Dáil Éireann díospóireacht -
Wednesday, 5 Mar 1958

Vol. 165 No. 7

Tea (Purchase and Importation) Bill, 1957—Committee Stage (Resumed).

Question again proposed: "That Section I stand part of the Bill."

Mr. Sweetman

The Minister placed in the Library since last week a copy of the Draft Memorandum and Articles of Association of the proposed company. I want to raise a couple of questions on the Articles of Association. In Article 71 there is a most unusual provision in sub-paragraph (f). It seems to me most likely, in relation to this body, that a small group of small registered tea traders might come together and select one of their number to represent them on the board of the company. Because of being small in number they would be able to elect only one director. Now, it is most unusual to provide in any Articles of Association that the office of director shall be vacated if a director is requested in writing by all his co-directors to resign. In the circumstances in which this company is being set up that is a grossly improper provision. It is certainly a provision which will enable the larger traders to oust any representative of the smaller traders by a simple act done in the secrecy of a boardroom. There is the normal course under Article 80 in which the company can by extraordinary resolution remove a director. That is perfectly proper. That can only be done with the attendant publicity that a general meeting of the company requires. If a director has so acted that it is not proper he should remain a director, in my view it would be perfectly right that he should be removed by the company in general meeting under the provisions of Article 80. That is the normal procedure, a procedure which receives publicity and which would be proper for this type of company. The other provision is one that, in my view, would be entirely inappropriate for a company of this nature—that a particular director could be removed merely because he is obnoxious to others on the board when, as very well may be the case, he represents a smaller and different class of tea trader than the classes that the other directors represent.

The Bill provides in Section 2 that the Articles of Association cannot be amended without the consent of the Minister. I would urge the Minister very strongly indeed to require that clause F of Article 71 would be deleted before the company is incorporated. I am one of those people who feel very strongly that it is a great mistake to expect people to do work and not to pay them adequately for their work. But I do rather feel that the limitation on dividends included in the Bill is somewhat unreal in the light of the provisions which are included for payment of fees to directors, together with the provisions included for directors being able, under Article 73, to form subsidiary companies and to receive payment for membership of the boards of such subsidiary companies.

Again that might be, and would be, a normal practice in ordinary cases. It is entirely improper for the case we are discussing under this Bill. I would urge the Minister strongly to remove that article or at any rate, if it is to be retained, to provide in relation to it the same provisions as exist in the British Companies Acts, 1929 and 1948, that is to say that the parent company must on the face of its accounts disclose the remuneration received by directors of the company acting on any subsidiary of that parent company. At the very least that should be done in the special circumstances of this case and I think more should be done. Section 73 is, candidly, not appropriate.

I am obliged to the Minister for the facilities he gave us to examine the draft of the memorandum and articles. I think the second point I raised is of importance, but the first point is absolutely vital. I would press the Minister very strongly in relation to it. I am not quite clear exactly how one can cope with that on an amendment for the Report Stage but I trust that the Minister will see the force of the argument and insist on that clause being knocked out before the Report Stage.

When we were discussing this Bill last week, before the adjournment we had a little badinage across the House. The Minister suggested on one or more occasions that I might read the Bill. I did read the Bill and I understood the meaning of Section 8. The more I read the report of last week's debate, the more it becomes clear to me that the Minister does not understand the legal implications of Section 8.

An Leas-Cheann Comhairle

We are discussing Section 1.

Mr. Sweetman

We discussed all this on the section. It was the Minister who referred particularly to Section 8 the last time. Discussion on the first definition is inevitable because the powers, duties and responsibilities of the company must be dependent on the incorporation of the company. It was for that reason we asked for the draft memorandum on the last occasion and it was for that reason the discussion took place on this section rather than on the other sections.

The function of an agent, as set out in this legislation, is quite clear. If I become a registered tea trader and decide to buy tea in India, the agent goes to the auction, bids for the amount I suggest and, having bid at the auction, arranges for the tea to be exported from——

Mr. S. Lemass

Section 8 relates only to acting as agents for importation, not for purchase.

Mr. Sweetman

I thought from the Minister's argument the last day on financing that he was intending to make importation include purchase. If that is not his interpretation, then I am very much stronger in the view I shall put to the House. The tea is bought at an auction and arrangements have to be made for shipping, for the usual customs duties clearances in India and at this end, loading and unloading, delivery and so forth. I understood the other day that the Minister meant that to include purchase. Apparently, he does not feel now that it does include purchase.

The Memorandum of Association provides, in No. 2, that the company is empowered to carry on business, financing and so on, but if the Minister will look at column 756 of last week's debate he will see that he committed himself on record as saying that the company would be bound to provide the finances for any registered tea trader who wished to import. There is nothing in this Bill, or in the provisions binding the company to act as an agent for importation, to bind the company to finance any purchase of tea by anyone other than that it can, of course, be bound to finance its own purchases. That is where I think the Minister was most misleading to the House last week.

Surely the company cannot be bound, by virtue of the terms of this Bill, to finance the purchase of tea by a person who is a registered tea trader but who is not solvent? It could not be done. Whether a registered tea trader buys or does not buy must depend, first of all, on his own personal solvency, and if the shipment that is coming is to be the security for the financing, then it must depend on the price at which he buys it.

It would be utterly impossible for the company to be bound, to be obligated, to finance any individual purchase. Certainly there is nothing in the Bill that does so obligate the company, and in my opinion it would not be practicable to include any such provision. Once that is admitted—and I think it must be admitted—then the whole argument the Minister was making last week about the company being bound to finance the small trader if he wishes to import tea falls completely to the ground.

One of the objections—although we need not go into it on this stage—to an obligatory purchase in the country of origin is that such a purchase, to be economic at all, means inevitably a very large purchase and, inevitably, when you restrict purchases to the country of origin, you are automatically, in practice, restricting purchases of tea to the large firms.

Last week, the Minister tried to suggest that that argument is invalid because the company was bound to finance every registered tea trader and every individual purchase of tea. I doubt very much whether anybody would consider that possible. I am quite certain of one thing, that is, that if that is the correct interpretation of this Bill, it would never have got through anywhere.

Mr. S. Lemass

I had some hesitation before deciding upon the wisdom of putting a copy of the Memorandum and Articles of Association of the company in the Library because, as Deputies know, it is not uncommon to frame these documents on a very wide basis to provide for every possible contingency, no matter how remote, that may arise at any time for the company concerned. I must make it clear that I am not taking any responsibility for these Articles, except in respect of the particular matters that are of concern to me as Minister in the administration of this Bill.

It satisfies me that these documents have been accepted by the organisation of which the registered tea wholesalers of Ireland are members. Presumably they discussed them in detail and have satisfied themselves as to the reasons for all the provisions in them.

There is, however, one aspect of the matter to which Deputy Sweetman referred which should be stressed. One of the conditions which I regard as essential and for which these Articles provide is that there shall be absolute equality between all the members of the company and that there shall be no possibility of a situation arising in which any section of the tea wholesalers, big or small, would be open to dominate the company in its own interest. It is provided that a registered tea wholesaler may take a share in the company, and one only, and that all shares carry equal rights and that the election of the directors is made by the votes of all the shareholders.

Mr. Sweetman

All the "A" shareholders?

Mr. S. Lemass

Yes, so that the board of the company will be the people whom the registered tea wholesalers of Ireland will want to have. There is certainly no intention that it should be subject to influence or control in respect of its membership by the Minister for Industry and Commerce. What then has the company to do? It is being set up for the purposes set out in the memorandum, primarily to act as importing agent for dealers in tea, and to take on the business of financing in respect of the importation of tea. There are other objects stated in the memorandum but it will never have the resources to carry them out. Its primary purpose is to act as importing agents for dealers in tea. It will, under the provisions of the Bill, be the sole importer of tea. It will not be the sole buyer. It will finance dealings in tea by individual registered tea wholesalers, if that facility is required by them.

Mr. Norton

Would the Minister repeat the last sentence?

Mr. S. Lemass

It will finance the purchases of tea by registered tea dealers who require that facility from them. The Bill provides that it must act as a shipping agent for the import of tea for any registered tea wholesaler. That provision must obviously be there, because it alone can import tea. Therefore, any tea merchant who has purchased tea must be entitled, as of right, to that facility from the company.

When one comes to consider the question of a corresponding provision relating to the financing of purchases, one will easily realise the impracticability of making it a statutory obligation on the company, because ordinary commercial considerations would require it to have regard to the creditworthiness of the merchant. The point is that the company is being set up for that purpose. It is the aim of its founders and the desire of the tea merchants of Ireland who are setting it up that it should proceed in that way.

I will not attempt to answer the question why certain provisions relating to directors were put in. I do not think they are important from our point of view. If all the tea merchant members of the association regard these Articles as acceptable to them, I do not know why we should interfere with them, nor would I consider that the power taken in Section 2 to require ministerial consent to the amendment of the Articles should be used to prevent amendments to these purely machinery Articles.

Mr. Norton

Reference was made by Deputy Sweetman to Section 8 in connection with the matter of Section I which we are now discussing. Perhaps we can discuss that section. As I understand the Bill and the Articles of Association, the position is that the new tea organisation will be the only body permitted to import tea and that any tea trader in the country who so desires may purchase tea on his own account but must purchase in the country of origin. Having purchased tea in the country of origin, he is entitled, under Section 8, to say to the new tea organisation: "You get that tea imported here for me," and the new tea organisation, being the only organisation entitled to import tea, has a statutory obligation on it to act as the importing agent for the registered tea trader. Is that not correct?

It has no obligation to finance the tea trader for the reason that many people may hold themselves out as tea traders who would be quite uncreditworthy. The organisation itself is not debarred from financing and may finance the purchase of tea if the tea trader is a creditworthy person. That is my interpretation of Section 8. Would the Minister say whether that is the interpretation he places on it and whether it is the general interpretation which we should get from this section?

Mr. S. Lemass

That is quite correct. Perhaps I should amplify what the Deputy has said. He said any trader may purchase tea in the country of origin. I would contemplate only registered traders purchasing tea and I do not contemplate this company purchasing tea at all—there will have to be some interim arrangement covering this year and perhaps next year—but the normal arrangement will be that this company will only arrange for the importation of tea purchased by the individual merchants, most of whom will probably finance their own transactions, and others of whom may seek the assistance of the company to purchase tea. But the company will not ordinarily purchase tea on its own account.

Mr. Sweetman

Might I remind the Minister of what he said last week? It is quoted at the column to which I have already referred and it reads:—

"To meet the problem of the smaller trader who may not be able to get financial accommodation and ensure that he will be at no disadvantage whatever as compared with the larger traders, this company will be there to finance his purchases for him, if he requires that facility."

Mr. S. Lemass

That is what the company is being set up for.

Mr. Sweetman

Is it not a fact that that statement of the Minister is in direct contradiction of what he has just said to Deputy Norton?

Mr. S. Lemass

No.

Mr. Sweetman

The company will not be there to finance his purchases for him, if he requires that facility?

Mr. S. Lemass

It will, yes.

Mr. Sweetman

The company will be there as a person, using the word "person" in the commercial sense, to whom one can apply for financial accommodation in exactly the same way as one can apply to anybody else.

Mr. S. Lemass

That is not correct. Say a certain merchant wants to buy tea in India and is not able to finance the purchase himself, he will go to the company and ask the company to buy the tea for him, on a basis which will involve payment by the purchaser at a later date, the transaction being financed by Tea Importers, Limited.

Mr. Sweetman

But the company being under no obligation whatever to do that, unless it thinks the transaction is a wise one—I do not see how it could be otherwise——

Mr. S. Lemass

No, not the transaction being a wise one; unless they think the person for whom they are buying the tea is not creditworthy.

Mr. Norton

Is it not a question of the tea trader being solvent?

Mr. S. Lemass

Yes, the company must exercise judgment on the creditworthiness of the merchant.

Mr. Sweetman

And therefore it comes back to the company and the directors of this company will be the larger tea traders——

Mr. S. Lemass

I do not know why you say that.

Mr. Sweetman

Because nobody except large tea traders will pay £2,500 for the shares.

Mr. S. Lemass

I do not know where the Deputy gets that. The association tells me that there will be at least 50 traders holding shares in this company and all of them cannot be large in the sense used by the Deputy. Indeed if any conflict of interest should arise in the tea trade it is more likely to work the other way round.

Mr. Sweetman

I would not think so at all. I think the explanation the Minister has given now about the financial responsibilities of the company is correct and that the explanation given last week was quite incorrect. I believe the correct explanation of its financial methods means exactly what we were saying on these benches last week, that it is only the large tea trader who will be able to import tea from the country of origin under this Bill.

Mr. S. Lemass

No.

Dr. Esmonde

I understood the Minister to agree with Deputy Norton that any registered tea trader can buy tea in the country of origin, and then it is a question as to whether this company will import the tea for him or not. The Minister left us to understand the company need not do so——

Mr. S. Lemass

They must do so.

Mr. Norton

They must act as shipping agents.

Dr. Esmonde

They must act as shipping agents—is that not so?

Mr. S. Lemass

That is correct.

Dr. Esmonde

But must they bring the tea in? Where a registered tea trader buys tea in the country of origin, must this company import it?

Mr. S. Lemass

Yes.

Mr. Norton

Or arrange for its importation.

Dr. Esmonde

And pay for its importation also?

Mr. Sweetman

No.

Dr. Esmonde

Then they have it both ways; they have a complete monopoly and can say what tea comes into the country and who buys the tea or they may not import it.

Mr. S. Lemass

They have not that power.

Dr. Esmonde

They can import the tea, but they can say to a merchant: "We will not import the tea for you because you are not creditworthy."

Mr. S. Lemass

They must act. That is the whole point. All merchants will buy tea and presumably will make arrangements for financing it, but the business of shipping the tea will be undertaken by this company. But they must ship all the tea; it is the importing company.

Mr. Sweetman

Provided they get cash down. They may say you are not creditworthy and therefore we will not bring in your tea. They have it both ways: they have complete control over the tea and who is to bring it in. They can bring in tea for whom they choose or refuse to bring it in, if they say the person is not creditworthy.

Mr. S. Lemass

But who will this company be?

Dr. Esmonde

The company the Minister is setting up.

Mr. S. Lemass

I am not setting up any company.

Dr. Esmonde

Who is setting up the company?

Mr. S. Lemass

The tea merchants themselves.

Dr. Esmonde

That is what Deputy Norton and the Minister say, but I do not accept that. The simple fact is the Minister has introduced legislation into the Dáil to set up Tea Importers Ltd., 1958——

Mr. Sweetman

To give legislative sanction to it.

Dr. Esmonde

And the Minister has complete control over them, as to whether they are registered or not, as to whether they are set up or not, and the Minister has power to remove people from the company——

Mr. S. Lemass

I have not.

Dr. Esmonde

Deputy Norton and the Minister for Industry and Commerce say that——

Mr. Norton

No, I never mentioned it.

Mr. S. Lemass

No; anybody can register as a tea trader.

Mr. Norton

May I put this to the Minister? Is it not possible for a person, having become a registered tea trader, having had his name entered on the register when this company is set up, to write to some agent in India or to some owner of a tea plantation and say: "Please send me on the following quantities of tea. I have opened an irrevocable letter of credit with the Bank of Ireland or any other bank and the moment that tea lands in Dublin, you will be paid for it." Then he can go to the tea organisation and say: "Here is correspondence I had with some tea planter in India. I have ordered that quantity of tea. I have opened an irrevocable letter of credit in a bank in Dublin and the tea planter accepts that arrangement. There are the documents. You get me that tea from India and have it landed in Dublin." Is that not possible?

Mr. S. Lemass

That is quite possible. That is the normal arrangement.

Mr. Norton

In future, any tea trader in the country, once registered as such, can buy any kind of tea he likes and all the varieties of tea he likes, and he will not be inhibited in any way from buying any variety he wants. Having made his arrangements to buy certain tea direct with the person selling tea in India or with the Irish tea importing organisation, he can import into this country what tea he likes and nobody in the world can prevent him doing it.

Mr. S. Lemass

Quite right.

Dr. Esmonde

He can only import through the company.

Mr. S. Lemass

But the company must import it for him.

Mr. Norton

He buys it freely, but the company arranges the shipping.

Dr. Esmonde

If he can buy the tea and he is creditworthy, surely he should be free to import it himself, and what we want this Bill and this company for, I do not know.

Mr. S. Lemass

Perhaps we will discuss that on Section 7, which is the section concerned.

Mr. Rooney

I want to ask the Minister whether in fact this Bill will give power to the company to be set up to get commission on every pound of tea they import here from the principals abroad from whom that tea is shipped? Is there any control on the commission and profit they can make by arrangement with the companies abroad, before the tea is sent in here at all? Is there any danger that there would not be free and fair competition in connection with the importation of tea in the matter of arrangements between the proposed new company and the principals abroad?

Mr. S. Lemass

This company will not be buying tea abroad. Tea will be bought by 50, 60 or 100 tea merchants. They will buy the tea. This company will not be buying it at all. Therefore, I do not see how the question of sharing a profit with people abroad will arise. On the question of commission, this company is set up to perform this service for its members. Presumably, for the members of the company, there shall be no question of commission. I should imagine that if they perform the same service for a non-member, some commission will be charged, because, clearly, the non-member would have to contribute to the interest upon the money which was utilised for the transactions; but the purpose of the company is not to make profit and, in order to ensure that they will not have that purpose, the dividend limitation in the Articles of Association is an essential condition, from my point of view.

Dr. Esmonde

What is to stop them making a profit?

Mr. S. Lemass

What can they do with it? They cannot distribute it to themselves, anyway.

Dr. Esmonde

They are a registered company.

Mr. S. Lemass

There is a dividend limitation in the Articles.

Dr. Esmonde

On the previous day here, I questioned the Minister and subsequently Deputy Michael O'Higgins questioned him further, as to whether this was a profit-making company or not, and he said: "Yes, they could make a profit."

Mr. S. Lemass

With a dividend limitation.

Dr. Esmonde

What dividend limitation is there?

Mr. Sweetman

There is a dividend limitation in the Articles of Association. They can get around that; there is a way of getting around that.

Dr. Esmonde

They will be the sole importers. They can charge what they like for the tea. Human nature being what it is——

Mr. S. Lemass

Human nature being what it is, the 50 tea merchants who will be shareholders of the company and who will be paying the interest charges, will take good care that it does not happen.

An Ceann Comhairle

Deputy Haughey.

Mr. Norton

Is it not clear that the tea merchant need not buy from the company? He can buy from the gardens or in the auction rooms.

An Ceann Comhairle

I have called on Deputy Haughey.

Mr. Haughey

The only point I want to be clear on is: how does the Minister propose to ensure that in exercising the commercial judgment to which he referred earlier, this company will not unfairly refuse to finance any particular registered tea merchant in the importation of tea?

Mr. Sweetman

The answer is he cannot. That is the whole row we have had for the last two days.

Mr. S. Lemass

The position is that anybody can register as a tea trader. Anybody can do it, and clearly the position as to whether any particular trader who wants to buy tea in the country of origin is worthy of the credit he is seeking from this company will be a matter for the company itself to decide. There may be a misunderstanding here. A great number of the tea merchants of Ireland, including many of the tea wholesalers, will not in fact buy tea in the country of origin at all. They will buy unblended tea from the primary wholesalers. They will blend this tea to the form we get it in the shop and wholesale or retail that tea. Those merchants who are in the business in a comparatively small way will work, presumably, in that way in future as they have done in the past. It is anticipated that there may be 50 merchants who will be dealing direct with the country of origin, buying tea, and it seems to me that, in relation to our community, that represents a very considerable number of such merchants. There is, however, no limitation upon the number of people who can import tea.

Mr. Cosgrave

If what the Minister and Deputy Norton say is a fact, that individual tea traders can import, there does not seem to be any necessity for all this elaborate machinery.

Mr. S. Lemass

Except to achieve the two main purposes, namely, direct purchase in the country of origin by firms that are Irish-owned and controlled.

Mr. Cosgrave

I was going to say a three line Bill, but a six line Bill could achieve that.

Mr. S. Lemass

I would invite the Deputy to consider whether he could take any line out of the Bill. I would prefer a three line Bill.

Mr. Cosgrave

You can introduce a simple Bill making it obligatory on them—it is another question whether it is wise or not—to purchase only in the country of origin and also restricting the right to import to Irish-controlled firms, without this elaborate machinery.

Mr. S. Lemass

The rest is merely machinery. There are other considerations which I will deal with on another section, but primarily the Bill is machinery for the effective achievement of that purpose.

Mr. Sweetman

It is most cumbersome machinery to achieve something that could be achieved in a few lines.

Mr. Cosgrave

We are talking here about the small trader and so on. The Minister says 50. In practice, what will happen is that about 50 wholesalers will import the tea; they will in the normal way distribute it either directly to their own customers or to secondary wholesalers who buy tea after it has been blended by the primary wholesalers, or, alternatively, some people who blend it themselves will buy the different varieties they want and blend it. In fact, the small tea trader, about whom there has been a lot of the talk here, will not go to India because he would not be buying in sufficiently large quantities to buy in the country of origin and will buy through the primary wholesalers, whatever number of them there may be.

Mr. Russell

I just want to clarify the mechanics of the actual buying and importing. In this new company, the Minister anticipates there will be about 50 shareholders, of whom there will be presumably a board of directors—five, say.

Mr. S. Lemass

Let me explain. There are about 90 registered tea merchants at the present time.

Mr. Russell

I know.

Mr. S. Lemass

The association tell me that they expect that, of these 90, about 50 will become shareholders of this company. The others, of course, will remain in business, but not as shareholders in the company.

Mr. Russell

I understand that. If this company will set up a board of directors who will, presumably, carry on the business of the company, that board of directors will decide who, in their opinion, is creditworthy, if the buyer of tea wants to import through them, wants to be financed by the new company. Is that correct?

Mr. S. Lemass

Yes, presumably.

Mr. Russell

That means that some of the small buyers, for instance, would have to satisfy this board of directors that they were creditworthy before they would give them the finance?

Mr. S. Lemass

Either satisfy this board or their bank manager.

Mr. Russell

That is getting back to the ordinary free enterprise, without any company such as this. It is a rather cumbersome system, if the Minister does not mind my saying so. There will be a board of directors who will represent the 50 primary buyers and the rest of the tea will flow through the ordinary channels, as it has always done. Does it in fact require a Bill like this to do that?

Mr. Sweetman

No.

Mr. Russell

There will be 50 shareholders of this company and the rest of the traders, after one or two efforts to prove their creditworthiness or, perhaps, not wanting to show their hand in that regard, will buy from those 50 primary wholesalers.

Mr. S. Lemass

In trying to see what will happen, we are only speculating. We have had a situation for almost 20 years in which there has been only one centralised buyer of tea and no merchant has had any experience of buying tea, except from that company. The tea trade themselves think this is going to work out as I have indicated, with all these merchants buying tea in the country of origin when they think it is to their advantage to do so and rebuying tea from other wholesalers when they think that is to their advantage, doing one thing one year and the other thing the next. However, that is a matter entirely for themselves. They may buy the tea in the country of origin, as much as they like of it, any variety, and they may change from one method to another if they think fit.

Mr. Russell

Say if you issued licences only to companies—that is, if you are satisfied they are bona fide Irish companies—on condition that they imported from the country of origin. Would that not have the same effect, without having to have this Bill?

Mr. Sweetman

I do not believe in the licences system at all. A Bill would do it—no person shall import tea save from the country of origin and no person who is not an Irish citizen shall import tea. That is the Bill—and a penalty clause at the end of it—and all this paraphernalia would be absolutely unnecessary.

Mr. S. Lemass

That is what is in this Bill.

Mr. Sweetman

The whole point of this Bill is not to do it in the simple way I have suggested but rather in this way so that the trade will have it all to themselves. That is what the trade believe this Bill will bring them.

Mr. Haughey

Who will bring in the tea, under your system?

Mr. Sweetman

The same as in 1938. I do not agree with the country of origin, for reasons which we shall discuss later, but it could be done as it was done in 1938. This is to create a monopoly.

Mr. Rooney

Is it not a fact that when the small traders find themselves unable to get into this company, for financial reasons, they will have the price determined for them by those who are strong enough——

Mr. S. Lemass

The price of what?

Mr. Rooney

Tea.

Mr. S. Lemass

This company will not be buying tea or selling it, except as agents for individual merchants.

Question put and agreed to.

SECTION 2.

Question proposed: "That Section 2 stand part of the Bill".

Mr. Sweetman

I do not think the Minister can ride away quite so simply with the statement that he is not concerned with anything in the Articles of Association when he has incorporated this Section 2. If this section were not in the Bill, the point the Minister made could be accepted without question. However, once Section 2 is in the Bill, the Minister must accept the validity of arguments in this House that what is not to be changed without his consent must be something with which he, the Minister, agrees. Otherwise there is no meaning in the section.

Mr. S. Lemass

This company is not in existence yet and comments of that kind regarding the draft memorandum and articles can, therefore, fairly be made. What will happen is that when the Bill is passed a register will be set up. Anybody may get his name on that register provided he is a registered tea trader or qualifies as regards the Irish nationality condition. Those who want to take shares in the company will have the opportunity of doing so and all those who do so will come together at a general meeting to adopt the articles and memorandum.

There are a lot of purely machinery conditions in this connection with which I am not concerned and if there is a desire to change them there would be no objection on my part. There is provision for dividend limitation, election to the board of directors on the basis of one vote per shareholder, one share per trader, and so forth, which are essential. If there is a desire amongst the shareholders to change the other conditions in any respect, there does not seem to be any good reason why it might not be done.

Mr. Cosgrave

Is it not conceivable that the directors of this company could give themselves preferential treatment? They can get round the dividend limitation.

Mr. S. Lemass

Directors' fees?

Mr. Cosgrave

I mean in regard to the terms on which they would import tea, in contradistinction to others who are not directors of the company.

Mr. S. Lemass

The Deputy mentioned benefit to the directors. I do not see how that could happen at all —certainly not without the consent of the shareholders and I cannot see its being given.

As regards a distinction between the shareholders and non-shareholders, it is presumed that, while the company would not charge commission for the services it renders to its members, it is reasonable that it would charge some commission on the services it renders to the non-members. The members will pay up to £2,500 and get no return unless the company has a surplus of revenue whereas the non-members must be expected to meet at least the interest charges on the finances involved in servicing them.

Mr. Cosgrave

According to the memorandum and articles, they can lend and advance money or give credit to such persons, firms or companies and on such terms as may seem expedient. That is the usual form. It means that, if they want it, they can give some members preferential rates which others may not enjoy.

Mr. S. Lemass

The second paragraph of this section makes it possible for the affairs of this company to be investigated by the Fair Trade Commission. Therefore, if there is any complaint by any individual trader of any unfair dealing, an investigation can be made. Without that paragraph, the company might have been excluded from the Restrictive Trade Practices Act.

Mr. Sweetman

Why?

Mr. S. Lemass

Because there is a provision in the Restrictive Trade Practices Act which would exclude—

Mr. Cosgrave

A State company.

Mr. Sweetman

This is not a State company. The Minister has been most careful to make the case that it is not.

Mr. S. Lemass

Perhaps it would be better to put it that the paragraph is in there to remove any doubt about the powers of the Fair Trade Commission to investigate its operations.

Mr. Cosgrave

This is a company under statutory authority.

Mr. Sweetman

It is, but it is not a State-sponsored company.

Question put and agreed to.

Section 3 agreed to.

SECTION 4.

Mr. S. Lemass

I move amendment No. 1:—

In sub-section (2) (a), page 3, line 11, to delete "by wholesale".

Those words are unnecessary. It is intended that any Irish citizen or company or partnership of Irish citizens who propose to carry on the business of selling tea either by wholesale or retail should be free to apply for registration as a tea trader. The words "by wholesale" were inserted by mistake. People who are not wholesalers will still be able to buy direct from the country of origin if they wish to do so. There are certain large retailers who would normally do so.

Dr. Esmonde

In sub-section (2) (a) it says that the Minister shall register an applicant if he applies direct to the Minister.

Mr. S. Lemass

The register of traders set up in the Department of Industry and Commerce.

Dr. Esmonde

Therefore, all applications for registration must go to the Minister instead of to the company?

Mr. S. Lemass

That is right.

Dr. Esmonde

The State seems to have a lot to do with it.

Mr. S. Lemass

We set up a rigister of traders.

Dr. Esmonde

Why must they go to the Minister instead of to the company?

Mr. S. Lemass

This register will ensure that trading in tea will be confined to Irish citizens and companies registered in Ireland. Also anybody who is a registered tea trader now is entitled to be registered—and some of them would not qualify as Irish citizens of Irish companies.

Dr. Esmonde

If you are setting up a registered company by legislation such as this, surely you could give the company authority to register them without their having to go to the State to do it?

Mr. S. Lemass

The whole purpose of this scheme is that the company must allow a registered trader to become a member of the company without question.

Dr. Esmonde

But why must he come to the Minister? It seems unnecessary State control.

Mr. Rooney

Has the Minister made the point that a number of registered traders here will not be allowed to go on the register?

Mr. S. Lemass

No. I said that all people who are now registered traders will come on the register automatically, even though not Irish citizens or Irish companies—Liptons, the Home and Colonial, and all those in the trade.

Amendment agreed to.

Section 4, as amended, agreed to.

Progress reported; Committee to sit again.