I move amendment No. 32:
In subsection (1), lines 45 and 46, to delete " together with the instrument, if any, by which the charge is created or evidenced " and substitute: " verified in the prescribed manner ".
SECTION 99.
I think amendments Nos. 32, 33, 34, 35 and 39 may be related and if the Committee is agreeable, we could take them together.
I am not quite so happy about amendment No. 39.
We can take amendments Nos. 32, 33, 34 and 35 together.
The reason for amendment No. 32 has been indicated in the brief which has been supplied to the members of the Committee and it arises as a result of the adoption of a recommendation of the Jenkins Committee. When any charge is being registered at present, the instrument itself must be produced. The Jenkins Committee thought that, if certified particulars of the instrument were supplied, it should be sufficient.
Is it intended to prescribed the manner of certification?
It is, yes: " Certified in the prescribed manner."
By regulation?
I shall make the regulation subsequently.
Amendment agreed to.
I move amendment No. 33 :
In subsection (3), page 65, to delete all words from " the delivery to " in line 17 to " copy " in line 22 and substitute " 21 days after the date on which the prescribed particulars " and, in lines 25 and 26, to delete " and instrument or copy ".
Amendment agreed to.
I move amendment No. 34 :
In subsection (4), lines 28 and 29, to delete " instrument creating or purporting to create the charge " and substitute " prescribed particulars ".
Amendment agreed to.
I move amendment No. 35 :
35. To delete subsection (5) and substitute:
" () Where a charge comprises property situate outside the State and registration in the country where the property is situate is necessary to make the charge valid or effectual according to the law of that country, a certificate in the prescribed form stating that the charge was presented for registration in the country where the property is situate on the date on which it was so presented shall be delivered to the registrar of companies for registration."
Amendment agreed to.
I move amendment No. 36 :
In subsection (8), page 66, lines 7 and 8, to delete " the deed containing the charge, or, if there is no such deed,".
While it is not necessarily consequential on the other amendments, it relates to them. Subsection (8) as it stands requires that, where a series of debentures is created by a company, the deed containing the charge must be filed with the registrar. As the obligation to submit the instrument of charge under section 99 (1) is being done away with, it is considered logical that the obligation to file the deed containing the charge in relation to a series of debentures should also be abolished.
I do not understand this filing of debentures. The debenture itself would be handed over to the lender. A copy of the debentures has got to be filed. Surely the debentures themselves are given to the lender ?
This has been in the law since 1908.
I thought the procedure was that you simply filed a copy. I think that should continue.
It has always been in that form. It is in Section 93 (3) of the 1908 Act.
If you do not give the debentures to the lender, how can he prove his security? We used to produce one and take it away after it had been examined but now you are changing the method.
I think it is quite possible that it would be sufficient for the Registrar's purpose to see the debenture and hand it back as he has done up to this with an instrument creating a charge under subsection (1).
He sees the instrument, notes the particulars and gives it back. In this amendment to Section 99, you are proposing to delete the reference to the deed containing the charge and I do not see the reason for the other part of it.
This has proved workable in the past.
What section does it correspond to in the old Act?
Section 93.
The obligation is on the company to do this.
That is right. I do not see how the company has it.
The wording is changed, even though it is only the draftsman's wording. They simply tidy it up but the fact that the wording is changed at all may bring about a new interpretation. That is likely to happen always when a custom has grown up regarding the interpretation of the statute as it stands.
In this section, you have to deliver it and have it received by the Registrar and if the legal obligation is to deliver to and have it received by the Registrar, it does not follow from that that the Registrar keeps it. It seems to me it is probably all right.
He produces it ?
Just as he did with all instruments under Section 99 (1).
On whom is the liability to present it ?
The company.
The subsection says :
. . . there shall be sent to the Registrar for entry in the register particulars of the amount and date of each issue, but an omission to do this shall not affect the validity of the debentures issued.
Suppose, however, a difficult gentleman decides he will not deliver the debenture. What position is the company in then ?
Surely, in fact, it is the lender who does the registration?
The obligation is on the company.
But the lender does it.
The compulsion is on the lender to do it.
The statutory obligation is on the company, but there is provision for the filing of particulars by the lender, for obvious reasons. I do not think you could expect any trouble to arise out of the obligation to present one of the debentures.
I think it is an obligation on the company to do something it cannot do. Once it has given the debentures, the lender takes the debentures away with him.
Should it not be possible for the company to issue one of the debentures to some friend ?
Not at all.
Suppose they issue one debenture to a bank ?
This is not about one debenture. This relates to a series.
I do not think we ought to direct a company to do something it manifestly cannot do.
We have not heard of any difficulties.
I do not want to be testy about it, but the fact is that any of us in practice know that when a company gives a debenture to a bank, the bank takes the debenture immediately it is executed and they have physical control of the document. They, for their own purposes—protection—register. We should not provide that a company should do something it manifestly cannot do.
I do not think we are providing it. If you look at subsection (1) of Section 99, you will see it states :
Subject to the provisions of this Part, every charge created after the fixed date by a company, and being a charge to which this section applies, shall, so far as any security on the company's property or undertaking is conferred thereby, be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge, together with the instrument, if any, by which the charge is created or evidenced, are delivered to or received by the Registrar of companies . . .
It does not say by whom.
Subsection (1) of Section 100 does. It says :
It shall be the duty of a company to send to the Registrar of companies for registration the particulars of every charge created by the company, and of the issues of debentures of a series requiring registration under section 99 . . .
May we put it this way ? Section 99 is quite all right but Section 100 may be forcing the company to do something.
Mr. Costello
But Section 100 goes on to say :
. . . . but registration of any such charge may be effected on the application of any person interested therein.
That is to provide protection for the debenture holder.
Enabling him to do it, but is there still not an obligation on the company if the debenture holder does not do it ?
Would a certified copy of one of the debentures do ?
Certainly. I object to directing a company to do something it manifestly cannot do, if we are doing that. I thought we were doing that. Perhaps the Minister will examine it.
I shall, certainly. We might, possibly, delete these words.
Or provide for a copy.
A copy certified by the secretary of the company.
Amendment agreed to.
Question proposed: " That Section 99, as amended, stand part of the Bill ".
There is one matter I wanted to raise myself on the section. Subsection (1) at lines 51 and 52 says:
. . . . and when a charge becomes void under this section, the money secured thereby shall immediately become payable.
I do not quite follow that. Could the Minister explain it to me ?
My understanding of it is that when the charge becomes void, it is a simple debt and the money is immediately payable.
I am visualising a charge which provides for payment, shall we say, in 12 months' time. It becomes void under this subsection—void as against the liquidator—by reason of failure to register. This seems to say that in those circumstances the money due under the charge becomes payable immediately ?
Yes.
Instead of 12 months? Am I misinterpreting that ?
No, I think that is the effect of it. That is the way it was always drafted. The purpose of it may have been to protect to a certain extent the people who have suffered as a result of the voiding of the charge—their money becomes immediately payable, but there is no security.
As a simple contract debt?
I think that is the intention of it.
This seems to be changed from the 1908 Act?
I do not think so. ". . . shall immediately become payable " is in Section 93 of the Act of 1908. I do not think it is an unreasonable imposition.
It is designed to penalise the company for failure to secure registration?
That is the impression you would get from it.
I think what it is intended to cover is this. If a person by mistake does not register, the company, having borrowed the money, cannot say : " You did not register and therefore I am not going to pay you at all." There is a list of priorities but he is still entitled to be paid as a simple contract debt.
It was the word " immediately " I was wondering about.
I suppose the reason being that you can then take proceedings and secure it. Am I right in thinking that (g), (h) and (i) of subsection (2) are new?
They are new, yes. They were recommended by our own committee.
Question put and agreed to.
SECTION 100.
I move amendment No. 37 :
In subsection (3), to delete " within the time required by section 99” at each place where it occurs in lines 44 and 48.
This amendment is to rectify a drafting error.
Amendment agreed to.
I move amendment No. 38 :
To delete subsection (5).
This subsection is being transferred to a more appropriate section.
Amendment agreed to.
Section 100, as amended, agreed to.