Seanad Éireann debate -
Wednesday, 25 May 1983

Vol. 100 No. 11

Companies (Amendment) Bill, 1982 [Seanad Bill Amended by the Dáil]: Report and Final Stages.

An Cathaoirleach

This is a Seanad Bill which has been amended by the Dáil. In accordance with Standing Order 82, it is deemed to have passed its First, Second and Third Stages in the Seanad and is placed on the Order Paper for Report Stage. On the question "That the Bill be received for final consideration" the Minister may explain the purport of the amendments made by the Dáil and this is looked upon as the report of the Dáil amendments to the Seanad. The only matters, therefore, that may be discussed are the amendments made by the Dáil. It will, of course, be understood that Senators may speak only once as we are on Report Stage.

For the convenience of Senators I have arranged for the printing and circulation to them of the amendments.

Question proposed: "That the Bill be received for final consideration".

Minister of State at the Department of Trade, Commerce and Tourism (Mr. M. Moynihan)

I am presenting to the House this afternoon the 13 amendments to the Companies (Amendment) Bill, 1982 as accepted. They are all of a technical nature. Amendments Nos. 1 to 6; Nos. 8 to 10 and 13 are absolutely identical, No. 7 is merely a printing correction and Nos. 11 and 12 deal with section 56 of the Bill and the definition of "Articles in the Principal Act". I will just briefly go over the amendments.

Amendments Nos. 2 to 6; Nos. 8 to 10 and No. 13 are ten identical amendments requested by the parliamentary draftsman. Section 5 (4) provided that a certificate of incorporation given under section 18 of the Principal Act in respect of a public limited company would be sufficient evidence until the contrary is shown of the company's status and its compliance with the requirements of the Companies Acts and that it had been duly registered. In including the provision, the parliamentary draftsman was departing from the long-standing position in the Principal Act and indeed in earlier companies legislation, that the certificate of incorporation is conclusive evidence of the matters mentioned therein, for example, section 19 of the Principal Act.

Following expressions of concern by legal and other professional interests that the drafting of section 5 (4) had the effect that the certificates of incorporation would in future be prima facie evidence only and would leave the very existence, status and validity of any company open to challenge, the parliamentary draftsman was requested to reconsider the issues. He concluded that it was appropriate and necessary in the interest of certainty to provide that the certificate of incorporation referred to in section 5 (4) shall be conclusive evidence of the matters mentioned in that subsection.

The effect of this amendment therefore, is that all who deal with a company will know that they are dealing with a legal entity whose actual existence or status can never be challenged. The same issues arise in the case of certificates of incorporation, issued under sections 9 (9), 11 (3) (b), 14 (5), 18 (6), 43 (11), 52 (5), 53 (5) and paragraph 20 (b) of the First Schedule and in cases of certificates issued under section 6 (6). Identical amendments were adopted in the Dáil to cover each of these nine other cases.

Mr. Harte

I welcome the Minister of State to the House. I have not had an opportunity to do so before. I wish him very well for the rest of his term which I hope will be for four years. I know that he will bring that conscientiousness and diligence which he displayed when he was a Member of this House to his new post.

On the actual word "conclusive", to my simple mind it is not clear whether that is deleted or does it run throughout the Bill? Is that the position?

Mr. M. Moynihan

That is the position until the contrary is assured.

Mrs. Robinson

As the Minister indicated, substantially these are drafting amendments which have been effected by the Dáil. My purpose in rising is to ask the Minister if he could inform the House when the order will be made bringing this Bill into effect once it is passed. We have incurred the wrath of the Court of Justice of the European Communities for our delay in implementing the Second Directive which this Bill now does. It is necessary to know that it will be brought into effect without further delay.

Mr. M. Moynihan

There is an urgency about the introduction of this legislation and I can assure the House it will be brought in as as soon as possible in order to bring us in line with the EEC.

Mrs. Robinson

Is there any reason why there should be any delay at all?

Mr. M. Moynihan

There will be no delay.

Mr. Durkan

In relation to a certificate of incorporation that has been improperly obtained, as, for example, where a certificate of incorporation was obtained by fraud, in such circumstances will such a certificate be deemed to be conclusive evidence as certified in the amendment? The amendment relates not merely to the form of company which this Bill establishes, namely, a public limited company, but the amendment will also apply to ordinary limited liability companies. That indicates there is a certain amount of difficulty in relation to companies incorporated prior to 1982 when in many cases certificates of incorporation may exist but the statutory requirements introduced by the 1982 Act to deal with directors and secretaries of registered offices have not actually been furnished to the Registrar of Companies as such was not essential prior to the incorporation of the companies prior to the 1982 Act.

Mr. M. Moynihan

Subsection (4) as amended provides that the certificate of incorporation is conclusive evidence that the company has complied with all the requirements of the Companies Acts in respect of registration and procedural matters incidental thereto and it is authorised to be registered under the Principal Act. This places the existence of the company as a legal person beyond doubt. Consequently, even if, for example, the signatures on the memorandum were forged or some of its objects were illegal, the certificates would be conclusive evidence that the company was validly registered. It would prevent any doubt from being raised as to the legal persona of the company but it would not, however, validate the illegal objects which could be challenged.

In relation to the other amendments, there is the problem of companies registered who may have headquarters outside the State. Amendment No. 11 arises from representations received recently which drew attention to a problem which section 56 creates for certain foreign companies operating in the State. That section makes it an offence for any person who is not a public limited company which is defined in section 2 of the Bill to carry on business under a name which ends in "public limited company", or the Irish equivalent. The problem is that a company incorporated outside the State, for example under United Kingdom legislation, may be a legitimate public limited company and obliged to style itself as such but while it may establish a place of business within the State under Part XI of the Companies Act, 1963, without being incorporated here, it would be technically in breach of section 56 of this Bill by using the designation "public limited company" or the initials "PLC". The amendment is to put that situation right.

I wish to thank the Seanad for co-operating so rapidly on this legislation which, as Senator Robinson said, and as the Minister has already said in the other House, is urgently required to bring our company law into line with EEC requirements. I would also like to thank Senator Harte and other Senators for their good wishes and I assure the Seanad that they will always have my fullest co-operation.

Question put and agreed to.

Question "That the Bill do now pass" put and agreed to.