When introducing this Bill in the Dáil I pointed out that it was to make provision for the formation and registration of a company having for its principal object the provision of industrial credit. I went on to point out that there were three ways in which such credit might be provided. The first, which relates to the ordinary short term credit or accommodation which a concern might require from day to day, is generally provided by joint stock banks or other agents in the form of an overdraft. The second is a guarantee which might be given by any corporation or organisation, in our case, generally the State, as a backing for certain specific forms of share issue, which acts as an inducement either to banks, financial houses or others who wish to be assured of the safety of their capital, and a certain return thereon, to invest in the undertaking. The third is that form of credit which a new undertaking generally requires during its initial and development stages. In other countries that form of credit is provided by underwriting syndicates, by issuing houses and financial houses. It is not a form of credit that banks here, and I think quite properly, find themselves in a position to extend with any freedom or any liberality. As a general rule the speculative element in the new enterprise is too great, and apart altogether from that, if credit is to fulfil any useful purpose, it must be long-term credit. Banks naturally are chary of committing themselves to the principle that their funds, and the funds of their depositors, which are generally placed with them for very short terms, can be mortgaged or involved over considerable periods. In the case of States or communities where the financial organisation has been fully developed, the hesitation of banks to involve themselves for long-term industrial undertakings of any magnitude, or in any risk, is not a great drawback, because there are other organisations specially devised for the purpose which will intervene to fill the gap.
In our case, however, there is not at the moment existing any organisation of that kind. Our general public are cautious and timorous in regard, particularly, to native enterprise. Those of them who speculate and those of them who invest seem to prefer to entrust their capital to concerns abroad. In many cases they entrust it to well-established concerns, but in many cases, also, as the experience of the last five years has taught us, they invest it in undertakings the outcome of which, to say the least, is uncertain. In pursuance of its general industrial policy, the Government finds it necessary to have initiated here large manufacturing ventures of a novel kind. It is the desire of the Government that the Irish public should participate as fully as possible in financing these enterprises. The Government would like to see the Irish banks take an adequate share in that task, but, at the same time, the Government has to have regard to two very natural factors. In the first place, people generally may not have the same faith in the future of these enterprises that the Government have, and they might not feel themselves competent to undertake whatever risk there might be in financing these undertakings. The Government has also to have regard to the fact that the existing joint stock banks would naturally be uneasy and alarmed if the Government were to approach them with a request in the making of which there might be implied an element of coercion—an element of coercion which the Government could not, in conscience, exercise, and which those responsible for the management of these concerns and the safety of the funds entrusted to them would naturally resent. Accordingly, another method had to be devised to finance these undertakings at the outset. If the public come into them and if the banks come into them, they will come in of their free will. The Government, while it is anxious to have regard to that principle, is, at the same time, concerned to ensure that these undertakings, which it considers necessary for the fulfilment of its general industrial policy, should not be allowed to fail for lack of funds, and that the initiation of them should not be deferred because it is difficult for them to secure funds. This Industrial Credit Bill, under which it is proposed to launch an undertaking to be known as the Industrial Credit Company, is the means which the Government has devised for allowing the public and existing financial houses to participate in the financing of these new enterprises to the extent which they deem, in their own judgment, wise. At the same time, if what they feel they can do falls short of what is required, the Government will be able to come in and make good that deficiency out of the State funds. That is the general purpose of the Bill. I do not know whether or not the House has studied the matter in detail, but I shall briefly go through the sections.
Section 1 is the definition section. Section 2 provides for the establishment of a company for the purposes I have indicated. Under Section 3 the Minister for Finance is empowered to lend £15,000 to the company for the purpose of defraying preliminary expenses. In that connection I should like to point out that this will not involve any ultimate loss to the Exchequer, as with a capital of £5,000,000 the stamp duty will amount to £12,500 and the fees payable in the companies' offices will amount to about £60. The remainder of the sum will be available to meet the cost of printing, legal and other formation expenses. Under Section 4 the authority of the Minister for each additional issue of share capital is required. It is necessary that the Minister should have some control over the issue of capital of the company, as he may ultimately have to foot the bill for any losses the company may suffer. It is, therefore, essential that he should be informed, whenever a new issue is contemplated, of the purposes to which the proceeds of that issue will be devoted, so that he may, in the first place, satisfy himself whether it is one in which, in view of the provisions of Section 5, he should sanction the investment of State funds, and, secondly, to ensure that the issue will be made under such conditions as will not involve the Exchequer in too heavy a burden. Section 5 authorises the Minister to take up the balance of the issued capital of the company which may remain unsubscribed by the public. It is very difficult to predict the exact liability which will fall on the Exchequer in this connection, but it is not contemplated by any means that the whole of the authorised capital of the company should be offered immediately for public subscription. It will be only issued from time to time in such amounts as may be required for the immediate business of the company. It will be noticed, in connection with this section, that no provision is made for direct application by the Minister for shares in the company. This function is confined to the underwriting of such issues as the company may, from time to time, make. On the Committee Stage, I may introduce an amendment to give the Minister power to apply for shares in the first instance. Section 6 is the usual charging section. It charges the moneys required by the Minister for the purchase of shares in the company on the Central Fund, and it gives him power, if he raises a loan for the provision of such money, to charge the principal and interest on such loans on the Central Fund. Section 7 requires the Minister to pay into the Exchequer all the moneys received by him in respect of shares of the company. Section 8 confers on the Minister the usual rights enjoyed by every shareholder in the company. In this connection, however, I should like to point out a provision which will not normally be found in the articles of association of a company. These articles, as the House is, no doubt, aware, generally provide that no person shall be appointed a proxy for another unless he is a member of the company, except in the case of a proxy appointed by a corporation. Under this section the Minister will be able to choose his proxies from outside the members of the company. That is necessary, because the Minister may sometimes desire to act through the officials of his Department. Section 9 empowers the Minister to hold the shares of a company as long as he thinks fit, and to dispose of them when he thinks fit. I should like to point out that the Minister will exercise this power with extreme caution. There will be no likelihood that the Minister will suddenly unload any shares held by him on the market, thereby causing their price to fall, or that he will do anything that would be in any way injurious to the public interest. At the same time, it is felt that if the Minister at any time desires to sell these shares, which he has come into in the same way as any member of the general public would come into them, he should have the same right to dispose of them as any private shareholder would. The proceeds of such a sale as the Minister might make under the section would, of course, go into the Exchequer. Section 10 renders invalid any alterations in the memorandum or articles of association of the company which might be made without the previous consent of the Minister for Finance so long as he holds shares in the company. It is also required that the Minister for Industry and Commerce should be consulted before any alteration is made. These two provisions are considered necessary to secure that the Ministerial policy responsible for bringing the company into being will not be overruled by the company so long as the Minister for Finance is identified with the company. Section 11 is a very important section from the point of view of the Oireachtas and the general administration of the company. It provides that within 90 days after the end of each accounting year the company shall furnish to the Minister a balance sheet for that year, duly audited by an auditor of the company, and also a profit and loss account for the same period, similarly audited. Under sub-section (2) the balance sheet and profit and loss account are to be drawn up in manner prescribed by regulations to be made under the section, and they are to contain, in addition to any matter required by these regulations, a summary of the capital assets and liabilities of the company, together with such particulars as will disclose the nature of such assets and liabilities and the manner in which the value of the assets was arrived at. Sub-section (3) imposes on the company the duty of furnishing to the Minister such further information or explanations as he shall think proper to require in respect of any balance sheet or any profit and loss account furnished pursuant to the section. Sub-section (4) provides that a copy of every balance sheet and profit and loss account furnished to the Minister shall be laid by him before each House of the Oireachtas within one month after such balance sheet and profit and loss account have been furnished. Sub-section (5) is a penal sub-section. It provides that if the company makes any default in complying with any of the provisions of this section, it and each and every director, manager and other officer of the company who knowingly and wilfully authorised or permitted the said default shall be liable to a fine not exceeding £5 for every day during which the default continues. Sub-section (6) gives the Minister general power to make regulations affecting any matter referred to in the section.
It will be seen that this section, together with Sections 4 and 10 of the Schedule, raises the question of the powers of the Minister in relation to the company. In connection with that, I would like to make it clear that it is not intended that the company will be subject to any petty restrictions or to close Ministerial control, but merely that the Minister should have supervisory powers over its general policy. The necessity for this follows naturally from the fact that the company is being created by the State and will be an institution of national importance. It is suggested that that position will continue to exist, even if the Minister should dispose of all his shares in the company in view of the manner in which the company came into existence.
