The Minister in his introductory speech referred to a period of four or five years, not a couple of years. These proposed financial arrangements should tide the company over for four or five years.
Industrial Credit (Amendment) Bill, 1970: Committee and Final Stages.
Section 1 agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."
I intended to say "a few years". When speaking of it afterwards, did I say "a couple of years"?
"A couple of years", that is right. That is the reason I mentioned it. Four or five years seems looking a long way ahead in this day and age of depreciating currency and increased costs.
Question put and agreed to.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill."
I should like to ask the Minister to clarify one point in the Bill which I cannot reconcile with his introductory statement. As I understand it, under the provisions of this Bill—in fact I commented on this matter when I was speaking—an Irish company with a subsidiary company or associate company, say, in Great Britain or anywhere else, which wishes to expand or which, to go a step further, proposes to expand, the subsidiary can now get a loan from the Industrial Credit Company. Is that correct?
Yes, the subsidiary being abroad.
I do not read that anywhere in the Bill. It always refers to carrying on in the State. In all subsections of section 3 the reference is made to "the State", which I take to be this country.
The position is that at present the Industrial Credit Company have in fact invested money in Irish companies where the parent company is within the State, and which has a subsidiary company abroad. In the main this has been satisfactory in so far as they have been able to deal with the parent company which is within the State, and for the benefit of the company abroad. But if you have a reverse situation where you have the parent company abroad and the subsidiary company here, and the subsidiary company is looking for assistance from the Industrial Credit Company—in fact the subsidiary company may not even be registered in this country; it may be operating here but not registered—in those cases the ICC are not permitted by law to take up shares in the company because it is not registered here. What we are providing for here is that in such cases the ICC may invest in the foreign registered company but where they do so they must be satisfied that the investment is likely to be of benefit to a trade or industry within the State. It is the reverse of the situation that Senator Russell envisages.
The Minister in his speech said:
While the ICC may at present assist Irish-based companies in the acquisition, establishment or development of overseas subsidiaries or associated companies, it can only do so by lending to or investing in the Irish parent company. It may not assist the overseas subsidiary or associated company direct. This is considered to be a shortcoming which should be removed.
Where is it removed in this Bill?
In subsection (4).
What I have referred to in my speech is the fact that you can assist an Irish registered company under the law as it stands. This is enabling assistance to be given to an non-Irish registered company provided that they operate for the benefit of a trade or industry within the State.
Where there is an Irish parent company at the moment the only assistance that can be given is by loan. Is that not correct? So the Minister's speech said. Now it is proposed to give the ICC powers to invest in the Irish subsidiary overseas. I take it by invest it means taking up shares in that also.
Yes.
I cannot read that into this Bill because it refers all the time to activities in the State or proposes to carry on activities in the State. I just cannot see it.
The reading of it seems to confine it to "operation within the State". I think the question that Senator Russell is putting is: can a loan be given to an Irish company which has a subsidiary outside the State? Could the money be directed towards benefiting that company, because there have been cases quite recently where Irish companies have taken over very useful channels of distribution overseas?
That is what we want to encourage. I cannot see it in this. I cannot relate the Minister's speech to any section or subsection of this particular section.
Bear with me for a moment until I examine the section more closely.
Surely section 4 says: "provided that the person is engaged within the State he can also get money to operate outside the State"?
Or "proposing to engage within the State". Again the same words are used. I am talking about "proposing to engage outside the State".
Wherever incorporated and wherever operated.
Is that not negatived by the words that follow "in which a person engaged——"?
The qualification is that a person is engaged or proposing to engage in the State. That is the qualification. If he is so qualified he can get a loan to operate anywhere. That is how I see it.
Provided it is likely to be of benefit to a trade or industry in the State.
In other words you cannot have a situation where, say, a German who has never engaged in business here and does not propose engaging in business here can get a loan even though that might ultimately be of benefit here but if he is engaged in business here, even though the company is incorporated and may be operating in Germany, he could get a loan provided it is likely to be of benefit here.
That is right.
In other words if a foreigner—we will not mention a German specifically—proposes to engage in the State now by merely proposing to engage in the State he can get a loan or he can get shares taken up in an associated or subsidiary company, say, in Great Britain or France, by merely proposing to engage in the State.
There is a further qualification. It is not merely that he engages or proposes to engage but in addition the ICC must be satisfied that the project is likely to be of benefit to a trade or industry in the State. That is additional.
It is the proposal we are talking about. If he puts up a good proposal that is likely to be of benefit within the State he can then get assistance to establish the parent industry and concurrently assistance to establish a subsidiary outside the State.
I cannot visualise a situation in which somebody outside the State can get a loan or investment from the Industrial Credit Company for an operation outside the State.
Both inside and outside.
If it is both in and out then clearly you can measure whether it is going to be of benefit to us here. If he is outside the State and he is proposing to operate outside the State and not within the State, I cannot visualise in any circumstances how this can be of benefit. The Senator's point is that he is proposing to operate here and on that basis he gets in inside the section.
He also gets assistance for a proposed subsidiary outside.
All I can say to that is that he would have to have a lot more than a mere proposal to get inside this and to satisfy the board of the ICC that he should get assistance under this section. If he merely had a proposal and was really interested in an operation outside the State how would he demonstrate in those circumstances that the operation was likely to be of benefit to a trade or industry in the State? He would have to go a great deal further than that to satisfy the board of the Industrial Credit Company that he came within the section at all.
I agree with the Minister that it is most unlikely. But, in fact, as the Bill reads he can come along and say "I want to establish a factory within the State to employ, say, 100 people but it will be necessary in order to do this that I have subsidiary or associate companies all over the place." If he can sell that to the Industrial Credit Company he qualifies for several loans in that case or other forms of financial assistance. It might never happen but that is how the Bill reads.
In such circumstances it would be contingent on his actually setting up that operation within the State.
A proposal, yes.
A proposal, but I am saying that in practical terms he could not get a loan which would come within the terms of likely to be of benefit to a trade or industry in the State unless he had fair proposals. The condition of the loan would be that he would set up the operation here which was going to benefit from it. I think the House might take it that the Industrial Credit Company are not interested in, and will not be interested in, investing in any operation which is not going to be, in their view, of benefit to a trade or industry within the State however it is presented.
Their reputation is that, even if you could comply with all the conditions, it is hard enough to get it out of them.
I accept that.
Question put and agreed to.
Sections 4 to 9, inclusive, agreed to.
Title agreed to.
Bill reported without amendment, received for final consideration and passed.
The Seanad adjourned at 6 p.m. until 3 p.m. on Wednesday, 19th May, 1971.