This section provides that a company may be required to investigate the ownership of shares under the powers they have under section 73 if one tenth of the members of the company apply for it in a requisition. This requisition, according to the section, must give "reasonable grounds" for requiring the company to exercise these powers. Given that this is compulsory on the company once one tenth put down a notice requiring an investigation of this kind — it is not something the company has a meeting about and decides, it is compulsory if one tenth wants it — to avoid mischievous repetitive investigations, would it not be desirable for the Minister to specify the "reasonable grounds" in the legislation so that investigations would not be required in mischievous or unnecessary circumstances.
SECTION 75.
In principle that is not unreasonable. The difficulty is the definition of "reasonable grounds" as what may be reasonable in one case may not be in another. Obviously one does not want to encourage people to apply mischievously or vexatiously for investigations of this kind. The matter is probably covered by subsection (5) where if the company refuse, because presumably they regard the grounds as not being adequate or reasonable, then the aggrieved requisitioners can apply to the court for an order compelling the company to exercise their powers under section 73 if the court considers it reasonable to do so. If the court agreed with the company that it was not reasonable to exercise the power it would not make the order compelling them to do so.
"Reasonable" is about the most overworked word in this legislation. We are constantly being told that the court must behave reasonably, that the company must behave reasonably. Reasonableness is not a very clear and definite concept upon which people can make business decisions. What is reasonable for one person could be unreasonable for another. What we may well be doing here is legislating for uncertainty, the creation of uncertainty. We must remember that you can have minorities within a company, say a 15 per cent minority, who know, for instance, that they have lost the battle to take over the company and are in very bad humour with the company, they cannot dispose of their shares and decide that they will make a profound nuisance of themselves.
They can force the company, it would appear, by requisitions for investigations which are refused, into having to go to court and the company then have to defend their refusal to have an investigation on the flimsy ground that they feel it would not be "reasonable". There is no guideline given as to the definition of reasonable and therefore until you know which judge is hearing the case and what way he or she is likely to look at issues, you have no way of knowing what the law is. It is well known that, depending on what judge you appear before and, indeed, depending perhaps on the day of the week in some cases, the decision can be quite variable. In those circumstances, to leave the whole decision hinging on the single word "reasonable" and to fail as a legislature to specify what we think is reasonable is legislating, as I say, for uncertainty. I am unhappy about this. I know it is not unique to this section; it runs through the legislation and it is not very good.
There are two points I would make in reply to Deputy Bruton. First, whether he likes it or not and whether he agrees with it or not, the concept of reasonableness runs through the common law. The question was asked in the last century or early this century: who is a reasonable man? The reply is the man on the Clapham omnibus. Deputy Bruton can apply that in whatever fashion he likes to County Meath or anywhere else, to the man in the mart at Navan or whoever. This is the system of law we happen to have. There is a certain vagueness about it but there is a certain security in the vagueness, in my respectful opinion, because it allows the courts to weigh up all the circumstances. It does not tie them down in the way that, for example, Finance Acts tie them down to interpreting things even when they feel it might be inequitable to have to interpret them in a particular way.
The other point I would like to make is that the sections we are talking about relate to public limited companies and, in practice, mainly to quoted companies. If somebody owns 10 per cent of a public limited company, that is not an insignificant holding and he is entitled to some information. If he is not on the board, for example, or has not a nominee on the board, it is probably not unreasonable for him to ask that investigations be carried out. It would not normally be one person — because it is not often that one person holds 10 per cent of a quoted company — but rather a group of people who feel they have common interests and they are not an insignificant minority, I suggest.
I would be very concerned if we started to define reasonable behaviour. I accept what Deputy Bruton has said but I would not like to ask him to define it. I do not think it would be practical because, as the Minister has said, it depends on the environment, the circumstances and the background in each case. Quite frankly, we could be creating more problems for ourselves if we gave too narrow a definition.
I agree with the Minister that you would find at the end of the day you would leave out some aspect of reasonable behaviour. We have a very lengthy Bill as it is and if I was to ask Deputy Bruton to start defining reasonable behaviour, even in the context of this section, I think we would be putting ourselves into extreme difficulties.
I do not want to prolong the issue either. Wherever the word "reasonable" appears it might be useful to say: in determining what is reasonable the court shall take into account the significance of the financial interests involved, the costs of the investigation and of compliance, or something of that kind, to give an indication to the courts what the legislature regards as comprising reasonableness without closing off other considerations.
The reference is in subsection (2) (c). I am prepared to consider that but I am loath to get into a situation where big shareholders have necessarily certain rights and small ones, by virtue of their smallness, do not. There would be a danger of that happening if the wording was put in exactly the way the Deputy expresses it. We could look at the possibility of trying to express it along those lines and avoiding that problem. I will do that before Report Stage.