Seanad Éireann debate -
Tuesday, 5 Jul 1994

Vol. 140 No. 19

Investment Limited Partnerships Bill, 1994: Second Stage.

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

Minister of State at the Department of Enterprise and Employment (Mr. S. Brennan)

This Bill is divided into seven parts. Part I refers to preliminary matters, as is usual; Part II deals with the constitution of an investment limited partnership; Part III relates to its formation; Part IV concerns the administration of an investment limited partnership; Part V outlines the powers of the Central Bank in this area; Part VI deals with the dissolution of an investment partnership and the circumstances in which this may happen. Part V outlines the powers of the Central Bank in this area; Part VI deals with the dissolution of an investment limited partnership and the circumstances in which that may happen; and Part VII deals with miscellaneous matters.

The object of this innovative legislation is to provide a new mechanism called an investment limited partnership, ILP, for investors to come together with the aim of investment in property, bonds, securities, etc. The purpose of the Bill is to add investment limited partnerships to the number of collective investment mechanisms available in the IFSC and the Bill, together with this year's amendments to the 1989 Finance Act provisions, provides that addition to the business of funds management carried out in the IFSC.

This Bill is of general application and it would be possible to have a domestic investment limited partnership with resident limited partners. However, such a combination of partnership would only qualify for the tax treatment at the usual domestic rates.

The Bill provides for four principal participants in the existence of an investment limited partnership — general partners, limited partners, custodians and the Central Bank. "General partners" might be termed as directors or management under the Companies Act. They assume unlimited liability for the debts of an investment limited partnership should it fail. "Limited partners" might best be termed, in corporate parlance, as shareholders or unit holders. Their liability, in general, only relates to the amount that they contribute to the investment limited partnership. "The custodian", or trustee in other legislation, is the person in whom the assets of the investment limited partnership are entrusted for safe keeping.

The authorised investment limited partnership and both the general partner and the custodian will be subject to the supervision of the Central Bank. The bank is the authority which will, by the issue of a certificate of authorisation to a proposed general partner, create an investment limited partnership.

I would like, at this stage, to emphasise that an investment limited partnership can invest in "property". For the purposes of this Bill, property may be regarded as stocks, shares, bricks and mortar and securities.

The genesis of the Bill emanated from the IFSC/Paircéir working group in December 1993 which proposed that a further measure was required to entice certain aspects of the collective investment funds industry to use Ireland as a location for activity. They felt, and the Government subsequently agreed, that the use of the partnership concept, which is used particularly in North America, merited specific application to the needs of the financial services sector. The thinking behind the introduction of this proposal is that the greater the range of options available to that sector the greater the incentive for financial institutions to locate in Dublin or Shannon.

The Bill before the House addresses the principal limitations, in respect of international limited partners, which exist under current Irish law in respect of the international financial community. These limitations, evident in the 1907 Limited Partnership Act, relate to the number of partners, the involvement in the management of partnerships and the withdrawal of funds. I must stress that the 1907 Act is still in existence and will remain in existence after the passage of this legislation. Currently, that legislation has over 200 limited partnerships registered with the Companies Office.

It is envisaged that this Bill will be used primarily by investors located in the International Financial Services Centre. Over 260 projects generally have been approved to operate in the IFSC and 220 of those are being actively pursued at present. These active projects have committed to creating 2,800 new, incremental jobs in the next few years. Of these, in excess of 1,400 people are now employed in IFSC companies, and this figure does not include the number of indirect jobs created in the accounting, legal and general support services. Direct employment within the funds sector in the IFSC amounts to circa 600 people spread over 20 plus companies.

In promoting this legislation, the Government is aware that this Bill will enhance the attractiveness of the IFSC and create a further small number of jobs without costing the Irish taxpayer a penny. The activity will create not only a small number of jobs directly but also ancillary job opportunities in the legal, accountancy and services sector.

Another area of benefit to the economy will be the inflow of fees to the general partners, service providers and custodians. The activity will create not only a small number of jobs directly but also ancillary job opportunities in the legal, accountancy and services sectors.

Another area of benefit to the economy will be the inflow of fees to the general partners, service providers and custodians. That inflow of funds will attract a tax liability which will be to the net benefit of Ireland.

As indicated earlier, this Bill, while it can be used domestically, will generally be used by investors attracted to the International Financial Services Centre from other jurisdictions. The Central Bank will authorise the entities and the entities so authorised and located in the IFSC-SFADCo zones will attract certain advantages, but no more so than is currently available to other areas of the IFSC or SFADCo.

At this stage the principal market opportunities are in the US market. The investment limited partnership tool is designed to be a vehicle by which multiple investors can pool their capital resources and avail of the same professional asset management expertise while benefiting from economies of scale.

There is $14 billion in Irish domiciled funds with administration, fund accounting and custody located there, in over 160 funds and almost 400 sub-funds. A further $4 billion of funds domiciled elsewhere are also under administration in the IFSC. The growth in Irish domiciled funds in terms of value under administration has amounted to a remarkable 143 per cent during the calendar year 1993.

I would like to emphasis a number of matters in relation to the Bill under consideration which relates to investment limited partnerships. Section 44 of the Bill has the decided merit of requiring the Central Bank to provide an annual report on the operation of this legislation. That report will be laid before both Houses of the Oireachtas.

These entities will be subject to appropriate Central Bank regulation. This regulation will be appropriately balanced and will ensure that the Irish reputation in respect of supervision of entities, both within the IFSC and otherwise, remains at its current high standing.

I appreciate that Members will be concerned with regard to the end 1994 deadline for the IFSC. I understand the Minister for Finance, Deputy Ahern, is in contact, as necessary, with the European Commission regarding certification matters with the IFSC and the Shannon customs free airport zone. A joint review with the European Commission arranged some time ago has already begun in regard to the end 1994 approval date for service companies wishing to establish in the Shannon zone. The similar approval date for the IFSC will receive attention in that context also.

My colleague, the Minister for Finance, in his 1994 budget provided the tax application in respect of ILPs which exit for other collective funds vehicles in the IFSC-Shannon zone. I wish to stress that investment limited partnerships will not attract any additional tax benefit currently not available to collective funds vehicles located in the IFSC-Shannon zone.

Particular points which warrant consideration, are that the provision of this type of organisation relates to the number of jobs which can be created, income by means of fees charged which can be brought to Ireland and taxation generated, will have arisen at no cost to the Irish taxpayer.

From a marketing point of view the construction of the Bill is all embracing in that everything required by promoters and users of the legislation is set out within the one set of covers, thus not requiring references to copious other European directives or primary legislation. In effect, it is a logical extension of the one-stop-shop principle and should considerably help the marketing of the investment limited partnership vehicle to overseas users.

In commending this Bill to the Seanad, I wish to bring to the attention of the House a typographical error at page 34, line 5, which should read "1851". I understand that the correction can be made under Standing Order 100 of the Seanad by the Clerk, under the direction of the Cathaoirleach, and does not require to be made by way of formal amendment. I would request that the House accede to my request to have the necessary correction made.

I look forward to Members' contributions as a result of their study of the Bill.

An Cathaoirleach

As regards the last point made by the Minister, Standing Order 100 reads: "During the progress of a Bill corrections of a verbal or formal nature may at any time be made in the Bill by the Clerk under the direction of the Cathaoirleach." I will arrange for the necessary correction to be made. Is that agreed? Agreed.

Mr. Farrelly

I welcome the Minister to the House. I also welcome the Bill since the financial services centre will lose its designation at the end of 1994 and new companies will no longer be entitled to tax exemptions. Any measure that increases the ability to provide employment in the centre is welcome.

The delay in introducing the Bill has to be questioned. As the Minister said, it was to be introduced late last year. It is clearly being rushed at this stage which suggests that someone failed in the planning and introduction of the legislation. It will be a major task for the IDA and other agencies seeking to sell this measure to complete the necessary marketing and attract companies by the end of the year. This concern must be expressed.

This is a good occasion on which to raise the recent serious concern about the lack of regulation of investment intermediaries. Ireland has no system for regulating such operations. Those involved in the business can put a plate on the door of a building and operate without regulation. It is somewhat ironic that while this House is introducing legislation which requires people selling oranges and bananas on the streets to have tax clearance certificates, there is no system to regulate those who establish themselves as investment experts selling large scale investment products to a sometimes unsuspecting public. In the recent past we have even sold passports which is significantly different from selling bananas.

The newspapers recently reported two incidents where investment intermediaries who were fined and prevented from operating in the UK transferred their operations to Ireland. It would appear that they are operating similar businesses to those for which they were struck off in the UK. Some were gambling on movements in the stock exchange and such investments clearly offered no security to people who had entrusted their hard earned savings to the people running the schemes.

It would be extremely damaging to Ireland's reputation if such incidents became a regular feature of the activity of investment intermediaries here, particularly in the city of Dublin. Too many people overseas would be pleased to see the financial services centre in Ireland, which is attempting to develop a successful industry in this area, run aground and its reputation damaged. Some UK security regulatory boards have circulated notices warning about Irish based operators who are not to be favoured in handling savings.

Confidence is the key ingredient in successfully attracting investment. The onus is on the Government to move speedily to ensure the highest level of confidence in investment intermediaries operating in Ireland. We have to establish credible and effective regulations and we should take the opportunity presented by this Bill to do so. If steps have not already been taken in this area, something must be done because we are all aware of scams which have taken place both here and abroad.

I query the future of the financial services sector. Tax concessions in the financial services centre will cease at the end of the year and no further companies will be able to avail of them. I realise that investment limited partnerships under this Bill are unlikely to be seriously damaged by the loss of tax concessions. However, many companies involved in this type of business may have other investment activities which could be adversely affected by the tax changes. To what extent are the activities in the financial services centre tax dependent and vulnerable to changes in the tax regimes in other countries? More importantly from the point of view of developing the centre, has the Minister taken action to renegotiate the cessation of tax concessions with the European Commission?

It appears that we are only starting to develop the Financial Services Centre as a successful location for doing business. From the Minister's figures it appears that an additional 200 people have been employed in the past 12 months — a substantial increase on the employment level in the previous 12 months. Clearly the Financial Services Centre is in its infancy and the Minister has stated that over 200 companies are in negotiations with the IDA at present. We must ask ourselves if we have done enough up to the end of 1994 to capitalise on the opportunities and, if not, can we renegotiate and gain an extension of time for the concessions given to companies heretofore.

It is embarrassing that excessive rents have given rise to problems in the Financial Services Centre, apparently curtailing the relocation of companies which committed themselves to establishing in the centre. They have not moved in and I would be interested to learn how many companies who committed themselves to the centre have not located there at this stage and if that is because of the excessive rents. If the level of rents is the source of the problem, can a system of arbitration of rents be established? The Government must take action to ensure that the potential of the centre is not damaged by the apparent lack of competition in the provision of sites and rent charges.

Perhaps the Minister would give an insight into the area of vacant space in the centre and how close we are to meeting the projections for the building programme and occupancy rates. It is important that we know the facts because we are approaching the last six months of the scheme which provides the tax concessions and, if there is a problem, we should be looking to renegotiate, we need to know the figures.

The vulnerability of these operations to tax changes must be ever present in the minds of policy makers. Recent changes in the tax laws have damaged Irish companies. We need to get our act together and, if necessary, renegotiate the tax concessions with the Commission. Luxembourg is an impressive example to follow in this regard. They employ about 18,000 people in the financial management sector. Admittedly, Luxembourg is well ahead of us in experience and has established a network over a number of years. However, we would have advantages because of our traditional links with the US.

This Bill is particularly welcome in that we are getting an opportunity to land mobile investment management projects for Ireland. Increasingly, multinational companies seem to want to centralise the management of pension funds, other funds and share options. If they centralise all their multinational operations in one country clearly the location of the central management is highly mobile and, should we be able to offer the best package, we can land employment for Ireland and increase the numbers in the IFSC substantially.

This investment vehicle provides extraordinary concessions in that projects will not be liable for any of our taxes — capital gains tax, VAT and stamp duty. We need an assurance that such companies and partnerships cannot be used as offshore companies for purposes we would not like. It is heartening that the Central Bank regulations will apply but, effectively, without a great deal of debate, we are giving extraordinarily generous tax concessions to a certain type of investment vehicle. The House would need assurances that the vehicle would not use those concessions for purposes for which they are not intended.

In light of recent statements made by the Taoiseach about bank charges, etc., I hope something will be done to deal with the problems that many people have in that regard — especially small business people each of whom employs a few people. The charges imposed by the financial institutions are exorbitant and they are causing substantial long term hardship and action rather than words from the Government and the Minister for Finance would help. Regulations should be introduced by the Central Bank in negotiation with the financial institutions so that people will not be ripped off in the future. Many jobs are on the line due to the continuation and increase in the level of charges which, in real terms, are causing hardship for many companies. As a result, people who would otherwise be employed are unemployed.

I welcome the Bill.

Mr. Roche

Reading through the Bill this morning, it occurred to me that it is a particular example of legislation that should have been referred to a different type of legislative arrangement. It highlights the need for some form of committee system which would examine highly technical measures, such as this Bill.

As the Minister said, the purpose of the legislation is relatively simple and straightforward. It adds to the menu of investment formulae or devices available to the Irish financial services sector both in Dublin and at the centre in Shannon. To that extent, it is obviously welcome. The aim of the Bill is to effectively attract international funds into companies based in Ireland. The funds will be used for investment purposes and the revenues which will accrue to the Irish side will come from the management of those funds. It is an important adjunct to the menu of devices available at the International Financial Services Centre.

I agree with Senator Farrelly that the Bill raises a number of issues. All Members would agree that it is important to ensure that any new partnership set up under the terms of the Bill would, in all regards, be above board and clean. I am sure the Minister shares the priority of wishing to protect the good name and reputation of Ireland in general and of our financial services in particular. While it is important to put down a marker in that regard, we should not to conjure up problems which may not exist.

Senator Farrelly focused on the problem of financial intermediaries under EC legislation in the Treaty of Rome and the provisions relating to freedom to provide services, rights of establishment and freedom to move across borders. It seems to me that he was mistaken in trying to tie his concerns about this issue to this Bill. They are two entirely different matters without a direct or immediately evident relationship.

As the Minister said, the limited partnership device is one which has been well used in the United States and which has developed particularly there. In that regard, as a good deal of the funds which we will try to attract over the next few years into the financial services, to be used by companies based in that sector, are US based, the decision of the Government to move in this direction is prudent. The Bill is highly technical and its genesis was the report produced by Séamus Paircéir. He is a fine public servant who, unfortunately, was hit by turbulence arising from another investment decision by a State enterprise. The Paircéir report made it clear that movement in this particular direction would be one of a number of devices which Governments would have to consider if we were to put the full range of investment opportunities, which are available internationally, in place in the financial services sector.

The Government has acted prudently. It has tried to create between two covers user friendly legislation relating to a specific and highly technical area. The Minister could have used another method and made a series of amendments to other legislation dealing with partnerships in general but he was prudent to choose the device used in this Bill by putting a specific user or client oriented set of rules relating to a particular form of investment relationship into one piece of legislation.

Regarding the Irish financial services sector in general, one of our biggest problems whenever we discuss this area is our tendency to make prophecies of doom. We look at the time constraint at the end of this year and we tend — although it is not deliberate — to talk down the very real success of the IFSC. Hundreds of companies which operate in the financial services sector in this country would not be located here were it not for the International Financial Services Centre. Thousands of people are employed there and many thousands of the jobs are new or additional jobs. The centre has proven to be a remarkable success.

I visited the centre recently with an Oireachtas group and I was pleased to note that there are cranes on the site again and that building is taking place there. I share Senator Farrelly's and the public's concern about the almost monopolistic operations regarding office space in the centre. I would also share a concern that high rents would undermine the efforts of successive Governments to make the centre a successful operation. However, that is a short term problem which will be resolved in the longer term.

The Minister said that the main aim of the Bill is to create a new device to assist in creating an inflow of funds to be positively used by management companies in this country. The benefit to this country will be the creation of additional jobs. The Minister has been candid in this regard. He has pointed out that since this is a highly technical area, the number of additional jobs will not be great. However, the important element is not the jobs but the provision of a wider range of investment possibilities in financial services in this centre, a range which is comparable with that available in other countries. It guarantees the continued success of the centre. The other benefit will be the revenue from taxes which will attach to the fees. The fees on the levels of funds involved will be considerable as with the potential tax revenues.

This highly technical legislation is welcome. The Minister has made it clear that the necessary protections are provided in the Bill and in the financial services sector in general to guard against the type of problem rightly pointed out by Senator Farrelly. We have foreseen the likelihood of such problems and we have put protections in place.

I commend the Bill and the Minister.

Ms O'Sullivan

This is a technical and complicated Bill for people who are not involved in this sector. Our concept of the activities of a financial centre is somewhat abstract because a financial centre deals in money rather than in objects. It is probably quite difficult for many of us to comprehend the detail of it but the Bill, in essence, offers an additional option to investors which has the potential to bring money and jobs into the Irish economy. We should support this Bill.

It is important to offer options which investors are willing to consider. The Minister called it an extension of the concept of the one-stop-shop; people are given all the detail in one Bill and they can comprehend the intention and the content of what is being offered to them. The main source of funding is the US. It is relevant to talk about the US in the context of the Shannon section as well as the International Financial Services Centre in Dublin because for many years much of the investment in the Shannon region has been made by US based companies. The midwest has received much from that country, for which we are grateful. A good deal of money has been invested over the years and provided valuable jobs for many people in my part of the country. That continues, in the Shannon area and in the technological park close to the University of Limerick; the university has also received financial investment from the US. It is appropriate to continue to source whatever funds we can from the US but also from other parts of the world.

I welcome the Minister's announcement that there will be no cost to the taxpayer, there is all to gain from this move and nothing to lose. He also indicated that 2,800 new jobs are committed to the financial services sector. I take on board the concerns of Senators Farrelly and Roche but it is a substantial number of posts and we should encourage that investment to continue.

Although it is a detailed and complicated Bill, I am glad it encourages a level of transparency, including supervision by the Central Bank, the requirement to keep books and records and make them available to the bank. If it sees the need, the bank has the power to appoint inspectors to the various companies to ensure everything is above board and carried out according to the regulations.

The Bill also details the responsibilities of the different sectors of the companies involved, the obligations of the general partner, the custodian and the other levels of responsibility within these partnership companies. This transparency is essential to ensure everything is done according to the rules. It is also welcome that an annual report will be placed before both Houses of the Oireachtas, in line with the need to monitor and ensure public accountability.

The simplification of paperwork is important because it means people with substantial funds for investment will know the regulations. They do not have to look for EU directives and other legislation; everything is in the Bill. This will be an encouragement — often people are not aware of all the red tape and the regulations but that problem is dealt with in this Bill. Investors are, therefore, encouraged to put their money into Ireland, in the financial services sector, the Shannon free trade zone or elsewhere. The Minister indicated this Bill can apply to other parts of the country but normal tax payments would apply elsewhere.

We must encourage as much investment as possible to Ireland. Ours is not a rich economy; not many people in the indigenous sector have huge amounts of money to invest. We have all spoken in this House about the importance of strengthening and developing indigenous firms and encouraging Irish people with money to invest it. However, it is equally important to continue to encourage people outside to put funds into this country and, as a result, to bring jobs and money into the economy.

If the downward trend in the unemployment figures over the last six months continues, we should continue to make these legislative changes to facilitate investment. On that basis I welcome the Bill.

Mr. McGowan

I join other speakers in welcoming the Minister. I am enthusiastic about the Bill although I represent a part of the country which is far removed from the financial centres. Most people realise the financial services centre has been a success story, it is competing on the world stage. It has also done great work for the taxpayer — 10 per cent of all tax now collected comes from the financial services centre. That is important to everyone, whether they live in Donegal or in Dún Laoghaire. Like Senator Roche and other Members, I also visited the centre and was impressed with the air of prosperity and confidence there. We should support and encourage those involved in its promotion. Its establishment was timely and I shudder to think that we could be without that centre today.

The one-stop-shop, which the Minister described, is one aspect of the International Financial Services Centre which is of interest to me. I encourage such development at Government level because there is much duplication of effort in this country. For example, a developer in my county may approach the IDA, Forbairt, Teagasc offices, county enterprise partnership boards, county development teams, tourist boards, etc. for assistance. This area must be more focused and having listened to the Minister's speech, I am convinced that the Government is moving in this direction. I hope this does not stop at Shannon or at the International Financial Services Centre because there is a greater need for such development where jobs must be provided in rural areas. There must be direction, but not duplication and confusion and the buck must not be passed.

Unfortunately, in the establishment of local or regional organisations, there is an air of confusion about financing and direction, the relationship with central Government and the administration structure. I welcome the extension of the one-stop-shop and hope the Government sees fit to set up one in every county. We need a professional central service in every county so that a positive answer can be given to people who want to know about finance, training or the preparation of submissions for EC or local funding. We must remove the duplication which gives committed people the run-around. The Bill suggests the Government is moving in the right direction.

In the United States, many different offices were trying to do different things. I was glad the Taoiseach opened a one-stop-shop in New York last March. We all saw the need to tidy up our business, to adopt a new approach and to set up a more businesslike centre where people could get information on how to go about their business. I see the value of this Bill and am glad the Minister has emphasised the value of the one-stop-shop. This legislation is timely and I congratulate all those involved. Our best wishes go to those developing the financial centres and affairs of this country. I hope we can look forward to increased revenue from the activities at the International Financial Services Centre.

Minister of State at the Department of Enterprise and Employment (Mr. S. Brennan)

I thank the Senators for their welcome for this complex Bill. The phrase "financial engineering" comes to mind as a description of what is in this Bill. It is necessarily complex because the world of international finance today is complex. Having said that, the idea behind it can be put very simply. In the International Financial Services Centre at the moment there are a number of products on offer for would-be investors. An international player can go there and set up a captive insurance company, for example; a fund management, treasury management operation can be set up to manage the currencies of international firms. At the moment it is basically a centre of companies that manage international funds.

As Senator McGowan said, it needs to be said more often that what has happened here in the past few years is truly remarkable in Ireland. With skill and know-how and well educated, skilled personnel, we have won a reputation worldwide for being able to professionally manage funds. At present US $14 billion of funds are under administration at the International Financial Services Centre. They do not own that money but they manage its administration on a day to day basis. When I say "manage", I mean that the treasury manages it, it deals with the various hedges and other currency protection measures, it deals with reinsurance, it replaces the insurance already laid with insurance companies and it carries out the ordinary fund management. What is going on there is truly remarkable and I take this opportunity to note that.

Senator Farrelly asked about the regulation of investment intermediaries. Legislation is being planned to regulate intermediaries based on both EU directives to be implemented and the recommendation of the working group established under the aegis of the Irish Association of Investment Managers. The Senator is right to draw attention to this.

We have introduced legislation in a number of areas, for example, insurance. I was involved in introducing legislation some years ago to regulate insurance intermediaries but there are other intermediaries who are not now so regulated. For example, people who sell non-insurance investment type products like unit trusts, or UCITs, are not at present regulated but it is proposed to regulate them as soon as possible.

The Senator also asked about the end of 1994 status. I pointed out that the Minister for Finance is in contact with the European Commission regarding certification within the centre and in Shannon and that we are undertaking a joint review with the European Commission in this area. I am reluctant to say any more about that lest I give the wrong impression. The legal position is that the deadline occurs at the end of 1994. All I can and will say at this point is that the Minister for Finance is watching that situation very closely and is in touch with the Commission on what options are available to us. I want to pick my words carefully there lest any company misread that intention.

Senator Farrelly also asked about the progress of the centre and the rental situation. Considerable construction work is going on in the centre. Work on the sixth office building, known as Harbourmaster Three, is well under way and it is now almost 100 per cent pre-let. The next phase of the office development will entail the construction of buildings in the George's Dock section of the area, the marketing of which will be starting shortly. Some good progress has been made also on this issue and I am confident that, with further space becoming available, more IFSC companies will locate in the centre.

In addition to the office building programme which I mentioned, the refurbishment of one of the old warehouses was completed last month. The Dublin Exchange facility is now operating from that building. The first tenant of the Exchange, Finex — a division of the New York Cotton Exchange — commenced business there on 17 June. Finally, a licensed premises is being developed at the centre and residential units are now being marketed also. It is unusual for the Irish not to put the pub in first and the buildings afterwards, but at least we now have both. It could be called an investment in liquid engineering.

The Senator hinted at what was happening in the Consumer Credit Bill in regard to bank charges and so on. The Minister of State at the Department of Enterprise and Employment, Deputy O'Rourke, is currently briefing the Committee on Enterprise and Economic Strategy on that area and the Consumer Credit Bill, which will deal with the financial charges issue, is due very shortly.

I thank Senator Roche for drawing attention to the Paircéir report. I have arranged, under a request from the Dáil, to publish that report and since it has been formally laid before the Oireachtas it is available to every Member. It was from that committee that this new structure came about. The question of supervision was also mentioned. Section 44 lays down that the Central Bank shall carry out supervision in this area under the legislation. That is important. It is well versed in supervising financial companies and there is no difficulty with this one. It has been pointed out to me that section 44 does not specifically cover Central Bank supervision, but the Central Bank will be supervising these partnerships.

Attention has been drawn to the success of the centre. I thank Senator O'Sullivan for focusing on the fact that there are jobs here. There may not be as many as we would wish, but when you add them all up there are up to 1,400 people employed in the centre, and that is direct employment. There are also spin-off jobs for those in finance, accountancy, law, etc.

Senator McGowan drew attention to the fact that over 10 per cent of the corporation tax collected in the State now comes from this centre; this is remarkable. From Ireland's point of view what is happening in the International Financial Services Centre is all win, because profits made on the international funds managed in Ireland are subject only to 10 per cent taxation. If we did not have that regulation or the centre we would not have those funds and there would be no corporation tax from that area. Generally people realise that because I do not see any criticism of the taxation rate on international funds. It is widely accepted and I hope we can hold on to it for as long as possible. Overall, as Senator Roche put it, this is another item on the menu that the International Financial Services Centre have to sell to international funds who want to have their funds managed at this centre and in Shannon. They may set up these funds outside the centre but if they do they will not get the special tax rates. This means there is no loss to the economy in that case.

What does Ireland get from it? We get the 10 per cent corporation tax which is very substantial, we get highly skilled jobs and many spin-off jobs, a great deal of credibility and, increasingly important, we get the fees. The companies based here get fees for managing US$14 billion and those fees are Irish income. The subject matter of this Bill is necessarily complex in that you have a limited partner and a general partner. For example, the general partner is the same as directors in a company; the limited partner is the same as shareholders; there is a new animal there called the "custodian". The custodian is like a trustee so there is a balance of power between the three elements of the limited partnership, all of which are necessary for balance and a separation of powers with final responsibility at the end of the day for supervision resting with the Central Bank.

My thanks to Senators for their consideration of the legislation. Once we pass it and receive the necessary signatures, the International Financial Services Centre and SFADCo can go out and market the new product. I apologise to the Seanad for rushing this legislation. The reason is that those bodies have already targeted some business and want to get on with it over the summer.

It is useful legislation and will help the centre to grow. Proper supervision has been put in place and this legislation will further enhance our reputation as a financial services centre. I thank the Senators for their comments.

Question put and agreed to.

Agreed to take remaining Stages today.