This section, as I understand it, says that if any event that is contemplated in section 48 (2) — that is essentially a change in ownership of a company or something to do with nominee shareholdings in a company — happens, there is an obligation to notify this information within five days. I can understand the need to have such a tight time limit in the case of publicly quoted companies where time is of the essence and take-overs are occurring, shareholdings are being built up and so on and one wants to have this information quickly, but I wonder, in the case of a small private company, if some event of the kind mentioned in section 48 occurs, if the section applies? Is it realistic to say that criminal sanctions will occur if one takes six days rather than five to notify this sort of information? I am raising this as an example of the point I was trying to make earlier.
SECTION 50.
With any time limit, one can set any figure of days, weeks, months or years even, but experience has shown that it is better in a requirement of this kind to have a short time limit to ensure that people will comply with it as soon as the event happens. If they have some weeks or months in which to comply with it, they tend to put it on the long finger and forget about it. It is human nature that it will not be complied with if there is a long time limit. People are conscious of the requirement when they carry out the activity that gives rise to the necessity for notifying it and they should be encouraged to do it more or less simultaneously. That is why a five day period is there. It was apparently argued before that it should be extended to ten days, some weeks and so on, but there was agreement in the Seanad that on balance it was better to leave it at five days.
In relation to the requirement that notice be kept that this provision was adhered to and that notice was given within five days, who would know whether it was or was not kept? Has a record to be kept of the date on which the notice was given? Would the Minister not agree that in relation to small family companies, the vast majority of people will be unaware of all the provisions of the Companies Act? It is all right for a large corporation who make it their business to inform themselves of what is in this type of legislation, but I suggest that in a small firm of maybe a husband and wife, they would be totally unaware of all its provisions, particularly in relation to this section. I know ignorance of the law is no defence but to be practical, I cannot see how we can expect the small average family company to be totally aware of the fact that they have to make changes like this, and that they have to be made within five days. Could we make some effort to be realistic not to the large private company but to the small family company that Deputy Bruton referred to earlier, the company genuinely doing their business, but which will be unaware of this provision? It is pointless making laws that are incapable of being policed and enforced.
What is the limit at the moment?
The present limit, if you could call it that, under the existing legislation is "as soon as may be". The committee will agree that trying to put something specific in, in lieu of "as soon as may be" is desirable. There will be many changes in company law when this Bill is passed, but my Department will seek to publicise the changes as widely as possible in as simple a way as is possible, and draw the attention of shareholders to the new requirements for giving notice of certain things. We are not just talking about anything and everything, we are talking about the requirement under section 48 which is that the director disclose his shareholding. The changes in that presumably small company would be very infrequent. Sometimes they might never happen in the lifetime of a company, so it is not a thing that will have to be done every day of the week.
Is there a requirement that notice be kept of the fact that changes of this nature were made within five days?
The existing requirement to notify "as soon as may be" is under section 193 of the 1963 Act and it is a criminal offence not to notify under the existing legislation.
May I suggest that the Minister make the limit two days for public companies, not five, and 14 days for private companies? The reason I suggest this is that the requirements for prompt disclosure are more important where it is a company whose shares are capable of being traded.
I would draw the Deputy's attention to the fact that in amendment No. 109, I will be proposing transitional provisions for these requirements and the period in the transitional provision will be ten days in lieu of five. That largely meets the Deputy's point. There are only four days between us and in any event, I would remind the committee that Saturdays, Sundays and public holidays are excluded in the computation of the five days.
The very infrequency of the changes of ownership in most companies is the reason that inadvertently people may fail to comply with section 48, particularly if it is something that they leave to their legal advisers to look after for them rather than do themselves. Then we could have a situation where somebody's solicitor was somewhat negligent or inefficient and did not get the information in within five days. If it is a solicitor who would be dealing with it, it could be an accountant — I do not wish to single out any profession here — they are all competing with one another. They are in the same field increasingly——
That was not meant to be a compliment.
I know your anxiety for competition in the professional field is only matched by your anxiety to take on the competition in the political field as well.
I wonder if the sotto voce insults that are going on will appear on the record?
Parliamentary privilege but it is better not to abuse it.
Can I ask the Minister if he would have another look at whether the transitional provisions might not be the best provisions to have permanently, particularly as they apply to the smaller companies.
I will have a look at that. When we come to amendment No. 109 I will consider extending that to 14 days. That may cover it and we will have a look at whether the transitional provisions might be made permanent in respect of some aspects of this at least. What we are talking about is the duty of a director to notify his own company. That is something fairly basic and not, I think, unduly onerous.
How can you bring a prosecution if there is no requirement to keep a note that this was adhered to within five days. How is it ever going to arise? If you are not required to——
But you are required, Deputy.
Put into the register?
Yes. Section 53 (2) creates the requirement.
That does not answer my point. How do you know if it was done within five days?
One has to put in some time limit, otherwise it will never be done. I will look into the query the Deputy raises as to how you prove the time.
Would it not meet the point if section 53 (2) was amended to include not only the date of the entry but also the date of the transaction?
We might be able to make an amendment to section 53 (2) to cover that point.