, to insert the following:
"(9) In this section and in sections 42 and 44, ‘relevant period', in relation to a company, means a financial year of the company ending not earlier than 6 months after the commencement of the section concerned.".
I move amendment No. 48:
In page 41, line 23, to delete "relates." and substitute "relates, and".
I move amendment No. 49:
In page 41, between lines 23 and 24, to insert the following:
"(g) in the case of arrangements to which section 32 relates, the aggregate value of such arrangements at the end of the financial year concerned, in relation to any persons specified in that section, expressed as a percentage of the company's relevant assets at that time; and
(h) any amendment of the terms of any such arrangement in accordance with section 33.".
I move amendment No. 50:
In page 41, lines 42 to 44, to delete "a financial year (‘the relevant period') of the company ending not earlier than six months after the commencement of this section," and substitute "the relevant period".
I move amendment No. 50a:
In page 43, line 16, to delete "(but excluding years prior to 1989)", and substitute "(but excluding any financial year ending prior to the passing of this Act)".
This is a technical drafting amendment which arises from an amendment made on Committee Stage. The Committee Stage amendment, in turn, replaced a section in the Bill as initiated, and made several changes to the original text.
One of these changes was the insertion of the words which currently appear in brackets in section 43, and the idea was that the obligation on banks to keep a register of transactions coming within the disclosure provisions of Part III of the Bill should not apply retrospectively when the Bill was enacted.
As well as bringing up to date the actual cut-off point mentioned in section 43 (1), this amendment will make the meaning of the provisions in brackets clearer.
I move amendment No. 51:
In page 46, to delete lines 11 to 17.
Amendment No. 52 in the name of An tAire. Amendments Nos. 52, 53 and 54 form a composite proposal. I propose that we take amendments Nos. 52, 53 and 54 together, by agreement.
I move amendment No. 52:
In page 46, between lines 28 and 29, to insert the following:
"(d) a copy or written memorandum, as the case may be, of any variation of any contract of service referred to in paragraph (a), (b) or (c);"
These three amendments also arise from the debate in the Special Committee. The first, arising from comments by Deputy O'Dea, is intended to make it clear that copies of all variations of contracts of service involving directors should be kept in the same place as the copies of the original contracts — on reflection, this is not clear enough from the present combination of subsection (8) and the last two lines of subsection (1). Making the amendment to subsection (1) also has the effect of ensuring that the company advise the Registrar of Companies as to where the variations are kept, a point also suggested by Deputy O'Dea.
While this amendment would replace the first clause of subsection (8), the second clause appears to be superfluous, in view of subsection (1) (c), and so the third amendment in this group would simply delete subsection (8).
The second amendment in this group of amendments is intended to cover a different aspect of the section, also raised by Deputy O'Dea, and that is where a contract of service is neither wholly in writing nor wholly in some other form.
I move amendment No. 53:
In page 46, between lines 30 and 31, to insert the following:
"(2) Where a contract of service is only partially in writing, paragraphs (a), (b), (c) and (d), as appropriate, of subsection (1), and subsections (3) and (4), shall also apply to such a contract.".
I move amendment No. 54:
In page 47, to delete lines 27 to 29.
I move amendment No. 55:
In page 49, after line 51, to insert the following:
52.—(1) The matters to which the directors of a company are to have regard in the performance of their functions shall include the interests of the company's employees in general, as well as the interests of its members.
(2) Accordingly, the duty imposed by this section on the directors shall be owed by them to the company (and the company alone) and shall be enforceable in the same way as any other fiduciary duty owed to a company by its directors.".
I move amendment No. 56:
In page 50, line 20, after "events", to insert "and the date on which it occurred".
This amendment arises from a query by Deputy Barrett in the Special Committee debate on what are now sections 55 and 58.
The net point was that there seemed to be no way of knowing whether a person had fulfilled his obligation to notify the company of what we call a "notifiable event" within five days of the occurrence of the event concerned, since he was neither obliged to state the date the event occurred nor to put a date on his notification to the company. While I am still not sure to what extent this is, in fact, a practical problem, I have, in deference to Deputy Barrett, brought forward amendment No. 57 in an effort to clarify the position.
Thank you, Minister.
Amendments Nos. 57, 59 and 64 are cognate. I suggest that we take amendments Nos. 57, 59 and 64 together by agreement.
I move amendment No. 57:
In page 55, to delete lines 30 to 38, and substitute the following:
"(4) Where any right or interest is restricted under subsection (3), any person in default under that subsection or any other person affected by such restriction may apply to the court for relief against a disability imposed by or arising out of subsection (3) and the court on being satisfied that the default was accidental, or due to inadvertence, or some other sufficient cause, or that on other grounds it is just and equitable to grant relief, may grant such relief either generally, or as respects any particular right or interest on such terms and conditions as it sees fit.
(5) Where an applicant for relief under subsection (4) is a person referred to in subsection (3), the court may not grant such relief if it appears that the default has arisen as a result of any deliberate act or omission on the part of the applicant.".
I have tabled amendments Nos. 57, 59 and 64 to address a particular difficulty raised by Deputy Bruton in the Special Committee, which the Deputy felt could arise out of the present wording of section 103 (2) and (3). Exactly the same difficulty would arise under sections 57 and 78, which explains why the three amendments are grouped here for discussion purposes. The Deputy's concern was that, as currently worded, the person in default would be the only party who could seek relief from the restrictions imposed by the sections concerned, whereas any other person who had, subsequent to the default, acquired an interest in the shares from the defaulter would not be able to make application to the court to regularise matters.
I undertook to look at the possibility of rewording the provision before Report Stage, and the present amendments arise from that undertaking. While the amendments I am proposing today will continue to allow the actual defaulter to seek relief from the court, as the current text already does, it will also allow any other person who may be incidentally affected by the default to seek relief. I think this is what the Deputy was seeking to achieve.
Amendments Nos. 58 and 60 are related. I propose that we take the two amendments together by agreement.
I move amendment No. 58:
In page 57, to delete lines 21 to 24, and substitute the following:
"(9) The said register shall also be and remain open and accessible to any person attending the company's annual general meeting at least one quarter hour before the appointed time for the commencement of the meeting and during the continuance of the meeting.".
These two amendments arise from a debate in the Special Committee debate on an amendment by Deputies Barrett and Bruton. While I agreed at the time to accept an adjusted wording on the floor of the Committee, I indicated that I might return to the matter on Report Stage, and that is why these two amendments are before the House.
When I reflected on the matter in the meantime, I discovered that there is no corresponding provision in Chapter 2 of this part, which deals with individual and group acquisitions in plcs. It would seem just as appropriate, indeed even more so, that a plc should have its register of interests in shares available at its annual general meeting and I propose to take the opportunity to rectify this omission, as well as coming back with an appropriately adjusted wording to section 59 (9).
I move amendment No. 58a:
In page 61, line 13, to delete "and 23 (1)" and substitute", 23 (1) and 23 (3)".
I move amendment No. 58b:
In page 71, line 10, to delete "1985", and substitute "1990".
I move amendment No. 58c:
In page 71, to delete lines 15 and 16, and substitute the following:
"(iii) Agricultural Credit Corporation plc or Industrial Credit Corporation plc,".
This is a straightforward amendment to delete the reference to Fóir Teoranta as that body is being wound-up and it is no longer appropriate to refer to it in this section or anywhere else.
I move amendment No. 59:
In page 71, to delete lines 45 and 46, and in page 72, to delete lines 1 to 7, and substitute the following:
"(4) Where any right or interest is restricted under subsection (3), any person in default under that subsection or any other person affected by such restriction may apply to the court for relief against a disability imposed by or arising out of subsection (3) and the court on being satisfied that the default was accidental, or due to inadvertence, or some other sufficient cause, or that on other grounds it is just and equitable to grant relief, may grant such relief either generally, or as respects any particular right or interest on such terms and conditions as it sees fit.
(5) Where an applicant for relief under subsection (4) is a person referred to in subsection (3), the court may not grant such relief if it appears that the default has arisen as a result of any deliberate act or omission on the part of the applicant.".
I move amendment No. 60:
In page 78, between lines 2 and 3, to insert the following:
"(2) The register referred to in subsection (1) shall also be and remain open and accessible to any person attending the company's annual general meeting at least one quarter hour before the appointed time for the commencement of the meeting and during the continuance of the meeting.".
I move amendment No. 61:
In page 79, to delete lines 9 to 23, and substitute the following:
"(5) Where the Exchange receives a declaration under this section it shall, subject to subsection (6), publish, in such manner as it shall determine, and within three days of its receipt, the information contained in that declaration.
(6) The Exchange may decide not to publish the information contained in the declaration if, but only if, it is satisfied—
(a) that the disclosure of such information would be contrary to the public interest, or
(b) that such disclosure would be seriously detrimental to the company or companies concerned:
Provided that——
(i) the Exchange shall not decide not to publish the information under paragraph (b) unless it is satisfied that a decision to do so would be unlikely to mislead the public with regard to the facts and circumstances knowledge of which is necessary for the assessment of the interests in question, and
(ii) notwithstanding any decision taken under this subsection, the Exchange may publish the information later than three days after its receipt where it is satisfied that the considerations in paragraph (a) or (b) no longer apply.".
This amendment arises from a query raised in the Special Committee by Deputy O'Dea. The case pointed to by the Deputy was where the Stock Exchange decided, under what is now section 90 (6), not to publish information it had received from a shareholder, for example, on the grounds that it would be seriously detrimental to the company concerned. However, if the exchange then decided, after a week or so, that the public interest no longer required the "non-publication" of the information, the exchange would be caught by subsection (5), which only gives it three days to publish from the date it received the information in the first place. While the "anomaly" raised by the Deputy may not arise very much in practice, I did give a firm undertaking to rectify the matter on Report Stage.
The amendment before the House would, accordingly, make two changes to the existing text. First, there is a minor change to subsection (6) involving the replacement of the words "but in any event not later than" by the less absolute word "within". Second, the proviso to subsection (6) would be expanded by including a new paragraph to make it clear that the exchange could, notwithstanding the fact that more than three days had passed, nevertheless decide to publish information which it had previously withheld under paragraph (a) or (b) of the subsection.
I move amendment No. 62:
In page 81, lines 24 and 25, to delete "the Building Societies Acts, 1976 to 1984", and substitute "the Building Societies Act, 1989".
This amendment arises simply because the Building Societies Act, 1989, has now replaced the previous "collectively-cited" Building Societies Acts. As far as I can establish, this is the only reference to these particular Acts in the Bill which needs to be adjusted in this way.
I move amendment No. 63:
In page 84, to delete lines 5 to 10, and substitute the following:
"(3) The court may, if it considers—
(a) that it would be just and equitable to do so, and
(b) that the financial interest of the applicant would not be prejudiced thereby,
exempt in whole or in part from the requirements of a disclosure order——
(i) any person or class of persons,
(ii) any interest or class of interest in shares or debentures,
(iii) any share, group or class of shares,
(iv) any debenture, group or class of debentures.".
This amendment arises from a debate in the Special Committee on section 100 of the Bill, particularly subsection (3). That subsection allows the court to make specific types of exemptions from any disclosure order it may already have made in respect of particular shares.
Deputy Bruton felt that the powers of the court under this subsection were too sweeping and should at least be clarified, and I agreed to consider a short form of words suggested by the Deputy to this end. On reflection, however, I think a better solution would be to amend subsection (3) in the way set out in the proposed amendment. The amendment would insert two particular matters which the court would have to address before exercising its power under subsection (3). These are, first, whether it would be just and equitable to give the exemption sought and, second, whether the financial interest of the original applicant for a disclosure order would thereby be prejudiced.
I move amendment No. 64:
In page 86, to delete lines 7 to 15, and substitute the following:
"(2) Where any right or interest is restricted under subsection (1), any person in default under that subsection or any other person affected by such restriction may apply to the court for relief against a disability imposed by or arising out of subsection (1) and the court on being satisfied that the default was accidental, or due to inadvertence, or some other sufficient cause, or that on other grounds it is just and equitable to grant relief, may grant such relief either generally, or as respects any particular right or interest on such terms and conditions as it sees fit.
(3) Where an applicant for relief under subsection (2) is a person referred to in subsection (1), the court may not grant such relief if it appears that the default has arisen as a result of any deliberate act or omission on the part of the applicant.".
I move amendment No. 65:
In page 86, to delete lines 25 and 26, and substitute the following:
"(a) section 59 (5) of this Act or section 92 (1), 119 (1) or 195 (10) (inserted by section 51 of this Act) of the Principal Act, or".
This is a straightforward technical amendment intended to correct a cross reference in subsection (1) (a) of section 104, in so far as section 51 of the Bill is concerned.
Amendment No. 66. Amendment No. 67 is related and Nos. 66 and 67 may be taken together by agreement.
I move amendment No. 66:
In page 86, lines 29 and 30, to delete "and by reference to the actual costs involved".
Amendments Nos. 66 and 67 arise from the debate in the Special Committee on an amendment by Deputies Bruton and Barrett. I agreed to accept the amendment, with the option of refining it on Report Stage, and that is what the two amendments here would do.
Under the amendments, we would effectively be making two changes to the present text of section 104. First, if, when making regulations about permissible costs chargeable by companies for copying company share registers and so on under the provisions listed in subsection (1) (b), the Minister is to be required to have regard to the commercial cost normally associated with this, as the Deputies suggested, this requirement should really apply, in addition, to straightforward fee increases for inspecting these types of documents as well, under the provisions listed in subsection (1) (a). In other words, the Deputies' amendment on Committee Stage was deficient, by amending subsection (2) only.
I move amendment No. 67:
In page 86, between lines 32 and 33, to insert the following:
"(3) In making any order under this section, the Minister shall take into account the general costs incurred by a company in facilitating the inspection, or providing copies, of the registers or other documents referred to in subsection (1).".
I move amendment No. 68:
In page 86, line 46, to delete "10 days", and substitute "14 days".
Again, amendment No. 68 arises from a debate in the Special Committee, particularly contributions by Deputy Bruton, about the general fairness of requirements to notify changes in interests in shares to a company within five days, with the Deputy generally arguing that this period should be longer. For my own part, I did not accept that five days was unreasonable in general, but I did undertake, nevertheless, to consider extending a transitional provision in what is now section 105 from ten days to 14 days, on a once-off basis. That is what the amendment before the House does — when these provisions come into force, existing shareholders will have to notify their existing shareholdings to their company with 14 days of the commencement of section 105, as opposed to ten days, as at present.
We now reach the point where in accordance with the order of the House we could terminate our business. If the feeling of the House is that we should proceed, the order would not preclude us from so doing.
We are eight hours and fifty-five minutes ahead of schedule, which is commendable. The order does not preclude our going on. Perhaps we could move on slowly to take Part V. All the official amendments to Parts V and VI have long since been circulated.
I suggest that we adjourn until after Question Time and proceed as the Minister has suggested. That will give us time to have a look at Part V.
