Seanad Éireann debate -
Wednesday, 9 Nov 1977

Vol. 87 No. 3

Stock Exchange (Completion of Bargains) Bill, 1977: Second Stage.

Question proposed: "That the Bill be now read a Second Time."

Parliamentary Secretary to the Minister for Industry, Commerce and Energy (Mrs. Geoghegan-Quinn)

The purpose of this Bill is to enable The Stock Exchange to introduce a computerised and more efficient stock settlement system.

Before dealing with the Bill, I should like to say something about The Stock Exchange and its operations. This, I trust, will help Senators to see the Bill in its proper setting. Senators will be aware that in 1973 stock exchanges in this country and the United Kingdom were amalgamated to form a single stock exchange to improve standards and to give a better service to investors. The single stock exchange serving both territories is called The Stock Exchange. The separate stock exchanges which existed before the amalgamation are now local administrative units of The Stock Exchange. For example, what used to be the Irish Stock Exchange, and now called The Stock Exchange—Irish, is the administrative unit in Ireland of The Stock Exchange. Of course, The Stock Exchange—Irish holds a special position in a number of respects under the amalgamation arrangement. For example, that Irish brokers continue as before to deal in Irish securities, on a broker to broker basis without the intervention of a jobber, on the floor of The Stock Exchange—Irish in Anglesea Street.

The Stock Exchange usually operates a two-week dealing period during which deals or bargains to sell and buy securities are made but not settled. Settlement is effected during the settlement period which follows. I do not intend to delve into the intricacies of the settlement system in practice. It is sufficient to say that, although this period runs for seven working days, most of the work is done towards the end of the period. Thus, paper work such as splitting bought shares into bundles of sold shares, instructions for delivery, preparation of transfers and payments, are crammed into two or three days at the end.

In most cases sellers of securities are obliged to sign open transfers because the ultimate buyers of those securities at the end of the dealing period are not yet known. This has the disadvantage that sellers are reluctant to release their stock under an open transfer until the very last moment because of risk of fraud or misappropriation. This adds to the concentration of paper work at the end of the settlement period. Taking The Stock Exchange as a whole, it is understood that during the settlement period more than half a million pieces of paper in the form of tickets—that is to say instructions for delivery—and transfer forms can pass around the stock market every fortnight in the paper chase necessary to link buyers and sellers.

A system of such extent and complexity must obviously be costly and open to error, and the advantages which could accrue from computerising it are obvious. However, it did not prove possible to devise a fully satisfactory computerised system which would handle the transactions involved in accordance with company law as it stands today, and the purpose of this Bill is to make some changes in the intermediate steps, without of course altering in any way the ultimate realities of transfer, so as to permit computerisation.

Two points should be emphasised. The first is that the operation of Talisman, which is the name given to the new system of settlement is a matter for The Stock Exchange itself. The main purpose of the Bill is merely to make technical adaptations of the law to enable the system to operate.

The second thing which I wish to emphasise is that the new system which this Bill will authorise is not concerned with the procedure for dealing or making bargains on The Stock Exchange but with the system of settlement which takes place afterwards; that is to say, the paper work by which sales and purchases of securities are matched up, payments made and transfers completed.

Central to the new settlement system is a nominee company of The Stock Exchange called SEPON Ltd. Under the new system, bargains to buy and sell will continue to be made in the usual way, but instead of the seller legally transferring title in the securities to the buyer he will transfer it to SEPON. The seller will, however, retain beneficial rights attaching to the securities until he is paid. SEPON will hold the securities transferred to them in a central "pool" of stock on behalf of sellers until the settlement period when securities will normally be transferred out of the pool to the various purchasers to satisfy purchase bargains.

The Stock Exchange will also maintain computerised records of all holdings by SEPON of the securities of companies participating in the system. Talisman will eliminate much of the paper work already described and will level out the present peaks in workloads.

The transfer of securities to SEPON as opposed to the present system of a seller executing an open transfer will reduce the scope for mistakes or fraud and will thus encourage the early execution of transfers. In this way transfer work will be spread out rather than being concentrated in the few days at the end of the settlement period. I should add that the new system is not expected to have any effect on the volume of employment in The Stock Exchange—Irish or in stock-brokers' offices in this country.

For investors, Talisman should mean less delay in obtaining certificates and also result in fewer mistakes in other areas such as the allocation of dividends in respect of shares in the process of transfer.

There should also be benefits for professional company registrars, that is to say, those people whose profession it is to keep the records of other companies up-to-date and to prepare new certificates when existing holders of securities in the company sell them to someone else. Under the present system a registrar can receive notification of transfers from a variety of brokers who have purchased on behalf of clients.

Under the new system all communication will be through The Stock Exchange and most of the documentation relating to transfers will be computer produced in a standard format. Notifications to company registrars of transfers will be reduced to notifications from the Stock Exchange about transfers into SEPON and transfers out of SEPON. In this way the work of registrars will be simplified.

At this stage I would like to refer to the question of confidentiality which can pose a problem for any computerised system. Senators will wish to know that the Stock Exchange have taken care to build into Talisman safeguards to prevent unauthorised access to, or tampering with, confidential information. For obvious reasons the nature of these safeguards is not being disclosed.

Before leaving the subject of Talisman, I should mention that gilts such as Government and local authority stocks will not be affected by Talisman. These types of security are paid for by cash immediately and do not fall within the delayed and complicated machinery of the settlement system which I have already described. I should like now to pass on to the provisions of the Bill.

SEPON will merely act as a depository for shares in process of transfer and the size of their holdings in companies participating in the system will be constantly changing. Section 2 of the Bill will exempt companies from having to issue certificates in the name of SEPON in respect of transfers of securities into SEPON, as required by the Companies Act, 1963. Obviously it would be a mere waste of time to issue certificates in a transient situation of this kind. Indeed it would be adding to rather than reducing the amount of paper work. Of course, once securities are transferred from SEPON to the buyer certificates in the name of the buyer will be prepared as usual.

It is common for the articles of association of a company to require that share certificates must have the common seal of the company affixed in order for them to be valid. Large companies frequently entrust registration work to an outside firm of professional registrars which, having prepared share certificates, for example, must return them to company headquarters to have them signed and sealed with the common seal. This procedure can cause delays.

In keeping with the objectives of speeding up the processing of documents relating to securities, section 3 will allow a company to have a special "official" seal which can be entrusted to the company registrar for sealing certificates and transfer documents. The consequential amendments of the Companies Act are dealt with in section 5. I feel that the use of the official seal could be a useful improvement generally. For this reason sections 3 and 5 have general application and are not confined to the Talisman system.

The new system will involve computerisation of some company records. In particular it is envisaged that records, such as the register of members, will be kept on computer by some of the larger companies. This will further simplify the work of registrars and speed up transfers.

There is uncertainty as to whether company law permits the keeping of company records in non-legible form. Section 4 will remove any doubt that computerised records are acceptable, provided that they can be reproduced in legible form. Although it was framed with Talisman particularly in mind, section 4 has a wider application so that modern methods of strong information, such as on computers, can be applied to the keeping of company records generally.

Section 6 applies these amendments of company law, allowing for any necessary adaptations or modifications, to unregistered companies, that is, companies not formed or registered under the Companies Act but to which certain provisions of that Act apply.

Under Talisman, sellers of securities will be encouraged to transfer title to SEPON in advance of payment and buyers to pay in advance of receiving title. Strictly speaking, trustees and personal representatives dealing in this manner with securities held in trust could be chargeable with breach of trust. Section 7 will remove this danger for trustees participating in Talisman.

Talisman will involve the use of two new transfer forms: one for transferring securities to SEPON and another for transferring securities from SEPON. The Stock Transfer Act, 1963, which is administered by the Minister for Finance, includes provisions which deal with stock transfer forms. It will be necessary to amend that Act to allow the use of the types of transfer forms which Talisman requires. Section 8 provides for this.

A considerable amount of capital has been raised on the stock market by the larger Irish companies. Anything which can improve the service provided by The Stock Exchange can only be beneficial for Irish companies and investors. Talisman is expected to achieve a considerable improvement over the present settlement system which has remained largely unchanged for about 100 years.

I recommend the Bill to the House.

Mr. Alexis FitzGerald

I first of all welcome the Parliamentary Secretary to this House. I congratulate her on her appointment and on the introduction of that which, I believe, is her first Bill to the Oireachtas. She has done very well if I, as an ancient and in a non-patronising way, may say so. Having said that, I should now like to deal with the Bill.

Nobody more than I can welcome the provisions of the Bill in so far as they improve the procedures of the Stock Exchange. It is in that spirit that I approach this and if I have criticisms to make of the form of the Bill I would hope that they can be met in such a way as will delay as little as possible the achievement of something well worth while. This is an exact copy of a similarly named Bill in the British Parliament, the only difference being the type of English that an English parliamentary draftsman uses and an Irish parliamentary draftsman uses, slight turns which in no way affect the points I have to make. This Bill was enacted in the British Parliament on the 12th October, 1976.

I must make my points on this by taking the sections as I find them. Although we have not been given the Companies Act as the Principal Act, in effect this is achieved to a considerable degree by subsection (3) of section 1 where any word or expression in the Bill is given the meaning assigned to it by the Act of 1963. We then find in the first section—not a very important point—something referred to which is not given any meaning in the Companies Act of 1963, that is to say, the Stock Exchange. If it was the only point I had to make I would certainly sit down very quickly having made it, but the only reference that there is to the Stock Exchange in the Act of 1963 is to a recognised stock exchange, that is, one recognised by the Minister.

This Bill is not one of a series which links it in such a way to the Act of 1963 that a step taken under the 1963 Act immediately identifies what is recognised under the 1963 Act by the ministerial regulation as being the Stock Exchange to which reference is made in this Bill, but we can look at the 1963 Companies Act for the purposes of determining what is a company, which is referred to throughout this Bill. In the definition section of the 1963 Companies Act, any company means:

a company formed and registered under this Act, or an existing company.

Therefore, I would ask Senators to bear in mind when reading this Bill that every section in this Bill which refers to a company refers to every company existing before the Act of 1963, or registered under that Act. That includes public companies as well as private companies. I do not think that the phrase in section 1 (2), "except where the context requires otherwise" can be relied on to lift out of the category to which the Bill will apply public companies without quotations— and there are a number of them—public companies, some of which are quoted and others which are not—and there are a number of them—and the large number of companies which are not public at all and for which, it would seem to me, this Bill will have application and considerable consequences.

I can make this point with regard to the fact that the words "except where the context requires otherwise" does not save the situation, by drawing attention to section 5 of the Bill. Section 5 (2) substitutes a new regulation for Regulation 8 of Part I of Table A. That provision in Part I of Table A is the part which applies to public companies. Part II applies to private companies. But if you look at Part II, you will find that certain regulations in Part I do not apply to private companies. One of the regulations which applies, which is not excluded from application, is Regulation 8. Regulation 8 provides that if somebody, after we enact this Bill, does so, if he forms a company without putting in any articles, then the regulations of Part II as amended will apply to that company. That includes the provisions with regard to, for example, a seal which does not require to be signed or witnessed by the persons concerned.

There is a large number of private companies in this country, unlike the UK—I do not know what the proportions are but, taking a rough guess it is nine to one, rather a reversal of the situation—for which it seems to me, this Bill has consequences that cannot have been intended by the Stock Exchange when it looked for this improvement which is involved in our designing a mechanism which I welcome.

There are one or two questions I should like to ask with regard to SEDON Ltd. It cannot have been necessary so to extend our company law that because certain quoted companies as well as The Stock Exchange will be facilitated in the registration of their quoted security, all the provisions of the Companies Act with regard to the various records that have to be kept should be abrogated and left over until this Bill is enacted and be dealt with by ministerial regulation, which should be the subject of a lengthy debate in this House as the provisions which it will be amending were sent to a Special Committee when the Companies Act, 1963, was enacted.

The side note to section 4 refers to the use of computers for certain company records. There is also a reference to section 378 of the 1963 Act. The side note to section 378 reads: "Former registers, minute book and books of account". It is unthinkable that, even in the case of large public companies with outside registrars handling their affairs, it is intended that the minute books of general meetings should be computerised, to make available more information about the company to the members of the company, and in certain cases to persons who are not members of the company. That does not follow as a necessary consequence of our passing a short Bill which will facilitate the rapid computerisation of the Stock Exchange performance, giving them what they want and taking our time to deal with any of those cases —how many of them there may be I do not know—where the dealings are so large the computerisation ought to be provided. Where computerisation is being provided, we ought to have exact provisions before us to see what needs to be dealt with.

It is the question of who is on the register that is important. The question of the register being kept up to date with directors dealings in shares is important. The fact that the register should be available at the annual general meeting for inspection by shareholders is important. How that is all going to be done I do not know. This Bill ought not to apply either to the securities of a public company which are not quoted—and there are many such companies—or to a public company whose securities are not quoted or to a private company where there is no question of quotation involved at all.

Quite apart from this question of Parliament dealing with the adaptation of our statutory law to deal with the effects of computerisation of records, the provisions of this Bill ought to be looked at to see whether they can stand up at all. To take one example, I direct the House's attention to section 4 (1) (2). Subsection (1) provides for the power conferred on a company by section 378 (1) of the 1963 Act to keep a register or other record. This is the language of the UK draftsmen. It is not such a power because it is a power to keep in bound books or record in any other manner certain things that the Act obliges them to keep. We are not talking about a power. We are talking about a facility for the performance of duties which are cast on directors and secretaries for excellent reasons.

I attach little importance to this matter of registration because I had a client many years ago who was a joint owner of a company here when war broke out and he went off home to Germany. He came back in 1948 and found he was no longer joint owner of the company, that something remarkable had happened in the intervening ten years. The shares had been transferred to his partner's wife. So the question of the state of the register which recorded this transaction raised interesting legal questions because the register was prima facie evidence that the transfer was correct and we had the serious responsibility of trying to prove that he had not done something which gave rise to the entry in the register, the transfer being conveniently lost in the intervening ten years. These matters do happen, in private companies in particular. People can get defrauded in a manner other than the frauds to which the Parliamentary Secretary referred to in her opening speech address and we must see that they are duly protected.

Section 4 (1) includes the power to keep the register or other record by recording the matters in question otherwise than in a legible form so long as the recording is capable of being reproduced in a legible form. Fair enough, where we are dealing with the appropriate type of company with the appropriate type of security.

Subsection (2), which contains no reference to subsection (1) reads:

Any provision of an instrument made by a company before the commencement of this Act which requires a register of holders of debentures of the company to be kept in a legible form——

This is a requirement of the Companies Act, 1963.

——shall be construed as requiring the register to be kept in a legible or non-legible form.

It does not say, as it might surely have done, so long as the recording is capable of being produced in a legible form. If it is going to discharge the duty of keeping a register to make illegible entries under subsection (2), this is going to make nonsense of the provision of the Act which requires that the register be kept properly and be capable of being construed by the attending the annual general meeting when he wants to find out what were the directors doing it in the last 12 months, or whatever he may want to find out.

I refer in particular again to subsection (1) which proposes to give the Minister power to make regulations modifying the provisions of the Act of 1963 relating to such registers or other records mentioned in subsection (3). That power ought not be given to the Minister: the power to modify under this Bill the provisions of another Act by a regulation.

Incidentally, I would have thought that some provision ought to have been in this Bill, from a stock exchange point of view, which would entitle a company which kept a seal abroad under section 41 to have a security seal as well. There are many provisions in the Companies Act which apply, such as transfers of personal representatives, registration of transfer, requested transfer or notice of refusal to register transfer, certificates of transfers, various duties about transferring, including the fiscal duty on the secretary and on the Board of Directors to see that the proper stamp duty is paid, rights of inspections of registered debenture holders; registered members and rights of inspection, lists of shareholders, of directors and their spouses and children and so on. If all these matters are to be modified they ought to be modified by us in debate in this House and not be left to the Minister for determination by regulation. It is like this because it is a rather intimidating task to undertake to do it. To make provision for the computerisation of the records of public companies we should do what the title of the Bill says, provide for the simplification of certain activities connected with the periodic completion of bargains made on the Stock Exchange. For that purpose, and for no other, we should amend and extend the Companies Act, not to provide for any other connected matters. The improvement of stock exchange transactions and the provision for the computerisation of company records in six to 12 companies that may be affected are entirely different matters. We ought not to be making a widespread amendment of our company law for the sake of a half dozen to a dozen companies. If there is need, as there was in 1963 after a gap of 55 years, for looseleaf minute books, public companies that want to computerise their records ought to stagger on for a few more months until we have appropriate provisions before us to deal with them.

This Bill should only deal with the mechanisation of the stock exchange and the improvement of the transactions. I do not think there ought to be, without full consideration, any relaxation of the obligations on companies other than those which are absolutely necessary to make that possible.

Professor Conroy

I should like to welcome and congratulate the Parliamentary Secretary. I welcome this Bill which is a necessary and timely measure. As the Parliamentary Secretary has indicated, we do not now have a separate Irish stock exchange. We have the Stock Exchange—Irish, which is part of the general stock exchange covering these islands. But it is in many ways an independent unit but one which must, if its value is to be maintained, have a close relationship with London and other parts of the Stock Exchange.

Admittedly, the number of transactions which take place in Dublin are relatively few compared with London. Nonetheless, they are extremely important. It is a key section of our business and financial institutions. It is one which has played a very important role in the origin and development of many of our companies. It is highly necessary that we maintain this stock exchange in an active manner. One of the busiest parts of the stock exchange in recent years has been the gilt edge market, and it does not come within this Bill. The general sections of the stock exchange must come within it. It is necessary that stock exchange records and transactions be speeded up. It is necessary in present circum-most terrified member of the public stances that they should be computerised. We should bear in mind the very definite disadvantages of computers and I am sure this has been considered. It is possible for frauds to occur, and for there to be a certain lack of accountability once information is fed into a computer as compared with handwritten or typewritten records. We must keep a wary eye on the situation.

Many of the companies which the Stock Exchange—Irish has helped to develop and continues to support are very important in the Irish economy. They are, by their nature publicly quoted companies. Many other companies, public companies and private, are not quoted on the stock exchange even though in many ways they may be modelled on the regulations pertaining to publicly quoted companies. We must be very careful to ensure that company records—the records of shareholders and of transactions—are available. The computerisation of company records may be very convenient in London, but if that is going to take place in Dublin, it should still be possible for ordinary shareholders and other interested parties to obtain this information readily without great expenses or inconvenience.

In a Bill like this, which relates to happenings in Dublin and elsewhere it is difficult to co-ordinate all the features of it and, at the same time, co-ordinate the changes and implications of this Bill in relation to company law, which is a very complicated portion of the law. I am sure that the interesting comments we have heard are worth close consideration. I am sure they will be given great consideration by the Parliamentary Secretary and her advisers.

The Stock Exchange—Irish plays a key role in our economy and I am glad to see the Minister taking this measure in relation to it. I am sure the Parliamentary Secretary will assure me that the Government will continue to facilitate and support the continuance of an Irish stock exchange unit. It is tremendously important from the point of view of our economic and political development that we have some degree of economic independence, that we have our own financial institutions. I welcome this necessary Bill.

Mrs. Robinson

I should like to extend a particularly warm welcome to the Parliamentary Secretary on her first occasion in both visiting the Seanad and introducing this Bill. I do not claim to have expertise in the operation of the Stock Exchange, I am particularly indebted to Senator Alexis FitzGerald for his thoughtful and helpful analysis of the Bill. I agree in large measure with the points he was making. My contribution is very much as a lawyer looking at the way in which the Bill is framed. It has been mentioned that it is an identical copy of a Bill introduced in the Westminster Parliament, but I understand that it was a Private Members' Bill introduced in the House of Lords rather than in the Commons. It is interesting that we now have a Government Bill following a private initiative in Britain. Would that we could have more Private Members' Bills successfully going through this House as part of the inherited tradition from the Westminster Parliament.

The Bill is strangely cast in achieving its objectives. First of all, the Title is slightly difficult. I wonder why —and I would welcome the view of the Parliamentary Secretary on this—it was not entitled a Company Law Stock Exchange (Completion of Bargains) Bill or some indication that, basically, what the Bill purports to do is to amend the Companies Act of 1963 and also make a minor amendment of the Stocks Transfer Act, 1963.

As Senator Alexis FitzGerald has already pointed out, the Companies Act of 1963 is referred to and identified as the Act of 1963 in the interpretation section, section 1. Then subsection (2) provides for a general interpretative link between this Bill and the Companies Act of 1963. This could give rise to confusion and difficulty in interpreting these two measures together. This would be helped if the words "company law" were in the Title and if those dealing with it were alerted to the fact that they should examine the provisions of this Bill.

The Bill expressly amends several sections of the Companies Act, 1963, as has already been outlined, and also empowers the Minister by regulation to make further adaptations. I would go along with Senator Alexis FitzGerald is urging that the Bill be confined to the narrow purpose of improving and mechanising the inner working of the process of settlements within the Stock Exchange, and that the question of what amounts to a change in the whole area of company law be left to a Bill dealing with company law more expressly than this Bill does. I understand that it will be necessary to introduce a measure of a form of company law to implement directives at European Community level and that, in a very short time we can expect a general Bill on several areas of reform of company law. It would be appropriate to await that particular measure rather than to include a general provision of that sort in a technical Bill, the primary purpose of which is to improve the inner workings of the Stock Exchange with regard to the process of settlements after deals have been concluded.

As I said, I speak very much as a lawyer who does not like the way in which this Bill is structured and who does not like the difficulties that might arise from a series of amendments to the Companies Act of 1963 and the giving of considerable powers to the Minister to make regulations in this area. It is possible that, in all good faith, people might be unaware of the amendments. I would have preferred if the title had been clearer and if the Bill were more confined in achieving its objectives.

Dr. West

I do not like the Bill. I do not object to what it is trying to do, but I object to the way in which the changes are coming about. I am very happy to welcome the Parliamentary Secretary. It is somewhat intimidating for a bachelor to see a woman as Parliamentary Secretary, but it is very pleasant at the same time. My main objection to the Bill, as referred to by the Parliamentary Secretary, is that there is now a single Stock Exchange and no independent Irish stock exchange. This is what has brought this Bill about. There are some consequences which have been alluded to by Senator Alexis FitzGerald. We made a serious mistake, and it is going to affect our operations in this House. As far as I can see, there is no hope of any amendments to the Bill being accepted now that a similar Bill has been passed in the House of Commons. The difficulty is that the Stock Exchange is now completely under the control of the Council of the Stock Exchange operating in London. So when they pass a measure in Britain we have got to follow suit, whether we like it or not.

Senators FitzGerald and Robinson have both pointed out that there are problems, particularly in section 4 (3) and (4). It might be much better for us if we did not interfere with our company law where it did not strictly refer to the completion of bargains, which is what this Bill sets out to do.

The amalgamation of the Irish Stock Exchange with the British Stock Exchange took place in the general euphoria that accompanied the last boom. Everybody except stockbrokers knows that after a boom there is a slump. Whereas it may be of great benefit to us to row in and completely give up our autonomy when the boom is on with the British Stock Exchange, it could be very disadvantageous to us to have this situation when the slump is on. Who is going to say that the British economy is going to keep booming? Most economists that I know of do not have a very optimistic outlook on Britain's economic future. This is one reason why we should be very careful to guard the autonomy we have. We spent the best part of 700 years trying to prove this point, then some years later we give away one important part of our financial autonomy by amalgamating our Stock Exchange with the British Stock Exchange. This has consequences. I do not think the Parliamentary Secretary can accept any amendments to this Bill. It is a ridiculous situation we are in. If she can, where does that leave her if her job, as she sees it, is to produce a Bill which is a direct copy of what has gone through the House of Commons? This will cause problems. I hope she will not take this attitude, but my fear is that she has got to, that she has no option but to pass a Bill which is exactly the same as the Bill passed through the Westminster Parliament because we do not have our own stock exchange. The Stock Exchange here must operate by the regulations which are made by the Council of the Stock Exchange. I should like to ask the Parliamentary Secretary how many Irish members are on that council? Do we have any say in this?

Our Stock Exchange is a very small operation compared with the total British Stock Exchange. Senator Conroy has referred to the Dublin Stock Exchange, but people tend to forget that there is one in Cork, and it has got to be highly regarded. There is also a Stock Exchange in Belfast. Since these three Stock Exchanges are of the same scale and size and totally different in scale and size from the British Stock Exchange, it would be my hope that some day these three will get together and get out from under the great umbrella, particularly if and when problems occur in the British economy, as I think they are going to, maybe not in the short term because of North Sea oil but in the long term, and this will get us into a lot of trouble.

On principle, I dislike seeing British legislation repeated verbatim. I am not only anti-British but I am pro-Irish and I do not think that in these situations we should slavishly copy British legislation. We are forced into this by the fact that our Stock Exchange is amalgamated. This is my first point.

I am against amalgamation as such. That has caused the situation. It is a bad thing and a pity we have to have this legislation. I am not all that sanguine about computerisation. It is necessary, it is going to happen and we are going to have to produce legislation for it but my experience of computerisation has not been entirely happy. My university colleague Senator Martin, will agree with me. We have just had a pretty rough experience of a major computerisation piece of our administration in the central admissions office which Senator Martin can get up and curse roundly. Their great computerised system has been operating university entrance in the Republic just for this year and there has been utter chaos and confusion.

Dr. Martin

I have just arrived to lend moral weight to these points.

Dr. West

The Senator has just matriculated and they have turned him down. We read about it in the newspaper today. One hears the standard comment that once the computer comes all the problems will be solved. Let us get that out of our system. The computer is as good as the people who run it. If one does not have a properly run system one can have absolute chaos and confusion. It is right for the Stock Exchange to take this step but the idea that it is going to solve all the problems is a bit over optimistic. It can introduce new problems as well as solve old ones.

I should like to refer to another computerisation. Senator Conroy, and the Parliamentary Secretary, have referred to the possibility of fraud. Computerisation lends to the possibility of even bigger frauds if one happens to get the right code. I will illustrate this by a non-fraudulent but true story which occurred in one of the two universities in Dublin — it would be invidious to say which one. I have a great affection for both but only one pays me. This university was handling the computer work for one of our five-year economic plans. There was a lot of material to be put through the machine and an intrepid undergraduate student who worked in the computer laboratory late at night happened to pick up from the wastepaper basket the code into the computer core or the key to the whole machine. He found he was able to print his way happily into every single programme being run on the machine. When the Department of Finance got back the five-year plan every second or third page was headed with slogans such as: "Long live Chairman Mao, capitalism is dead" and so on. Very amusing but it gives an illustration of the fact that anybody who can get at the core or key to a computer system has pretty well unlimited power to do whatever he likes to the programmes being run by the computer at any time. Let us be wary of that. I can summarise that computers will lead to bigger and better frauds in the future. The fact the Parliamentary Secretary says that there are safeguards is reassuring but only partly so. One can always get around any of these safeguards if one is sufficiently ingenious. This can easily happen.

I should like to refer to the points made by Senator FitzGerald and Robinson. As I understood it, Senator FitzGerald was worried about subsections (3) and (4) of section 4 which amend the Companies Act, 1963. They are concerned with the way company records are kept but really have nothing to do with the Stock Exchange. The Senators are right in the point they make and these two subsections should be deleted. They should be left to an amending Companies Act which is to deal with company law and has nothing to do with the Stock Exchange. Subsections (3) and (4) of section 4, have nothing to do with the Stock Exchange. We should not have to make an amendment of this nature at this time. It should be left to a separate amending Bill because computerisation will lead to other necessary amendments of the Companies Act, 1963.

We are involved in legislation here which really is not of our own making. It comes about because our Stock Exchange has given up its autonomy and given up its freedom. It was a bad decision which the Stock Exchange made in the great boom time when everybody was euphoric about stock prices continually going up and never coming down. We will reach a situation where we will have to try and get that autonomy back because our conditions are so different from those in Britain and they are likely to diverge even more. We will regret the day when this amalgamation took place. Because of this amalgamation we are faced with legislation which is an exact copy of the British legislation and I am not happy about that situation.

Parliamentary Secretary to the Minister for Industry, Commerce and Energy (Mrs. Geoghegan-Quinn)

Firstly, I should like to thank the many Senators who took part in the debate for their warm welcome to the House and to hope that on my frequent visits to the Upper House of the Oireachtas each visit will be as pleasant as this one has been so far. Senator Alexis FitzGerald pointed out that there was a tremendous similarity between this Bill and one which was passed last year in the British Parliament. I acknowledge that that is fair to say because that is the situation. This Bill is similar to that passed by the British Parliament last year. That is deliberately so because it is the same Stock Exchange, the same computer and the same holding company with which all of us are dealing. Therefore, it is important that, in so far as possible, the law both in its legislative form and subsequent interpretation be as close as possible in both countries.

The Senator made the point that the Bill refers to every company which is registered under the Act. It does but Talisman will be used by quoted companies and sections 3, 4 and 5 of the Bill may be used by private companies if they so wish. Section 4 is not mandatory, it is enabling and if companies do not want to computerise records they do not have to. The Senator also said he found in section 1 the term "Stock Exchange" used instead of "recognised Stock Exchange", as in the Companies Act. It amounts to the same thing because the Stock Exchange was described for the purposes of the Companies Act but this Bill takes a more direct approach and names the Stock Exchange itself.

Senator Conroy urged that the Government encourage continuance of the Stock Exchange — Irish, this being an administrative unit of the Stock Exchange. I hasten to assure him, that it is, and will continue to be, Government policy to encourage the continuance of the Stock Exchange— Irish.

Senator Robinson spoke about the Title of the Bill and wondered why it should not have been entitled a Companies Bill. The reason is because the Bill also deals with the Stock Transfer Act and the law on trustees. It does not solely deal with the Companies Act.

Senator Robinson also made the point that the Bill should, perhaps, be more confined in its application. It is not possible. The Senator mentioned that a comprehensive Companies Bill would be coming before both Houses of the Oireachtas and that is so, but it is not possible at this stage to say how soon the Bill will be presented. In the circumstances it was felt that the opportunity should now be taken to allow companies generally to avail of computerisation if they find it useful.

Senator West regretted the amalgamation of the Stock Exchanges. While that may be a valid point for the Senator I must deal with the situation as I find it. The position at present is that the Stock Exchanges have amalgamated and I propose to deal with that situation in this Bill.

Dr. West

Can the Parliamentary Secretary accept amendments to this Bill?

Mrs. Geoghegan-Quinn

If Senators wish to make amendments I certainly will not oppose them. I had intended taking all Stages of the Bill this evening if that was possible but I am flexible on the matter and if Senators wish to have time to put amendments we can arrange, with the agreement of the Leader of the House and the Whips, to defer Committee Stage to another time.

Senator West also asked about the membership of the Stock Exchange and of the council. The membership of the Stock Exchange is 3,907 overall, of which 88 are Irish. The governing body, called the council, has 46 members of which one is Irish.

Question put and agreed to.

An Cathaoirleach

When is it proposed to take the next Stage?

Mr. E. Ryan

The Parliamentary Secretary said she hoped to get all Stages this evening but in view of the discussion which has taken place, does Senator FitzGerald still feel he can put down amendments which would not destroy the purpose of the Bill?

Mr. Alexis FitzGerald

The Parliamentary Secretary has replied in a very fair way to my contribution but has left me with net point for consideration, that is, whether or not there should be an option given to private companies to use this type of recording or whether that option should be there for public companies without quotation. At the moment I am disposed to be against that because we leave too wide a field open for treatment by ministerial regulation in the context of Irish companies. For that reason I should like time to consider it, while not wishing to delay the Bill in any way and without assuring the House that I would put down amendments. One simple amendment would deal with the matter and there could be a discussion on it. The text of the Bill would be largely unchanged except where the language of one or two points is capable of improvement.

Mr. E. Ryan

The next sitting day, not including tomorrow?

Committee Stage ordered for next sitting day.