I move amendment No. 2:—
Section 4. To add at the end of the section a new sub-section as follows:—
(6) No issue of debentures shall be made by an agricultural co-operative society under this section unless and until a resolution approving the issue of such debentures shall have been passed by a special meeting of the shareholders of such society convened for the purpose of passing such resolution.
I am afraid I will have to trouble the House at some length with this amendment, because the matter was considered very carefully in the Dáil. The whole thing really centres on the amendment that was made in the Dáil where the Minister got the Dáil to cut out of the Bill, as originally drafted, a clause which is really the clause which I wish to have inserted. I would like the House to consider carefully Section 4, which is a terribly drastic section, not only for the societies that are being dealt with at present but for the fact that it may establish, and probably will establish, a precedent which if it were carried, dealing with the articles of association of other companies outside this Bill, would be a tremendous interference with the possibilities of carrying on companies in this country. Sub-section (1) of the section reads:—
(1) An agricultural co-operative society which is authorised by its rules to borrow money may at any time, with such consent of the Minister as is mentioned in this Act and whether the issue of debentures is or is not authorised, or is or is not forbidden by the rules of such society, issue debentures to any authorised lender for the purpose of securing to such lender the repayment, with or without interest, of any capital sum of money lent by such lender to such society before the issue of such debentures (whether before or after the passing of this Act) or intended to be so lent at or after such issue, or partly so lent and partly so intended to be lent.
That sub-section rides over articles of association of every type. There is no mention in it of the shareholders of the society having anything whatever to do with the issue of debentures by the societies. In the Bill as it originally came before the Dáil there were these words added in a little clause dealing with the Agricultural Credit Corporation: "If and when such charge can lawfully be made." The Minister got the Dáil to cut those words out. The Bill comes to this House without these words in it, and there is not in the Bill as it is before us anything to protect the shareholders of any of these associations except the consent of the Minister. There are various reasons why the Minister is rather a doubtful party in this case.
Dealing with the latter part of the Bill we must remember that this Corporation for whose benefit he has taken out that clause, is a Corporation in which the larger shareholders are, I believe, the Government themselves. The banks also have capital in that company. The strange thing is that we have a Government in power who are large shareholders in a Corporation in whose behalf they are now trying to strain the law so as to give them illegal leave to do certain things. I have read all through what the Minister said in the Dáil and I cannot find in any of his arguments any justification for the taking out that clause or any justification which would satisfy anyone that he was taking care of the rights of the shareholders. The Minister states quite plainly why he wants to get this power. It is because this Corporation found out themselves that if the Bill were left with that clause as it originally stood, they could not get this charge put on without the consent of the shareholders. The Minister cut out the clause to suit this particular Corporation who had lent money—a Corporation in which the Government hold a large amount of the capital. I do not think the House ought to let such a thing go through.
If we are to establish a principle that the directors can play ducks and drakes with the articles of association of a company, regardless of the interests of the shareholders, then we are establishing a principle which is far and away above and beyond this Bill. To talk more specifically, this Bill and what the Minister wants to get is not really demanded by the needs of the situation. If this company, having lent the money, want to get it back, the Government, as a matter of fact, ought to bring in a Private Bill and not do what they want to do in a Bill of this kind. If the Minister would bring in a Private Bill here the rights and the wrongs of the business could be looked into by the two Houses and the members of the Oireachtas could say what they thought fit about it. It should not be done in the way in which the Government is doing it in this Bill— asking the Oireachtas to over-ride the rights of the ordinary shareholders and establishing a principle that the shareholders should have no right to vote on such a matter. I have been making investigations about it and I find that none of the societies has put forward the demand that in effect is being made under this Bill.
As far as I can make out, none of the societies put forward a demand that it should be able to issue debentures without the consent of its shareholders. The banks outside this Corporation have lent a large amount of money to various societies, but I have not heard that any bank put forward the claim that it should be given the right to claim debentures or that the society should grant them, irrespective of the wishes of their ordinary shareholders. The Minister is doing this, as he admitted himself, simply to meet the pledge which his predecessor gave to that bank when it gave out the money. The money was given out in 1929—five years ago. They were given to believe that within seven years the Corporation would get their debts paid off. Five years of those seven have passed but we have no information that they have got any of this money. If the societies had met their obligations up to date, all but two-sevenths of the money should be repaid by now. If that were the case, I do not believe that the Minister would have brought in this Bill. Therefore, I take it for granted that the Corporation have not been able to secure the fulfilment of the terms of the agreement. They have not got back five-sevenths of their money.
What we should probably be asked, if the Bill came before us in the ordinary way, would be to sanction an arrangement whereby the shareholders would be burdened with the payment of the uncalled capital and the repayment of these loans to the Corporation, probably to the full amount. Yet, they are not to have a word to say to it. This is not a good time for agriculturists in the country. It is not a time when the Oireachtas or anybody else should be piling burdens on them. I wonder very much at the Minister not adopting some other course of settling this matter. It is very loyal on his part to carry out the arrangement made by his predecessors, but I doubt very much if he has weighed fully what it means for the Oireachtas to pass such a clause as Section 4 without some protection behind it for the ordinary shareholders. I have looked carefully through what the Minister told us the other day about it and I find that he did not tell us about the clause that had been deleted from the Bill, which made the Bill a reasonable one to bring into the Dáil. Without that clause, or a clause leaving the shareholders the right to say whether or not the societies should issue these debentures, I think the Bill is a very dangerous one indeed. I am, therefore, proposing as an amendment at the end of Section 4, the following:—
No issue of debentures shall be made by an agricultural co-operative society under this section unless and until a resolution approving the issue of such debentures shall have been passed by a special meeting of the shareholders of such society convened for the purpose of passing such resolution.
As far as I know, what the societies want is leave to issue debentures. They want the Oireachtas to give them leave by an Act to issue these debentures, but they never asked that their shareholders should not have a voice in it. Neither did the banks outside ever ask such a thing. There being no demand from anybody outside this Corporation, with which the Government is closely associated, I do not think that the Minister should ask the House to pass a section of this kind. I have really not much more to say in regard to the matter. We shall come later to the question of the Corporation itself and the understanding which Senator Comyn and Senator Johnson referred to in the last debate. The point of the whole matter is that if we do not insert an amendment such as I am suggesting, we are passing a Bill of an extremely dangerous kind, containing a principle which, if applied to other companies, would wreck a tremendous mass of business.
Senators might consider what would happen, say, in the case of insurance companies. I dare say a number of Senators hold shares in insurance companies. You will find insurance companies with shares on each of which only 5/- has been paid up, but these shares carry liabilities running practically to the whole of the debts of the insurance company. If you applied such a clause as we are debating here to such companies, you would create a state of affairs that would destroy the whole insurance business of the country. Yet, if you once pass this clause, what is there to prevent the Government's coming in here, saying that they are bound up with a certain insurance company in some way or other, and asking us that a clause such as this should be passed and applied to insurance companies? I have no brief for insurance companies, but I am a shareholder in an insurance company, and I can say that if such a clause were passed giving power to the company to issue debentures without my consent or the consent of other shareholders it would ruin us. For all we know, if we let this section through without giving the shareholders some means of protecting themselves, we may be passing a Bill which will ruin individual shareholders in these concerns amongst the agricultural community. I do not think we should do so. I have explained to the House why we should protect the ordinary shareholders of the societies and I think this amendment will do so.