I move amendment No. 15:
In page 20, to delete lines 10 to 15, and substitute the following:
"in possession of–
(a) other books or documents which may constitute copies of any books or documents of the body,
(b) subject to subsection (4), other books or documents which may relate to any books or documents of the body;
but where any such person claims a lien on books or documents produced by him, the production shall be without prejudice to the lien.
(4) The power under subsection (3)(b) shall not be exercised unless–
(a) in the opinion of the Director, there are reasonable grounds for believing the first and second-mentioned books or documents in subsection (3)(b) are related to one another (and those grounds may include grounds related to the relationship between the body and the person of whom the requirement under subsection (3)(b) is proposed to be made, a common origin of some or all of the information contained in the said books or documents or similar considerations), and
(b) save where the Director is of opinion that compliance with this paragraph could result in the concealment, falsification, destruction or the disposal otherwise of the books or documents concerned, the Director notifies the person of whom the requirement under subsection (3)(b) is proposed to be made ('the third party') that the Director proposes to make that requirement and states in that notification the grounds for his opinion under paragraph (a) and that the third party may (if such is his contention) make submissions to the Director, within 21 days from the date of the making of the notification, as to why he believes the said opinion of the Director to be erroneous (and the Director shall have regard to any such submissions so made before finally deciding whether to make the said requirement or not),
but in no case shall the third party be obliged to comply with such a requirement in relation to a particular book or document concerned if he would be entitled, by virtue of any rule of law or enactment, to refuse to produce, in any proceedings, the book or document on the ground of any privilege (whether the privilege to which section 23 applies or not).".
Section 29 provides for the repeal and substitution of section 19 of the Companies Act, 1990, which provides for the examination of the books and documents of companies and other bodies. Section 19(3) provides that where the Director of Corporate Enforcement has the power to require the production of books and documents from any body he shall have the power to request their production from any person who appears to be in possession of them. On Committee Stage it was agreed to extend this subsection to cover books or documents also that may constitute copies of any books or documents of the body in question.
This amendment provides for the further extension of this subsection to cover books or documents that appear to the Director of Corporate Enforcement to relate to books and documents of a body whose books are being examined by the director. It has been the experience with a number of section 19 examinations that arrangements are often put in place to hide the company's true business by using intermediate vehicles, such as other companies and trusts. As the law stands it has not been possible to obtain the books and documents that these other companies or intermediate vehicles may have relating to the business of the target company. Thus, the progress of section 19 examinations has often been inhibited by a lack of adequate legal powers. The Bill addresses these weaknesses by providing for the production by any other bodies of documents relating to a body whose books and documents are under examination.
This additional amendment now proposed for section 19(3) should significantly enhance the usefulness of section 19 examinations. Access to the personal or private documents of individuals who have been involved or who have done business with the body under examination may be essential if the director is to obtain meaningful information or evidence of how a body conducted its affairs. As the books and documents referred to in subsection (3)(b) are the personal and private documents of an individual, I also propose the introduction of a new subsection (4), which is designed to protect the individual's right to privacy. The new subsection will ensure that the power under subsection (3)(b) will only be exercised where the director has reasonable grounds for believing that the individual's books and documents relate to the books and documents of the body under examination. The director must notify the individual concerned of the reasons his or her books or documents are being requested for examination.
The amendment also provides that where the individual concerned believes the director's reasons for forming his or her opinion are erroneous he or she can make representations to the director accordingly. Finally, the proposed subsection (4) provides for the individual referred to in subsection (3)(b) to be relieved from his or her obligation and to produce personal or private documents if he or she is entitled to do so under any legally recognised form of privilege.
The new section 371A of the Companies Act, 1963, introduced by amendment No. 41, is intended to address a situation in which a person claims a privilege under section 19(3)(b) but the Director of Corporate Enforcement disputes this claim to privilege. In such circumstances the director may apply to the court to compel the person to comply with his or her demand for production of the books or documents in question. The court would, as part of hearing any such application, settle the question of whether the books or documents were privileged or otherwise.