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Special Committee Companies Bill, 1962 debate -
Tuesday, 5 Feb 1963

SECTION 78.

Question proposed : " That Section 78 stand part of the Bill ".

This is a new provision. It is an important provision and I will give the reasons for it. When the capital of a company is divided into a number of different classes of shares, the articles usually provide for the alteration or modification by the company of the rights attached to any class of shares with the sanction of a specific majority of the holders of those shares. In some cases the modification of the rights of shareholders may benefit the holders of another class of share. For instance, those who hold ordinary shares frequently hold preference shares also and they might use their votes as preference shareholders in order to improve their position as ordinary shareholders. The purpose of Section 78 is to provide a remedy for persons who are aggrieved by any arrangement for the modification of their rights; it provides that the holders of not less, in the aggregate, than 10 per cent. of the shares affected may apply to the court to have the modification set aside.

There is one point about this section. I have no objections to that equitable provision but I want to deal with subsection (4) which states that the decision of the court on any such application shall be final. The court in this case is the High Court. I think I am correct in that ?

The next court is the Supreme Court. I do not think that constitutionally you can bar an appeal in this case. An appeal can be taken to the Supreme Court. The only purpose that that provision could have would be on a question of fact, surely? In other words, is that necessary where the High Court is concerned ?

There are precedents for this provision in other pieces of legislation and it is specifically put in on the recommendation of the Committee in order to provide a speedy remedy.

But does it really mean anything ? You cannot by an Act of Parliament block an appeal. I do not think you can.

I am afraid I cannot comment on the constitutionality of it.

Is it desirable from a general public point of view to try to block an appeal to the Supreme Court ?

The members of the Committee know how slow these appeals to the Supreme Court can be and how slow ordinary cases in the High Court may be.

I am looking at it from the point of view that there is overall policy in it and the policy of the Constitution. Is it right for the Parliament to legislate, even if it is possible, which I doubt, or to attempt to legislate the Supreme Court out of the picture ? Is that good public policy ?

I should like to support Deputy de Valera on this. I do not see why we should impose such a limitation and I think it is a bad principle. I know about the argument regarding delays and so on, but it might be an important matter.

What you could do, if you want to have it effective, is to say that the decision of the court would rule pending agreement or something like that.

As I said, the purpose of having it inserted was that it met the wishes of the Committee to get a speedy determination of these matters.

Is it right then that we should legislate for something which the Supreme Court may not tolerate ? I think that is objectionable also. Frankly, if I may make a suggestion, I think the legal department should be asked whether this has any meaning, or if it has any restrictive effects, on the right of appeal of either party. If it has, I for one would be strongly against barring that right of appeal.

I suggest deleting this subsection. It is not a good principle except in very exceptional circumstances.

I will consider introducing an amendment to delete it but I should like to take further advice on it.

In regard to subsection (2) which lays down a time limit of 28 days, I think that a provision should be inserted giving power to the court to extend the time if it thinks fit. It is not at all unusual to give a general power to the court. In certain companies this can be altered by the consent of the shareholders. There need not be a meeting. The consent might come into the company's office and the shareholders affected might not know it. There might be a good reason for a delay. They might not be able to get in touch with the others concerned. While I agree with the limit there should be a saver in case of a delay that may occur. Would the Minister consider putting in a saver that the court should have power if it thinks fit to extend the time ?

This time limit was recommended by the Committee. The usefulness of the section might be in some doubt if power was given to the court for a limited extension of the time in which an application can be brought.

I think it is general experience that when there is a time limit you will have fairly good reasons to persuade the court to extend it. If there are good reasons, the power should be there. The difficulty is that the court has power to extend time under rules but it has not power under statute. I would envisage circumstances in which 28 days might be too short. I should like the Minister to consider putting in a saver.

I will consider doing that.

Is this not going contrary to the principle laid down in the Bill all the time, the principle that the Minister has advocated where things are deliberately fixed by articles? Is he going to override these articles ?

Has not this principle been accepted for many years ?

No. It is new.

It has been in Britain since 1928. It is new in our law.

My own view, quite frankly, is that it is worth making an exception to the principle here.

I only mention it to make it quite clear that I am not necessarily going to accept the argument being made in relation to the other sections where it has been the answer, thrust, albeit very politely, down our throats.

Yes. This is an exceptional thing. Certainly Deputy Sweetman seems to agree that such a provision might be made in exceptional cases and I do not mind if he uses it to turn the tables on me again in connection with some other section.

It is merely protecting minority interests.

Is Section 78 agreed ?

Subject to the comment on subsection (4).

You have got two different periods, 28 days in subsection (2) and 21 days in subsection (5). That makes for confusion. Wherever you have a period of days in a section like that you should try to keep them the same.

In the case of the 21 day provided for in subsection (5), it is the time within which the company must forward a copy of the Order made by the court to the Registrar. I do not think it is very onerous on the company. Subsection (2) is entirely different.

I think it is a mistake to have different times.

As a matter of fact, the 28 days which we provide in subsection (2) is 21 in British law; if you wish we could have two periods of 21 days.

I would not mind two periods of 21 days if power of extension were given to the court.

I would prefer 28 days.

I would prefer two periods of 28 days.

Question put and agreed to.
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