Irish Collective Asset-management Vehicles Bill 2014: From the Seanad

The Dáil went into Committee to consider amendments from the Seanad.

I understand the Minister of State has indicated his intention to seek a Clerk's correction under Standing Order 140 on the Irish Collective Asset-management Vehicles Bill 2014.

Before we commence 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 corrections to the text of the Bill: first, on page 101, line 25, insert "of" after "date"; and, second, on page 110, line 11, delete "the reference to" and substitute "the reference in". These amendments are being inserted in the interests of textual clarity and do not effect any substantive amendment.

Seanad Amendment No. 1:
Section 2: In page 12, lines 19 and 20, to delete “section 85” and substitute “section 85”.

Amendment No. 1 is a technical proofing amendment to correct an error that arose in the publication of the Bill as passed by Dáil Éireann.

This probably relates to the overall perspective-----

We are dealing with a particular amendment now.

I will speak to the amendment. It seems strange to me that we spent a long time in the Dáil going through this Bill, yet we have so many amendments coming back from the Seanad. The Bill has been before the Government for a long time, since we sat down with the Labour Party and discussed it. Perhaps the Minister of State might explain why so many amendments were put by the Department to the Seanad and we are now back discussing it.

We cannot have a general debate. We are dealing with individual amendments. This is a technical amendment.

I have a general question.

Deputies may not ask general questions on amendments from the Seanad. If I were to allow the Deputy to ask a general question, it would reopen the debate. He must appreciate that this is purely a technical issue to be dealt with in a technical manner. I assume the amendment is agreed to.

Seanad amendment agreed to.
Seanad amendment No. 2:
Section 11: In page 17, to delete lines 1 to 3 and substitute the following:
“(a) in relation to a person named as a director of the ICAV—
(i) all particulars which are, in relation to a director, required pursuant to subsection (2) of section 65 to be contained in the register kept under that section, and
(ii) if the person is disqualified under the law of a country or territory other than the State (whether pursuant to an order of a judge or a tribunal or otherwise) from being appointed or acting as a director or secretary of a body corporate or an undertaking, the particulars which are required by section 66(1) to be stated in a notification under section 65(6),
and”.

I understand amendments Nos. 2 and 10 will be discussed together. Amendment No. 2 provides that a director must disclose in his or her statement, required under section 10 for registration of an ICAV, if he or she is disqualified under the law of another country from acting as a director or secretary of an entity. The amendment effectively provides for the insertion of section 23 of the Companies Act 2014 in the ICAV Bill.

Amendment No. 10 is a technical amendment consequential on amendment No. 2. It modifies the text on company law disqualification of directors' rules to take account of the relevant statutory reference in relation to ICAVs, namely, the fact that directors are being disqualified under the law of another state.

Seanad amendment agreed to.
Seanad amendment No. 3:
Section 18: In page 19, to delete lines 12 and 13 and substitute the following:
“(ii) if the ICAV is not authorised under the AIFM Regulations, the full name and address of the proposed external AIFM within the meaning of the AIFM Regulations, and”.

The purpose of amendment No. 3 is to ensure the Central Bank is notified of the details of an external fund manager in the case of an alternative investment fund ICAV. In relation to an ICAV that is an alternative investment fund, it will have either internal management within the ICAV or appointed external management. The Central Bank, through the authorisation process of the internal management, will be aware of the manager if he or she is internal to the ICAV since it will be one and the same person. However, in the case of external fund management, the bank will not automatically know who the manager is. The amendment clarifies that all external managers will have to provide their full name and address for the Central Bank of Ireland on application to the Central Bank for authorisation as an ICAV. All managers of non-UCIT funds will be authorised separately under the rules implementing the alternative investment fund managers directive.

Will there be a charge on the fund by the Central Bank of Ireland for providing this service?

Will the Deputy please repeat the question?

In the light of the additional burden this will place on the Central Bank, will the Central Bank impose a charge on funds?

As is already the case with regard to bodies regulated by the Central Bank, fees are payable to it for supervision.

Seanad amendment agreed to.

Amendments Nos. 4 and 5 form a composite proposal and may be discussed together.

Seanad amendment No. 4:
Section 23: In page 22, line 8, after “satisfied” to insert “that”.

Amendments Nos. 4 and 5 are minor drafting corrections. Amendment No. 4 proposes the insertion of the word "that" after the word "satisfied" on line 8 of page 22, while amendment No. 5 proposes to delete the word "that" on line 9 of page 22.

Seanad amendment agreed to.
Seanad amendment No. 5:
Section 23: In page 22, line 9, to delete “that”.
Seanad amendment agreed to.
Seanad amendment No. 6:
Section 27: In page 24, to delete lines 21 to 25 and substitute the following:
“(f) borrowing policies of an ICAV, or
(g) the timing and contents of reports issued by an ICAV,
and such other supervisory and reporting conditions relating to the business of an ICAV as the Bank considers appropriate and prudent to impose on the ICAV, depositary or management company.”.

Amendment No. 6 is a minor drafting correction which deletes the original paragraph (h) and replaces it with the same text but not within a paragraph.

Seanad amendment agreed to.
Seanad amendment No. 7:
Section 32: In page 26, to delete lines 9 to 35 and substitute the following:
“Execution of documents
32. (1) Contracts on behalf of an ICAV may be made as follows:
(a) a contract which, if made between natural persons, would be by law required to be in writing and to be under seal, may be made on behalf of the ICAV in writing under the common seal of the ICAV in accordance with this section;
(b) a contract which, if made between natural persons, would be by law required to be in writing, signed by the parties, may be made on behalf of the ICAV in writing, signed by any person acting under its authority, express or implied;
(c) a contract which, if made between natural persons, would by law be valid although made by parol only, and not reduced into writing, may be made by parol on behalf of the ICAV by any person acting under its authority, express or implied.
(2) A contract made according to this section shall bind the ICAV and its successors and all other parties to it.
(3) A contract made according to this section may be varied or discharged in the same manner in which it is authorised by this section to be made.
(4) The following provisions of this section shall apply whether it is the case that—
(a) as permitted by section 33, the ICAV does not have a common seal, or
(b) the ICAV does have such a seal.
(5) A document has the same effect as if executed under the common seal of the ICAV if it is expressed (in whatever form of words) to be executed by the ICAV and it is signed on behalf of the ICAV—
(a) by 2 authorised signatories, or
(b) by a director of the ICAV in the presence of a witness who attests the signature.
(6) Each of the following is an authorised signatory for the purposes of subsection (5):
(a) a director of the ICAV;
(b) the secretary (or any joint secretary) of the ICAV; or
(c) any person authorised by the directors of the ICAV in accordance with the ICAV's instrument of incorporation.
(7) Where a document is to be signed by a person on behalf of more than one ICAV, it is not duly signed by that person for the purposes of this section unless he or she signs it separately in each capacity.
(8) References in this section to a document being (or purporting to be) signed by a secretary are to be read, in a case where that office is held by a firm, as references to its being (or purporting to be) signed by an individual authorised by the firm to sign on its behalf.”.

Amendment No. 7 seeks to make the rules on the execution of documents consistent with the position under the Companies Act 2014 in respect of public limited companies. ICAVs may wish to authorise other individuals such as the investment manager to execute standard trading documents on behalf of the ICAVs. The original text which limited signatories to the directors and company secretary is out of line with how investment funds operate.

Seanad amendment agreed to.

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

Seanad amendment No. 8:
Section 84: In page 56, between lines 18 and 19, to insert the following:
“Breaches of certain duties: liability to account and indemnify
84. (1) Subject to section 85, where a director of an ICAV acts in breach of his or her duty under section 79(1)(a), (c), (d), (e), (f) or (g), he or she shall be liable to do either or both (as the corresponding common law rule or equitable principle relating to bodies corporate with respect to the matter would have required) of the following things:
(a) account to the ICAV for any gain which he or she makes directly or indirectly from the breach of duty;
(b) indemnify the ICAV for any loss or damage resulting from that breach.
(2) Subsection (1) is without prejudice to—
(a) the ICAV’s right at common law to claim damages for breach of duty, or
(b) the ICAV’s right to make an application seeking the grant of equitable relief,
but subsection (1) and this subsection shall not be read as having the combined effect of enabling the ICAV to be afforded more compensation for any damage or injury, or more protection of any proprietary right, than is just and equitable in all the circumstances.”.

Amendment No. 8 inserts a new provision in the ICAV Bill that stems from the introduction of section 78, being the provision governing fiduciary duties owned by a director. The section mirrors section 232 of the Companies Act 2014. The amendment obliges the director who acts in breach of his or her fiduciary duties to account to the ICAV for any gain he or she has made arising from the breach of duty or indemnify the ICAV for any loss arising from the breach.

Amendment No. 9 inserts a new provision that follows on from amendment No. 8 and mirrors section 233 of the Companies Act 2014. The amendment provides that an officer of an ICAV may have a defence to a claim of negligence or breach of duty on his or her part where he or she has acted honestly and reasonably.

Seanad amendment agreed to.
Seanad amendment No. 9:
Section 85: In page 56, between lines 18 and 19, to insert the following:
“Power of court to grant relief to officers of ICAV
85. (1) This section applies to any action for negligence, default, breach of duty or breach of trust against an officer of an ICAV.
(2) In proceedings to which this section applies the court hearing the proceedings has the power of granting relief provided under subsection (3) if it appears to the court that the officer is or may be liable in respect of the negligence, default, breach of duty or breach of trust (the “wrong concerned”) but that he or she has acted honestly and reasonably and that, having regard to all the circumstances of the case (including those connected with his or her appointment), he or she ought fairly to be excused for the wrong concerned.
(3) The power referred to in subsection (2) is to relieve the officer, either wholly or partly, from his or her liability in respect of the wrong concerned, on such terms as the court may think fit.”.
Seanad amendment agreed to.
Seanad amendment No. 10:
Section 85: In page 57, between lines 32 and 33, to insert the following:
“(i) the references to section 23 included section 11(3)(a)(ii) of this Act,”.
Seanad amendment agreed to.
Seanad amendment No. 11:
Section 85: In page 58, to delete lines 10 and 11 and substitute the following:
“(l) in section 863(2), in the case of an offence in relation to an ICAV—
(i) the reference to the Registrar were a reference to the Bank, and
(ii) the reference to prescribed particulars being given at such time and in such form and manner as may be prescribed were to particulars specified by the Bank being given at such time and in such form and manner as may be so specified,
and”.

This amendment amends section 85(2)(l)of the ICAV Bill which refers to section 863(2) of the Companies Act 2014. Section 863 of the Companies Act 2014 provides that details of a disqualification order or conviction or other such relevant occurrences must be supplied to the Company Registrations Office, CRO. The amendment makes it clear that where such an offence occurs in respect of an ICAV, this information must be sent to the Central Bank, rather than the CRO, and should be sent to the bank in a form and manner that it will specify.

Seanad amendment agreed to.
Seanad amendment No. 12:
Section 87: In page 58, line 34, to delete “Part” and substitute “Act”.

Amendment No. 12 is a drafting amendment to use the point to "Act" rather than "Part", which would be incorrect.

Seanad amendment agreed to.
Seanad amendment No. 13:
Section 94: In page 64, between lines 25 and 26, to insert the following:
“(9) The registration of a body corporate as an ICAV by continuation under Part 9 does not affect the priority of charges created by the body corporate before its registration as an ICAV.”.

Amendment No. 13 provides for the protection of the priority of charges held by a migrating company seeking to register as an ICAV. The purpose of the amendment is to safeguard the priority to which any person may be entitled on foot of legal, equitable or such other principles as govern charges in the jurisdiction in which they were issued.

Seanad amendment agreed to.
Seanad amendment No. 14:
Section 144: In page 92, line 14, to delete “authorisation” and substitute “approval”.

Amendment No. 14 is a drafting amendment to replace the word "authorisation" with the more correct term "approval".

Seanad amendment agreed to.
Seanad amendment No. 15:
Section 152: In page 100, line 23, to delete “section 609 is” and substitute “sections 600 and 609 are”.

Amendment No. 15 is a drafting amendment to correct the specific modifications to cater for the winding up of the ICAV. The amendment does not change the policy set out in the Bill.

Seanad amendment agreed to.

Amendments Nos. 16 and 17 are related technical amendments and may be discussed together.

Seanad amendment No. 16:
Section 171: In page 110, line 3, to delete “agreement” and substitute “ “agreement” ”.

Amendment No. 16 is a drafting amendment to correct a syntax error arising from the use of inverted commas. Amendment No. 17 is also a drafting amendment to correct an error in section 171. Inspectors, not directors, furnish reports.

Seanad amendment agreed to.
Seanad amendment No. 17:
Section 171: In page 110, line 6, to delete “a directors’ ” and substitute “an inspector’s”.
Seanad amendment agreed to.
Seanad amendment No. 18:
Section 178: In page 113, to delete lines 29 to 32 and substitute the following:
“General Offences
178. (1) Section 876(1) and (3), 877 and 878 of the Companies Act 2014, and other provisions of that Act relating to those provisions, have effect as if—
(a) the references to a company included an ICAV, and
(b) the references to that Act included this Act.
(2) In its application in relation to the provisions mentioned in subsection (1) as they have effect in accordance with that subsection, section 865 of the Companies Act 2014 has effect as if the reference to the Director of Corporate Enforcement included the Bank.”.

Amendment No. 18 modifies the enforcement provision in respect of sections 876, 877 and 878 of the Companies Act 2014 in order that the Central Bank, as well as the Office of the Director of Corporate Enforcement, will be able to take summary proceedings should these offences occur. Section 876 of the Companies Act concerns the offence of providing false information. Section 877 concerns the offence of destroying documents, while section 878 concerns the fraudulent parting with documents. These sections are cross-applied from the Companies Act 2014 to the Irish Collective Asset-management Vehicles Bill by virtue of this section. The amendment reflects the reality that, by virtue of the Central Bank's role as the registration authority for ICAVs, it may be best placed to prosecute for such offences.

Seanad amendment agreed to.
Seanad amendment No. 19:
Section 180: In page 114, between lines 3 and 4, to insert the following:
“Registration and inspection of documents
180. (1) Every document relating to an ICAV that is required to be deposited with, or sent or furnished or otherwise provided to, the Bank under this Act or the Companies Act 2014 as it applies in relation to the ICAV—
(a) shall be recorded on a register relating to the ICAV maintained by the Bank, and
(b) shall be open to inspection free of charge on a web-site maintained or used by the Bank.
(2) The register maintained in compliance with subsection (1) is in addition to the registers maintained under section 14 or 96 or by virtue of section 84 or 85.
(3) Documents provided—
(a) under Chapter 2 of Part 2 (or pursuant to a condition imposed under section 27),
(b) under section 145(2)(d),
(c) by virtue of section 171(2)(d),
(d) by virtue of section 180, or
(e) by virtue of section 185,
shall not be recorded on the register maintained in compliance with subsection (1) or be open to inspection under that subsection.”.

Amendment No. 19 inserts a new section which sets out the mechanism for the registration of documents concerning an ICAV and how such documents may be inspected.

Seanad amendment agreed to.
Seanad amendment No. 20:
Section 184: In page 115, to delete lines 12 to 17 and substitute the following:
“Amendments of UCITS Regulations
184. The UCITS Regulations are amended—
(a) in Regulation 3(1)—
(i) by inserting the following definitions:
“ ‘Act of 2015’ means the Irish Collective Asset-management Vehicles Act 2015;”, and
“ ‘ICAV’ means an ICAV within the meaning of the Act of 2015;”,
(ii) in the definition of “articles”, by inserting “and, in relation to an ICAV, means its instrument of incorporation within the meaning of the Act of 2015” at the end,
(iii) in the definition of “directors”, by inserting “and includes directors and shadow directors of an ICAV” at the end, and
(iv) by substituting for the definition of “investment company” the following:
“ ‘investment company’ means—
(a) an investment company with fixed capital,
(b) an investment company with variable capital, or
(c) except in Regulations 45, 89(4)(a) and 107, an ICAV;”,
and
(b) in Regulation 4(6) by—
(i) deleting “or” after subparagraph (c), and
(ii) substituting the following for subparagraph (d):
“(d) common contractual funds, or
(e) Irish collective asset-management vehicles.”.”

Amendment No. 20 specifically modifies a number of the USITS regulations in order that they are given effect in the context of the ICAV. This is to ensure they can apply to an ICAV.

Seanad amendment agreed to.
Seanad amendment No. 21:
Section 185: In page 115, between lines 17 and 18, to insert the following:
“Adaptation of certain provisions of UCITS Regulations
185. (1) Regulations 17(11), 42(4)(d), 104(2), 125 to 127, 131, 134(1) to (9) and 135(1) and (2) of the UCITS Regulations apply to an ICAV authorised under section 19 as they apply to the bodies to which those Regulations relate but subject to the modifications in subsection (2).
(2) The modifications are that—
(a) references to repurchase are to purchase,
(b) references to the UCITS Regulations are to this Act,
(c) references to an UCITS are to an ICAV,
(d) references to a unit are to a share,
(e) references to a unit-holder are to a shareholder, and
(f) references to the Companies Acts include this Act.(3) References to cognate terms or expressions in those Regulations shall be read accordingly.”.
(3) References to cognate terms or expressions in those Regulations shall be read accordingly.”.

Similarly, this amendment has been designed to adapt specific use of the regulations in their application to ICAVs that are authorised as AIFs pursuant to section 19 of the Bill. This will enable the bank to operate a similar regime for all ICAVs, regardless of whether they are UCITS or AIFS.

Seanad amendment agreed to.
Seanad amendment No. 22:
In section 185: In page 115, to delete lines 18 to 24 and substitute the following:
Amendment of Central Bank Act 1942
“185. The Central Bank Act 1942 is amended—
(a) in section 33AK(3) by inserting the following after paragraph (a)(vi)(II):
“or
(III) the Irish Collective Asset-management Vehicles Act 2015,”,
and
(b) in Part 1 of Schedule 2 by inserting the following:

43

No._of 2015

Irish Collective Asset-management Vehicles Act 2015

The whole Act, apart from Parts 5, 10 and 12

"

The amendment provides for changes to the Central Bank Act 1942 to take account of the ICAV. Subsection (1) amends section 33AK of the Central Bank Act 1942 and is necessary to provide a gateway for the Central Bank to furnish information to the Office of the Director of Corporate Enforcement, ODCE concerning its functions under the Bill. Such a gateway is provided for the passing of information by the Central Bank to the ODCE on breaches of the Companies Acts, but it is of paramount importance in the context of the Bill, given the dual enforcement role of both agencies.

The purpose of subsection (2), which replaces the previous section 185, is to designate only those parts of the ICAV Bill that are properly the responsibility of the Central Bank to enable it to enforce these parts of the Bill and include use of its administrative sanction powers and its powers of inspection and enforcement under the Central Bank (Supervision and Enforcement) Act 2013.

Seanad amendment agreed to.
Seanad amendment No. 23:
Section 188: In page 116, to delete lines 14 to 16 and substitute the following:
“Director of Corporate Enforcement
188. (1) Sections 953, 956 and 957 of the Companies Act 2014 have effect as if references to that Act included this Act.
(2) Without prejudice to the generality of subsection (1), and in addition to the functions under section 949 of the Companies Act 2014, the Director of Corporate Enforcement may perform the functions conferred on the Director of Corporate Enforcement by this Act and do such acts or things as are necessary or expedient in the performance of those functions.”.

This is a technical amendment that seeks to clarify and confirm the ODCE's role in the context of the ICAV regime. The amendment concerns particularly the functional powers of the office. It specifically cross-applies sections 953, 956 and 957 of the Companies Act 2014. As a result, section 953 provides that the ODCE is not liable for any act taken or omission pursuant to the Act. Section 956 provides for confidentiality within the ODCE when dealing with ICAVs, while section 957 provides for gateways for the disclosure of information by certain bodies to the ODCE where offences may be carried out by an ICAV manager.

Section 188(2) extends the functions of the office to include its functions under the Bill. The amendment provides that the office will ensure the effective application and enforcement of the obligations, standards and procedures as set out in the Bill, where necessary and appropriate, by way of its compliance, investigatory and prosecution powers.

Seanad amendment agreed to.
Seanad amendments reported.

A message will be sent to Seanad Éireann acquainting it accordingly.

Sitting suspended at 11.05 a.m. and resumed at noon.