I understand we reported progress on amendment No. 130 to section 94 of the Companies (No. 2) Bill, 1987. I am not too sure whether the Minister was speaking at the point at which we decided to break it?
Companies (No. 2) Bill, 1987: Committee Stage (Resumed).
Debate resumed on Government amendment No. 130:
In page 83, before section 94, but in Part V of the Bill, to insert a new section as follows:—
"99. — (1) In this section, ‘authorised person' means a person authorised in writing by a relevant authority of a recognised stock exchange and approved by the Minister for the purposes of this Part.
(2) For the purpose of obtaining any information necessary for the exercise by a relevant authority of such exchange of the function referred to in section 98, an authorised person may, on production of his authorisation if so required, require any person whom he or such relevant authority has reasonable cause to believe to have dealt in securities, or to have any information about such dealings, to give the authorised person any information which he may reasonably require in regard to —
(a) the securities concerned,
(b) the company which issued the securities,
(c) his dealings in such securities, or
(d) any other information the authorised person reasonably requires in relation to such securities or such dealings,
and give him such access to and facilities for inspecting and taking copies of any documents relating to the matter as he reasonably requires.
(3) Every document purporting to be a warrant or authorisation and to be signed or authenticated by or on behalf of a relevant authority shall be received in evidence and shall be deemed to be such warrant or authorisation without further proof until the contrary is shown.
(4) An authorised person, or any person on whom he has made a requirement under this section, may apply to the court for a declaration under this section.
(5) The court, having heard such evidence as may be adduced and any representations that may be made by the authorised person and a person referred to in subsection (4), may at its discretion declare—
(a) that the exigencies of the common good do not warrant the exercise by the authorised person of the powers conferred on him by this section, or
(b) that the exigencies of the common good do so warrant.
(6) Where the court makes a declaration under subsection (5) (a), the authorised person shall, as soon as may be, withdraw the relevant requirement under this section.
(7) Where the court makes a declaration under subsection (5) (b), the person on whom the requirement was imposed shall, as soon as may be, furnish the required information to the authorised person.
(8) Where, in contravention of subsection (7), a person refuses, or fails within a reasonable time, to comply with a requirement of an authorised person, the authorised person may certify the refusal under his hand to the court, and the court may, after hearing any statement which may be offered in defence, punish the offender in like manner as if he had been guilty of contempt of court.".
I was not. I had explained the meaning of amendment No. 130 and a number of questions were being put to us by Senator Robinson when we finished yesterday. That is my understanding.
Senator Ross had also put some questions about authorised persons. Perhaps I will deal with those very briefly. Amendment No. 130 relates to the question of authorised persons, defining authorised persons and how they may be appointed. Senator Ross asked me to ensure that these people will be totally independent of the stock exchange and independent of the company concerned. I had explained to Senator Ross that the Bill is quite clear that the person must be approved by the Minister.
Just to refresh Senators' memories, what is involved is that the Stock Exchange, if it has reason to be suspicious about a deal, will appoint what is called an authorised person and will appoint that person in writing. In other words, it will formally lay out the terms and conditions of the appointment of the authorised person. That authorised person will investigate the deal concerned and will then decide to report back to the Stock Exchange on their findings.
Senators were rightly putting the point that if the Stock Exchange is going to appoint an authorised person to investigate a deal, it is important that that person should be independent and be seen to be independent. I am happy that is dealt with by the section in the Bill which says that the person has to be approved by the Minister. If the person is approved by the Minister, we can take it that the Minister of the day will be looking at the independence of that person to ensure that person is not just there to avoid questions being asked.
Another question was raised about the ability of the authorised person to go to court, and in what circumstances an authorised person might go to court for a declaration. It was Senator Robinson who asked me these questions. She asked me in what circumstances would an authorised person apply to the court. Is it if a person refused to co-operate? That actually is the case. The authorised person is there to investigate. If the authorised person's attempts to get information are frustrated, he or she will be able to seek a declaration from the courts that the information he or she was seeking should be provided. My reply to the question is that I am happy that an authorised person will be independent because the Minister has to approve such an appointment. We have built in an additional safeguard, that is, that the authorised person or any person or company being investigated may go to the court, if they feel they are being frustrated by the blocking of information.
Senator Robinson asked me if it was necessary for the Minister to have statutory powers to describe the conditions under which the authorised officer may be employed. The Senator's point may be met by the proposed amendment No. 132 which will give the Minister power to make regulations. I am happy in any case that, because of the fact that the authorised person has to be approved by the Minister, that is a safeguard which will ensure the independence of the authorised person to investigate any suspicious dealing.
Amendment agreed to.
Government amendment No. 131:
In page 83, before section 94, but in Part V of the Bill, to insert a new section as follows:—
"100. — An annual report shall be presented to the Minister on behalf of every recognised stock exchange on the exercise of the functions of a relevant authority of the exchange concerned under this Part and, in particular, the report shall include —
(a) the number of written complaints received suggesting possible contraventions of this Part,
(b) the number of reports made to the Director of Public Prosecutions under this Part,
(c) the number of instances in which, following the exercise of powers by authorised persons under this Part, reports were not made to the Director of Public Prosecutions, and
(d) such other information as may be prescribed.".
This involves the Stock Exchange in making an annual report to the Minister. It is a new section 100. I want to tell Senators that this is the seventh of the new sections I am proposing to include in Part V. It is largely self-explanatory, but I will just say a few words about it.
The section recognises the fact that we are devolving certain powers and functions on the Stock Exchange under the previous two new sections. In a sense, a kind of counterbalance is required. This new section will therefore require the exchange to submit an annual report to the Minister containing certain information in regard to the discharge by the Stock Exchange of its functions under this Part. This should not alone nail down the magnitude of the problem but it should also act as a kind of a check to make sure the exchange carries out its new functions diligently and effectively. I am very keen that the exchange should take this very seriously. The annual report will enable the Minister to be aware of the scale of the problem and also any difficulties which are faced by the exchange in implementing its powers.
Under paragraph (d) the Minister will be able to prescribe additional information which, in the light of experience gained in the operation of this scheme, he considers should be included in such annual reports. This will also permit other corrective action to be taken. For instance, by enacting supplementary regulations under the next new sections or, indeed, over time as the annual reports are studied by Ministers, the need may even arise for amendments to legislation but that will become obvious as the annual reports are made to the Minister.
Amendment agreed to.
Government amendment No. 132:
In page 83, before section 94, but in Part V of the Bill, to insert a new section as follows:—
"101. — (1) Where the Minister considers it necessary or expedient to do so for the proper and effective administration of sections 98 and 99, he may make such regulations as he thinks appropriate in relation to—
(a) the powers of authorised persons, or
(b) the matters in respect of which, or the persons from whom, authorised persons may require information under this Part.
(2) Every regulation made by the Minister under this section shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the regulation is passed by either House within the next 21 days on which that House has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.".
This amendment allows the Minister to make regulations in connection with authorised persons. This is the final new section which I am proposing to include in Part V. It is largely self-explanatory.
As we are breaking new ground in introducing a novel function for the Stock Exchange we cannot be sure that the procedures we are proposing will cover all the cases which should be covered or as effectively as they should be. This section, therefore, will allow the Minister and the exchange to learn from experience and adapt the procedures we are laying down here in the light of experience of operating the new system. In the section we have just agreed we have been laying down procedures for an annual report to be made to the Minister. That is very important because when the Minister gets the annual report and sees what the Stock Exchange has been doing in this area for the previous 12 months, the Minister will then be able to decide whether any new regulations are needed to improve or clarify the powers of the authorised person, or the manner in respect of which the authorised person may require information from the company or the person being investigated. This is part of a number of amendments. Senators will remember that yesterday we dealt with the penalties on insider trading which were £200,000 maximum or a ten year prison sentence. With those very severe penalties, it is important that there be some safeguards on both sides. One of the safeguards we have built in here is that an annual report should be made which will lay out the details of the number of cases investigated, how many cases were investigated and not proceeded with, and how many prosecutions were taken etc.
This section will allow the Minister to amend the regulations covering what the authorised person may do. That is very important, particularly with such stiff penalties. I am very concerned that we get a balance because the penalties are quite severe.
The fact that an annual report shall be presented to the Minister is very good. However, is the frequency of the annual report sufficient? Take the case of insolvency problems that cannot be effectively dealt with by the end of the year but could be dealt with in a report in the middle of the year, if there was a half yearly report.
That issue was dealt with in the previous amendment. I will allow it.
It was mentioned by the Minister.
That is a fair point. One could argue about the time scale but in practical terms, as there is so much paper work involved in this, it will be seen that many of our State companies that are supposed to give us an annual report, run many months behind. It seems to take them all their time to get the annual report out through the Auditor General and published. One of the regrets I have always had in regard to State companies is that they have not been able to get their accounts out quickly. Some of them are very good but some of them are falling seriously behind and they are not getting their company accounts out as quickly as a company in the Stock Exchange would get its accounts out. With the realisation of what actually happens in the market-place in terms of producing accounts and facts and figures, a yearly report is enough.
To refresh our minds on this, the annual report would include the number of written complaints received suggesting possible contraventions of this part of the Act, the number of reports made to the Director of Public Prosecutions under the part, the number of incidents in which following the exercise of powers by authorised person reports were not made to the Director of Public Prosecutions, and such other information as may be prescribed. I do not want to be too specific on this but I could not envisage a huge number of prosecutions and therefore if you get the information on an annual basis it will be enough to plan ahead. If we find a need for it later on, we can talk about a twice-yearly report. We want to keep the Minister also at arm's length. I do not want the Minister to be looking down their throat every few months. If we are going to give them the job to do and put in heavy penalties, we should let them get on and do it and check them on an annual basis.
I accept the point. My concern was where there might be companies availing of limited liability that do not deserve it. They have not earned it by their conduct, they have got away with it.
I welcome the amendment. I am surprised that such an important institution of State does not prepare some form of annual report. When you consider that all the companies listed on the Stock Exchange prepare a report on the financial and other aspects of their business, it is right that the Minister receives an annual report. I accept there can be problems with a six monthly report, but it is right that the Minister should be asking them for an annual report.
Amendment agreed to.
Sections 94 to 97, inclusive, agreed to.
I want to intervene to say that if the Seanad agrees there will probably be Government amendments to some of these sections. We are not in a position to bring them forward at this stage. I have undertaken to study carefully many submissions relating to sections beyond those which have just been passed. With the permission of the Seanad, I would prefer to come back with some amendments to those sections at this stage of the Bill. I am not in a position to go on with the Bill.
Which section are we on?
With the permission of the Seanad, I would like to stop, having passed section 97.
That is acceptable to us. The Bill has taken an enormously long time. It is very complicated and difficult and an enormous amount of work has gone into it. It is improving all the time. Would the Minister give us an indication of the timetable for the Bill in the next few weeks?
I will just reiterate what the Taoiseach has said in the Dáil, which is that this Bill is a priority and all the resources available to me are being put into it. We will move it as quickly as possible. I can assure the Senator that there is enormous pressure both from Government and from the Seanad to get this Bill moving. I will have it back here as quickly as I can. I also want to try to give Senators as much notice of amendments as I can. I could rush in a few amendments in the next few hours but I do not want to do that. That would be unfair to the Bill.
I agree with the Minister. If it is possible for the Minister to give us notice of the amendments earlier than we are getting them, we would have the benefit of hearing the views of other interested groups in relation to the important sections we are coming up with, particularly in relation to solvency and the winding up of a business. I would like to be very much aware of the Government's intentions before I come in here the next day.
I can give an undertaking that we will give as much notice as possible. Sometimes it is not that easy, because there are areas which one should amend which one only spots very close to the line. However, that is a practical difficulty. We will certainly give as much notice as we possibly can. I want to explain to Senators that one of the reasons for the logjam in the Bill was the decision taken to criminalise insider trading, which was not taken originally in the Bill. This was a civil remedy.
The Seanad has been criticised for holding up this Bill. As Cathaoireleach, I would appreciate if you would comment on the delay?
I should point out first that this Bill has been around for many years and did not move anywhere until 12 months ago. In the past 12 months it has moved dramatically and it is now moving at a very solid pace. The work which is being done is very good. We are getting good legislation through. The officials are working flat-out on the Bill. I can assure the House of that.
The reality is that a decision was taken to criminalise insider trading which involved a whole new section of the Bill. This is, arguably, the longest, most complicated, most difficult legislation that will come before this House for the next decade. It is important that we get it right. The decision to criminalise insider trading meant, in effect, the writing of a large portion of a Bill. That decision was taken some two or three months ago and since then the Department have been involved in writing the legislation.
I am delighted that the Cathaoirleach raised the point because I was about to raise it. The Taoiseach said in the Dáil that the Bill was delayed in the Seanad. That was grossly unfair and I think the Minister should accept the fact that it was unfair. Everybody accepts that this is complicated legislation. Somebody said it took five or six years for the previous companies legislation to get through the Oireachtas. There is no doubt about the work that has gone into the Bill. But we in this House feel that it was unfair of the Leader of the other House to say that this Bill was delayed in the Seanad, when it was actually being delayed in the Minister's Department for extremely good reasons. Nobody is arguing about the reasons. We welcomed it. Somebody spoke in favour of the criminalisation of insider trading. There is no doubt that that is a positive, progressive thing to do. It was unfair that this House should be lumped with a difficulty which is not of its making.
The level of annoyance about the lack of progress in the Bill has been a problem of long gaps between dealing with it. It would be a far more efficient method of dealing with this, if we were to take two or three hours a week on this Bill and do a number of sections, rather than trying to finish it in a day. I would prefer the Minister to say that the next time we meet we will take sections 93 to 120, that we will do that within the next fortnight or whatever it happens to be, and that we will circulate the amendments beforehand. So we will know, coming in on that day, what sections will be dealt with and that they will be dealt with properly.
I would like to compliment both the Department and the Minister on the manner in which they are dealing with this Bill. The Minister has been absolutely aware of the problems that have been raised by many different groups and he has listened to argument and accepted amendments. It is a copybook exercise in how legislation and the legislative process should work. Therefore, I want to make it clear that I am not standing in a critical manner, I am just putting forward a suggestion that would allow this legislation to get the fullest possible consideration. Therefore, I appeal to the Minister to consider that the next time we meet we will take a set number of sections, and we will have had the amendments, as Senator Hogan suggested, in good time. Then we can deal with it in that way.
I concur totally with the remarks of Senator O'Toole. I am not an expert on this. I know the Minister wants to get the legislation right. In order that we have the opportunity to assist the Minister I appeal to him to note that the normal practice of Government amendments arriving the day before the legislation comes into the House does not give adequate time for people to give mature consideration to and to reflect on the amendments being proposed. Perhaps we could be given the amendments on the Friday prior to the Seanad sitting on the following Wednesday. This would be more appropriate in order to give due consideration to the many issues that are about to be raised, as well as the issues that have been raised.
This is the most comprehensive legislation to come before this House for many years. It is an update of the 1963 Act which was based on the UK Act, 1948. We are endeavouring to update 40 years of company law.
I compliment the Minister on his approach to this Bill. He has taken on amendments from all parties and he has given them careful consideration. Having sat through all of the debate on this Companies Bill so far, I believe the legislation has been greatly improved since the Bill first came into this House. The time spent in the Seanad debating this legislation will be time saved in the Dáil.
Businessmen generally recognise the need for this legislation and they are anxious that it should be concluded quickly. But we are also very anxious that when it is finalised it should be good legislation. I am confident that will happen.
Before we adjourn on this Bill I would like to compliment the press coverage of this issue for the last two days. The Irish Times, The Cork Examiner and RTE have really reflected the importance of this legislation. It is important that this work should get detailed consideration by the public and that the public should know what is going on. We all have different viewpoints on it. The previous speaker spoke from the viewpoint of the business person. I would speak from the point of view of the worker, but we all have a vested interest in proper responsible legislation. I thank the media for their interest in it. It has been very positive. Apart from projecting the image of this House, it has also shown the complexity of the legislation.
If the Seanad feels that it would like to do some work on this Bill, I could make one suggestion. First, I should like to comment on some of the things said. In fairness, the Taoiseach said in the Dáil that the Bill was with the Seanad. I do not recall him saying that it was delayed by the Seanad, but the Official Report will show that.
I thank Senator O'Toole for his compliments which I value very much. Senator Hogan raised the point regarding the time to study the amendments. We will certainly try to give as much time as possible.
The Government may have some amendments to the sections as they are laid out in the Bill, (1), when we get time to consider some public comments on them, (2), to restudy some of the submissions and, (3), to take on board some comments made during this debate already on the general Companies Bill which may refer to later sections. We had intended to take all of those on board and then, if necessary, to introduce Government amendments, giving the Senators time to submit their amendments. There is one other way we could do this, that is to go ahead and debate the section in the absence of the amendments. That is not a course I would normally propose to Senators, unless they felt they really needed to. We could take on board the points made and come back with amendments but I do not think that is the way to do it.
Progress reported; Committee to sit again.
Sitting suspended at 12.35 p.m. and resumed at 2.00 p.m.