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Seanad Éireann debate -
Wednesday, 24 Feb 1988

Vol. 118 No. 13

Companies (No. 2) Bill, 1987: Committee Stage (Resumed).

Question again proposed: "That section 55, as amended, stand part of the Bill."

I am sure Senator Norris could squeeze the matter into the Companies (No. 2) Bill somewhere.

It is unfair of the Minister to tempt me to do so.

Senator Hogan obviously feels strongly about the question of discouraging enterprise. I do not think this will discourage enterprise in any way. People can find out already who the directors are, now they will know what shares the directors hold. They also will know whether there is a third party involved. They would have known about the existence of a third party under the existing law because you had to send in your list of shareholders. While there was not a breakdown of the shareholding the list of shareholders had to be submitted to the Companies Registration Office.

If a family company had a number of shareholders who were not family members, that would appear in the Companies Registration Office, as presently constituted. Granted it could read Leinster House Limited, or something. It could be a company that held the shares in the family company and it would not disclose the person behind that company. The only fresh area that a private family limited company has to worry about in a real sense is that, if there is an outside investor in that company and somebody with a financial interest wants to find out who it is, they can find it out in court. We are not dodging that. Yes, it is an additional disclosure. It is not unhealthy in my view. I do not see what damage it can do. If you have a financial interest in a company, you are entitled to know who you are dealing with if something goes seriously wrong. You are entitled to be able to find out with whom you are dealing.

On the last point, I want to see if I am correct in this. Apart from having the standing because you have an interest to pursue it in court in relation to a non-member of the family, if I could put it that way, a non-relative of a director——

A non-director.

——a non-director or relative of a director, child or spouse of director, in fact, in many cases I would have thought, particularly in the case of a private company you could probably do it by elimination. If you have access to the director's secretary, spouse and children, then if there is an outside shareholding and you know the name of the shareholder, in a large number of circumstances you will be able to find out what the shareholding is in that case, just by finding out what share the others have and the value of them and what is left is the holding of the outsider.

You can find out what shares the directors hold in the family and, by subtracting that from 100, you can find out that there is an outside shareholder who has the remainder shares. That is quite true. To get the name of that person and to get further information means the court route however. You may want to get more information about the actual name, for example, because it could be held in a company. If you are an investor in a family company, you will very likely hold it through another company, so the existing regulations which say you have to list the shareholders in the Companies Registration Office would apply. The information that it was owned by family members plus this limited company would already be there, but if you want to get behind that limited company now you have got to go to court. It is not as if we are suddenly pointing out that there are outside shareholders who up to now could be hidden. Up to now that information was not hidden but was available at the Companies Registration Office. You could always find out that there was an outside shareholder but you can now find out if that outside shareholding is held by a company. If you are prepared to go to court and you have a financial interest and the court agrees with you, you can now find out who that is.

Question put and agreed to.
SECTION 56.

Government amendment No. 54 has already been discussed with amendment No. 53.

Government amendment No. 54:
In page 55, line 29, after "director", to insert "or secretary".
Amendment agreed to.

Amendment No. 55 has been discussed with amendment No. 45.

Government amendment No. 55:
In page 56, lines 14 to 17, to delete "or who, in purported fulfilment of such an obligation makes to a company a statement which he knows to be false, or recklessly makes to a company a statement which is false,".
Amendment agreed to.
Government amendment No. 56:
In page 56, line 20, to delete "subsections (7), (8), (9) and (10) of that section", and substitute "subsections (8) and (10) of section 49".

The problem here is just a drafting one. To begin with the reference should be to section 49 and not to section 50. That is just a mistake which can be taken straightaway and, that being the case, there is no need in section 56 (7) to mention subsection (7) as the provision involved already appears in section 56.

Section 49 (9) need not be mentioned either since in a separate amendment we are removing that provision, that is, the need for the DPP's consent to a prosecution.

It is obviously a drafting amendment and there is no particular issue on it. Could the Minister read the subsection as amended?

I will have to make it up because what we are doing is deleting subsections (7) (8) (9) and (10) of that section and we are substituting subsections (8) and (10) of section 49:

(7) The provisions set out in section 50 shall have effect for the interpretation of, and otherwise in relation to, subsections (1) and (2) and subsections (8) and (10) of section 49 shall with any requisite modification, have effect for the purposes of this section as they have effect for the purposes of that section.

What chances have the rest of us?

We will let it go by on the basis that it is too difficult.

Amendment agreed to.
Government amendment No. 57:
In page 56, line 23, to delete "subsections (1) and (2) of section 51", and substitute "section 53".

This is equally clear. It is a question of a wrong reference. The purpose of section 56 (8) is to ensure that information in relation to the interests of spouses and children or directors and secretaries will be recorded in the register of directors and secretaries interests required by section 53 and not by subsections (1) and (2) of section 51, as the subsection now states. Section 53 is the section which deals with the keeping of registers whereas section 51 deals with time limits for the notification of information by directors and so on. The purpose of the amendment, therefore, is simply to correct the wrong reference.

Amendment agreed to.
Question proposed: "That section 56, as amended, stand part of the Bill."

I want to be clear. This is extending the provisions of section 49 in relation to interest to spouses and children. We have already adverted to that. In relation to the filing of the information in the directors' report, the directors' report would extend to directors, secretaries, spouses and children. Is that correct? It would be lodged in the Companies Registration Office. It is just a small point.

Yes, on the basis they are attributed back to the directors. It is not a matter of listing the children, as such, but the shareholding being attributed to the main director as holding those.

Question put and agreed to.
SECTION 57.

Amendments Nos. 58 and 59 are related and may be discussed together.

Government amendment No. 58:
In page 56, lines 26 and 27, to delete "in the case of which shares or debentures are listed on" and substitute "in the case of whose shares or debentures dealing facilities are provided by".

The amendments are similar to ones we have already made to section 29 of the Bill, which dealt with dealing by directors of a company in options. The reason the amendment was made to section 29 and, indeed, why we are proposing it to this section too, is that the reference to a company which has a listing on a recognised Stock Exchange is not specific enough. For example, it is not clear whether it means a company on the full Stock Exchange list or whether it would include, for example, a company dealt with on the unlisted securities market, the USM or, indeed, the new smaller companies market.

We would obviously like to have the widest possible coverage of this section in the interest of the fullest possible information being made available to investors. The effect of the amendments here will be that, whenever a director or a secretary of a company with any sort of quotation in the Stock Exchange makes a notification to the company under this chapter, the company must immediately notify the Stock Exchange who may, in turn, decide to publish the information.

Amendment agreed to.

Amendment No. 59 has been discussed with amendment No. 58.

Government amendment No. 59:
In page 56, line 30, to delete "listed on a recognised stock exchange" and substitute "for which such dealing facilities are provided".
Amendment agreed to.
Government amendment No. 60:
In page 56, line 38, to delete "and liable to a fine not exceeding £1,000".

The purpose of this amendment is not, as might appear at first glance, to lessen the penalty for contravention of this section but rather to increase it. We are dealing here with dealings by directors of publicly quoted public limited companies and we would attach great importance to the duty under this section on such directors to notify the Stock Exchange quickly of any dealings they might have in their own company's shares in the interest of investors.

The penalty for contravening the section is £1,000 in the current draft of the Bill. On reflection, however, we think that the offence being created here is somewhat more serious than a straightforward penalty of a £1,000 fine would imply and that the penalty should be increased accordingly. As to the form of the amendment itself, the deletion of the words mentioned in the amendment will have the effect of applying the provisions of section 184 (1) of the Bill to an offence under the section. The offence will thus attract the standard penalties under that section for an offence for which no punishment is specifically provided. The penalties will thus be a maxima of £1,000 or 12 months imprisonment on summary conviction and £10,000 or three years imprisonment on conviction on indictment.

Amendment agreed to.

Amendment No. 61 has been discussed with No. 46.

Government amendment No. 61:
In page 56, to delete lines 39 to 41.
Amendment agreed to.
Question proposed: "That section 57, as amended, stand part of the Bill."

I just want to ask for clarification from the Minister about the duty here. It seems as though there are different elements being dealt with here in section 57. The main obligation is the obligation on the company in the circumstances of section 57, as amended, to notify the Stock Exchange where the company has been notified of interests of a director or secretary. There is a penalty and the Minister is allowing for an increase in that penalty or more flexibility in that penalty by virtue of the other amendments, but there is a further matter and that is that the Stock Exchange may publish in such manner as it may determine. I would like to understand that provision. First of all, is that completely discretionary? The Stock Exchange does not have to publish at all or is the "may" there mandatory? Is it mandatory that it will be published and is it the form of the publication that is at the discretion of the Stock Exchange? I would like to be clear as to what that means.

The requirement is for the company to notify the Stock Exchange and then it goes on to say that the Stock Exchange may publish that in such manner as they think fit. The present situation is that in most companies, there is certainly a requirement by the Stock Exchange to get that information from the companies under their aegis in any case, although it is not legally required — it will be after this Bill. So, what we are doing is just giving, to an extent, legal effect to what is very often a method of operation of the Stock Exchange in any case. We now want to make sure that they get that information. We will feel we have gone as far as we should go once we are sure that they get the information, that they now in their regulation of the Stock Exchange on the various markets, the USM, SCM and so on, are fully aware of the information which they should be aware of.

We felt we should not tell the Stock Exchange, as it were, how to use that information in the interests of their members. You could make an argument for that but in general terms the Stock Exchange nearly always publish that information in any case. They would certainly want a very good reason not to. You could argue that the Stock Exchange should be told to publish all that information but they may decide that in a particular case it is in the interests of the company and the investor not to do it. We are operating here on the basis that the Stock Exchange are well behaved and will do what is good for the investor and the company, I would like to drop it at that stage and leave it to them.

I am not sure that I have understood the provision specifically now in relation to the Stock Exchange and the fact that they may publish it. If that sentence — the last part of the sentence from "and the Stock Exchange may publish in such manner as it may determine, any information received by it under the subsection..." was left out, would it make any difference?

If we left out the sentence which says they may publish it?

Yes, after the semicolon —"and the Stock Exchange may publish in such manner as it may determine any information received by it under the subsection..."

Off the top of my head, I do not think it would make any difference because I assume they could publish it in any case, unless there is something somewhere which forbids publication by parties. I cannot see offhand that there is. I do not see any reason why it should be left out but I would have to return the question in this sense that if removing it makes no difference then being there should not be a difficulty.

I am not asking because I see a difficulty; I am asking so that I can understand. If the section meant something it would be imposing some requirement. That was my initial question. It would require that there should be some publication of this information and I could see reasons for that. After all, we are making it a criminal offence not to inform the Stock Exchange. It could well be a legislative purpose to require some publication but then not direct how this is to be done, leaving it to the discretion of the Stock Exchange how that would be communicated. As I have understood it — and the Minister may further clarify it — that is not what is being done and so the section adds nothing but the Minister feels: why not have it in there anyway?

I do not think that it would make a major difference to leave it out. We will certainly have a look at that. You could argue, however, that it does lay a slight onus on the Stock Exchange to consider very seriously as to what they are going to do with this information. It has that insinuation in it that they may publish it. If they are to make that decision, then it lays on them the clear job of not just filing the information in the outer office — not that they would do that, I think — but of seriously considering the information to give effect to whether they may or may not publish it. You could make that argument. I do not feel that strongly about it, if from a drafting point of view it is not necessary.

What I want to do is clear, which is to say that the company must tell the Stock Exchange and the Stock Exchange should consider the information very seriously and then decide what to do with the information in the best interests of the investor and the company. That is what I want to achieve here. So, we will certainly look at leaving that out if the Senator feels strongly about it but perhaps it does put a slight onus on them to consider seriously what they are going to do with this information. To that extent, on balance, I would prefer to leave it there unless the matter is pressed.

On the section, a great source of irritation to me personally, and I am sure to the Minister, is the amount of financial resources available in the State which are not being invested in public companies or in private companies. I will certainly take advantage of this section to ask the Minister to highlight the situation in the Stock Exchange about small companies. Various moves have been made over the past year or so to make the Stock Exchange more relevant to the smaller investor and to the small companies sector in the market. I do not think they have been successful enough in that regard and perhaps the Minister would use his good offices to enable one stop shops to be operated by the stock market in order to attract the smaller investor rather than having to go through the expensive procedure of going to a stockbroker with the natural inhibitions a normal country individual would have in doing so in the capital city. People generally would like — if they got the opportunity — to invest in public companies or private companies on the stock market and they do not get enough opportunity to do so.

Secondly, in the section we are talking about the publication of certain information as a result of an investment in the Stock Exchange. Does that mean that if somebody as a director of a company, as a private individual invests in shares on the Stock Exchange, he or she would have that information published?

If there are notifications in a public company, when the company has been told by the people who are supposed to tell it, the directors and secretaries, that the company has not that information on the Stock Exchange, all that section does is make sure that the link between the company and the Stock Exchange is kept tight. The general stipulation here is that if you hold shares you notify the company. What we are now saying is that you must tell the Stock Exchange if your company is on the Stock Exchange. Obviously if the company is not, they would not be interested. That is really all it does.

Let me take this opportunity to say two things quickly, because I think the Senator is right about it. The Government want to see wider share ownership. We want to see more people holding shares because if more people hold shares in Irish industry then more people have a stake in it and more people are concerned about the results of it. This legislation will make it easier for people to operate in holding shares because it will be a lot more visible and above board in many ways. It will bring in the wider public. I would like to use the occasion to appeal for wider share ownership right across the board. One scheme in particular called the Business Expansion Scheme has been very successful. Basically it says that if you invest £25,000 of your personal income, your private money, in a manufacturing company or, indeed, if a trading house or some tourist amenities are being selected, you can write that £25,000 off against your personal income. So, if you are a doctor, a dentist, a teacher, or a barrister or you have got other business interests, you can reduce your ultimate tax liability by investing that £25,000 in a manufacturing company. That is a scheme that is attuned to get wider share ownership.

We will be looking at more and more areas where we can encourage your average Irish person to put money into companies, to buy shares and to participate. That is why the Stock Exchange, for example, have brought in the Smaller Companies Market. I agree that we must bring more people in as shareholders. The Smaller Companies Market is beginning to move now and more and more ordinary individuals are buying shares. It does not have to be the Stock Exchange. That is one route. You can do it privately: you can increase it into a business expansion fund scheme. These funds are being set up where you can buy a share in a company by investing in a business expansion scheme fund so there are more and more financial instruments allowing people to invest in Irish business.

I want to encourage more and more people to do that by owning shares. It is no shame — quite the contrary. One should be proud to hold shares in any company in Irish industry and be quite prepared to say so. Sometimes there is an ethos which goes in the other direction which I would disapprove of that if you hold shares it is something you have to hide or pretend is not the case. That is totally the wrong impression and feeling that this country needs at this time.

I thank the Minister for those points of clarification and his appeal to people to become more share-orientated as it were. We concur very firmly on those matters. I am glad of the opportunity to acknowledge the amount of work a former Minister for Industry and Commerce, Deputy John Bruton, did in trying to get worker participation and worker shareholders involved in their own businesses and in the setting up and establishment of the Business Expansion Scheme. Those innovations are now seen to be of tremendous benefit in creating more employment, in getting money that is dormant, active.

I appreciate that the Minister is trying to set a certain note but I must say I do not think people are ashamed to hold shares. I think they do not have the wherewithal to acquire shares. That is more of a problem, perhaps. If I could come back to the section from which we ranged rather far, there is a point under subsection (3) on which I would welcome clarification. It is of some significance. In relation to default, this section imposes a duty on the company to notify the Stock Exchange but subsection (3) says: "If default is made in complying with the section, the company and every officer of the company who is in default"— who is that? How do they know they are in default? They are exposed to prosecution, either summary or on indictment. It should be very clear who might be in default.

I can get the reference, but I understand it is every officer of the company who is knowingly in default. The 1963 Act has the definition that "failure to comply with the obligation imposed under subsection (1) will be an offence punishable by a fine not exceeding.... Those liable to prosecution in relation to the offence are the company and every officer of the company who is in default." An officer in default is defined in section 3 (8) (iii) of the 1963 Act as meaning "any officer of the company who knowingly and wilfully authorises or permits the default in question", so it refers back to section 3 (8) (iii) of the 1963 Act.

Is the Minister satisfied that that would apply without a reference to it? In relation to directors' reports we refer to section 128 of the Companies Act of 1963; would it be more appropriate to make it an actual specific reference here?

It might be, but I do not see any difficulty with this 1963 solution either which seems to be reasonably clear — any officer of the company who knowingly and wilfully authorises or permits the default in question.

I had no problem in knowing what is in this subsection. It is the duty of a company to notify the Stock Exchange and it might cause a problem as to who in fact was also personally responsible.

The section does say "every officer of the company who is in default," and an officer in default is defined in section 3 (8) (iii).

It says if default is made in complying with the section. If the Minister is happy about it, I have raised the point.

Question put and agreed to.
SECTION 58.
Government amendment No. 62:
In page 57, line 20, to delete "9 to 11, 16 to 18 and 22, 23 (1) and 186", and substitute "9, 16 to 18, 22 and 23 (1)".
Amendment agreed to.
Question proposed: That section 58, as amended, stand part of the Bill."

This section deals with investigations by the Minister into suspected contravention of the provisions of the Bill concerned with dealings by directors in the shares of their own companies. Subsection (6) specifies various other provisions of the Bill which are to apply to such situations. Looking again at the provisions, in subsection (6) there appears to be unnecessary duplication in some cases. For example, section 10 of the Bill need not be mentioned since it is already referred to in subsection (3). Section 11 need not be mentioned since the substance of it is contained in subsections (4) and (5). Section 186 will apply automatically anyway. The amendment would delete the present references in subsection (6) to sections 10, 11 and 186 on the basis that these provisions would already apply to such investigations by virtue of other provisions of the Bill. That is the general view.

There is just one point in relation to this section which empowers the Minister to appoint inspectors to comment on the possibility of contraventions of disclosure provisions in companies and to draw up a report. Under subsection (5) it is provided that any such report may be written or printed, as the Minister may direct, and the Minister may cause it to be published. It would be helpful if the Minister could indicate the circumstances in which reports of this kind, if there were investigations, would be likely to be published. I ask because if the report discloses contraventions presumably they would be properly dealt with by way of prosecutions either by the Minister or the DPP and, therefore, might there be a difficulty in publication? It is only if the inspector finds all is well that there would be publication? If so, what would be the interest in having publication?

I think the phraseology will cover that, Senator. The Minister may cause it to be published. Leaving that discretion with the Minister would cover what you are suggesting.

It is how he will exercise that discretion that fascinates me.

Yes: cause it to be published, I suppose, in Iris Oifigiúil or something like that.

No, I do not mean where it would be published but what the considerations would be.

If there was a case pending or there were some legal ramifications and any publication would be likely to prejudice that, that would be an example of where the Minister would not cause it to be published. Is the Senator looking for further examples of cases where he might not publish?

Might publish.

I will come back to the Senator on that. If the Minister thinks it is in the public interest to publish, he will just publish it in the ordinary course. Equally, the Minister may decide not to publish it. You probably could not give a check list here as to what those conditions might be because they are probably very varied.

The common good is a bit broader.

Common sense. If it makes sense to publish it, I think it will be published. If there were items in there which might be the cause of further litigation or something, that would perhaps be the normal case where the Minister would not publish it. The Minister would publish it unless there was some reason he should not publish it. The normal course would be for the Minister to publish it.

Question put and agreed to.
SECTION 59.
Government amendment No. 63:
In page 57, line 45, after "company's", to insert "relevant".

Moving on to Chapter 3 of the Bill, for general information this chapter generally is different in that it applies only to public limited companies. There is a limit of 5 per cent put in for notification. If you hold more than 5 per cent in a public limited company then the notification procedure is put in place. We are not dealing in this chapter with private companies. It is important to make that distinction.

The purpose of amendment No. 63 is to make it clear in the avoidance of doubt provision in section 59 (2) (a) that the doubt we are clearing up is the case where the company's relevant — that is voting — share capital is divided into different classes and not where the whole of the company's capital is so divided. The whole scope of this Chapter 3 is limited to interest held in the voting capital of public limited companies. This is made clear in the preamble to subsection (2). All this amendment does is to make it clear that we are speaking about voting capital in paragraph (a) of the subsection as well.

Amendment agreed to.

Amendments Nos. 64 and 65 may be discussed together.

Government amendment No. 64:
In page 57, line 46, to delete "Part", and substitute "Chapter".

These are purely drafting amendments in most cases. They arise because it is only in Chapter 3 that reference to a percentage share holding occurs. In other words, a shareholder holding more than a certain percentage of the shares is required to notify that fact to the company. In these circumstances it would be misleading to refer here to references in "this Part".

Amendment agreed to.
Government amendment No. 65:
In page 58, line 3, to delete "Part", and substitute "Chapter".
Amendment agreed to.

Amendments Nos. 66 and 67 are related and may be discussed together.

Government amendment No. 66:
In page 58, to delete lines 17 to 23.

These amendments are purely drafting amendments and would make no substantive change in the Bill. Like some of the other amendments we have prepared under Part IV of the Bill, these two are intended to tidy up the drafting and eliminate unnecessary complications. There are essentially two reasons for the two amendments. First, there is not much point in saying as section 59 (4) does in the opening three lines that "the existence of an obligation in a particular case depends in part on the circumstances obtaining before and after whatever is in that case the relevant time", without mentioning what else it also "partly" depends on. Not only that, the opening two-and-a-half lines of subsection (4) appear to simply repeat what is in section 60 (4) (5).

The real object of section 59 (4) is simply to define a particular point in time at which a person buys or sells his shares so that it can be established that he has X per cent of a company's shares before that time and Y per cent of a company's shares after that time. The second thing these two related amendments do is to shift the actual definition of "relevant time" to section 60. Amendment No. 67 actually does this. The reason is that there seems to be no reason to leave the definition in section 59 as there will now be no mention of "relevant time" until section 60. Section 59 establishes basic parameters in relation to notification requirements and the definition of a particular phrase and without any refernce to that phrase in the section it would seem to be somewhat out of place. We propose, therefore, to insert a new subsection at the end of section 60 containing the definition of "relevant time" and amendment No. 67 does this.

Amendment agreed to.
Question proposed: "That section 59, as amended, stand part of the Bill."

I cannot resist making a very serious point on amendment 66. It is really with the greatest reluctance that I accept the Minister's reason for shifting the subsection into section 60 and redrafting the subsection because as section 59 (4) stands at the moment, it is such a wonderful subsection for any lawyer: it really is a gift. It necessarily requires a legal opinion and, therefore, the work of lawyers. I declare that I am being self-sacrificing in being prepared to let that one go.

Question put and agreed to.
SECTION 60.
Government amendment No. 67:
In page 59, between lines 3 and 4, to insert the following new subsection:
(6) For the purposes of this section, the relevant time' means—
(a) in a case within section 59 (1) (a) or (3) (a), the time of the event or change of circumstances there mentioned, and
(b) in a case within section 59 (1) (b) or (3) (b), the time at which the person became aware of the facts in question.
Amendment agreed to.
Question proposed: "That section 60, as amended, stand part of the Bill."

On the interest to be disclosed — and the Minister has drawn the important distinction that we are now talking about disclosure of shareholding interest in public limited companies —could the Minister identify whether there is a substantial difference between the type of disclosure here and the type of disclosure of interest for directors and secretaries under section 49? In other words, it is difficult to compare the sections because they are quite complex but as between the disclosure of an interest under section 49, in the context of section 49, and the disclosure of the interest here, is there a difference?

The most obvious one is the 5 per cent. That is not required in private companies; it is in public companies. In public limited companies we are talking about voting shares. I do not think that specific stipulation is laid down in the case of private companies. They would be the two major ones as far as I am concerned. There may be other detailed ones which we will dig up for the Senator's information.

Question put and agreed to.
Section 61 agreed to.
SECTION 62.
Government amendment No. 68:
In page 59, lines 30 to 36, to delete subsection (4).

The purpose of this amendment is to delete subsection (4) of section 62 which currently provides for approval by the Houses of the Oireachtas of regulations made by the Minister under this section. This provision is unnecessary, however, since there is already provision in the 1963 Companies Act which provides for the same thing, that is section 396, and this Bill and the 1963 Act are by virtue of section 1 of the Bill to be construed together.

I should like to have clarification on that. I do not have section 396 of the 1963 Act in front of me at the moment. Perhaps the Minister would help me. I take it that the effect would be that, where any change is made in the 5 per cent, which is the cut off for disclosure, the Minister is satisfied that under section 396 of the existing Companies Act any regulation would have to be laid in precisely the manner which is provided for here subject to annulment of 21 days.

It is the same procedure.

Amendment agreed to.
Question proposed: "That section 62, an amended, stand part of the Bill."

On the question of the notifiable percentage, as it is called, clearly 5 per cent is being included here and the section envisages that that can be varied. Does the Minister have any information about how the 5 per cent was arrived at and the circumstances in which it might be varied?

We are extremely creative here. We looked at the Stock Exchange regulations, the UK Act and a few other jurisdictions and they all seemed to concur with the sensible conclusion that 5 per cent was the correct figure.

Do I take it that if there is any change in the UK Act we may be seeking a draft regulation?

After recent events the Senator cannot draw any such conclusions.

Question put and agreed to.
SECTION 63.
Question proposed: "That section 63 stand part of the Bill."

I am not so sure if it is applicable here but the obligation to notify is within the same five day period. We are talking about possibly a more ascertainable issue which probably does not give rise to quite the same concern as the notification of interest under section 49. I would be interested in the Minister's response as to whether he concedes that there could be a difference in the nature of the obligation to notify within the prescribed period. Under the next section we are talking about notification of family and corporate interests but these are clearly defined interests in the voting share capital of public companies. That is very defined and definable.

The Senator has played a very valuable role in concentrating her mind on the need for transitional provisions in the case of private companies. That is something we will need to have a very close look at, particularly when you consider we have already a form of transitional provision here in regard to public companies in section 81 which effectively extends it in certain circumstances to ten days. That is the effect of section 81 on entry into force of sections 59 and 65. There is a form of transitional arrangement there which is more benign for public companies. That probably strengthens the Senator's argument that if it is that benign for public companies it should be at least as benign for private ones. We will certainly have a very close look at that. This one is OK for public companies.

Question put and agreed to.
Section 64 agreed to.
SECTION 65.
Government amendment No. 69:
In page 61, line 12, to delete "in a particular company" and substitute "comprised in relevant share capital of a particular public limited company".

This section deals with concert parties and we are proposing this amendment for two reasons. First, we are only interested in concert parties which involve acquisitions and disposal of relevant shares, in other words, shares carrying unrestricted voting rights. We are not concerned with arrangements which involve acquisitions of any kind of share capital, for example, non-voting preference shares and so on. Secondly, we think it is necessary to make clear that this group of sections, 65 to 67, dealing with concert parties applies only and solely to public limited companies and not to all companies. As section 65 stands the concert party provisions could be interpreted to apply to all companies and we would not obviously want this to be the situation. It is to make sure that it is clear that it is only to public companies.

Could the Minister just give the effect of this on subsection (1) as it would read in relation to amendment No. 69.

The amendment is to subsection (1) to delete the words "in a particular company" and put in the words "comprised in relevant share capital of a particular public limited company".

And that is not the target company?

The target company stays.

Now that I have followed the amendment is that narrowing the definition of a target company necessarily?

It is clarifying it to pin down that it is a public limited company area only not any other companies and also to pin down that it is voting shares therein as it were.

Amendment agreed to.
Question proposed: "That section 65, as amended, stand part of the Bill".

There is a very small point. At the side of it are the words, "agreement to acquire interests in a particular company." Maybe that does not have any bearing on the legal interpretation but we are removing the words "a particular company" and substituting other words.

Yes. The office will have to change that.

Question put and agreed to.
SECTION 66.
Question proposed: "That section 66 stand part of the Bill."

With regard to subsection (1) in all shares in the target company is that back to the amendment we are talking about, relevant share capital of a particular limited company?

Yes. It is the target company.

Is the Minister happy that you can use the term, "all shares of the target company" and that it will necessarily have a definition carried over?

Yes. We are happy that section 65 is acting as a sort of definition section for section 66 as it leads into it.

Even though all shares——

It is voting shares only. Is the Senators worried that that could be seen as being all shares?

Yes. Only those defining the target company. Then the Minister says all shares are the target company.

The first line says, "in the case of an agreement to which section 65 applies." If section 65 applies to a voting this will be a voting. We will have a look at it.

Would the word "relevant" be a useful one to have in there, "all relevant shares? "

We can do that. If we could adopt the section we will bring that back at Report Stage.

Question put and agreed to.
Section 67 agreed to.
SECTION 68.
Government amendment No. 70:
In page 64, line 35, to delete "that section", and substitute "the said section 65".

This is a technical amendment. The reference in section 68 (2) (d), to "that section," is intended to be to section 65. It has been pointed out, however, that this is not at all clear from the wording of the paragraph. This point is accepted as it seems that there is a danger that a person reading the paragraph could think that the reference is intended to be to section 64 or section 66 as these are mentioned at the beginning of subsection (2).

Amendment agreed to.
Section 68, as amended, agreed to.
SECTION 69.
Question proposed: "That section 69 stand part of the Bill."

I want to see how the 5 per cent cut-off operates in relation to section 69. I am getting a little confused at this stage. Perhaps the Minister would clarify that.

The purpose of section 69 is to define, for the purposes of sections 59 to 63, what kind of interests are to be taken into account when deciding whether a person has a notifiable interest in shares. That is the general one. Does the Senator want to know what the amount would be?

How it came to 5 per cent.

If the interest adds up to——

To 5 per cent of the voting shares of a public company?

Yes, if it adds up to a notifiable interest.

In relation to the determination of the interest then, at all times we are reading into it, that we are talking about interest in voting shares of a public company.

Yes, voting shares of a limited company.

Question put and agreed to.
SECTION 70.
Government amendment No. 71:
In page 66, to delete paragraph (b), lines 5 to 8, and to substitute the following paragraph:
"(b) an interest of a person subsisting by virtue of—
(i) his holding units in—
(I) a registered unit trust scheme within the meaning of section 3 of the Unit Trusts Act, 1972;
(II) a unit trust to which section 31 of the Capital Gains Tax Act, 1975, as amended by section 34 of the Finance Act, 1977, relates;
or
(ii) a scheme made under section 46 of the Charities Act, 1961.".
Amendment agreed to.
Government amendment No. 72:
In page 66, line 15, to delete "58", and substitute "13".

Perhaps the Minister would clarify this.

It is a mistake. It rectifies an incorrect reference. It is section 13 of the Succession Act and not section 58, which provides that where a person dies intestate or dies testate but with no executor, his estate vests in the President of the High Court until a grant of administration issues. Section 58 of that Act deals with something else entirely.

Amendment agreed to.
Government amendment No. 73:
In page 66, line 25, to delete "corporation" and substitute "body corporate".
Amendment agreed to.
Government amendment No. 74:
In page 66, lines 30 and 31, to delete "section 2 of the Capital Acquisitions Tax Act, 1976", and substitute "section 96 of the Income Tax Act, 1967".

There is another incorrect reference. The purpose of the amendment is to clear that up. The definition of "settler" is not contained in the Capital Acquisition Tax Act, 1976 but in section 96 of the Income Tax Act, 1967.

Amendment agreed to.

Amendments Nos. 75 and 76 are related and may be discussed together.

Government amendment No. 75:
In page 66, line 35, to delete "a person who is".

The sole purpose of these two separate amendments is to put ACC, ICC and Fóir Teoranta on the same footing as the pure banking bodies mentioned in section 70 (4) (a), (i) and (ii), in other words licensed banks, Trustees Savings Banks and the Post Office Savings Bank. It has been represented to us that ACC and ICC in particular carry on businesses in the same way as the bodies which are licensed banks under the Central Bank Act and that the same rule should not, accordingly, apply to them as far as exemption under this section in certain circumstances is concerned. This seems to us to be a reasonable approach and is the reason for the amendment.

Incidentally, I would like to reassure the House that neither this amendment nor indeed subsection (4) generally will give banks a general exemption from disclosure of interests and shares under the Bill. All we are saying here is that where a bank holds an interest in shares merely as security, for example as collateral for a loan to a customer, they will be exempted from the disclosure rules.

I understand there is a drafting amendment the Minister has not bothered about —"is held by", then he is deleting "a person who is". I am wondering whether, at the bottom of (b), in relation to the fact that it is by way of security only for the purposes of a transaction entered into in the ordinary course of his business — the Minister is rightly cutting out "person"— it should be also tidied up there.

I thank the Senator for pointing that out. She is correct. We will have to make a consequential amendment there. We will do it on Report Stage.

Amendment agreed to.
Government amendment No. 76:
In page 66, between lines 42 and 43, to insert the following new subparagraph:
(iii) Agricultural Credit Corporation plc, Industrial Credit Corporation plc or Fóir Teoranta,".
Amendment agreed to.
Section 70, as amended, agreed to.
SECTION 71.

Acting Chairman

Amendments Nos. 77, 78 and 80 and are similar and may be discussed together.

Government amendment No. 77:
In page 67, line 7, to delete "Chapter 2 or 3", and substitute "this Chapter".

These four amendments are related to amendments we have already made to the earlier sections of Part IV, Chapter 2 of the Bill. As I said on those sections, what we have in mind is to ensure that both Chapters 2 and 3 of this part are each effectively self contained with the minimum of overlapping between them. In the case of these four amendments we think it is confusing to be creating in Chapter 3 sanctions for non-compliance with various provisions of Chapter 2. The purpose of these related amendments, therefore, is to remove the reference to Chapter 2 from subsections (1), (2), (3) (a) and (7) (a) of section 71. The new sections we have now put in before section 53 will effectively provide for the same arrangement but in a self contained way in Chapter 2, where we think they belong.

Amendment agreed to.
Government amendment No. 78:
In page 67, line 9, to delete "Chapter 2 or 3", and substitute "this Chapter".
Amendment agreed to.
Government amendment No. 79:
In page 67, line 11, after "director", to insert "or secretary".

The reason for the duty in the last two lines and the deletion of section 71, as currently drafted, is that a director who is making a disclosure of interest to his company shall be required to make clear to the company what exact duty he is fulfilling, in other words, which section or sections of the Bill he is declaring his interest under. This is because the director will be subject to the rules both in Chapter 2 and in Chapter 3. If the secretary of the company had a sizeable holding in the company then, like a director in a similar situation, he could be subject to the rules of disclosure of both Chapters 2 and 3. This amendment therefore, would put the secretary in the same position as the director vis-a-vis the obligation in section 71 (2) to specify the particular duty under which he was making his disclosure.

Amendment agreed to.
Government amendment No. 80:
In page 67, line 15, to delete "Chapter 2 or 3", and substitute "this Chapter".
Amendment agreed to.
Government amendment No. 81:
In page 67, line 21, to delete "those shares", and substitute "any shares in the company concerned, held by him,".

This is a drafting amendment. The problem is that the words "those shares" in line 21 do not appear to refer to anything previously said in subsection (3). We are talking about shares held by the shareholder concerned in the company in which he has an interest. However, this should be made clear and that is what the amendment does.

Amendment agreed to.
Government amendment No. 82:
In page 67, line 37, to delete "Chapter 2 or 3" and substitute "this Chapter".
Amendment agreed to.
Government amendment No. 83:
In page 67, to delete lines 38 to 41.
Amendment agreed to.
Government amendment No. 84:
In page 68, to delete lines 8 to 10.
Amendment agreed to.
Question proposed: "That section 71, as amended, stand part of the Bill."

The Minister had dealt partially with this in relation to the amendment which put the secretary on the same terms as the director. I would like to be clear on how the obligations on directors and secretaries under the earlier Part, sections 49 and following, and this Part tie in. They have to make a disclosure generally in relation to every company under the first Part. They have to make disclosure if they hold more than 5 per cent of the voting share in a public limited company under this Part. How do the two co-exist?

A director is fully subject to stipulations under Chapters 2 and 3. The director is fully under the jurisdiction in Chapters 2 and 3.

So is a secretary.

Yes. The director and secretary are both subject to Chapters 2 and 3 so they have responsibilities under both chapters.

Is what we are doing here in section 71 (2), requiring them to say which disclosure they are making?

That is precisely the situation. They have to say which duty they are fulfilling.

Question put and agreed to.
SECTION 72.
Government amendment No. 85:
In page 68, between lines 26 and 27, to insert the following new subsection:
"(4) The nature and extent of an interest recorded in the said register of a person in any shares shall, if he so requires, be recorded in the said register.".

We noticed that there does not appear to be any provision in Chapter 3 corresponding to subsection (3) of section 54 which appears in Chapter 2. This amendment would only insert a similar position here in section 72. The amendment provides that a person could require that the nature of his interest in shares or debentures should be indicated in the register. He may wish it to be recorded that he is not the beneficial owner of certain shares but merely holds them as trustee for somebody else. The idea is to allow a shareholder to have extra information entered in the register over and above that which he is legally required by the provisions of Chapter 3 to have there.

If he is caught by the 5 per cent and must file the disclosure, he is equally protected by being able to require of the company that the nature of that holding be specified and is not obliged to do it in a manner that discloses it.

Amendment agreed to.
Government amendment No. 86:
In page 68, line 49 and in page 69, line 1, to delete "subsection (1) or (2), or with any of subsections (5) to (7)" and substitute "any of the provisions of this section".

The reason for this amendment is that the coverage of offences here in this section seems to be incomplete. As currently drafted, contravention of subsections (3) or (8) would not be an offence. On reflection they should be. Subsection (3) requires the company to enter information received from shareholders within three days. It would be important to make sure that it would be private since the whole purpose of disclosure provisions would be prejudiced if public limited companies did not keep their registers or interest up to date. Subsection (8) requires the public limited company to keep its register of interests at its registered office and to make arrangements to allow inspection of it by anyone interested. There would be little point in having these requirements if we did not make sure they were observed.

Amendment agreed to.
Question proposed: "That section 72, as amended, stand part of the Bill."

Making available the register for inspection is governed by subsection (8) (b) which says "shall be available for inspection in accordance with section 80" which governs that. There are different provisions in relation to the right of inspection from when we went back to section 49 and following sections, 53 and 54, where you pay 30p. Perhaps the Minister could indicate why there is a difference. Maybe we will come to this on section 80 but since we are dealing with the section it links into section 80.

Section 80 (2) says you only pay 10p in this case.

Is there a reason discerned for a difference in the availability of the register to the public here and the availability of the register of directors, secretaries and their families in the earlier Part?

It is equally available. There are different stipulations and different charges but they are both equally available to the public. Are the charges or the 100 words of concern to the Senator?

I am not quite clear why a different approach is being adopted.

Section 54 (8) says: "Any member of the company or other person may require a copy of the said register ..." I am advised that, apart from the charge, the other approaches are the same but the charge is different. The general stipulations are the same. We will have a look at it.

It intrigues me.

I think it is called precedent.

Section 54 (8) goes on to say: "or such less sum as the company may prescribe, for every hundred words or fractional part thereof required to be copied". Is that a charge for copying? Previously there was a 30p charge for inspection.

You can get a copy for 10p.

We will try to align that text a bit more closely. The 100 words provision is in section 54 and the other one.

It is 15p in section 54.

It is more difficult to get it now than it ever was.

Question put and agreed to.
SECTION 73.
Question proposed: "That section 73 stand part of the Bill."

Section 73 deals with company investigations. In view of the wide interpretation of the word "company" given in an earlier section, has the Minister any plans to incorporate all companies rather than just public limited companies?

This whole chapter deals with public limited companies and the intention here is to make sure they can find out who owns their shares.

Question put and agreed to.
Section 74 agreed to.
SECTION 75.
Government amendment No. 87:
In page 70, lines 38 and 39, to delete subsection (5), and substitute the following subsection:
"(5) If default is made in complying with subsection (4), the court may, on the application of the requisitionists, or any of them, and on being satisfied that it is reasonable to do so, require the company to exercise its powers under section 73 in a manner specified in the order.".

The purpose of this amendment is to remove the present subsection (5) which provides for an offence for non-compliance by a company with the requisition for an investigation under section 73. The intention is to replace this offence by giving the requisitionist a civil right to apply to the court for an order requiring the company to comply with the requirement to carry out an investigation. On reflection, there seems to be little point in providing for an offence for non-compliance which will benefit the requisitionist nothing and which would be very difficult to prove, whereas giving them a right to apply to the High Court for an order enforcing compliance would seem to be a more effective way.

I am sure Senator Robinson would consent.

Yes, it seems to be something that I can approve. I am interested in the term "requisitionist". Perhaps it is my own ignorance that I am not familiar with it. I have not come across it before.

It is outdated. I understand a requisitionist to be a person who makes the requisition, but if I am wrong I would like to know.

Amendment agreed to.
Section 75, as amended, agreed to.
Section 76 agreed to.
SECTION 77.

An Leas-Chathaoirleach

Amendment No. 88 has been discussed with amendment No. 45.

Government amendment No. 88:
In page 71, lines 45 to 48, to delete "or who, in purported compliance with such a notice, makes any statement which he knows to be false in a material particular or recklessly makes any statement which is false in a material particular".
Amendment agreed to.
Section 77, as amended, agreed to.
SECTION 78.
Government amendment No. 89:
In page 72, line 15, to delete "Part", and substitute "Chapter".

This group of sections 72 and 78 to 80 relate only to the register of interest to be kept by public limited companies in Chapter 3 and is distinct from, for example, the register to be kept under Chapter 2 in relation to directors' shareholdings. This amendment will make this clear by confining the terms of section 78 (1) solely to entries in the register kept under Chapter 3.

I understand the Minister's explanation of the purpose of it. I just want to see if I understand the consequences of it. Does this mean that if it is kept under the requirements of the previous chapter it will be kept indefinitely? An entry against a person's name can be removed if more than six years have elapsed. What, if any, period exists for the entry against a person's name in the earlier chapter?

The directors' register can be kept indefinitely. There would be no time limit or bar to it. Is that what the Senator had in mind?

Yes. Does this mean that once you are on a register you are going to be there for ever though you may not be a current director? In other words, you can go back through the records of the company and you will find in the case of the public limited companies voting shares after six years have been deleted. Why is there a cut-off here?

There is no reason. In the case of the public company, six years seems to be a sensible cut-off point. There is a greater turnover in the shares, so there is much more activity. In the case of the private company it is unlikely that you would have that much difficulty in having it going back further because there would be little turnover. Compared to the turnover in a public company it would be minimal. There is no problem about holding it going back because obviously the date of the interest will be attached to it. There would be no question of it hanging there as if it was applying to some date other than the date on which it was mentioned.

The amendment proposes to delete "Part" and substitute "Chapter" to make more precise that it means this chapter relating to voting shares in public limited companies. The next section provides that entries in a company's register of interest and shares shall not be deleted except in accordance with section 78. I am not quite sure whether that means entries only in relation to voting shares in public limited companies or is a broader provision.

Our intention is that that would relate only to public companies. I will look at the wording again.

I know we are dealing with section 78 but it looks as if we are moving on to section 79. It seems as though it is broader than that. Perhaps it is over-broad?

I see the point the Senator is making. If I can tighten it up I will.

Amendment agreed to.
Section 78, as amended, agreed to.
Sections 79 and 80 agreed to.
SECTION 81.
Government amendment No. 90:
In page 73, line 46, after "interest", to insert "which, if it was acquired after such commencement, would be".

The provisions of Chapter 3, sections 59 to 81 apply to all share requisitions and disposals made after the date on which the relevant provisions came into effect. The purpose of section 81 (1) on the other hand is to apply the same rules of disclosure to persons who already have interests on the date the Act came into force. However, the present wording of section 81 (1) does not achieve this. A person who has a substantial interest on the date of commencement could not on that date actually be subject to the notification requirement under section 59. In other words, we have here a kind of legal conundrum. The amendment will solve this difficulty by deeming a person to have an interest for the purpose of the Bill regardless of whether he has it when the Bill comes into force or requires it after that date.

Amendment agreed to.
Government amendment No. 91:
In page 73, line 50 and in page 74, lines 1 to 4, to delete subsection (2) and substitute a new subsection as follows:
"(2) For the purposes of subsection (1), section 63 (1) shall apply as if, for the period of 5 days there mentioned, there were substituted a period of 10 days.".

Section 81 (2) is a transitional measure the purpose of which is to allow people who have notifiable interest on the date the Bill comes into force the longer period, as I explained earlier to Senator Robinson, the period of ten days to make the required notification rather than the standard five days. There are two reasons for this amendment which would substitute a new wording in subsection (2) for the existing one. First, the existing wording seems somewhat confusing. At first glance it seems to be saying that section 63 (1) will not apply and then that it will.

There is a more important point of substance, however. As I have already mentioned, we say that section 63 (1) will not apply to cases arising under subsection (1) of this section, nevertheless a person will have to notify existing interests under section 63 (1) within ten days instead. However, section 63 (1) provides not only a time limit but also that the notification must be in writing. The present version of section 81 (1) would remove the requirement for the notification to be in writing in a case to which that subsection referred. The amendment would preserve this "notification in writing" requirement as well as, I hope, improving the clarity of the subsection.

This is really a drafting amendment. I accept that it is retaining the transitional provision of having a period of ten days. Earlier we were discussing the need for a somewhat similar provision in the early section or at least parity with those who hold voting shares in public limited companies for the disclosure provisions in the other part.

Amendment agreed to.
Section 81, as amended, agreed to.
SECTION 82.
Government amendment No. 92:
In page 74, between lines 26 and 27, to insert a new subsection as follows:
(3) Any reference in this Chapter to share capital or relevant share capital shall, in relation to a company, be deemed to be a reference to the issued share capital of a class carrying rights to vote in all circumstances at general meetings of the company, and references to shares shall be construed accordingly.

Let me explain to the House, to keep ourselves on track, we are starting on Chapter 4 of the Bill which deals with companies other than public limited companies. We are talking here about non-directors in non-public limited companies. This is where you start into the court procedure for getting information.

The purpose of amendment No. 92 is to make it clear what the scope of the disclosure of orders made under Chapter 4 is. The intention is that the scope of an order and, indeed, of the whole chapter should in so far as shares are concerned be confined to relevant shares, that is shares carrying full, unrestricted voting rights. This is the approach we adopt in Chapter 3 of this Part in relation to public limited companies as Senators will recall.

The reason for this limitation in Chapter 4 also is that whatever classes of shares a private company choose to have are essentially their own affair, and all that needs to concern the court or the applicant for a disclosure order is the identity of those who hold shares with voting rights, that is, those who exercise the real control and influence over the affairs of that company. The problem at present is that the references throughout the chapter are not consistent. In some cases, for example, section 83 (7) and section 85 (1), the reference is to relevant share capital while other sections simply refer to share capital. While it could be argued that referring to relevant share capital in sections 83 (7) and 85 (1) (a) is enough to ensure that the scope of Chapter 4 is limited to relevant shares, it is probably worthwhile putting the matter beyond doubt.

The purpose and thrust of the chapter have been made clear by the Minister in introducing this amendment, but I want to clarify that what the Minister is proposing to make particularly clear by putting it in here at the start of the chapter is that the disclosure in this chapter relates only to the relevant share capital of the voting shares in a company and no other type of interest; we are specifying one type of interest.

Specifically voting shares.

Amendment agreed to.
Question proposed: "That section 82, as amended, stand part of the Bill."

The Minister spoke about disclosure orders in relation to the number of companies and has listed a number of companies. I am concerned about those under the Building Societies Act. Does that arise under this section or am I out of order or misinterpreting the Minister's indications here?

No, this Bill is so complicated that there is no such thing as being out of order on it. Every question is legitimate. The section excludes building societies when it provides at the start, "all bodies corporate incorporated in the State other than ..."

I would be concerned about the exclusion of building societies. I know every policy holder or mortgage holder is deemed to be a shareholder in a building society in theory, but in practice over the years we have seen grave disquiet over the manner in which building societies operate their business and the difficulty or otherwise of the normal shareholder getting on to the board of a building society. Would the Minister care to comment on whether the building societies in regard to the Companies (No. 2) Bill are too loosely termed under the building society legislation which is in the Department of the Environment jurisdiction? If so, can he do something to give each mortgage holder or policy holder in a building society an opportunity to have a greater say in the running of a building society and in the operations of its management?

I would be sorely tempted, were it not for the fact that we are coming up to four hours of this, to get into that debate with the Senator but I do not think I should. Firstly, this Bill is trying to do a great deal. I do not think it should try to sort out shareholding structures of building societies which are very complicated institutions and if there are to be any changes in that area ideally it should be in building society regulations or under building society legislation. In other words, we have concluded in bringing forward this Bill that it would not make sense to try to do anything other than deal with the normal company. If we tried to deal with building societies in a Bill like this, we would become totally confused. In other words, building societies should be dealt with separately under building society legislation. That is why I have excluded it here.

What means of disclosure have we at our disposal as Members of the Oireachtas or general taxpayers at the moment regarding the affairs of building societies under the building societies regulations? Are we satisfied that these are operable under the building societies regulations?

You have the wrong Minister for that because this is in the area of the Departments of the Environment and Finance. There are a number of regulatory authorities dealing with building societies and all financial institutions. It is just not in our area. The Central Bank has some role in these things and there is a register of friendly societies and so on. There is a regime there to deal with the control and the future of building societies. That is not something I would like to get into tonight.

Having sat here for the best part of an hour I feel qualified to stand up at this stage. I would like some clarification because of a variety of interests. Section 82, (1) (d) of the Bill reads:

any body corporate which is prohibited by statute or otherwise from making any distribution of its income or property among its members...

That seems to incorporate a considerable area of charitable organisations, voluntary organisations and, I suspect, religious communities; I am not quite sure. Could the Minister elaborate a little on the extent of the application of that because questions about charities, in particular, often arise?

The Senator is quite correct. The intention is to exempt institutions, mainly charities, who would not be distributing their income among their members. That phrase is used because distribution of income among members is a sign that they are a company, as it were. The intention is to exclude charities and such like. Before we finish the Bill, I will, if I can, give the Senator a list of what we exempt. That is the clear intention of it.

This Chapter, in relation to disclosure orders on which you can apply to the court if you have reason, defines the companies it applies to by excluding certain companies. It might be helpful if the Minister could say what companies are included in a general sense.

In a general sense, you are talking about your private limited company which is by far and away the vast majority of companies.

Trading or——

Anything. The main company is the private limited company incorporated under the 1963 Act. Other statutory companies will perhaps be incorporated by guarantee, for example statutory companies like some of the major ones which would have their own Act of the Oireachtas setting them up, unlimited companies. The list would be roughly the same length.

It is just to clarify.

Mainly the private limited company is the bulk of it.

Question put and agreed to.
SECTION 83.
Government amendment No. 93:
In page 74, lines 38 and 39, to delete "not later than a date specified in the order".

This is a drafting problem. While the idea of a date by which a disclosure order must be complied with is contained in subsection (1) (a) of this section, we have not inserted a similar form of words in paragraphs (b) or (c). However, rather than insert the same words in these two paragraphs, a more suitable course would probably be to delete them altogether from the subsection. This is on the basis of specifying a date by which information must be given but would be more suitably left to the rules and practices of the court.

Amendment agreed to.
Government amendment No. 94:
In page 75, line 15, to delete "is satisfied", and substitue "is of the opinion".

Again, this is a drafting problem. Requiring the court under section 83 (5) (b) (i) to satisfy itself that the financial interests of an applicant in a disclosure order would be prejudiced by the non-disclosure of interest in shares in the company concerned is asking too much of the court as it is effectively a burden of proof that would be too difficult for it to discharge. The reasoning here is that, in many cases, the court could not be satisfied that prejudice would result from non-disclosure until the disclosure has taken place because the existence or non-existence of prejudice would become apparent only after the information sought was disclosed under the order. This would put the court in a very difficult position indeed. The wording of the amendment would reduce the difficulties of the court in this regard by requiring it merely to take a view about the possible prejudice of the applicant by non-disclosure rather than requiring the court to satisfy itself about likely prejudice. Overall the amendment is simply intended to help make the disclosure regime more workable and practical.

The Minister may be not surprised but pleased to know that I support that amendment. To require the court to have a standard of being satisfied would be too much of a burden to make the section effective for the reasons clearly outlined by the Minister.

Amendment agreed to.

I move amendment No. 95:

In page 75, subsection (5) (b), lines 19 and 20, to delete subparagraph (ii).

The amendment is quite clear. In adjudicating as to whether a disclosure order may be made, the court is required, in the light of the Minister's opinion, to be of the opinion: (i) that the financial interest of the applicant is or will be prejudiced by the non-disclosure of any interest in the shares or debentures of the company; and (2) the application is not made in contemplation or in furtherance of a trade dispute. What I find most extraordinary about this is that a reference to a trade dispute is inserted in the middle of a large and complex Companies Bill which is long overdue. The various huge and substantial documents about it which I have received and have endeavoured to read all agree at least that it is badly needed and well intentioned.

What is so threatening to a company that they could use the argument that somebody might be contemplating a trade dispute? I am fascinated by the fact that the person who has a financial interest in a company may apply for a disclosure order, but an employee who I suspect under subsection (6) probably does not have a financial interest according to the law but quite clearly to the ordinary layperson has a fundamental financial interest, that is his job in a company, is precluded from seeking financial information about who controls the company, simply because the court could form the opinion that the application is made in contemplation or furtherance of a trade dispute. It seems to me that somebody somewhere got a notion that we could not let these nasty trade unions do this sort of thing and therefore we must prevent it.

I do not think disclosure orders of the kind contemplated under these sections would be sought frequently. Unfortunately, the trade union movement perhaps is not as good as it should be at assembling the information that legally could be availed of. The logic behind that subsection excapes me. I cannot see what fundamental interest of a company would be threatened by its employees who are furthering a trade dispute trying to find out who controls the company. Secondly, why the absolutely unprovable assertion that somebody was contemplating a trade dispute?

Given the ups and down of Irish industrial relations, I am not permitted to mention names but one large supermarket who have an appalling level of industrial relations could perpetually argue that some of their employees were contemplating an industrial dispute because they have such a bad record of industrial relations. They could say effectively that employees could not at any stage seek a disclosure order about who had an interest in the company simply because they were "contemplating" an industrial dispute. There might be — although I do not accept it — an argument for not disclosing information where the application is in furtherance of a trade dispute.

To put in something as vague as "in contemplation of a trade dispute seems to me to be effectively loading the dice completely against people who have a very fundamental interest in the future, structure and ownership of the company, that is, the employees. I will come back to that when we are dealing with the section because I think subsection (6) deserves some elaboration from the Minister as to what precisely all these interesting topics mean.

Senator O'Toole is here so no doubt he will elaborate on what I have just said. I simply move the amendment on the grounds that it seems to me to be invidious to pick out one specific area of activity and exclude that for reasons which perhaps the Minister can explain to us.

Progress reported; Committee to sit again.

When may we expect the debate to be resumed?

I should like to know, too, when it is proposed to resume the debate on the Bill.

As soon as possible.

Sitting suspended at 6.30 p.m. and resumed at 7 p.m.
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