On behalf of the committee, I welcome the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Michael Ahern, and his officials to the committee. I also welcome Mr. John Fallon, who is here observing on behalf of Goodbody Consultants, and Deputy Burton, who is deputising on behalf of Deputy Howlin. The purpose of this meeting is to consider Committee Stage of the Investment Funds, Companies and Miscellaneous Provisions Bill 2005. It is proposed that the committee consider the Bill until 12.30 p.m. today. Is that agreed? Agreed.
Investment Funds, Companies and Miscellaneous Provisions Bill 2005: Committee Stage
Section 1 agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."
On section 2, because we will need to transpose the EU prospectus directive and possibly alter the market abuse directive by regulations to be made under sections 29 and 43, in respect of both of which I have tabled amendments on this Stage, I may need to include both these sections as sections that will come into operation when the Bill is signed by the President. If this proves necessary, I will revert with an amendment on Report Stage.
Question put and agreed to.
Sections 3 to 8, inclusive, agreed to.
SECTION 9.
Question proposed: "That section 9 stand part of the Bill."
It has been brought to my attention that section 9(7) may need an amendment. Subsection (7) concerns the report of the Central Bank and Financial Services Authority of Ireland to the Minister for Finance. I am examining this issue to see whether the reference to section 6(5) of the Central Bank and Financial Services Authority of Ireland Act 2003 is the correct one. I will introduce an appropriate amendment on Report Stage, should one prove necessary. I will ascertain that there is not an issue regarding the preparation of the material relating to the common contractual funds, just the designation of which report in which it is to be included.
Question put and agreed to.
Sections 10 to 20, inclusive, agreed to.
SECTION 21.
I move amendment No. 1:
In page 16, subsection(3), lines 15 and 16, to delete "the Director of Public Prosecutions or".
This amendment is under the name of my colleague, Deputy Howlin. The section mentions the DPP specifically whereas section 46(5), which also concerns offences, does not. The Labour Party's legal advice is that the DPP has authority to prosecute all summary offences under the Prosecution of Offences Act 1974. Conferring such an authority on an individual in respect of some specific offence is inappropriate and is not done in drafting terms, nor is it consistent with the rest of the Bill. If the Minister of State examines section 46(5) on page 36, it states: "Summary proceedings for an offence under this section may be brought and prosecuted by the competent authority designated under Irish prospectus law or by the registrar of companies". This does not mention the DPP and it is our contention that the reference to the DPP should be deleted.
I thank the Deputy for tabling this amendment which I accept.
Amendment agreed to.
Section 21, as amended, agreed to.
Sections 22 to 24, inclusive, agreed to.
SECTION 25.
I move amendment No. 2:
In page 17, to delete lines 3 and 4, and substitute the following:
"25.—The following sections are inserted after section 256 of the Act of 1990:".
This is a stylistic amendment to align the text with previous sections.
Amendment agreed to.
Amendments Nos. 3 to 6, inclusive, are related and may be discussed together.
I move amendment No. 3:
In page 21, line 34, to delete "filed" and substitute "served".
The drafter of this section appears to have been under the misapprehension that the procedure for appealing to the Supreme Court is that one first files an appeal and then serves it. I am not a lawyer but lawyers tell me the opposite is the case. The appeal is made when it is served. Only after it is served on a copy endorsed with the particulars of service will the Supreme Court accept it for filing. The amendment is a technical one as it would be absurd for one procedure to apply to all other appeals in the land and the opposite procedure to apply to this Bill. The concern of my colleague, Deputy Howlin, is that, given the nature of the Bill, the lawyers will seek any opportunities they can get.
Concerning page 21, line 36, an order is not delivered by the court but created administratively by the registrar who draws up the perfected order after the judge has given reasons verbally. The order is not delivered by anyone as the parties must request it. In all cases between parties, the time for appeal to the Supreme Court runs from the date of perfection of the order. This amendment and those related to it are designed to clarify what may be a legal administrative issue that we consider should be addressed in the Bill if the opportunity arises.
I thank the Deputy for raising these points and I note the amendments Nos. 3 and 4 substituting "served" for "filed" and "perfected" for "delivered". However, I must consider these further and will do so before Report Stage. Regarding amendments Nos. 5 and 6, there is no "cross-appeal" involved. Subsection (3) is merely building on subsection (1) to the extent that the latter provides for an appeal by the umbrella fund. I am not prepared to accept these amendments at present.
The Minister will examine amendments Nos. 3 and 4.
Yes.
Amendment, by leave, withdrawn.
Amendments Nos. 4 to 6, inclusive, not moved.
Section 25, as amended, agreed to.
Sections 26 and 27 agreed to.
NEW SECTION.
Amendments Nos. 7 and 28 are related and may be discussed together.
I move amendment No. 7:
In page 24, before section 28, but in Part 3, to insert the following new section:
28.—The following section is inserted after section 260 of the Act of 1990:
260A.—(1) Notwithstanding section 148(2) of the Principal Act (inserted by the European Communities (International Financial Reporting Standards and Miscellaneous Amendments) Regulations 2005 (S.I. No. 116 of 2005)) an investment company may, in respect of its individual accounts, opt to prepare those accounts in accordance with both of the following, namely—
(a) an alternative body of accounting standards, and
(b) section 149A of the Principal Act,
as if the references in that section 149A to international financial reporting standards were references to that alternative body of accounting standards.
(2) In the application of subsections (4), (5) and (6) of section 148 of the Principal Act to an investment company which has opted under subsection (1) to prepare its accounts in accordance with an alternative body of accounting standards—
(a) the reference in that subsection (4) to international financial reporting standards shall be read as a reference to that alternative body of accounting standards, and
(b) there shall be substituted for “IFRS”, in each place where it occurs in those subsections (4), (5) and (6), “ABAS” (which shall be read as referring to that alternative body of accounting standards).
(3) For the purposes of this section, accounts shall not be regarded as having been prepared in accordance with an alternative body of accounting standards unless the accounts concerned would, were they to have been prepared by a company or undertaking registered in the relevant jurisdiction, be regarded as having been prepared in accordance with those standards.
(4) In this section—
"alternative body of accounting standards" means standards that accounts of companies or undertakings must comply with that are laid down by such body or bodies having authority to lay down standards of that kind in—
(a) United States of America,
(b) Canada,
(c) Japan, or
(d) any other prescribed state or territory,
as may be prescribed;
"relevant jurisdiction" means the state or territory in which the alternative body of accounting standards concerned have effect.
(5) Before making regulations for the purposes of subsection (4), the Minister—
(a) shall consult with the Central Bank, and
(b) may consult with any other persons whom the Minister considers should be consulted.
(6) If particular regulations for the purposes of subsection (4) are proposed to be made at a time subsequent to the commencement of Part 2 of the Companies (Auditing and Accounting) Act 2003, then, before making those regulations, the Minister shall also consult with the Irish Auditing and Accounting Supervisory Authority.'.".
Together, amendments Nos. 7 and 28 make provisions for investment companies established under Part XIII of the Companies Act 1990 and investment companies established as UCITS to prepare their accounts in accordance with certain accounting standards. These amendments will give these investment companies the flexibility to prepare their accounts in accordance with an alternative body of accounting standards, which will be those issued by standard-setters prescribed by the Minister by regulation. The provisions will have the desirable effect of not interfering with existing requirements as set out in section 148 of the 1963 Act inserted by Statutory Instrument 116 of 2005 and section 41 of the 2003 Act.
In so far as positively applying section 149A, this will clarify that investment companies are still bound by the Acts and will be required to give standard information that every company gives but is allowed to prepare the accounts in accordance with another body of accounting standards in place of the international financial reporting standards that would not necessarily require such disclosures. References to "IFRS" in section 148 are to be read as references to an alternative body of accounting standards. Subsection (3) in each case makes it clear beyond doubt that a company opting for the alternative standards must fully comply with the relevant standards as if it were registered in the jurisdiction of the standard chosen. The term "Alternative body of accounting standards" is to include US, Canadian and Japanese generally accepted accounting principles, GAAP, and allows the Minister to prescribe other standards at a later date. The Minister must consult with the Central Bank and may consult with any other persons he feels necessary before making the prescriptions referred to. The Minister must also consult with the IAASA when the body is established.
In redrawing this section, has the Minister of State consulted the various accounting bodies? What are the implications for the regulation of standards to which the Commissioner, Mr. McCreevy, is talking about shortly making a commitment?
We have consulted with the CAPI and the IFRS have already come in. This section applies for investment funds only and not the general body of accountants.
Amendment agreed to.
SECTION 28.
Amendments Nos. 8, 9 and 11 are related and will be discussed together.
I move amendment No. 8:
In page 24, subsection (1), lines 36 to 39, to delete all words from and including "and" in line 36 down to and including "includes" in line 39 and substitute the following:
"(b) any measures directly applicable in the State in consequence of the 2003 Market Abuse Directive and, without prejudice to the generality of this paragraph, includes the Market Abuse Regulation, and
(c) any supplementary and consequential measures adopted for the time being by the State in respect of”.
Section 29 allows the Minister to make regulations under this Bill for the purpose of giving effect to the EU market abuse directive, market abuse regulation and supplemental directives. The market abuse regulation is directly applicable in all member states and entered into force in member states on the day of its publication in the official journal of the European Union. It was therefore incorrect to refer to giving effect to the regulation. It may prove necessary to facilitate or give full effect of the regulation and section 29(1) is being amended to reflect this.
Amendment No. 8 is a consequential amendment. Section 29(2) is being amended to clarify that regulations made under this section may only provide for penalties regarding a summary conviction. Section 29(3) provides that such regulations may include provisions currently in the Companies (Amendment) Act 1999 regarding disclosure of interests in relevant share capital. The Companies (Amendment) Act 1999 is being repealed in amendment No. 10.
Regulations may also impose the requirements imposed by Article 6(9) of the EU directive that any person professionally arranging transactions in financial instruments who reasonably suspects that a transaction might constitute insider dealing or market manipulation shall notify the competent authority. New subsection 29(4) states that this is without prejudice to the European Communities Act 1972.
Section 30 outlines the penalties that may be imposed on conviction and indictment of certain offences relating to market abuse. Amendment No. 11 clarifies that such offences may be those offences that specifically state, in the transposing regulations, that section 30 applies to them. Additions and refinements emerged as the process of drafting the transposing regulations has proceeded and the amendments I have described are the result.
Amendment agreed to
Section 28, as amended, agreed to.
NEW SECTIONS.
I move amendment No. 9:
In page 25, before section 29, to insert the following new section:
29.—(1) The Minister may make regulations for the purposes of—
(a) giving effect to the 2003 Market Abuse Directive and the supplemental Directives, and
(b) supplementing and making consequential provision in respect of the Market Abuse Regulation.
(2) Regulations under this section may contain such incidental, supplementary and consequential provisions as appear to the Minister to be necessary or expedient for the purposes of those regulations, including provisions creating offences (but the regulations may only provide penalties in respect of a summary conviction for any such offence).
(3) Regulations under this section may also—
(a) make, for the purposes of those Regulations, provision analogous to that which was made by section 3 of the Companies (Amendment) Act 1999 (repealed by section 29) for the purposes of that Act,
(b) impose on a market operator a requirement similar to that which is imposed by Article 6(9) of the 2003 Market Abuse Directive on the person referred to in that Article 6(9).
(4) This section is without prejudice to section 3 of the European Communities Act 1972.".
Amendment agreed to.
I move amendment No. 10:
In page 25, before section 29, to insert the following new section:
29.—The following are repealed:
(a) Part V of the Act of 1990, and
(b) the Companies (Amendment) Act 1999.”.
The provisions in Part 4 of the Bill, together with the transposing regulations will implement the market abuse directive. As the regulation-making power given to the Minister in section 29 does not explicitly entail the repealing of these enactments the existing market abuse law is being repealed in this section. The repeal of the market abuse legislation in this amendment and the repeal of the prospectus legislation in section 37 represent a significant streamlining of the law in these two areas. As I stated on Second Stage, the EU directives will simplify administration and reduce the number of different rules and standards across the EU. This is not a case of adding new legislation to existing law but bringing our legislation into line with Europe and making us more competitive globally.
Amendment agreed to.
Section 29 deleted.
SECTION 30.
I move amendment No. 11
In page 25, line 21, after "law" to insert the following:
"(being an offence expressed by that law to be an offence to which this section applies)".
Amendment agreed to.
Section 30, as amended, agreed to.
Section 31 agreed to.
SECTION 32.
I move amendment No. 12:
In page 26, between lines 36 and 37, to insert the following subsection:
"(3) Rules under this section may include rules providing for the manner in which or the matters by reference to which (or both) a determination is to be made of any issue as to whether a financial interest or interests is or are significant for the purposes of the provisions of Irish market abuse law implementing Article 5(1) of Commission Directive No. 2003/125/ EC of 22 December 2003.".
This amendment gives IFSRA the power to make rules in order to determine if a financial interest is significant. The Commission directive referred to lays down rules regarding the fair presentation of investment recommendation and the disclosure of conflicts of interest. Article 5(1) of that directive states that member states shall ensure that appropriate regulation is in place to ensure that relevant persons disclose all relationships and circumstances that may reasonably be expected to impair the objectivity of the recommendation, in particular, where such persons have a significant interest in one or more of the financial instruments which are the subject of the recommendation.
Amendment agreed to.
Section 32, as amended, agreed to.
NEW SECTION.
I move amendment No. 13:
In page 27, before section 33, to insert the following new section:
"33.—Section 33AJ (inserted by the Central Bank and Financial Services Authority of Ireland Act 2003) of the Central Bank Act 1942 is amended by substituting the following subsection for subsection (7):
‘(7) In this section, "agent" includes a person appointed or authorised by the Bank, the Governor or the Chief Executive to perform any function or exercise a power under the Central Bank Acts or any other enactment.'.".
Section 33AJ of the Central Bank Act provides that certain entities, including the bank, its employees, its agents and its constituent parts are not liable for damages for anything done or omitted in the performance or exercise of its functions, unless it is proved that the act or omission was in bad faith. However, agents are defined as including a person appointed by the bank, the governor or the chief executive to perform any function or exercise a power under the Central Bank Acts or any other Act.
This amendment, by replacing the term "act" with "enactment", will include functions under the regulations transposing the market abuse directive. The Central Bank Act 1942, as amended, defines enactment as including any instrument made under an enactment. This will ensure that the Irish stock exchange, in acting as an agent of the bank, is covered by the immunity clause contained in section 33AJ of the Central Bank Act.
Amendment agreed to.
Sections 33 and 34 agreed to.
SECTION 35.
Amendments Nos. 14, 16, 20 and 21 are related and may be discussed together.
I move amendment No. 14:
In page 28, subsection 1, lines 3 to 6, to delete all words from and including "and" in line 3 down to and including "includes" in line 6 and substitute the following:
"(b) any measures directly applicable in consequence of the 2003 Prospectus Directive and, without prejudice to the generality of this paragraph, includes the Prospectus Regulation, and
(c) any supplementary and consequential measures adopted for the time being by a Member State (including the State) or a Member State of the EEA in respect of”.
Section 43 allows the Minister to make regulations under this Act for the purpose of giving effect to the EU prospectus directive and the prospectus regulation. The prospectus regulation is directly applicable in all EU member states and enters into force on the day of its publication in the official journal of the EU. Therefore it was incorrect to refer to giving effect to the regulation. However, it may prove necessary to facilitate or give full effect to the regulation and section 43(1) is being amended to reflect this. Amendments Nos. 14 and 16 are consequential amendments.
Section 43(2) is being amended to clarify that regulations made under this section may only provide for penalties concerning a summary conviction. Such regulations may also revoke instruments made under other enactments. This is specifically needed to repeal regulations in 1984, 1992 and 1993 which transposed earlier EU directives relating to prospectuses to be published when securities were listed or offered to the public. Therefore, further streamlining of the law will be effected in the transposing regulations. New subsection 43(3) states that this is without prejudice to the European Communities Act 1972.
Section 44 outlines the penalties that may be imposed on conviction, on indictment of certain offences relating to prospectus law. Amendment No. 21 clarifies that such offences will be those offences that specifically state in the regulations that section 44 applies to them.
Amendment agreed to.
I move amendment No. 15:
In page 28, subsection (1), to delete lines 11 and 12 and substitute the following:
"individual or body (whether incorporated or unincorporated) the profession of whom, or the profession of members, officers or employees of which, gives authority to a statement made by the individual or body;".
Amendment agreed to.
I move amendment No. 16:
In page 28, subsection (1), lines 19 to 22, to delete all words from and including "and" in line 19 down to and including "includes" in line 22 and substitute the following:
"(b) any measures directly applicable in the State in consequence of the 2003 Prospectus Directive and, without prejudice to the generality of this paragraph, includes the Prospectus Regulation, and
(c) any supplementary and consequential measures adopted for the time being by the State in respect of”.
Amendment agreed to.
I move amendment No. 17:
In page 28, subsection (1), lines 37 to 42, to delete all words from and including "means" in line 37 down to and including "intermediaries;" in line 42 and substitute the following:
"has the same meaning as it has in Irish prospectus law;".
Amendment agreed to.
Section 35, as amended, agreed to.
Section 36 agreed to.
Amendment No. 18 not moved.
Section 37 agreed to.
Sections 38 and 39 agreed to.
SECTION 40.
I move amendment No. 19:
In page 33, line 2, to delete "whose denomination per unit amounts to at least €50,000".
This amendment removes the reference to a threshold as it is not considered necessary. The market practice is that for non-equity securities, the offerer, the person who sought admission of the securities or the guarantor alone should be liable. It would mean Ireland would not lose competitive advantage to countries where liabilities for prospectuses for all debt issues attaches, effectively, to the issuers only.
Amendment agreed to.
Section 40, as amended, agreed to.
Sections 41 and 42 agreed to.
NEW SECTION.
I move amendment No. 20:
In page 34, before section 43, to insert the following new section:
43.—(1) The Minister may make regulations for the purposes of—
(a) giving effect to the 2003 Prospectus Directive, and
(b) supplementing and making consequential provision in respect of the Prospectus Regulation.
(2) Regulations under this section may contain such incidental, supplementary and consequential provisions as appear to the Minister to be necessary or expedient for the purposes of those regulations, including-
(a) provisions creating offences (but the regulations may only provide penalties in respect of a summary conviction for an such offence), and
(b) provisions revoking instruments made under other enactments.
(3) This section is without prejudice to section 3 of the European Communities Act 1972.".
Amendment agreed to.
Section 43 deleted.
SECTION 44.
I move amendment No. 21:
In page 34, subsection (1), line 18, after "law" to insert the following:
"(being an offence expressed by that law to be an offence to which this section applies)".
Amendment agreed to.
Section 44, as amended, agreed to.
SECTION 45.
I move amendment No. 22:
In page 35, between lines 14 and 15, to insert the following subsection:
"(3) Summary proceedings for an offence under this section may be brought and prosecuted by the competent authority designated under Irish prospectus law.".
This amendment provides that the competent authority may prosecute for any summary offences under section 45, which relate to untrue statements or omissions.
Amendment agreed to.
Section 45, as amended, agreed to.
SECTION 46.
I move amendment No. 23:
In page 36, subsection (4), line 35, after "registrar" to insert "of companies".
This amendment clarifies that the registrar in question is the registrar of companies.
Amendment agreed to.
Question proposed: "That section 46, as amended, stand part of the Bill."
It may prove necessary to move an amendment to section 46 on Report Stage to clarify one particular aspect that has come to our attention as a result of the ongoing work of finalising the transposing regulations. To summarise our approach to the transposition of the prospectus directive, we are taking the threshold of €2.5 million, below which offers of securities fall outside the scope of application of the directive and hence the necessity to prepare a prospectus, pursuant to EU law and not requiring the preparation of a prospectus under national law, as is the position at present under the Companies Act 1963. We are simply requiring the inclusion of certain warnings in the offering documents, as set out in section 46. This is a significant lessening of requirements on the raising of capital and could be of significant benefit to small entrepreneurs. It is difficult, however, to say what use will be made of this relaxation of the existing law, but at least we have presented the opportunity and it is up to those who wish to avail of it to consider its attractiveness to them in their particular circumstances.
The need for a possible amendment arises from the fact that, while offers below €2.5 million are outside the scope of the prospectus directive, pursuant to Article 1.2 (h), there is a separate exemption from the obligation to publish a prospectus in Article 3.2 (e), where an offer of securities with a total consideration of less than €100,000 over a 12 month period is made. The net point is that if a total exemption is provided for the latter type of offer, we may not be correct in even requiring the publication of the warnings for such offers, as specified in section 46. The issue is being examined as a matter of urgency and I will revert to it on Report Stage if such clarification and refinement is considered necessary. As a result of this examination, there may also be a need to refine the definition of “local offer” in section 35(1) and to include greater clarification on the manner in which the cumulative calculation of the €2.5 million is arrived at, as specified in section 35(5).
Question put and agreed to.
Section 47 agreed to.
SECTION 48.
I move amendment No. 24:
In page 37, between lines 23 and 24, to insert the following subsections:
"(3) Rules under this section may include rules providing for the manner in which or the matters by reference to which (or both) a determination is to be made of any issue as to whether a transaction or transactions is or are of a significant size for the purposes of the provisions of Irish prospectus law implementing Article 2(2)(a) of the 2003 Prospectus Directive.
(4) The reference in subsection (2) to an obligation imposed on a person by Irish prospectus law includes a reference to an obligation imposed on a person by virtue of the person’s exercising a right or option provided under Irish prospectus law.”.
The new subsection (3) gives the Irish Financial Services Regulatory Authority, which is the designate competent authority, the power to define "significant" for the purposes of the register of small to medium sized enterprises, SMEs, and natural persons. Article 2.2 (a) of the directive lays down criteria for those investors who wish to be considered as qualified investors, one of which is that the investor has carried out transactions of a significant size on security markets at an average frequency of at least ten per quarter over the previous four quarters.
The new subsection (4) is necessary because applying for inclusion on the register of SMEs and natural persons is not an obligation imposed by Irish prospectus law, but one that only arises if a person decides to avail of that particular registration regime.
Amendment agreed to.
Section 48, as amended, agreed to.
Sections 49 to 52, inclusive, agreed to.
SECTION 53.
I move amendment No. 25:
In page 40, between lines 24 and 25, to insert the following:
"(n) to the extent that provision of this kind is not authorised by paragraph (e) or (f), the provision of financial assistance by a holding company or a subsidiary of it in connection with the holding company or subsidiary purchasing or subscribing for shares in the holding company on behalf of—
(i) the present or former employees of the holding company or any subsidiary of it,
(ii) an employees' share scheme within the meaning of the Companies (Amendment) Act 1983, or
(iii) an employee share ownership trust referred to in section 519 of the Taxes Consolidation Act 1997.".
Tax law provides that employee share ownership trustees must be incorporated as subsidiaries of the company in which the employee share ownership trust is held on behalf of the employee share option plan and acquire the shares. In addition, it is not unusual for non-Revenue-approved arrangements to have as the trustee a subsidiary of the company whose shares are acquired. This amendment is designed to allow these forms of financial assistance to operate.
Amendment agreed to.
Section 53, as amended, agreed to.
Sections 54 to 71, inclusive, agreed to.
NEW SECTION.
Amendment No. 26 proposes a new section. Amendment 29 is consequential on amendment No. 26 and one decision should suffice for both amendments. Therefore, amendments Nos. 26 and 29 may be discussed together.
I move amendment No. 26:
In page 48, before section 72, but in Part 7, to insert the following new section:
72.—The Irish Takeover Panel Act 1997 is amended—
(a) in section 2—
(i) in paragraph (ii), by substituting ‘Act of 1990,' for ‘Act of 1990.', and
(ii) by adding the following paragraph after paragraph (ii):
‘(iii) a public limited company or other body corporate incorporated in the State the only securities of which for the time being are authorised (or during the period of 5 years referred to in paragraph (b) were authorised) to be traded by a recognised stock exchange on a market regulated by that exchange are those specified in section 2A.’,
and
(b) by inserting the following section after section 2:
"2A.—(1) The securities referred to in paragraph (iii) of section 2 are debentures or bonds or other securities in the nature of debentures or bonds, by whatever name called, that do not confer voting rights in the company or body corporate referred to in that paragraph or in any other body corporate.
(2) The cases to which paragraph (iii) of section 2 applies include the case where the authorisation for the trading of the securities concerned was given by the recognised stock exchange before the commencement of section 72 of the Investment Funds, Companies and Miscellaneous Provisions Act 2005.’.”.
The purpose of amendment No. 26 is to address a problem arising from the present scope of the Irish Takeover Panel Act 1997, which brings issuers of non-voting debt instruments under the remit of the takeover panel if those instruments are listed on the Irish Stock Exchange. The provision is causing concern for the Irish Stock Exchange and the takeover panel.
The Irish Stock Exchange is now a major centre for the listing of debt instruments, having achieved significant growth in the last three years. There has also been an emergence of a large number of domestic Irish issuers of debt, mainly in the international financial services sector. This growth has been encouraged by governmental initiatives which accept that debt issuance represents a significant opportunity for Ireland to move up the value chain of financial services activities. The recent Deloitte report, sponsored by IDA Ireland, has placed debt issuance at the top of the strategic aims for Ireland as a financial services centre.
It would be out of keeping with this strategy if those Irish bond issuers were required to list in, for example, Luxembourg, in order to avoid this legislation. This issue was not identified when the 1997 legislation was enacted and the takeover panel has no desire for the legislation to have this effect. We are not aware of any other jurisdiction where the remit of the local equivalent of the takeover panel goes beyond traditional voting equity shares in this manner. Moreover, the focus in EU Directive No. 5 on takeovers, which has to be transposed into Irish Law by 2006, is on equity shares with voting rights. Amendment 29, which amends the Long Title, is a consequential amendment.
Amendment agreed to.
SECTION 72.
I move amendment No. 27:
In page 48, between lines 12 and 13, to insert the following subsection:
"(2) Subsection (7) of that section 45 is amended by substituting ‘this section' for ‘subsection (6)'.".
Amendment agreed to.
Section 72, as amended, agreed to.
Sections 73 to 82, inclusive, agreed to.
SCHEDULE.
I move amendment No. 28:
In page 52, between lines 34 and 35, to insert the following paragraph:
"Addition of new Regulation 79A
6. The following is inserted after Regulation 79:
‘79A.—(1) Notwithstanding section 148(2) of the Companies Act 1963 (inserted by the European Communities (International Financial Reporting Standards and Miscellaneous Amendments) Regulations 2005 (S.I. No. 116 of 2005)) an investment company to which Chapter 1 or 2 of Part VI applies may, in respect of its individual accounts, opt to prepare those accounts in accordance with both of the following, namely—
(a) an alternative body of accounting standards, and
(b) section 149A of the Companies Act 1963,
as if the references in that section 149A to international financial reporting standards were references to that alternative body of accounting standards.
(2) In the application of subsections (4), (5) and (6) of section 148 of the Companies Act 1963 to an investment company which has opted under paragraph (1) to prepare its accounts in accordance with an alternative body of accounting standards—
(a) the reference in that subsection (4) to international financial reporting standards shall be read as a reference to that alternative Body of accounting standards, and
(b) there shall be substituted for “IFRS”, in each place where it occurs in those subsections (4), (5) and (6), “ABAS” (which shall be read as referring to that alternative body of accounting standards).
(3) For the purposes of this Regulation, accounts shall not be regarded as having been prepared in accordance with an alternative body of accounting standards unless the accounts concerned would, were they to have been prepared by a company or undertaking registered in the relevant jurisdiction, be regarded as having been prepared in accordance with those standards.
(4) In this Regulation—
"alternative body of accounting standards" means standards that accounts of companies or undertakings must comply with that are laid down by such body or bodies having authority to lay down standards of that kind in—
(a) United States of America,
(b) Canada,
(c) Japan, or
(d) any other state or territory prescribed for the purposes of the section hereafter mentioned in this paragraph,
as are prescribed under the Companies Act 1990 for the purposes of section 260A(4) (inserted by the Investment Funds, Companies and Miscellaneous Provisions Act 2005) of that Act;
"relevant jurisdiction" means the state or territory in which the alternative body of accounting standards concerned have effect.'.".
Amendment agreed to.
Schedule, as amended, agreed to.
TITLE.
I move amendment No. 29:
In page 7, line 23, after "AMEND" to insert "THE IRISH TAKEOVER PANEL ACT 1997 AND".
Amendment agreed to.
Title, as amended, agreed to.
I thank the Minister of State and his officials for their assistance. I also thank the members of the committee for attending in such numbers and for their dedication and commitment to the business that was conducted here this morning.
I thank the Chairman, his staff and all the members of the committee for facilitating the processing of this important legislation. I also thank my own officials for the excellent work they have done.
When is it proposed to take Report Stage?
I hope to have it taken in the House the week after next.