Amendments Nos. 1, 2, 3, 5, 7, 9, 13, 16, 18, 19, 22, 24, 25, 26, 27 and 28 are cognate and may be discussed together. Is that agreed? Agreed.
Netting of Financial Contracts Bill, 1995: Committee and Final Stages.
The word "setoff" is used throughout the Bill as passed by the Dáil. However, while this usage is correct it is considered preferable to use the words "set off" throughout the Bill so as to better describe the process of setting debits and credits against each other and to conform with the description of this process in the Bankruptcy Act, 1988. This is merely a tidying up process.
Amendments No. 4 and No. 8 are related and may be discussed together. Is that agreed? Agreed.
Paragraph (b) of the definitions of netting and master netting agreements in section 1 are being amended so as to refer to "a guarantee" rather than "guarantees", since under the Interpretation Act, 1937, references to single items are construed as also meaning the plural unless otherwise stated.
Amendments Nos. 6 and 10 are related and may be discussed together.
The second issue that has arisen concerns money advanced to secure a guarantee. Subparagraphs (c) (2) (2) of the definition of netting and master netting agreements are amended so as to ensure that money advanced by a guarantor can be used for set off against the amount owing under a netting or master netting agreement. It was originally thought that the references at subparagraphs (c) (1) of each definition covered this point, but it has since been argued that money provided to secure the obligations of a guarantor under his or her net guarantee cannot be regarded as covered by the provision at (c) (1) which related to money advanced as security in respect of liabilities under a netting or master netting agreement. This argument has been accepted and an amendment made accordingly.
There is a printing error in amendment No. 11. The line reference should read "line 8" only. Amendment No. 12 is related and both may be discussed together.
Amendments Nos. 14, 15, 17, 20, 21 and 23 are related. Amendment No. 29 is consequential and all may be discussed together.
The Bill, as passed by Dáil Éireann on 7 July, was warmly welcomed by the Opposition. However, in the interim two substantive issues which require clarification have arisen. The first such issue is whether the intention of the Bill would ensure that guarantees given in support of a party to a netting agreement are legally enforceable and should be given effect by the Bill as passed. For example, if parties A and B enter a netting agreement and, for instance, A is a subsidiary of a major corporation and B is a bank, the corporation might guarantee that if A goes into liquidation, and under the netting agreement owes B money, it will pay the money owing. Bank B needs certainty that it can pursue A's corporate parent in respect of its guarantee. At present, under the terms of the Companies (Amendment) Act, 1990, which govern examinership, bank B would not be able to enforce the guarantees given on A's behalf for the period for which A remains in examinership. I accept that there may be some doubt about the enforceability of guarantees, accordingly the amendments to section 4 (1) (a) and (b) are designed to make clear that neither the examinership nor any other company law or bankruptcy rules will prevent the guarantee from being enforced.
I thank the Minister for responding as he did. I also thank him for taking the time and trouble to read into the record his response to the Consultancy Committee of the Accountancy Bodies of Ireland. That was very important because they raised certain issues.
My final point relates to a view shared by both myself and Senator Manning. It is a pity that, from time to time, important legislation must be introduced at short notice. I accept that the Minister had to introduce this legislation at this time. He was right to introduce it at short notice in order to get something on the Statute Book quickly. It certainly is a circumstance where something had to be done rapidly and one we can all endorse because the House should not be petrified from action when required. I thank the Minister for the comments he made in response to the individual items I raised.