Irish Collective Asset-management Vehicles Bill 2014: Report and Final Stages

I move amendment No. 1:

In page 11, between lines 19 and 20, to insert the following:

“(3) In relation to times before the coming into operation of the Companies Act 2014 references in this Act to any provision of that Act have effect as references to the corresponding provisions of any enactment to be repealed by that Act.”.

I thank Deputies for their assistance in getting the Bill to this Stage. We had a very good and detailed policy discussion on Committee Stage, during which I outlined that a lot of what Report Stage would involve would be technical in nature. It is based largely on the Companies Act and how the Bill will interact with it. I would like to explain at the outset that in the Bill, as passed by the Dáil on Committee Stage, it is proposed to cross-apply a number of provisions that apply to companies under the Companies Act to this Bill.

This arises in the following sections: section 82, regarding restricting or disqualifying directors; section 148, regarding the application of provisions relating to receivers; section 149, regarding the application of provisions relating to winding up; and section 173, regarding provisions relating to enforcement. During the course of exchanges on Committee Stage, I also mentioned that the provisions relating to compliance and enforcement needed to be examined to determine to what extent they would likewise need to be cross-applied.

While all of this was considered and prepared in the context of the provisions of the existing Companies Act, we were very conscious of the very advanced stage of the consideration of the Companies Bill 2012. As Deputies will be aware, the Companies Bill was enacted and signed into law by the President on 23 December 2014. This development has now allowed us to focus on the cross-application of the provisions contained in the latest consolidated Companies Act.

However, given that the current understanding is that the Companies Act 2014 will be commenced with effect from 1 June 2015, and as I am anxious to have the current Irish Collective Asset-management Vehicle, ICAV, Bill enacted and commenced without delay, it is necessary to specify what cross-applied provisions will apply in the interim. That is the purpose of amendment No. 1.

In examining the cross-applied provisions, a more detailed exercise was undertaken to more expressly and explicitly spell out how the cross-applied provisions will apply in practice, and in some instances it was considered more appropriate to copy in detail some specific provisions for applications in an ICAV context. That is the reason some of these Report Stage amendments are as detailed as they are. Arising from our exchanges on Committee Stage, I circulated - as I undertook to do - a brief summary of the amendments to Deputies in advance of Report Stage and I trust this has assisted them in comprehending quite technical amendments. I look forward to the debate.

Before concluding today's proceedings, I would be obliged if, in accordance with Standing Order 140, the Ceann Comhairle would direct the Clerk to make the following minor drafting correct to the text of the Bill: "on page 81, line 22, to insert the word "if" after "even"". This is being inserted in the interests of textual clarity and does not have any effect in a substantive way.

I thank the Minister of State for his remarks and we in Fianna Fáil will be supporting the passage of the Bill. It would be better if we did not have so many amendments on Committee and Report Stages. There are 40 amendments on Report Stage and we had approximately 68 amendments on Committee Stage, a total of over 100 amendments. It can be difficult to cross-reference these with the original Bill and the explanatory memorandum. It is important legislation and we will be constructive in our approach. We look forward to what we hope will be a quick passage of the Bill.

Sinn Féin will also approach this constructively and support the passage of the Bill. I have raised the issue time and again regarding the explanatory notes on amendments. It is a new departure and the Minister said he would ensure that this would happen. It has happened and it has made it a bit easier to navigate what can sometimes be technical amendments such as those before us today. That being said, there is an issue arising from so much change to legislation, and this is not the only piece of financial legislation we have had. We have discussed the heads of Bills, for example, and even at that stage we might be told that there is to be a radical change. Sometimes this is unavoidable but where possible, it should be avoided. I hope the explanatory notes for Government amendments will be continued for all legislation.

The comments of both Deputies are constructive and fair. As I tried to outline in my opening remarks, there are timing issues with this Bill, with the new Companies Act and the need to cross our t's and dot our i's to ensure cross-application takes place where necessary and a "copy and paste" takes place where it would be better. Consultation with the Attorney General on that has led to a significant number of amendments. However, I stress - as I did in my opening remarks - that these amendments, in the main, do not alter policy but rather spell out how this Bill will interact with the consolidated companies legislation. I thank both Deputies for their remarks in this regard.

I believe in the merits of the explanatory notes on amendments, as they lead to a more constructive debate. I will continue to advocate their use.

Amendment agreed to.

Amendments Nos. 2 and 3 are related and may be discussed together.

I move amendment No. 2:

In page 12, line 11, to delete “within the meaning of the Companies Act 1963;” and substitute the following:

“formed and registered under the Companies Act 2014 or an existing company within the meaning of that Act;”.

These are technical amendments. Amendment No. 2 is a technical amendment to the definition of "company" so that it refers to the definition provided by the Companies Act 2014 rather than the old definition. Amendment No. 3 is a technical amendment to the definition of "investment company" so that is the same as the definition provided by the Companies Act 2014, which is detailed at length in section 1386 of the Companies Act.

Amendment agreed to.

I move amendment No. 3:

In page 12, to delete lines 26 and 27 and substitute the following:

“ “investment company” has the same meaning as in Part 24 of the Companies Act 2014;”.

Amendment agreed to.

I move amendment No. 4:

In page 13, between lines 12 and 13, to insert the following:

“ “special resolution”, in relation to an ICAV, means a resolution passed by not less than 75 per cent of the votes cast by the members of the ICAV as, being entitled to do so, vote in person or by proxy at a general meeting of the ICAV;”.

This inserts the definition of "special resolution" to define it as referred to in section 86(7) and section 144(1)(c) of the ICAV Bill 2014.

Amendment agreed to.

I move amendment No. 5:

In page 15, line 7, after “office” to insert “or head office”.

This is a technical correction to reflect that the Central Bank needs to be notified of any change in the head office of an ICAV as well as of a registered office, which need not always be the same thing.

Amendment agreed to.

I move amendment No. 6:

In page 24, line 32, after “subsection (1)” to insert “or (4)”.

This corrects an error in section 27(5), which fails to take account of the fact that the Central Bank can impose conditions under both subsections (1) and (4).

Amendment agreed to.

I move amendment No. 7:

In page 25, to delete lines 16 to 26 and substitute the following:

“Alteration in instrument of incorporation

31. (1) No alteration in the instrument of incorporation of an ICAV shall be made unless—

(a) the alteration has been approved—

(i) by ordinary resolution, or

(ii) if the instrument of incorporation so requires, by a resolution passed by such majority as is specified in the instrument of incorporation of the votes cast by the members of the ICAV who, being entitled to do so, vote in person or by proxy at a general meeting of the ICAV,

or

(b) the depositary of the ICAV has certified in writing that the alteration—

(i) does not prejudice the interests of the members of the ICAV, and

(ii) does not relate to any such matter as may be specified by the Bank as one in the case of which an alteration may be made only if approved by members of an ICAV.

(2) No alteration in the instrument of incorporation of an ICAV shall be made without the approval of the Bank.

(3) Any person who makes an alteration in the instrument of incorporation of an ICAV otherwise than in accordance with subsections (1) and (2) commits a category 3 offence.

(4) Within 21 days after the date of the making of an alteration in the instrument of incorporation of an ICAV, the ICAV shall deposit with the Bank a copy of the instrument of incorporation as so altered or containing the alterations.

(5) If an ICAV fails to comply with subsection (4), it commits a category 2 offence.

(6) In this section “alteration in the instrument of incorporation” does not include a change in the name of the ICAV.”.

This amendment to section 31 prohibits a change in the instrument of incorporation of an ICAV without Central Bank approval and without the approval of its members except where a depository has certified that the alteration does not prejudice the interests of the members of the ICAV. The ICAV Bill 2014 as amended on Committee Stage prohibited a change to the instrument of incorporation of an ICAV solely without Central Bank approval. The amendment to subsection (1) sets out a better practice approach of also requiring the approval of members of the ICAV for an amendment to the instrument of incorporation. This subsection allows for the requirement of member approval to be dispensed with where a depository of the ICAV has certified that such an alteration does not prejudice the interest of the members of the ICAV.

Amendment agreed to.

Amendments Nos. 8 and 9 are related and may be discussed together.

I move amendment No. 8:

8. In page 51, between lines 6 and 7, to insert the following:

“Fiduciary duties of directors of ICAVs

78. (1) Without prejudice to the provisions of any enactment (including this Act), a director of an ICAV shall owe the duties set out in section 79 (“the relevant duties”) to the ICAV (and the ICAV alone).

(2) The breach by a director of the relevant duties shall not of itself affect—

(a) the validity of any contract or other transaction, or

(b) the enforceability, otherwise than by the director in breach of that duty, of any contract or other transaction by any person, but nothing in this subsection affects the principles of liability of a third party where he or she has been an accessory to a breach of duty or has knowingly received a benefit from it.

(3) The relevant duties (other than those set out in section 79(1)(b) and (h) are based on certain common law rules and equitable principles as they apply in relation to the directors of bodies corporate and shall have effect in place of those rules and principles as regards the duties owed to an ICAV by a director.

(4) The relevant duties (other than those set out in section 79(1)(b) and (h) shall be interpreted, and the provisions concerned of section 79 shall be applied, in the same way as common law rules or equitable principles and regard shall be had to the corresponding common law rules and equitable principles in interpreting those duties and applying those provisions.”.

This inserts an introductory provision to amendment No. 9 that seeks to insert a provision which enumerates the fiduciary duties owned by directors of ICAVs. Amendment No. 8 mirrors section 228 of the Companies Act 2014, which introduces significant change to Irish company legislation, as it is the first occasion that the Legislature has sought to codify the fiduciary duties of directors of companies. The concept of fiduciary duties is derived from general principles of common law and equity that have been interpreted and applied by the courts to directors of companies.

Amendment No. 9 inserts a provision which enumerates a non-exhaustive list of the fiduciary duties owned by the directors of the ICAV. This mirrors section 229 of the Companies Act 2014, which introduces significant change to Irish company legislation, as it is the first occasion that the Legislature has sought to enumerate the fiduciary duties of directors of companies.

Amendment agreed to.

I move amendment No. 9:

In page 51, between lines 6 and 7, to insert the following:

“Statement of principal fiduciary duties of directors of ICAVs

79. (1) A director of an ICAV shall—

(a) act in good faith in what the director considers to be the interests of the ICAV,

(b) act honestly and responsibly in relation to the conduct of the affairs of the ICAV,

(c) act in accordance with the instrument of incorporation of the ICAV and exercise his or her powers only for the purposes allowed by law,

(d) not use the ICAV’s property, information or opportunities for his or her own or anyone else’s benefit unless—

(i) that is expressly permitted by the ICAV’s instrument of incorporation, or

(ii) the use has been approved by a resolution of the ICAV in general meeting,

(e) not agree to restrict the director’s power to exercise an independent judgement unless—

(i) that is expressly permitted by the ICAV’s instrument of incorporation,

(ii) the case concerned falls within subsection (2), or

(iii) the director’s agreeing to such has been approved by a resolution of the ICAV in general meeting,

(f) avoid any conflict between the director’s duties to the ICAV and the director’s other (including personal) interests unless the director is released from his or her duty to the ICAV in relation to the matter concerned, whether in accordance with provisions of the ICAV’s instrument of incorporation in that behalf or by a resolution of it in general meeting,

(g) exercise the care, skill and diligence which would be exercised in the same circumstances by a reasonable person having both—

(i) the knowledge and experience that may reasonably be expected of a person in the same position as the director, and

(ii) the knowledge and experience which the director has,

and

(h) in addition to the duty under section 78, have regard to the interests of its members.

(2) If a director of an ICAV considers in good faith that it is in the interests of the ICAV for a transaction or engagement to be entered into and carried into effect, a director may restrict the director’s power to exercise an independent judgement in the future by agreeing to act in a particular way to achieve this.”.

Amendment agreed to.

Amendments Nos. 10 and 11 are related and may be discussed together.

Bill recommitted in respect of amendment No. 10.

I move amendment No. 10:

In page 54, to delete lines 36 to 40, and in page 55, to delete lines 1 and 2 and substitute the following:

“Restrictions on directors of insolvent ICAVs

82. (1) The provisions of Chapter 3 of Part 14 of the Companies Act 2014, and the other provisions of that Act relating to restrictions on directors of an insolvent company (within the meaning of section 818), have effect in accordance with subsection (2).

(2) Those provisions have effect as if—

(a) the following references:

(i) the reference to a company referred to in section 819(6) in the definition of “company” in section 818(1);

(ii) the references to a company in section 818(3);

(iii) the final 3 references to a company in section 819(1);

(iv) the references to an investment company in section 819(5);

(v) the references to a company in sections 821(1)(a) and (b), 825(1) and (2) and 836;

(vi) the references to a company in the definition of “restriction” in section 849;

(vii) the references to a company in sections 853(5), 855(1), 858 and 859, included an ICAV, and

(b) the reference in section 828(2) to the constitution of a company included the instrument of incorporation of an ICAV.

(3) The provisions of the Companies Act 2014 mentioned in subsection (1) apply, subject to necessary modifications and to the specific modifications specified in subsection (4), in relation to directors of an insolvent ICAV as if they were directors of an insolvent investment company.

(4) The modifications are that—

(a) references to a company in the definitions of “director of an insolvent company”and “insolvent company” in subsection (1) of section 818 and subsection (2) of that section are to an ICAV,

(b) references to the Registrar are to the Bank,

(c) the reference to prescribed particulars in sections 819(7) and 823(2), and to the prescribed form and manner in section 819(7), are to particulars, and to the form and manner, specified by the Bank, and

(d) the reference in section 823(5) to section 894 is to section 14 of this Act.”.

This deletes the previous section 82 and inserts a new section to cross-apply to ICAVs the provisions of the Companies Act 2014 relating to the restrictions on directors of insolvent companies which are found in chapter 3, part 14 of the Companies Act 2014. Pursuant to the Companies Act 2014, the court may make a declaration restricting a director upon application from the Director of Corporate Enforcement, the liquidator of the insolvent company or a receiver of any property of the company. The restriction is for a period of five years and the restricted person may not be appointed to act in any way, directly or indirectly, as a director or secretary, or to be involved in the formation or promotion of a company unless that company meets certain capitalisation requirements. This provision will, in effect, restrict directors of insolvent companies from involvement with a company or an ICAV and restrict directors of insolvent ICAVs from involvement with a company or ICAV. Restricting future directorships of dishonest or irresponsible directors of insolvent ICAVs or companies is an effective way of punishing such behaviour and protecting the public and investors from any future wrong-doing.

Amendment No. 11 introduces a new section 83. This cross-applies to ICAVs the provisions of the Companies Act 2014, relating to the disqualifications on directors of insolvent companies which are found at sections 837 to 848 of the Companies Act 2014.

Amendment agreed to.
Bill reported with amendment.

I move amendment No. 11:

In page 55, between lines 2 and 3, to insert the following:

“Disqualification of directors etc

83. (1) The provisions of Chapter 4 of Part 14 of the Companies Act 2014, and the other provisions of that Act relating to the disqualification of a person from being appointed or acting as a director or other officer, statutory auditor, receiver or liquidator, or being in any way (whether directly or indirectly) concerned or taking part in the promotion, formation or management of a company, have effect in accordance with subsection (2).

(2) Those provisions have effect as if—

(a) in the definition of “company” in section 837 after “Act” there were inserted “(including an Irish Collective Asset-management Vehicle)”,

(b) in the definition of “relevant requirement” in that section the reference to that Act included this Act and the reference to the Registrar included the Bank,

(c) the references to a company within the meaning of section 819(6) in sections 838, 848, 849 and 851 included an ICAV,

(d) the reference to that Act in section 839(1)(a) included this Act,

(e) in section 840—

(i) the references to section 149(8) included section 65(6) of this Act,

(ii) the references to section 150(1) included section 66(1) of this Act,

(iii) the reference to section 150(3) included section 66(3) of this Act, and

(iv) the references to the Registrar included the Bank,

(f) in section 841—

(i)the references to section 150(2) included section 66(2) of this Act, and

(ii) the reference to section 149(8) included section 65(6) of this Act,

(g) in section 842—

(i) the reference to section 286 included section 109 of this Act,

(ii) the reference to section 727 included section 152 of this Act,

(iii) the reference to Chapter 1 of Part 12 included Chapter 1 of Part 11 of this Act, and

(iv) the reference to section 733 included section 158 of this Act,

(h) in section 844(3) the reference to the Registrar included the Bank,

(i) in section 846 the reference to the Director of Corporate Enforcement included the Bank,

(j) in section 851(3) the references to the Registrar included the Bank,

(k) the references in sections 855(1), 858, 859 and 862 to a company included an ICAV,

(l) in section 863(2), the reference to the Registrar were, in a case of an offence in relation to an ICAV, a reference to the Bank, and

(m) in section 864 the references to the Registrar included the Bank.”.

Amendment agreed to.

I move amendment No. 12:

In page 55, to delete lines 37 and 38, and in page 56, to delete lines 1 to 3 and substitute the following:

“(6) But where an election under subsection (4) has effect for a year—

(a) one or more members of the ICAV holding, or together holding, not less than 10 per cent of the voting rights in the ICAV, or

(b) the auditor of the ICAV,

may require the ICAV to hold an annual general meeting in that year by giving notice in writing to the ICAV in the previous year or at least one month before the end of that year and the ICAV shall hold the required meeting.”.

This is to be inserted into section 84 of the ICAV Bill. Section 84(4) provides that the directors of an ICAV may elect to dispense with the need to hold an annual general meeting, AGM, upon notice to all shareholders of the ICAV. Where the directors of an ICAV seek to dispense with the holding of an AGM, either one or more members of the ICAV holding 10% of the voting rights in the ICAV or the auditor of the ICAV may require the ICAV to hold an AGM. This amendment provides an adequate safeguard against any potential abuse by directors of this unique characteristic of the ICAV, which is more appropriate to the operation of investment fund vehicles. This arose from the suggestions made by Deputies opposite on Committee Stage with regard to ensuring the voice of an auditor can be heard. It is prudent to include this.

In regard to amendment No. 12, is there a provision whereby the AGM can be dispensed with for a maximum number of occasions successively or can it be postponed indefinitely, with an AGM not required under the law? Will the Minister of State clarify that?

There is no provision in regard to that but the safeguards we have put in place address the issues in respect of protecting the investors. Also, giving the auditor a voice was something those on the opposite side of the House felt was silent and with which I agreed. This is beefing it up. The legislation does not contain a provision in regard to that.

From the point of view of governance of the ICAV, is there any merit in requiring an AGM to be held within a certain timeframe? If not, that is fine.

I will bring this Bill to the Seanad and I am happy to look at that. I will revert to Deputy McGrath on that.

I welcome the fact the role of the auditor has been included in this amendment. We debated this on Committee Stage and I acknowledge that it is not like other companies in regard to how AGMs take place and so on. Have any submissions been made to the Department or has there been any contact in regard to concern about this provision in the legislation and in terms of the 10% shareholding?

I am informed by my officials that they have not received any submissions. I certainly have not.

Amendment agreed to.

I move amendment No. 13:

In page 59, to delete lines 34 to 40, and in page 60, to delete lines 1 to 33 and substitute the following:

“91. (1) For the purposes of this section—

(a) “relevant rule of law” means any applicable rule of law that governs the priority of charges created by a body corporate, and for the avoidance of doubt, any enactment governing the priority of such charges is not encompassed by that expression;

(b) the reference in subsection (2) to any priority that one charge, by virtue of a person’s not having notice of a matter, enjoys over another charge or charges shall be deemed to include a reference to any priority that an advance made on foot of a charge, by virtue of a person’s not having notice of a matter, enjoys over a subsequent charge or charges.

(2) Any relevant rule of law shall stand modified in the manner specified in subsection (3), but not so as to displace any priority that one charge, by virtue of a person’s not having notice of a matter, enjoys over another charge or charges.

(3) That modification is that, for the part of the rule that operates by reference to the time of creation of the 2 or more charges concerned, there shall be substituted a part that operates by reference to—

(a) the dates of receipt by the Bank of the specified particulars of the 2 or more charges concerned, or

(b) if the date of receipt by the Bank of the specified particulars of the 2 or more charges is the same, the respective times, on the date concerned, of receipt by the Bank of those particulars.

(4) References in subsection (3) to the date, or time, of receipt of particulars are references to—

(a) if the procedure under subsection (3) of section 88 is complied with in relation to a particular charge, the date, or time, of receipt by the Bank of the specified particulars, in the specified form, of the charge, or

(b) if the procedure under subsection (4) of section 88 is complied with in relation to a particular charge, the date, or time, of receipt by the Bank of the notice, in the specified form and containing the specified particulars, in relation to the charge under paragraph (a) of that subsection (4).

(5) Subsections (2) and (3) shall not affect any agreement between persons in whose favour charges have been created in relation to the priority that those charges shall, as between them, have.

(6) In relation to particulars of a charge received by the Bank pursuant to section 88(3) or (4), the following provisions apply so far as those particulars consist of particulars of a negative pledge, any events that crystallise a floating charge or any restrictions on the use of any charged asset (and particulars of any such matter are referred to subsequently in this subsection as “extraneous material”):

(a) the Bank shall not enter in the register under section 88 particulars of the extraneous material pursuant to that section;

(b) the fact that the Bank has received the particulars of the extraneous material shall

have no legal effect;

but nothing in the foregoing affects the validity of the receipt by the Bank of the other particulars of the charge.

(7) In this section “negative pledge” means any agreement entered into by the ICAV concerned and any other person or persons that—

(a) provides that the ICAV shall not, or shall not otherwise than in specified circumstances—

(i) borrow moneys or otherwise obtain credit from any person other than that person or those persons,

(ii) create or permit to subsist any charge, lien or other encumbrance or any pledge over the whole or any part of the property of the ICAV, or

(iii) alienate or otherwise dispose of in any manner any of the property of the ICAV,

or

(b) contains a prohibition, either generally or in specified circumstances, on the doing by the ICAV of one or more things referred to in one, or more than one, provision of paragraph (a).

(8) The registration of an investment company as an ICAV by continuation under Part 8 does not affect the priority of charges created by the investment company.”.

The new section 91 added by amendment No. 13 provides for the priority of charges of an ICAV and again mirrors the text of section 412 of the Companies Bill 2012, as amended in the Seanad. Pursuant to this section, the operative date for priority of charges is specifically provided for as the date of registration as opposed to the date of creation for instances that have not been provided for elsewhere by statute. Again, this mirrors the text of section 412 of the Companies Bill and it is a technical amendment in that sense.

Amendment agreed to.
Bill recommitted in respect of amendment No. 14.

Amendments Nos. 14, 28 and 39 form a composite proposal and will be discussed together.

I move amendment No. 14:

In page 66, line 2, to delete “section 173” and substitute “section 168”.

Amendment No. 14 corrects a minor cross-reference error. Amendment No. 28 provides for further detail on the cross-application of the investigation provisions. It inserts a new section 168 into the Bill and provides that the provisions of the Companies Act 2014, Part 13, relating to investigation of companies apply in relation to ICAVs as if the ICAVs were investment companies. This cross-application is subject to necessary modifications as well as the specific modifications which are specified in subsection (2) of this section.

It was always the intention that the investigation and enforcement regime that applies to the current investment companies continues for ICAVs and in this regard, I also reference section 132 of the Bill, as published. The following amendments spell out and elaborate on these powers for the avoidance of any doubt.

Similarly, amendments Nos. 29 to 36, inclusive, provide for further detail on the cross-application or the copy-out of enforcement and compliance provisions from companies legislation. Amendment No. 39 is consequential to the amendments to the revised section 168 above relating to investigations. The old section 173 of the Bill is, therefore, deleted.

Amendment agreed to.
Bill reported with amendment.

I move amendment No. 15:

In page 69, line 30, to delete “subsection (5)” and substitute “subsection (5)”.

This is a technical amendment to correct an error in numbering which arose on Committee Stage. Without this amendment, it would technically be necessary to renumber this reference, resulting in an error on the face of the Bill.

Amendment agreed to.

I move amendment No. 16:

In page 70, between lines 19 and 20, to insert the following:

“(11) In this section “international financial reporting standards” means the international financial reporting standards, within the meaning of Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 20021 adopted from time to time by the Commission of the European Union in accordance with that Regulation.”.

Amendment No. 16 defines the references to international financial reporting standards at section 111(4) of the ICAV Bill, as passed by the Dáil on Committee Stage, which requires the annual accounts of an ICAV to be prepared in accordance with one of the following generally accepted accounting practices in the State, international financial reporting standards or an alternative body of accounting standards. This is defined in section 111(6) of the Act. It seeks to clarify the standard to be applied to annual accounts of an ICAV that are prepared in accordance with international financial reporting standards, as adopted from time to time by the EU, which Deputies felt lacked clarity on Committee Stage.

Amendment agreed to.
Bill recommitted in respect of amendment No. 17.

Amendments Nos. 17, 31 and 38 form a composite proposal. Amendments Nos. 31 to 33, inclusive, and 35 are related.

I move amendment No. 17:

In page 76, line 4, to delete “section 172” and substitute “section 171”.

Amendment No. 17 corrects a minor cross-reference error. Amendment No. 31 provides a restated list of which agency, the Central Bank or the Office of the Director of Corporate Enforcement is to prosecute which of the offences created in the Bill. The section is being replaced as a number of the offences have been assigned solely as the jurisdiction of the Central Bank rather than the joint jurisdiction of the Central Bank and the Office of the Director of Corporate Enforcement. In addition, the Report Stage amendments give rise to a number of new offences which fall to be included in the revised section 171. Offences in relation to sections that cross-apply the Companies Act 2014, such as restrictions and disqualifications, receivers or winding up, do not need to be mentioned here explicitly as the offences are already covered in the Companies Act itself.

Amendment No. 32 inserts a new section into the Bill. It is based on section 866 of the Companies Act 2014. This section makes provision for the District Court area within which summary proceedings against an ICAV or an officer therefore may be brought, heard and determined.

Amendment No. 33 inserts a new section into the Bill. This section cross-applies further provisions of the Companies Act 2014. Amendment No. 35 inserts a new section 175 which cross-applies section 876(1) and (3), 877 and 878 of the Companies Act.

Amendment No. 38 is consequential on amendments to the revised section 171 above relating to the agency with responsibility for enforcement. The old section is, therefore, deleted. This was to bring clarity as to who must do what and where the responsibility lies.

Amendment agreed to.
Bill reported with amendment.

I move amendment No. 18:

In page 77, line 9, to delete “subsection (4)” and substitute “this section”.

Amendment No. 18 is a correction to section 120 of the Bill which provides that the Central Bank may appoint an auditor to an ICAV in any circumstance where the ICAV has failed to appoint an auditor. Previously, the ICAV Bill 2014, as passed by the Dáil on Committee Stage, had only permitted the Central Bank to appoint an auditor to an ICAV where the ICAV had failed to appoint an auditor upon dispensing with an AGM, as required under section 84(4) of the ICAV Bill 2014. This amendment is aimed at ensuring the maintenance of appropriate accounting and auditing processes at all times within the ICAV.

Amendment agreed to.

I move amendment No. 19:

In page 83, line 5, to delete “a UCITS” and substitute “an UCITS”.

This amendment rectifies a slight drafting error.

Amendment agreed to.

Amendments Nos. 20 and 21 are related and will be discussed together.

I move amendment No. 20:

In page 85, to delete lines 11 to 14 and substitute the following:

“(2) The company shall then make an application to the Registrar in the form prescribed by the Minister for Jobs, Enterprise and Innovation to be de-registered as a company.

(3) On receipt of an application under subsection (2) the Registrar shall issue a certificate of de-registration of the company, shall enter in the register of companies that the company is de-registered and shall forthwith publish notice in the Companies Registration Office Gazette of the following matters:

(a) the date of the registration of the company as an ICAV under this section;

(b) the previous name of the company if different from the name under which it is registered as an ICAV.

(4) From the date of the registration of the company as an ICAV, the company shall become an ICAV, and shall cease to be a company, for all purposes but this section”.

Amendment No. 20 is a technical amendment to section 137(2) of the ICAV Bill which provides greater detail on the procedure involved in deregistering as a company and becoming an ICAV. Pursuant to the ICAV Bill, an investment company or UCIT may convert to an ICAV. In order to do so, the company seeking to become an ICAV must apply to the Central Bank to register as an ICAV.

Subsection (2) provides that the company must apply to the registrar of the company to deregister as a company. Subsection (3) provides that on foot of an application for deregistration, the registrar of a company must publish a notice in the Companies Registration Office gazette detailing the date of registration of the company as an ICAV and the previous name of the company, if different. Subsection (4) provides that a company will cease to exist upon the date of registration as an ICAV. It is a technical amendment to spell out in greater detail the intention.

Amendment agreed to.

I move amendment No. 21:

In page 85, to delete lines 34 and 35 and substitute the following:

“(5) On the registration of an investment company as an ICAV, the Bank shall immediately authorise it to carry on business.

(6) On the registration of an UCITS as an ICAV, the UCITS shall continue to be authorised under the UCITS Regulations.

(7) Section 889 of the Companies Act 2014 has effect as if this section were a provision of that Act.”.

Amendment agreed to.

Amendments Nos. 22 and 23 are cognate and will be discussed together.

I move amendment No. 22:

In page 86, line 6, to delete “letter” and substitute “giving of notice”.

Amendments Nos. 22 and 23 are corrections to errors which arose on Committee Stage. The ICAV Bill 2014, as passed by the Dáil on Committee Stage, provides for varying forms of notice, not simply notice by way of letter but two references to the bank giving notice by registered letter were overlooked. The use of new forms of communication to communicate with ICAV managers on various matters is a commonsense change from company law generally given the highly sophisticated nature of the collective asset management industry. We made this change in the previous Bill but there are two places in the Bill where we did not include the new forms of communication.

Amendment agreed to.

I move amendment No. 23:

In page 90, line 7, to delete “letter” and substitute “giving of notice”.

Amendment agreed to.

Amendments Nos. 24 and 25 are related and will be discussed together.

I move amendment No. 24:

In page 95, to delete lines 13 to 18 and substitute the following:

“148. (1) The provisions of Part 8 of the Companies Act 2014, and the other provisions of that Act relating to receivers, apply, subject to the necessary modifications and to the specific modifications specified in subsection (2), in relation to an ICAV as if it were an investment company.

(2) The modifications are the following:

(a) references to the Registrar are to the Bank;

(b) references to the prescribed form are to such form as may be specified by the Bank;

(c) references in section 431(1)(e) to such further or other information as may be prescribed are to such further or other information as may be specified by the Bank;

(d) in section 439(4) the reference to section 220 is to section 77 of this Act and paragraphs (b) and (c) are omitted;

(e) the references in section 447 to the Director of Corporate Enforcement include the Bank.”.

Amendment No. 24 sets out some further detail on the cross-application to the ICAVs of the provisions of the Companies Act 2014 relating to the receivers of investment companies which are found at Part 8 of the Companies Act 2014. Amendment No. 25 sets out some further detail on the cross-application to ICAVs of the provisions of the Companies Act 2014 relating to the winding up of investment companies which are found in Part 11 of the Companies Act 2014. Companies may be wound up by three different methods – members voluntary liquidation, creditors voluntary liquidation and court ordered or compulsory liquidation.

Companies may be wound up by three different methods: members' voluntary liquidation, creditors' voluntary liquidation and court ordered or compulsory liquidation. The liquidator is the person appointed to supervise and implement the company's winding up, and this is a further detailed cross-application.

Amendment agreed to.

I move amendment No. 25:

In page 95, to delete lines 22 to 27 and substitute the following:

“149. (1) The provisions of Part 11 of the Companies Act 2014, and the other provisions of that Act relating to the winding up of Companies (including, in particular, provisions about summary approval procedure) apply, subject to the necessary modifications and the specific modifications specified in subsection (2), in relation to an ICAV as if it were an investment company.

(2) The modifications are the following:

(a) references to the Registrar are to the Bank;

(b) references to the constitution of a company are to the instrument of incorporation of an ICAV;

(c) in the definition of “connected person” in section 559(1) and in 629(5) the reference to section 220 is to section 77 of this Act and paragraph (b) is omitted;

(d) in the table to section 567—

(i) the reference to section 286(3) is to section 109(1) of this Act;

(ii) the reference to section 609 is to section 110 of this Act;

(e) the references in sections 569(2) and 571(3) to section 212 are to section 55 of this Act;

(f) the reference in section 595(5) to that Act is to this Act;

(g) the words “into his or her custody or” in section 596 and paragraph 9 of the Table to section 627 are omitted;

(h) section 609 is omitted;

(i) section 636 has effect as if—

(i) the reference in subsection (3) to Part 4 were to section 86 of this Act,

(ii) for subsection (5) there is substituted a requirement that notice of a meeting given by a member, liquidator or contributory under subsection (3) comply with any requirements specified in the ICAV’s instrument of incorporation, and

(iii) the reference in subsection (6) to the Companies Act 2014 is omitted;

(j) the reference in section 656(2) to section 173 is to section 52 of this Act;

(k) in section 673—

(i) in subsection (1), for “hands of the liquidator” there is substituted “hands of the depositary or trustee within the meaning of the UCITS Regulations, to be under the control of the liquidator,”, and

(ii) in subsection (3), for “to the liquidator” there is substituted “to the depositary or trustee within the meaning of the UCITS regulations, to be under the control of the liquidator,”.”.

Amendment agreed to.

Amendments Nos. 26 and 27 are cognate and may be discussed together.

I move amendment No. 26:

In page 97, line 35, to delete “a director” and substitute “at least 2 directors”.

Amendments Nos. 26 and 27 are required because section 56 of the Irish Collective Asset-management Vehicles, ICAV, Bill stipulates that an ICAV needs to have at least two directors so the reference at section 154D to the appointment of one director only is incorrect.

Amendment agreed to.

I move amendment No. 27:

In page 103, line 28, to delete “a director” and substitute “at least 2 directors”.

Amendment agreed to.

I move amendment No. 28:

In page 104, between lines 23 and 24, to insert the following:

“PART 12

INVESTIGATIONS, COMPLIANCE AND ENFORCEMENT

Investigations

168. (1) The provisions of Part 13 of the Companies Act 2014, and the other provisions of that Act relating to investigations of companies, apply, subject to necessary modifications and the specific modifications specified in subsection (2), in relation to an ICAV as if it were an investment company.

(2) The modifications are the following:

(a) references to a body corporate include a company;

(b) the references in sections 752 to 757 to agents include depositaries and trustees within the meaning of the UCITS Regulations;

(c) in section 755(2)(a) for the words after agreement there is substituted a reference to a transaction within section 75(1) of this Act and in section 755(4) for the reference to section 220 there is substituted a reference to section 77 of this Act;

(d) the duty in section 759(1) to provide a copy of a directors’ report to the Director of Corporate Enforcement includes a duty to forward a copy to the Bank (so that section 759(2)(b)(vi) does not apply);

(e) the reference in section 763(1) to Chapter 5 of Part 5 is to section 80 of this Act;

(f) the references to the Registrar in sections 765(4) and 770 are to the Bank;

(g) the reference to section 785(4) to section 286 is to section 109 of this Act.”.

Amendment agreed to.

Recommittal is necessary in respect of amendment No. 29.

Bill recommitted in respect of amendment No. 29.

I move amendment No. 29:

In page 104, between lines 23 and 24, to insert the following:

“Compliance orders

169. (1) This section applies if an ICAV or an officer of an ICAV—

(a) has failed to comply with a provision of this Act, and

(b) the ICAV or officer has failed to remedy the default within 14 days (or such longer period as may be specified in the notice) after the date of service by any person referred to in subsection (3) on the ICAV or officer of a notice requiring the ICAV or officer to remedy the default.

(2) In any case to which this section applies, the High Court, on the application of a person specified in subsection (3), may order the ICAV or officer in default to remedy the default within such time as the High Court specifies.

(3) The High Court may make the order only on the application of one of the following:

(a) any member of the ICAV;

(b) any creditor of the ICAV;

(c) the Director of Corporate Enforcement.

(4) In making an order under subsection (2), the High Court may order that the ICAV or the officer responsible for the default pay all costs of and incidental to the application.

(5) Subject to subsection (6), no order may be made under this section in relation to a default that, in the opinion of the High Court, constitutes a wrong done to the ICAV an action in respect of which, under the general law, is maintainable by the ICAV alone, as distinct from another by derivative proceedings.

(6) Subsection (5) does not apply if the facts constituting the default in question amount, in the opinion of the High Court, to the Commission of an offence.

(7) Nothing in this section shall be taken to prejudice the operation of any enactment imposing penalties (including restriction or disqualification) on an ICAV or its officers in respect of the default in question.

(8) In this section “officer” means director, shadow director, promoter, receiver, liquidator, auditor or secretary.”.

Amendment agreed to.
Bill reported with amendment.
Bill recommitted in respect of amendment No. 30:

I move amendment No. 30:

In page 104, between lines 23 and 24, to insert the following:

“Restraining directors and others from removing assets

170. (1) The High Court may make an order restraining a director or other officer of an ICAV, or an ICAV, from—

(a) removing his or her or the ICAV’s assets from the State, or

(b) reducing his or her or the ICAV’s assets within or outside the State below an amount specified in the order.

(2) The High Court may make the order if it is satisfied that—

(a) the applicant has a qualifying claim, and

(b) there are grounds for believing that the director or officer, or the ICAV, may remove or dispose of his or her assets or the assets of the ICAV with a view to evading his or her obligations or those of the ICAV and frustrating an order of the High Court.

(3) The High Court may make the order only on the application of—

(a) the ICAV,

(b) a director, member, liquidator, receiver or creditor of the ICAV, or

(c) the Director of Corporate Enforcement.

(4) In subsection (2)(a) “qualifying claim” means a claim that—

(a) is a substantive civil cause of action or right to seek a declaration of personal liability or to claim damages against the director, officer or ICAV, and

(b) arises—

(i) under this Act,

(ii) under the instrument of incorporation of the ICAV, or

(iii) from the holding of an office of the ICAV.”.

Amendment agreed to.
Bill reported with amendment.

I move amendment No. 31:

In page 104, between lines 23 and 24, to insert the following:

“Agency with responsibility for enforcement of offences

171. (1) The Bank may instigate summary proceedings for offences under sections 6(5), 7(3) and (4), 8(3), 10(6), 18(6), 21(5), 22(4), 28(3), 30(2), 31(3) and (5), 33(3), 36(2), 39(4), 42(3), 43(4), 46(4), 49(4), 50(5), 55(7), 66(4) and (5), 75(4), 90(3), 95(5), 97(4), 109(1) and (2), 111(10), 112(9), 113(7), 115(4), 123(2), 130(5), 133(9), 136(5), 147(5) and 160(5).

(2) The Director of Corporate Enforcement may instigate summary proceedings for offences under sections 63(1), 64(4), 68(3), 70(3), 71(3), 79(11) and (12), 80(3), 81(10) and (11), 83(5) and 84(8).

(3) Either the Bank or the Director of Corporate Enforcement may instigate summary proceedings for offences under sections 117(6) and 119(2).”.

Amendment agreed to.

I move amendment No. 32:

In page 104, between lines 23 and 24, to insert the following:

“District court district within which summary proceedings may be brought

172. (1) Summary proceedings against an ICAV or an officer of an ICAV acting in his or her capacity as such (or a person purporting to so act) for an offence under this Act may be brought, heard and determined—

(a) before and by a judge of the District Court as provided for under section 79 or 79A of the Courts of Justice Act 1924, or

(b) before and by a judge of the District Court for the time being assigned to the district court district in which the registered office of the ICAV is situated immediately prior to the commencement of the proceedings.

(2) In this section “officer of an ICAV” includes a director, shadow director, promoter, auditor, receiver, liquidator or secretary of an ICAV.

(3) For the purposes of this section, the place for the time being recorded by the Bank as the situation of the registered office of the ICAV shall be deemed to be the registered office of the ICAV notwithstanding that the situation of its registered office may have changed.”.

Amendment agreed to.

I move amendment No. 33:

In page 104, between lines 23 and 24, to insert the following:

“Application of other provisions relating to offences

173. (1) Sections 867 and 870 of the Companies Act 2014 shall apply in relation to offences under this Act as in relation to offences under that Act.

(2) Section 868 of that Act shall apply in relation to an ICAV as in relation to a company.

(3) Section 872 of that Act shall apply as if references to that Act included this Act.

(4) Section 873 of that Act shall apply as if the reference to a category 3 or 4 offence within the meaning of that Act included a category 3 offence under this Act.”.

Amendment agreed to.
Bill recommitted in respect of amendment No. 34.

I move amendment No. 34:

In page 104, between lines 23 and 24, to insert the following:

“Special provisions applying where default in delivery of documents to Bank

174. (1) The Bank may deliver a notice that complies with subsection (2) to a person if the Bank has reasonable grounds for believing that the person is in default in the production or delivery to, or filing with, the Bank of a document required under this Act (being a default that constitutes a category 3 offence).

(2) The notice referred to in subsection (1) is a notice that—

(a) is in the form specified by the Bank,

(b) states that the person has failed to produce or deliver to, or file with, the Bank a document required under a specified provision of this Act,

(c) states that the person to whom the notice is delivered may during a period of 21 days beginning after the date of the notice, or such greater period as may be specified in the notice—

(i) remedy the default, and

(ii) pay to the Bank an amount specified by the Bank which shall be accompanied by the notice,

and

(d) states that a prosecution of the person to whom the notice is delivered—

(i) will not be instituted during the period referred to in paragraph (c), and

(ii) will not be instituted in any event if, within the period referred to in paragraph (c), the default is remedied and payment is made in accordance with the notice.

(3) Where a notice is delivered under subsection (1)—

(a) a person to whom it is delivered may, during the period specified in the notice, make to the Bank payment of the amount specified in the notice, accompanied by the notice,

(b) the Bank may receive the payment and issue a receipt for it and no payment so received shall in any circumstances be recoverable by the person who made it,

and

(c) a prosecution in respect of the alleged offence shall not be instituted in the period specified in the notice and if the default is remedied to the satisfaction of the Bank and payment of the amount specified in the notice is made during that period, no prosecution in respect of the alleged offence shall be instituted in any event.

(4) In a prosecution for an offence to which this section applies, the defendant shall bear the onus of showing that a payment pursuant to a notice under this section has been made.

(5) All payments made to the Bank in pursuance of this section shall be paid into or disposed of for the benefit of the Exchequer in such manner as the Minister for Public Expenditure and Reform may direct.

(6) If the person mentioned in subsection (1) is an ICAV, then that subsection authorises the delivery of the notice mentioned in it to an officer of the ICAV but, where the notice is delivered to that officer, the second reference in that subsection to person, and each reference in subsections (2) and (3) to the person to whom the notice is delivered or otherwise to person, is to be read as a reference to the ICAV.”.

Amendment agreed to.
Bill reported with amendment.

I move amendment No. 35:

In page 104, between lines 23 and 24, to insert the following:

“General offences

175. Sections 876(1) and (3), 877 and 878 of the Companies Act 2014 have effect as if the references to a company included an ICAV and the references to that Act included this Act.”.

Amendment agreed to.
Bill recommitted in respect of amendment No. 36:

I move amendment No. 36:

In page 104, between lines 23 and 24, to insert the following:

“Evidential matters

176. (1) Sections 879 to 886 of the Companies Act 2014 have effect as if references to that Act (or Parts 1 to 15 of that Act) included this Act.

(2) In the application of section 886(6) in relation to a declaration that purports to be made in pursuance of or for the purposes of—

(a) this Act, or

(b) a provision of that Act in its application by virtue of this Act, the references to the Registrar are to the Bank.”.

Amendment agreed to.
Bill reported with amendment.

I move amendment No. 37:

In page 104, to delete lines 26 to 29 and substitute the following:

“Mergers involving ICAV

168. (1) An ICAV authorised under the UCITS Regulations may, in accordance with the provisions of the UCITS Regulations, merge with any other UCITS.

(2) An ICAV authorised under UCITS Regulations which is the merging UCITS in relation to a merger for the purposes of the UCITS Regulations which involves the transfer of all its assets and liabilities to another UCITS (or a sub-fund of another UCITS) in the course of the merger shall, in accordance with the provisions of the UCITS Regulations, be dissolved without winding up on the coming into effect of the merger.

(3) An ICAV authorised under section 19 may merge with any other form of collective investment vehicle in accordance with any conditions imposed by the Bank.

(4) An ICAV authorised under section 19 which transfers all of its assets and liabilities to another collective investment vehicle (or a sub-fund of another collective investment vehicle) in accordance with conditions imposed by the Bank shall be dissolved without winding up on the coming into effect of the merger.”.

Merger provisions were cross-supplied in the Bill as published and passed by the committee. Amendment No. 37 inserts a new section that sets out the merger provisions explicitly. An ICAV that is a USIT may merge with any other USIT. This other USIT can have any legal form. The merging USIT-ICAV, which transfers all of its assets and liabilities to the other USITs, will be dissolved without winding up when the merger comes into effect. We included this on Committee Stage but I am setting it out in more detail.

Amendment agreed.

I move amendment No. 38:

In page 105, to delete lines 22 to 31.

Amendment agreed to.

I move amendment No. 39:

In page 105, to delete lines 32 to 34.

Amendment agreed to.

I move amendment No. 40:

In page 106, after line 38, to insert the following:

“Director of Corporate Enforcement

178. Sections 953, 956 and 957 of the Companies Act 2014 have effect as if references to that Act included this Act.”.

Amendment No. 40 inserts a new section 178, which cross-supplies sections 953, 956 and 957 of the Companies Act 2014. Section 953 concerns liability of a director or officer for acts and omissions. It is based on section 15 of the Company Law Enforcement Act 2001. Section 956 concerns confidentiality of information. It requires the Director of Corporate Enforcement or a former director of corporate enforcement or an officer of the director to keep confidential any information received from them in the performance of their work with the Office of the Director of Corporate Enforcement.

Section 957 concerns disclosure of information to the director. It facilitates the reporting to the Director of Corporate Enforcement of information relating to offences under this Bill, which is being gathered by the Competition Authority, members of An Garda Síochána, officers of the Revenue Commissioners, the Insolvency Service of Ireland, the Irish Takeover Panel and such other authority or person as may be prescribed. This derives from section 18 of the Company Law Enforcement Act 2001.

Amendment agreed to.
Bill, as amended, received for final consideration.
Question proposed: "That the Bill do now pass."

I thank Deputies, particularly Deputy Michael McGrath and Deputy Doherty, for their constructive engagement on this Bill. I thank my officials also who put a great deal of work into what is as we discussed on many occasions a largely technical but very important piece of legislation. It is important in terms of this country's competitiveness and trying to attract international financial investment to this country that we continue to make sure we have a good offering. This Bill offers a good new product that many of our competitors have previously offered but it does so in a responsible fashion and in a way that is cognisant of the Companies Act and cognisant of transposing, where appropriate, elements of the Companies Act, and recognising where an ICAV is different from a company.

I thank everybody for a very constructive engagement. I take on board the points made by Deputy McGrath and Deputy Doherty. I like to think I have taken on board suggestions they made during the debate on this legislation, particularly with regard to the inclusion of the provision regarding an auditor. I look forward to this legislation going to the Seanad and, following the Seanad's consideration, being signed by the President as quickly as possible. It is an important Bill.

I thank the Minister and his officials for their work on this legislation. It is good to see the Government paying due attention to the financial services sector and, within that, the Irish funds industry is an important part. As we know, investment in this area is highly mobile. Many of our competitor countries have been ahead of us in respect of this specific area and hopefully this will be a very useful tool in the armoury of the State as we seek to attract more investment in the area of funds and the wider financial services sector. Hopefully, it will ultimately boost employment and investment in the country.

I thank the Minister and his officials. It seems we have been dealing with this legislation for quite a while, particularly on Committee Stage where we had a good discussion on the intentions of the Bill. I outlined concerns on Second Stage about what we are trying to chase here, although it is disputed by the Minister in terms of chasing other countries and so on. Obviously, we hope things work out to the betterment but the key point in all this legislation is that we need to keep it under review. I am critical of legislation that we pass and then decide to come back to when it is outdated, not fit for purpose or has a consequence that was not intended at the time of its passage. While the Bill has not yet been enacted that is something that must be built into the legislation in terms of regular review.

I was hoping the Minister might give us a heads up as to when we can expect the mortgage legislation to come before the House. Does he have any indication? We understand it will be in the coming days. If he could impart his wisdom to the House, it would be welcome at this point in time to help myself and Deputy McGrath as we are bogged down with the banking inquiry and other matters. It would help our own agendas.

I genuinely cannot assist the Deputy in that but I will endeavour to find out and revert to him.

Question put and agreed to.