I appreciate the Seanad Éireann facilitating the taking of two Bills relating to credit union activities this evening. The Credit Union Restructuring Board (Dissolution) Bill 2019 has already gone through the Dáil and it should complete its passage through the Oireachtas next week. This Bill is starting here and will have to go to the Dáil but we want to ensure it is completed before the end of this year, if possible.
This Bill was initially set out as the credit unions (miscellaneous provisions) Bill as the overwhelming majority of the Bill relates to credit unions. As there are two items of a financial nature included in the Bill, the title has been changed to the Finance (Miscellaneous Provisions) Bill 2020.
The three core objectives of the Bill are to amend the Credit Union Act 1997 to allow for general meetings to proceed that are prohibited under current health regulations, to amend the Fiscal Responsibility Act 2012 to allow for an increase from two to three in the number of terms that can be served by a member of the Irish Fiscal Advisory Council, and to amend the Credit Institutions (Stabilisation) Act 2010 to include the European Union as a facility lender that will allow the State to comply with certain provisions contained in the SURE loan agreement.
The Credit Union Act 1997 requires credit unions to have their annual general meetings for the financial year to 30 September 2020 completed by the end of January 2021. Under current public health guidelines, general meetings, including such annual general meetings, cannot proceed in practice. The changes being proposed in the Bill will allow greater flexibility to manage general meetings on a permanent basis and it is important that these changes are permissive in nature. In other words, we are permitting credit unions to have their meetings virtually but we are not requiring them to do it. It is a matter for each credit union and the members of the credit union to set their own rules on the holding of such meetings virtually. They are not required to do it but there is currently a legal prohibition on them doing it. We are removing that in order to give credit unions who want to do it the facility to do so. Those credit unions that do not wish to hold virtual meetings are not obliged to do it. It is as simple as that.
Some of these amendments will be temporary and relate directly to changes required to enable general meetings to proceed during the Covid-19 pandemic. In particular, the board of a credit union may decide on the form of a general meeting, similar to the provisions in the Companies (Miscellaneous Provisions) (Covid-19) Act 2020, notwithstanding the rules of the credit union. Should these changes not be made and the public health measures continue to restrict large physical gatherings, the Central Bank has the power, in limited circumstances, to direct a credit union to postpone the holding of an annual general meeting for a period not exceeding nine months where it is necessary to do so.
The Central Bank has an identical power to defer special general meetings of credit unions. Boards could also issue information in written form to members and-or publish financial updates on their websites. However, these outcomes would be suboptimal as members would not be able to express their right to vote and-or call the board to account.
The main amendments proposed in the legislation are: to allow the option of virtual general meetings which provide access for remote attendance and the option of electronic voting; to provide credit unions with the option of availing of proxy voting for a temporary interim period to allow for the directors to determine the form of the general meeting, notwithstanding the credit union rules; to allow for AGMs related to the year ending in September 2020 to be delayed to April 2021 as opposed to the normal January 2021; to allow for the interim period to be extended by order beyond April, if necessary, depending on Covid etc.; to allow the Minister for Finance to make further regulations relating to general meetings to be held by the use of electronic communications technology; and to allow the directors of a credit union, in exceptional circumstances, to cancel the holding of a general meeting at any time prior to the holding of the meeting.
While the Bill introduced today is similar in some respects to the Companies (Miscellaneous Provisions) (Covid-19) Act 2020, it takes into account the different nature of credit unions and makes some permanent changes. For example, the Bill provides for credit unions to hold partly or fully virtual meetings on a permanent basis, a feature we hope will encourage greater member engagement at general meetings in the future.
The Bill will amend the Schedule to the Fiscal Responsibility Act 2012 to increase the maximum number of consecutive terms which a member of the Irish Fiscal Advisory Council may serve from two to three terms, before becoming ineligible for reappointment. This amendment is proposed to address exceptional continuity challenges which the council is currently facing and to provide for greater flexibility for future appointments. Members of the council are required to possess a certain skill set and a highly technical level of expertise. With members currently restricted to serving just two consecutive terms of office, the pool of candidates available for every new open competitive process is a particularly narrow one and an ongoing challenge.
The five-member council is likely to have three vacancies by the end of the year. In addition, the two members who will remain in situ are relatively new appointees. The continuity challenges which face the council constitute exceptional circumstances and require the proposed change to the Fiscal Responsibility Act 2012. Once passed, the change will help to address this considerable continuity challenge and allow for existing members to serve a third consecutive term.
The Bill will amend section 67 of the Credit Institutions (Stabilisation) Act 2010 to include the European Union as a facility lender, which will allow the State to comply with certain provisions contained in the EU support to mitigate unemployment risks in an emergency, SURE, loan agreement. Section 67(7) of the Credit Institutions (Stabilisation) Act sets out those institutions which are facility lenders to the State. While the definition of "facility lender" currently includes the European Financial Stability Facility and European Financial Stabilisation Mechanism, which are part of the European Union, these references would not cover the European Union as lender under the SURE regulation and loan agreement. The technical amendment to section 67(7) extends the definition of "facility lender" to include the European Union as lender to the Irish State.
As Senators will be aware, the Government has applied for a loan of €2.474 billion under the EU's SURE instrument. This loan will cover eligible expenditure on short-term work schemes, that is, the majority of the expenditure on the temporary wage subsidy scheme, which has already been spent to date. Essentially, we want to draw down a loan to cover the payments to date under that EU arrangement. At the moment there is no provision in Irish law to allow the State to draw down a loan directly from the European Union. While we can draw down from other European institutions, we cannot complete the agreement until we change our legislation to borrow directly from the European Union for the first time ever. It is a new initiative as part of the EU's response to Covid-19 across the Union.
I look forward to hearing the views of the Senators in the course of the debate on the Bill, which in summary, will allow credit unions to hold virtual AGMs associated with the financial year ending in September 2020, will allow each credit union to decide on the appropriate mechanism for voting at a general meeting, and will extend the time in which AGMs can be held from January 2021 to the end of April 2021. The Bill will also amend the Fiscal Responsibility Act 2012 to allow for an increase in the number of consecutive terms that can be served by a member of the Irish Fiscal Advisory Council. It will also amend the Credit Institutions (Stabilisation) Act 2010 to include the European Union as a facility lender, which will allow the State to comply with certain provisions contained in the SURE loan agreement.
I commend the Bill to the Seanad.