When the debate was adjourned progress was reported on amendment No. 91 to section 71. Deputy Bruton has spoken on amendments Nos. 91 and 92, which are related and the Minister was in the process of speaking on those amendments. We will take it from there, please.
SECTION 71.
Debate resumed on amendment No. 91:
In page 67, subsection (3), line 29, before "fails" to insert "knowingly".
—Deputy J. Bruton.
In these two amendments the Deputies are proposing that the word "knowingly" should be inserted in two of the paragraphs in subsection (3) of section 71. The primary purpose of section 71 is to create a number of sanctions, both civil and criminal, where the disclosure requirements of Chapter 2 are not complied with. Subsection (3) provides for civil sanctions for non-compliance with the obligations imposed. The sanction being imposed is that no right whatsoever in respect of the shares will be enforceable by a person who fails to notify the company as required. In other words, he could not vote his shares, he could not force the company to pay him a divided, he could be prevented from attending the AGM and so on. This is an important reinforcement of the basic notification requirements under sections 59 to 63. It happens quite often that a person will be willing to risk a prosecution and payment of a fine if in the long run he derives benefit from his actions. For example, a person who is trying to build up a substantial holding in a company may consider it worth while to risk criminal prosecution rather than disclose his shareholding in the company. With the present provision, however, such a person will be unable to enforce any rights he may have in relation to the shares.
What the Deputies are proposing is that these sanctions should apply where a person knowingly fails to fulfil his obligations. I must point out, however, that subsection (4) in my view already covers this situation in that it provides that a person may apply for relief against the sanctions imposed under subsection (3) where failure to fulfil his obligations was accidental or due to inadvertence or some other sufficient cause or that on other grounds it is just and equitable to grant relief. Thus it is clear that where a person's failure to notify his holdings as required under Chapter 2 was not done knowingly, he will be able to avail of the relief provided for under subsection (4).
I would like to stress also that the notification obligations imposed under Chapter 2 in relation to shareholdings of over 5 per cent arise only where a person actually knows that he has acquired an interest. Under section 59 an obligation of disclosure arises only where a person (a) to his knowledge acquires an interest to which Chapter 2 applies or (b) becomes aware that he has acquired a notifiable interest. It is clear, therefore, that the sanctions contemplated under section 71 will not apply where a person does not know that he has an interest which should be notified. Neither will it apply where a person's failure to notify the company was accidental, due to inadvertence or any of the grounds covered under subsection (4) of section 71. I am satisfied, therefore, that the point which the Deputies are seeking to cover in these amendments is already covered under the Bill as it stands and, therefore, the amendments will not be accepted.
May I ask the Minister for the second reference to the Bill, where he says that knowledge is already required?
Section 59 (1).
It seems to me that persons may know they have a share, an interest in shares, under section 59 but not be aware of his or her obligation to disclose that at a particular point or in a particular way in accordance with section 71. If that is the case it might be no harm to put in the requirement of knowledge in section 71 as well as in section 59.
I do not think it is necessary for the reason that if a person knows, for example, under section 59 that he has shares but if he does not know that he has a notifiable interest or holding, in other words that he has 5 per cent or more, then that section does not apply to him.
I should like to ask the Minister to explain how someone would not know they had shares in a company.
There are a number of ways and two that occur to me are that they would have inherited the shares and would not yet have known and, secondly, that the shares could have been bought on their behalf that day, or the previous day, and they had not been informed.
Would it not be better to put the obligation on the company to notify the person that they had shares?
No, the company would not know for some time afterwards because the company would not know until after the person himself knew because he would have to register his shareholding.
The Minister seems to have met the point.
Amendment, by leave, withdrawn.
Amendment No. 92 not moved.
Sections 71 and 72 agreed to.