I move amendment No. 1 :—
In page 19, subsection (2), line 14, to add " and of which he shall give at least three months notice."
I do not want to press this amendment as such. I merely put it down as a means of getting from the Minister an indication of the date on which he proposes to bring the Bill into operation.
I want to assure the Deputy and the Committee that I propose to make the necessary order bringing the Bill into operation not less than three months after the Bill has been enacted by the Oireachtas.
That is all right.
It has been mentioned already that the date on which the Bill is put into operation will have some bearing on the date on which companies normally finish their accounts for the year.
Yes. Full account will be taken of that.
When the Minister says not less than three months, what is the period, roughly, he has in mind ? Is it four months or six months ?
It may be four, five or six months. I want to take into account any delays there may be in printing the Bill and printing the Orders.
I move amendment No. 2 :
In page 19, line 18, after " counsel " to insert " nor Solicitor ".
We had some discussion about this as to what was intended in relation to " agent ", and in another section a solicitor is expressly excluded. The members of the solicitors profession are worried that unless there is a specific exclusion the question of privileges may arise. Privilege, of course, is not the privilege of the solicitor but the privilege of the client and an agent as such has no privilege at all. On the other hand, unless we exclude a solicitor in the definition of " agent "—he is included—it means that a solicitor could be asked to disclose information which is confidential to his client and which, without the client's permission, he should not be asked to disclose under the provisions of this Bill. It is to cover that point I put in this amendment.
We shall be dealing with the question of privilege later in specific amendments. Generally, the word " agent " does include a solicitor and he is often described as such in counsel's opinion. There is a number of sections of the Bill in which " agent " could not possibly be held to include " solicitor " and the only other sections in which " agent " is used are those in which it is provided specifically that " agent " does include " solicitor ". I refer to Sections 168, 170 and 299. They will become the subject of discussion on amendments also submitted by the Deputy, amendments Nos 127 and 146.
If the Minister likes, I can withdraw the amendment and we can discuss the question on those amendments.
Yes.
I move amendment No. 3 :
In page 21, between lines 4 and 5 to insert:
"‘ printed ' includes reproduced in any legible and durable form approved by the registrar of companies;"
It would appear that amendments Nos. 78 and 79 are related to No. 3 and if the Committee agrees they may be discussed together.
This is the problem as to what form the document should take, whether printed, written or typed.
Yes. I think we agreed generally that as long as the Registrar could read it and that it was in reasonably permanent form it should be acceptable.
I move amendment No. 4 :
In page 23, subsection (9), to delete line 12 and substitute " The repeal by this Act of any enactment shall not affect—"
This is only a drafting amendment and effects no change in the sense of the subsection.
I move amendment No. 5 :
In page 23, to delete paragraph (a), lines 43 to 46, and " (b)" in line 47.
This paragraph was intended to take the place of a similar clause introduced in the Companies Act, 1959. At that time the draftsman advised that it would be desirable to have this saver to ensure that references in earlier Acts to subsidiaries would not be held to be affected by the definition of subsidiary introduced by the Companies Act, 1959, which is now continued by Section 155 of this Bill. The draftsman has now advised that earlier references, for example, in the Insurance Companies Act, 1909, and in certain Finance Acts will not be affected and that the saver is not needed.
I do not think this arose out of other discussions. Is this new ?
Deputy Sweetman made reference to it in another connection but not on this basis. However, it is a drafting amendment and I think the Committee may accept it.
I move amendmentNo. 6 :
In page 25, lines 5 and 6, to delete :
" who had not at the time when he so relied thereon express notice " and substitute " who is not shown to have been actually aware, at the time when he so relied thereon,"
Amendment No. 7 appears to be consequential and I would suggest Nos. 6 and 7 be taken together.
This is a point raised by a number of Deputies who were concerned that a person should be shown to have been actually aware of what was involved. The altered wording is intended to meet the consensus of opinion of Deputies in this respect.
I think this is a wise provision and gets over one of the difficulties about which I was worried on the last occasion, that it might be held it was the duty of everybody concerned to go and inspect the memorandum in the Companies' office.
It certainly overcomes that difficulty.
I move amendment No. 7 :
In page 25, to delete subsection (2), lines 11 to 16.
I move amendment No. 8 :
In page 25, to delete subsection (1), lines 23 to 38, and substitute:
" (1) Subject to subsection (2), a company may, by special resolution, alter the provisions of its memorandum by abandoning, restricting or amending any existing object or by adopting a new object and any alteration so made shall be as valid as if originally contained therein, and be subject to alteration in like manner."
Amendments Nos. 10 and 11 appear to be consequential on No. 8 and I suggest Nos. 8, 10 and 11 be taken together.
This amendment is designed to meet a point raised by Deputy Costello. It sets out the circumstances in which objects may be altered.
I move amendment No. 9:
In page 26, subsection (6), before " confirming ", in line 7, to insert " canceling the alteration or ".
This amendment was suggested by Deputy de Valera. Its purpose is to remove any doubt, if any doubt exists, that the court has power to cancel.
We have discussed amendments Nos. 10 and 11 with amendment No. 8.
I move amendment No. 10 :
In page 26, to delete subsection (11), lines 53 to 60.
I move amendment No. 11:
In page 27, to delete lines 1 to 4.
Amendment No. 13 appears to be consequential on amendment No. 12.
I move amendment No. 12 :
In page 27, paragraph (d), line 50, before " witness " to insert " qualified ".
I feel frankly there is no point whatever in providing that a document must be witnessed unless you also provide that the witness must be a person of some particular standing. I would rather have it without witnesses at all than have anybody, by and large, to witness it. We have an example in the Land Registry. There certain people are set down as being qualified witness to witness the signature. The classes are wider than those I provide in amendment No. 13 but I should not mind at all widening this to that extent, if necessary. I put this down from the point of view only of the principle involved more than anything else. It seems to me that the incorporation of a company should be regarded as a serious mater. A person can, if he wants, incorporate a company himself. He must not be prevented from being his own lawyer, as it were, since that would be entirely contrary to practice and to the Constitution, I imagine. If he pays anyone to do the work for him, in the form of the Bill as agreed at the moment, he can pay only certain stipulated classes for doing it. If he wants to do it himself, I do not think it is unreasonable to say that he must have a sense of the seriousness of what he is doing impressed upon him by having to go to a qualified witness in the same way as a person who intends to transfer land, charge land, or deal in any way with Land Registry matters, must have his signature witnessed by a person of certain standing. It is to provide for that that I put in a solicitor, or a person who can act as auditor to a company, a peace commissioner or a commissioner for oaths. If the principle is agreed it can be widened any way at all. If you do not have a provision that the witness must be a qualified person I do not think there is any point in saying, as you do in paragraph (d) of Section 14, that articles must " be signed by each subscriber of the memorandum in the presence of at least one witness who must attest the signature." That means nothing unless you have qualifications.
I have considered this amendment and I should like to reiterate my views as expressed during the course of the Committee Stage. I said then that a witness to a signature purports to be a witness only to that signature. The witness does not hold himself out in any way as authenticating the contents of the document. It will add nothing to the articles of association if we cause the witness to the signatures to be a qualified person of the type set out in the Deputy's next amendment. It is desirable, I think, in the ordinary course of business, legal or otherwise, that the least possible difficulty should be placed in the way of a person who signs a document and whose signature must be witnessed. It would be unreasonable to have a person going out seeking a peace commissioner or a commissioner for oaths to perform no other function than to say that John Doe signed a document in his presence and that he witnessed the signature of John Doe. The peace commissioner or the commissioner for oaths contributes in no way to the authenticity of the document and he in no way verifies the contents of the document, nor is he expected to do so. The procedure often is that a clerk in a solicitor's office witnesses these signatures. I do not think any serious abuse, or any abuse at all, has ever arisen out of that practice. Very important documents like wills, deeds, and transfers of property are witnessed in the way I described and the witness is not presumed to have any knowledge of or take any responsibility for the contents of the documents. It would be rather inconsistent, in any event, to require that articles of association should be witnessed by persons holding certain qualifications whereas a memorandum of association, which is a very important document, would not have any such requirement attaching to it.
Without question, the Minister has me there. I meant to include both. My drafting is completely at sea.
I did not intend to catch the Deputy on the wrong foot on this mere drafting point but——
Might I suggest the Minister is not right when he includes transfers of property. Transfers of property in the Land Registry must be witnessed by a qualified person, transfers of unregistered lands by the grantor, and one of the witnesses must swear before a commissioner that he is witnessing. What is the point of having a witness to the subscriber's signature at all ? If there is any point in having a subscriber's signature witnessed at all, then it should be a proper witness. When you are incorporating a company your memorandum and articles of association are signed by two people—two subscribers, if it is a private company, seven if it is a public company, and then an affidavit has to be sworn by the solicitor engaged in the incorporation that all the formalities have been complied with. With respect, I differ from the Minister when he says it is usually a clerk in a solicitor's office who witnesses memoranda and articles of association. It is nearly always the person who is swearing the affidavit who witness them. It is intended to be done in that way, but an affidavit has to be sworn. In the case of a will, the purpose of a witness is so that the witness will be able to prove that the testator signed the will. In the case of memoranda and articles of association it is not the witness so much but rather the affidavit that is filed in the incorporation. It seems to me there is no case here for having any witness. There is a case for having a qualified witness and a case for having no witness. I am rather inclined to the view that the better procedure would be to have no witness at all. It is covered by the affidavit that is filed. Deputy Booth, before he got into more lucrative spheres, would have had practical experience of this.
There is a great deal to be said in favour of having no witness. It is different in the case of a will in that the witness must be satisfied that the testator is signing it as his last will. He is taking more responsibility. I cannot imagine anybody acting as a witness without at least satisfying himself to some extent that the man who is signing is John Doe. Normally the person called in as a witness is told : " This is John Doe who is going to sign his will " and there is some introduction or verification that the signature is the correct signature of that man. I do not think that in this case anything is going to be added by the witness and in view of what the Minister said, that no case has ever arisen. I would say it is simply because no witness had ever been called to verify a signature.
If you did want to query whether John Doe had signed the memorandum, you have the affidavit; it is filed in the incorporation. Surely that affidavit is far better than trying to chase whether in fact there ever was a person called " Mary Ann Snooks " who is alleged to have been the witness to John Doe's signature.
In many cases the signatories are two clerks in the solicitor's office who are merely nominees. I think that is normal procedure.
The procedure we adopt is that two clerks take the shares and the solicitor files the affidavit.
The case being made by Deputy Booth and Deputy Sweetman appears to demolish the case for the amendment. It makes a case for doing away with the necessity for having a witness.
I agree.
But there is no proposal before the Committee to do that.
I had overlooked that. One of the reasons I put it down was that I hoped that we would get some indication from the Minister whether some witness was necessary. If you are going to have a witness, you want to have a proper witness.
On Committee Stage, the Deputy said that he was throwing it out as a suggestion. I did not think he was going to develop a case. There is a lot to be said for continuing a procedure which has not been found wanting. I also hoped that I could avoid unnecessary difficulties in the formation of companies. However, I am not saying that I want to hold out against Deputy Sweetman and Deputy Booth.
The position is that we have no power to move a new amendment at this stage.
I understand that amendments can be put down on Report Stage in the Dáil.
Yes, but I was hoping that we would finish it here. I certainly was not going to put down amendments in the Dáil unless they were amendments on which we were all agreed. Would the Minister examine it between now and the next stage in the Dáil and if he thinks it is wise, put down an amendment, and, if not, I will not press it any further ?
I will go further and undertake to examine it with a completely open mind and if I am advised it is worthwhile, I will do so.
I was expecting to be told there was some necessity for the witness.
If the witness is retained, I think Deputy Sweetman's endeavour to make him a qualified witness is too narrow in the category.
I agree.
You have got to widen the number of people who are qualified.
I did that without having the Land Registry list before me but from recollection it includes the people I have there. It is a very wide list.
Amendment No. 14 appears to be cognate with No. 16.
I move amendment No. 14 :
In page 29, line 18, to delete " Minister " and substitute " Registrar ".
This is the same thing as we were discussing on the Registration of Business Names Bill. As long as the Minister will assure me that he is going to delegate power to deal with the ordinary normal case which would cover 99 per cent of the applications, I am quite happy to leave it as it is. Other people have rather stronger views on that.
I can give that assurance to the Deputy in this case also.
I move amendment No. 15 :
In page 29, line 18, to add " but an appeal shall lie to the court against a refusal to register ".
This is to meet a suggestion by a number of the members of the Committee that some safeguard should be provided against an unreasonable decision by the Minister. This is providing for an appeal to the court and a similar appeal is provided in the Registration of Business Names Bill with which we have just dealt.
I move amendment No. 17 :
In page 30, between lines 4 and 5, to insert a new subsection as follows:
" (6) Where the winding up of a company commences within one year after the company has changed its name, the former name as well as the existing name of the company shall appear on all notices and advertisements in relation to the winding up."
This is something about which Deputies are not aware. It was not discussed on Committee Stage. It comes as a result of a recommendation by the Institute of Chartered Accountants and the object is to ensure that people seeing the winding up notices will not be put off the scent, so to speak, by the use of a new name which the company has adopted. Therefore, as the amendment provides, if a company has changed its name within one year, the former name of the company as well as the existing name shall appear on all notices and advertisements by the liquidator.
I see the point of the amendment and I agree with it, but frankly I would like to have some provision for power to waive the stipulation. Where you have a company, call it Kildare Street Ltd. and it is decided to reconstruct the firm and call it Kildare Street (1963) Ltd., it very often causes immense factual and practical difficulties if you cannot immediately liquidate the old company—if you carry on two companies side by side before the period of switching over, so to speak. The company wants to keep the continuity of names so far as it can. I have seen cases in which there was no question of trying to avoid creditors. The name of the old company was changed and it was allowed to wind itself out rather than wind itself up. This means that it will have to do that for a year now unless the registrar has power to exempt. If you publish a notice that Kildare Street Ltd. is being wound up you will cause a lot of confusion, and creditors of Kildare Street (1963) Ltd. will probably file claims.
I wonder if Deputy Sweetman is right. I think one company is involved, and what Deputy Sweetman has in mind is two companies. When Kildare Street Ltd. is wound up, Kildare Street (1963) Ltd. will be carrying on. I do not think it would be affected by this.
What I have seen happen quite regularly is that as soon as you form a new company you take over the business. You do not liquidate the old company at once but to save the continuation, you change the name of the old company. If you do that now, you bring in the name of the old company again.
Kildare Street (1963) Ltd. is not going to be wound up.
I agree. I misread it—I apologise.
I move amendment No. 18 :
In page 30, subsection (2), line 18, to delete " under this Act ".
Deputy Costello raised this point by way of a letter to me. He was anxious to ensure that the subsection would apply to companies registered under earlier Acts as well as those registered under this Act. In fact, there is no doubt about it but there is no harm in removing any uneasiness which the Deputy may feel, and I move the amendment accordingly.
Amendment No. 20 appears to be consequential on amendment No. 19. I suggest we take them together.
I move amendment No. 19 :
In page 32, subsection (1), line 16, to delete " condition " and substitute " provision ".
This is a verbal amendment. It was spotted by Deputy de Valera.
I move amendment No. 20 :
In page 32, subsection (3), line 25, to delete " conditions " and substitute " provisions ".
I move amendment No. 21 :
In page 33, subsection (2), to delete all words from " any copies " in line 5 to " issued " in line 8 and substitute " to any person any copy of the memorandum which is not in accordance with the alteration, it shall be liable to a fine not exceeding £25,".
This amendment increases the fine provided for under the section. Volume 2, column 87 of the Report on the Committee Stage refers to it.
I move amendment No. 22 :
In page 35, line 45, to delete " by a Company prior to its formation or ".
How can a company enter into a contract prior to its formation ? Someone can enter into a contract on behalf of a company prior to its formation, but I cannot see how a company can enter into a contract prior to its formation.
Surely it is a contract purporting to be entered into ?
By a company prior to its formation.
Can the contract not be phrased in such a way that it appears to be entered into by a company, even though it is not yet registered ?
I admit there is a lack of logic there but from the practical point of view, we want to capture these cases and there must be some elasticity.
As the law is at present, I cannot enter into a contract on behalf of a company which is about to be formed. Under the new Bill, I can enter into a contract on behalf of Kildare Street (1964) Ltd. and when that company is formed, it can adopt my contract. That cannot be done at present. I am not a bit happy with this phraseology.
I am advised that sometimes the promoter does not contract on behalf of a company but causes the contract to be entered into ostensibly by the company itself. I am told there is a well known decision—Newbone v. sensolid Ltd. (1954)—relating to matters of this kind. That is a British decision, of course. Professor Gower, who is a very well known authority on company law, included a section on these lines in the Companies Bill which he prepared for the Government of Ghana. He deliberately phrased it this way to ensure that the kind of case I have mentioned was covered. Our draftsman adopted this phraseology advisedly.
May I advert to the wording of the section :
Any contract or other transaction purporting to be entered into by a company prior to its formation or by any person on behalf of the company prior to its formation may be ratified. I agree that Deputy Sweetman's point may be sustained in strict logic, but you must have regard to the whole commercial practice. The courts will be thrown back on the interpretation. They will have to get a reasonable interpretation and I think there would be no doubt about the interpretation intended here.
Was not this recommended by our Committee ? I think it recommended that contracts could be entered into in advance.
No. This was not mentioned by them.
The difficulty is that if you have no such a provision, it might be implied that no person could do anything in preparation for the business of the company.
The second part clearly covers that: " Any contract or other transaction purporting to be entered into by any person on behalf of the company prior to its formation may be ratified " I entirely agree with that. This is not the law at present. The best company lawyers will tell you it is not the law here at present. I do not know the English case the Minister mentioned. We are changing that and are providing properly in the section that I can buy a place in Kildare Street today in anticipation of forming a company next week and that when the company is formed next week, the company can adopt what I have done for and on behalf of the company. I do not know how a company before it is formed could purport to enter into a contract.
The same objection would really lie against the latter part of the subsection—" by a person on behalf of a company prior to its formation ".
I am the person who does the thing and I can say I am doing it on behalf of a company not yet formed, but how does a company not yet formed do anything ?
it is practically formed, to all intents and purposes. The people had got the feeling it was formed but the Registrar had delayed it for a day or so. If on the 21st of the month the members had got the feeling they had formed a company, they would enter into a contract but the incorporation would not come through until 22nd of the month. Now, they will get the benefit.
The Minister is right, logically, because the basic thing at stake here is that a company not yet formed has no legal existence. Deputy Sweetman's point is that such a thing with no legal existence cannot enter into a contract, but similarly one could not enter into a contract on behalf of something that has no legal existence.
I agree, but if you leave in the first alternative—the second alternative, the person can do the thing on behalf of a legal fiction, the company not yet formed—the company is purported to enter into a contract and there is not anybody to do anything. Who puts pen to paper ? Who speaks the words for the company ?
If the promoters who are going to be the directors——
Subsection (2) covers both alternatives—" the person or persons who purport to act in the name " is the first alternative, and " or on behalf of " is the second.
Lines 44 and 45 should be " by any person in the name of or on behalf of ". Unless there is a physical person there, about to do something, it cannot be done—somebody to permit somebody to do it in the name of the company or on behalf of the company. Of course it is not my job to draft it.
You still do not cover the case which the Minister is covering, where a contract is purported to be entered into by a non-existent person. That is the case you are still not providing for. If on the face of the document, a contract is entered into on behalf of a company —that is the phrase in the Bill——
That is not the phrase. It is " purported to be entered into by a company ".
I am stronger if I say " by ". In other words, the whole formality may be done. There may be a contract which the managing director, when the company is incorporated, may enter into as the company and that is a contract subsisting, but in fact there is no company behind it. It is not a question of its being done on behalf of anybody. There is no person subsisting at that stage. My view on that is that although I completely agree with Deputy Sweetman that it is illogical from the point of view of the law and that it is a physical process to an extent, nevertheless, in view of the commercial exigencies of the situation, we have to put something like that and leave it to the courts to interpret such a section in the light of reality.
There is one other matter covered by the Minister's amendment which I have come across in practice—a series of leases was granted by the company, sealed and so on by the company, and by some chance I have found it had been done prior to the date of incorporation. I think the Minister's proposed amendment would perhaps catch that type of case.
I would be interested to know what the Chairman did with these documents. I am not convinced, quite honestly, but I will be happy to withdraw the amendment if the Minister will ask the draftsmen to look at it in the light of the discussions we have had today. If the Minister is happy, I am happy.
I move amendment No. 23 :
In page 35, subsection (1), line 48, after " by " to insert " it ".
This is only a verbal amendment—to insert the word " it ".
I move amendment No. 24 :
In page 36, subsection (1), to add a new paragraph as follows :
" (d) Alternatively a Company may file a Notice with the Registrar of Companies specifying the persons who are entitled to complete contracts on behalf of the Company, and when such a Notice is so filed such persons shall be enabled to bind the Company accordingly ".
This is the German principle. We had some discussions on it earlier. The Minister may feel it is really more a matter for a general review of the law of contract.
I have looked into it from that point of view and, as I interpret Deputy Sweetman's statement now, I agree that it would be more proper to deal with this matter generally in relation to the law of contracts. That is the position.
I trust the Minister will ask the Department of Justice to advert to it whenever they are considering the law of contract in the future. That would be a better scheme.
I move amendment No. 25 :
In page 38, subsection (7) (b), lines 21 and 22, to delete " previously issued " and substitute " issued within the preceding 3 years ".
This amendment has been introduced at the suggestion of the Industrial Credit Company. They pointed out that in this country it would be quite possible for a company to have an interval of, say, 30 years between two public issues of shares. As drafted, subsection (7) (b) would entitle such a company to ignore the prospectus requirements of the Third Schedule in order to make the second issue even if substantial changes had occurred in the calibre of the company. The Industrial Credit Company felt that the easement should not extend back further than three years.
The purpose of the section is to ensure that people who are subscribing to the issue will be advised on all relevant facts and have all relevant facts before them. Is it reasonable to expect a person to retain relevant facts for a period of three years ? I think an amendment of the sort suggested by the Minister is eminently desirable and should be supported. I did not understand the point when I saw the amendment. I would restrict it even further.
I would not object to two years, if the Committee wish it.
Investors will not carry things like these terms in their minds for a long time. A year is quite long enough. After a year, there could be a very material change in the circumstances of a company and an issue.
You are envisaging the issue of a prospectus and looking for money from the public. They are entitled to have all relevant information.
Can you have two issues within a year ?
It is very unlikely.
If you say a year, it would be nothing at all.
You are not likely to have two genuine issues. The point about the Industrial Credit Company's suggestion is to hit at what could be sharp practice. You could have a company which made a genuine issue and then the control of that company could have passed into wrong hands and they could make another issue——
Pari passu——
——Pari passu with the previous one even though the company might have been billed badly in the meantime.
I think we are all in agreement with the Minister. The question is whether we go as far as Deputy Sweetman.
I have no objection to going for one year except that one does not——
There is a lot to be said, unless you can give a very positive reason for standing on the considered draft—unless there is some very strong reason for going closer, when the principle is agreed.
Does the insertion of the period strengthen the Bill ?
It does, very definitely.
I feel that if you make it one year you might as well say that every issue has to comply.
I would be frightened of using the words " every issue " because you have an issue and you have extra applications in relation to the same issue. I think you could hold that your provisional allotments which were rights were under one issue and your excess applications, which are generally dealt with at a second meeting, after the first one.
If Deputy Sweetman's point is valid there it is valid for a year because a year would not be sufficient, I think, in ordinary purposes to deal with such contingencies then. I wonder would it ?
I am in the hands of the Committee. I do not mind whether it is two or one.
A month would be——
It is unlikely, but possible.
I am very clear that the Minister's amendment is an immense improvement on the section.
We are all agreed on that.
You cannot alter the amendment here.
The amendment may, by leave of the Committee, be altered.
I thought you could not. I was codded there. I do not mind : I shall leave it to the Minister.
Make it one, so.
Preceding year, instead of——
Are we getting into any interpretation difficulties by the use of the phrase " in the preceding year " ?
If we are getting into trouble about that, are we not equally getting into trouble about " three years "?
Possibly not—" within preceding year ".
Make it " two years."
All right.
" Within the preceding two years." Amendment No. 137 will need to be similarly amended when we come to it.
" Two years " gets over your drafting difficulties.
Amendment, amended by leave, by the substitution of " 2 " for " 3 ".
I move amendment No. 26 :
In page 41, subsection (3), line 10, after " consent;" to insert " or ".
This is to rectify a simple printing omission.
On amendment No. 27, amendments Nos. 28, 29, 30 and 31 are consequential and amendment No. 32 is consequential on amendment No. 30. I suggest we take amendments Nos. 27, 28, 29, 30 31 and 32 together.
I move amendment No. 27 :
In page 45, subsection (1), lines 48 and 51, to delete " third " in each place where it occurs and substitute " fourth "
Deputy D. Costello made a suggestion that the public should have a little more than three days to examine the prospectus. This gives the public an extra day. The other amendments are consequential then.
I am not quite happy about amendment No. 32, which reads :
In page 47, between lines 15 and 16, to add a new subsection as follows:
" (6) In reckoning for the purposes of this section the third day after another day, any intervening day which is a Saturday or Sunday or which is a bank holiday shall be disregarded and if the third day (as so reckoned) is itself a Saturday or Sunday or such a bank holiday there shall for the said purposes be substituted the first day thereafter which is none of them."
Does this amendment in fact mean now four days when you have to disregard Saturday or Sunday and that you cannot have an issue, then, before a Bank Holiday weekend, for example ? Is that not so ? Maybe that is a good thing, I do not know.
The amendment merely gives you another extra day, if your final days happens to be a Saturday, Sunday or Bank Holiday.
I am advised that this is purely a drafting amendment consequential on amendment No. 30.
Very well.
It is certainly not the smoothest language in the world.
It means working days, really.
I move amendment No. 28 :
In page 45, subsection (2), line 58, to delete " third " and substitute " fourth ".
I move amendment No. 29 :
In page 46, subsection (5) lines 16 and 18, to delete " 7 " in each place where it occurs and substitute " 9 ".
I move amendment No. 30 :
In page 46, subsection (6), line 22, to delete " and section 57 ".
I move amendment No. 31 :
In page 46, subsection (6), lines 23 and 25, to delete " third " in each place where it occurs and substitute " fourth ".—
I move amendment No. 32 :
In page 47, between lines 15 and 16, to add a new subsection as follows:
" (6) In reckoning for the purposes of this section the third day after another day, any intervening day which is a Saturday or Sunday or which is a bank holiday shall be disregarded and if the third day (as so reckoned) is itself a Saturday or Sunday or such a bank holiday there shall for the said purposes be substituted the first day thereafter which is none of them."
I move amendment No. 33 :
In page 47, subsection (1) (a), line 22, to delete " descriptions " and substitute " occupations".
This amendment was suggested by the Chartered Accountants because the word " occupations " is used in other provisions of the Bill.
I move amendment No. 34 :
In page 47, subsection (1), between lines 34 and 35, to insert the following :
" provided that, where shares are allotted to the members of a company on a capitalisation or provisionally allotted on a rights issue it shall not be necessary to make a return of the particular allottees, notwithstanding that in either case there may be a right of renunciation ".
This relates to the section dealing with returns as to allotments. The amendment provides for a relaxation of the burden. In the case of a bonus issue on a capitalisation of reserves, the members are entitled to the shares in proportion to their existing holdings and there is not much point in requiring that all their names be listed in making the return of the allotment to the registrar. It will be sufficient if a general description of the issue is given. Similar considerations apply in the case of a rights issue where shares are issued to members at a favourable price in proportion to their holdings. Such shares are often allotted on renouncable letters of allotment to facilitate passing them on to other persons.
Why do you not have to make a return?
It is not necessary. Rights issues are usually taken up by the existing members of the company in proportion to their holdings.
I am thinking of the stranger coming in on renuciations.
You would not get those in the allotment returns anyway.
You get those in the annual returns. Is it not on the return of allotments you pay the additional stamp duty on the capital ?
That will not be affected by this amendment.
I move amendment No. 35 :
In page 49, subsection (2), to delete paragraph (b), lines 13 to 16, and substitute:
" (b) the company has forwarded with each notice of the meeting at which the special resolution is to be considered a copy of a statutory declaration which complies with subsections (3) and (4) and also delivers, on the same day as such notices are issued, a copy of the declaration to the registrar of companies for registration."
Deputy Sweetman suggested that copies of the declaration should be made available on request. It seems preferable that a copy should go out with each notice of the meeting, so that shareholders will have it before them. There will be no necessity to make the request then. This goes further than the suggestion.
It meets me and goes further than I suggested.
I move amendment No. 36 :
In page 49, subsection (3), line 18, to delete " 21 " and substitute " 24 "
I move amendment No. 37 :
In page 51, subsection (2), to delete lines 26 and 27.
Perhaps we could take with amendment No. 37 amendments Nos. 39 and 45.
The purpose of these amendments is as follows. It is now considered unsafe to allow the share premium account to be used for paying up amounts unpaid on shares. It could happen that a company heading for liquidation would have a share premium account and the application of this to fill up any amounts unpaid on the shares would be an injustice to creditors, since no additional cash is thereby brought into the company. It is in protection of creditors, to avoid calling on resources that really do not exist.
I move amendment No. 38 :
In page 51, subsection (1) (c), lines 51 and 54, to delete " 3 " and substitute " 2 ".
Deputy Sweetman thought the period of three years too long in this instance. Although this is the period recommended by the Company Law Reform Committee, I do not see any objection to reducing it to two years. Therefore, I propose to reduce it to two in the amendment.
I move amendment No. 39 :
In page 53, subsection (6), line 3, to delete " or in paying up the amounts unpaid on any shares " and to delete lines 4 and 5.
I move amendment No. 40 :
In page 53, subsection (1), line 7, to delete " which is not a private company ".
I move amendment No. 41 :
In page 53, subsection (1), to delete paragraph (b), lines 12 to 17.
We had a long discussion about this in committee as to the desirability of giving private companies the right to redeem preference shares. I think I resisted that suggestion fairly strongly. The proposed amendment will, I think, take into account both points of view in that a private company may redeem preference shares, provided it is supported by an Order of the court.
That is in respect of preference shares issued before 1959. If since 1959 a company has issued redeemable preference shares, even if it is a private company, it need not go to the court?
That is the position.
This only means a company can go back on the arrangements it made when it issued the preference shares which were not then redeemable if the court sanctioned the scheme as being fair to everybody all round?
On recollection, I think this was a suggestion put forward as a compromise and it seemed to be generally acceptable.
This keeps the redeemable preference to the 1959 companies?
It does not affect them at all.
The others can have it by going to the court?
Yes.
I move amendment No. 42 :
In page 53, subsection (1), to insert before line 36 a new paragraph as follows :
" () in the case of a private company the redemption must have been sanctioned by the court."
I move amendment No. 43 :
In page 53, between lines 35 and 36 to insert a new subsection as follows :
" (2) The powers conferred by this section may be availed of only by means of an offer made to all the holders of the preference shares concerned."
Amendment No. 44 is consequential.
A number of members of the Committee argued during the Committee Stage that the offer should be available to all holders of preference shares, and there seems to be no objection to this.
This meets it.
We were afraid certain holders could be picked out.
I move amendment No. 44 :
In page 53, to delete subsections (4) and (5), lines 49 to 62.
I move amendment No. 45 :
In page 54, subsection (9), to delete lines 21 and 22.
I move amendment No. 46 :
In page 54, subsection (1), line 43, before " alter " to insert " in general meeting ".
Amendment No. 47 is consequential.
If I may deal first with amendment No. 47, this subsection deals with the power of the company to alter its share capital. The subsection refers to the word " must ", and it might, therefore, be held to conflict with the new subsection which will be introduced in amendment No. 77 and which is designed to permit written resolutions in future. I think Deputy Sweetman made the point about written resolutions. To remove any doubt that a written resolution will suffice for the purposes of Section 68, it is better to delete subsection (2) and to insert instead in subsection (1) the appropriate reference to " general meeting."
It is only by the people being physically present that you can change.
I move amendment No. 47 :
In page 55, to delete subsection (2), lines 6 and 7.
I move amendment No. 48 :
In page 58, line 28, to delete " or " where it secondly occurs, and to delete paragraph (c), lines 29 and 30.
We propose to delete paragraph (c) because it is not necessary to have any reference to aiders and abettors since these persons are adequately covered already at common law and by the Petty Sessions (Ireland) Act, 1851.
I move amendment No. 49 :
In page 58, subsection (2), line 49, after " days " to insert " (or such longer period as the court, on application made to it by any shareholder before the expiry of the said 28 days, may allow)".
Deputy Costello suggested that a period of 28 days might not be sufficient in certain cases and the amendment provides for an application to the court to extend that period beyond 28 days.
I move amendment No. 50 :
In page 58, subsection (4), line 62, to add :
" but an appeal shall lie to the Supreme Court from the determination of the court on a question of law."
Objections were raised by a number of Deputies to a decision of the court being final. The amendment provides for an appeal to the Supreme Court on a question of law which most Deputies advocated.
I move amendment No. 51 :
In page 59, line 15, to delete " subsection (2) " and substitute " subsections (2) and (3) ".
This is a simple drafting amendment arising out of the insertion of a new subsection (3) in Committee.
I move amendment No. 52:
In page 61, line 43, after " owner " to insert " or votes at any meeting of the Company ".
When we were discussing this before, we found that apparently there were certain penalties for a person personating a shareholder to get a share certificate or interest due but there was no penalty for a person who personated a shareholder and by so doing came into a general meeting of the company and caused absolute chaos.
That is by voting, not just by creating a row ?
No, by voting. If I go into a meeting in the name of, say, Deputy Vivion de Valera, I may have a resolution at a meeting rejected. There should be a penalty to prevent that just as there is a penalty if I take Deputy de Valera's interest warrant. In fact, the personation voting at a meeting is a far more serious thing for the company than just taking the interest warrant. An interest warrant may be a serious thing for the person concerned who has lost his interest but it is not nearly so important to the company as a misvote in that manner. It may be that that fraudulent personation is caught somewhere but I cannot find it.
There is some substance in what Deputy Sweetman says.
I have looked into this point and it would not be appropriate to adopt the amendment as the penalty for the offence for which the section provides is too severe for transgressions of the kind which Deputy Sweetman as in mind.
Too severe ? It is not severe enough. Supposing a shareholder has a substantial block of shares and somebody goes in and personates that shareholder. A resolution could be completely overborne though it would have been carried otherwise or it could be carried although it would have been overborne otherwise. The whole affairs of the company are thrown into chaos. Court orders would have to be obtained to rectify it and so on.
Would it upset the section very much to adopt the amendment ?
I am not absolutely certain whether it would upset the Bill in any serious way.
Will the Minister have a look at it ?
Yes.
I agree with Deputy Sweetman that this could be an extremely serious matter. It is very difficult to identify people sometimes.
It would rarely happen.
It did happen and caused utter chaos.
I move amendment No. 53 :
In page 61, before subsection (1), between lines 48 and 49, to insert a new subsection as follows :
" (1) Every company shall keep a register of holders of debentures of the company and enter therein the names and addresses of the debenture holders and the amount of debentures currently held by each.
For the purposes of this subsection, debentures do not include any debenture which does not form part of a series ranking pari passu nor any debenture which is transferable by delivery.”
As amendments Nos. 54, 55 and 56 are consequential, I suggest they be taken with this amendment.
Deputy Sweetman made the suggestion that there ought to be a provision of the kind proposed here. I think he is supported by the Jenkins Committee in this respect. They thought that the absence of a register such as is proposed in the amendment could prejudice the position of debenture holders and they recommended a clause on the lines of the amendment.
I am grateful to the Minister. I did not know I had such weighty support.
I move amendment No. 54 :
In page 61, subsection (1), lines 49 and 50, to delete " which keeps a register of holders of debentures of the company ".
I move amendment No. 55 :
In page 62, subsection (2), lines 1 and 2, to delete " which keeps any such register ".
I move amendment No. 56 :
In page 62, to delete subsection (4), lines 9 to 12, and substitute:
" (5) Where a company makes default in complying with subsection (1) or (2) or makes default for 14 days in complying with subsection (3), the company and every officer of the company who is in default shall be liable to a fine not exceeding £50."
