The Government have given an indication that they propose to oppose this Bill. As I understand it, under Standing Orders, as one of the sponsors of the Bill I am entitled to make a statement on it and the Minister is entitled to make another statement. Have I any right of reply to the Minister's statement?
Private Members' Business. - Companies (Amendment) Bill, 1969: First Stage (Resumed).
Question again proposed: "That leave be granted to introduce a Bill entitled an Act to amend the Companies Act, 1963."
No. Standing Order 89 leaves the Chair discretion as to the number of explanatory statements which will be permitted. Deputy Sweetman is entitled to make an explanatory statement, but there will be no reply.
Will the Chair permit Deputy Donegan to add a few words?
The Chair has discretion to allow Deputy Donegan to speak.
Has the Chair discretion to allow the Minister to hear the case being put first, before he speaks.
Of course. I have to speak first.
The Chair is allowing more than one proposer to make an explanatory statement, and the Minister will have an opportunity of replying.
As I understand it, I can make a case; then the Minister objects, and Deputy Donegan——
I thought that would be permissible.
There can be no discussion at this stage. The Deputy is entitled to make an explanatory statement.
Very good. The House and the Minister, of course, are aware that our procedure in relation to companies is now governed by the Companies Act, 1963. Prior to the amalgamation of people into a company for the purpose of fostering trade and commerce there was something that had been running for about one hundred years or so. I think, speaking subject to correction, that the first Companies (Consolidation) Bill was in 1862 or thereabouts, but as a result of the legislation then and as a result of the 1908 Act, entrepreneurs, people in all walks of life, came together for the purpose of welding themselves into a legalistic person called a company for the purpose of ensuring activity in various parts of national life. They did so, first of all, in one way, and then, as the years went on, it became clear that there must be very exact regulations or the powers of limited liability that were given would be abused.
In consequence of that there was in the 1908 Act and again adopted in our Act of 1963; which was a consolidation measure primarily and an improvement measure, in addition, provisions that everybody who was concerned with any company would have an opportunity of knowing the type of company that was involved, in relation to its capital, its creditworthiness and the personnel who were engaged in controlling it and in running it. Accordingly, it was provided that there would be a regulation that the names of the directors, up to 1963, and after 1963, the names of the directors and secretary, of every single company would have to be registered in the Company's Office in the Castle; and in addition to that, under sections 195 and 196 of the Companies Act, 1963, that on every letter that went out, unless exemption was given, the names of the directors of the company would have to be published so that it would be clear and easily available to everybody who was concerned with any individual company.
As time went on, and only in quite recent years, because of the greater facilities of travel, people became directors of companies even though they might not be very near the actual source of operations of the company— indeed, the company itself might have several places of business—and when these directors were unable to attend a particular directors' meeting it became appropriate to appoint an alternate or substitute director, as they are usually known, to attend that meeting. This became the practice for occasional meetings and a good thing it was because it enabled companies to keep the balance of interested voting at meetings of the directors.
In the last two or three years an entirely different practice has sprung up of using the provisions of the Companies Act for the purpose of ensuring secrecy, not so much to prevent compliance with the law, as to prevent compliance with one of the things that the Companies Act should ensure, that is, open-handed dealing on all sides. In the last few years the practice has grown up by which nominal directors are appointed to companies, they are not the real directors at all, but are merely nominated and immediately after they have been nominated an alternate director is appointed by each of them. It is those alternate directors who really run the company. They are paid as such by the company, extract the profits of the company and direct its policy. The hidden hand is being used in this way, in a manner in which it was never visualised that the Companies Act should operate and in a manner which is universally condemned by people in commercial life.
This Bill is introduced for one reason and one reason alone, to ensure that where a person is acting as an alternate director he will have fixed on him the exact same light of day as the regular director has, no more, no less. I fail completely to see what reason there can be in the mind of the Government for objecting to such a procedure. If a person is going to act as an alternate director of a company he should be prepared to register his name in exactly the same way as a director has to register his name. He should be prepared to have his association with that company publicised in the same way as a director must have it publicised.
The only reason there can be opposition to this Bill is because some people are acting as alternate directors who have no right in the public mind to act as such directors and who are determined, therefore, to bring pressure on the Government to make certain that their activities will not see the light of day. There is not any other reason for opposition to this Bill. I am amazed that the Minister for Industry and Commerce, who is a person who holds himself out to be a defender of propriety in public life and who, I am sure, would not be himself personally party to the type of abuse that is going on, nevertheless allows himself to be sent in here by his Government to oppose it.
I am sorry the Deputy is developing that line. That is not the reason for opposing it at all.
There is only one reason why this Bill is being opposed by the Government and that is because a considerable number of the Minister's colleagues are acting as alternate directors. In the present circumstances if the Minister does not know that he must not know what is being talked about publicly all around the town.
I do not know that.
I suggest that the Minister make some inquiries. It is being talked of publicly all around the town. There is not any reason whatever why an alternate director should be ashamed of having his name registered in public. This Bill will provide it and that is the purpose of this Bill.
Deputy Sweetman having dealt with the legal aspects, there remains the purpose of the Bill. I want to make clear what the effect of the Bill will be in the proper legal manner through the operation of the Companies Act, 1963, as amended. If this Bill went through one would find a situation whereby every Minister of State forever after in this country until a further amendment would have occured would have to declare his interest in any company in which he had any interest. That is a principle that should have always held. It is a principle that is held in every democracy. There have been cases in other states where persons who did not declare their interests in certain industrial enterprises and were Ministers of State were asked to resign or resigned when that interest which they did not declare was found to exist. I hold, therefore, that this amendment will forever, until amended again, create the situation whereby Ministers of State shall have to declare their interest. What has been said by Deputy Sweetman in relation to the rumours around this town is true. There is no point in bringing dirty linen in here to be washed. It is right and proper the country should know there is this situation and that Ministers of State should be made to declare their interest. The amendment so well put together by Deputy Sweetman has much support. This declaration of interest provision should be tightened up so that it must apply in the case of every Minister.
Do the Labour Party wish to make a statement?
Having listened to the explanation, the only statement I should like to make is that, unless it can be proved by the Minister for Industry and Commerce that the statement made by the two supporters of Fine Gael is not the actual position at present, then we have no option but to vote for the amendment.
If the legal position were as described by Deputy Sweetman and Deputy Donegan, I would be the first to agree with the passage of this Bill as quickly as possible, because the principle which they have enunciated of full disclosure as to who are directors or alternate directors is one with which no reasonable man could quarrel. I would not quarrel with it. On the contrary, I would strongly support it but I must oppose it for the reasons I am about to give and I have my suspicions that the Bill was not brought in for bona fide reasons. I thought when this Bill was put down that it was a genuine attempt to try to improve Company Law in this country. In the light of the case put forward it now appears it was merely a tactic to further the smear campaign in which Fine Gael have been indulging rather than a serious attempt to improve Company Law. If it had been the latter I suspect the Deputies would have done their homework. Having done it they would have discovered what they are now suggesting is, in fact already in the 1963 Act. This is the only reason I oppose the Bill. It is not going to advance by one iota the cause which they have espoused, and to which I just as strongly subscribe. Section 2 (1) of the Companies Act, 1963, which, as Deputy Sweetman says governs our Company Law, provides that the word “director” includes any person occupying the position of director by whatever name called, and for the purposes of sections 195 and 196, which it is specifically proposed to amend in this Bill provides that a director includes a person in accordance with whose directions or instructions the directors of a company are accustomed to act. There is no definition in the Act of alternate or substitute directors, although there is an indication in Table A of certain circumstances and conditions which would normally apply to the appointment of such directors. It seems clear, and I am so advised, on the basis of section 2 (1) and section 195 and section 196 that an alternate or substitute director of a company, who is for instance entitled to attend and vote at board meetings, is a director for hte purposes of the Companies Act. His name should be included in the register of directors provided for under section 195 and the required particulars should be drawn on the company's notepaper under section 196.
The Minister will not get any company counsel in the Law Library to accept that. This was drafted by one of the best company counsel.
I am surprised, if Deputy Sweetman wants to argue this on legal grounds, that he did not do it the first time.
The Minister's advice is wrong.
On the face of it, the sections are quite clear. The position is that the Deputy has legal advice contrary to that available to me, which would show that that is not the position. It is only reasonable to expect the Deputy would have given us the benefit of his erudition on this, instead of making a political smear of it.
(Cavan): To expose low standards in high places.
If he were going to do this he should give us the facts. When I was challenged on this I gave my views outside the House to give anybody the opportunity to do something about it.
The Minister had to withdraw very quickly in the newspapers when I challenged him.
I said nothing about Deputy Sweetman. If the Deputy wants to show a standard in that, show that standard. Say what you mean and bring out your facts. Do not try to smear people. The Deputy is doing a disservice to the public and to this House. This Bill should have nothing whatever to do with this if it were genuinely inspired. If it were genuinely inspired it is reasonable to expect that the law, which appears to be clear on the face of it, would be exposed to us as being not clear. No attempt whatever was made to show this.
The law is clear. The Minister outside would not dream of giving the interpretation he has put up.
Does the Deputy admit that section 2 (1) provides that "director" includes any person occupying the position of director by whatever name called?
The Minister knows perfectly well that the ordinary articles of association provide that an alternate director will not be an officer of the company. On that account he gets out.
Of course, he does not.
What is wrong here, and the Deputy knows it as well as I do, is the difficulty of enforcement. The Law is there but the difficulty of enforcement is such that it may not be observed in many cases. The Bill that is proposed here does not improve on that. It has no provision for enforcement. It merely provides what the law already provides, and what advantage is that? If Fine Gael have some constructive suggestions as to enforcement, I shall be very glad to hear them. I agree with the principle enshrined in this Bill but it is already in the law. As I said earlier, and as I repeat, the difficulty is one of enforcement. I have given some thought to the question of better enforcement but I have not come up with any worthwhile solution yet. If Fine Gael have some constructive suggestion I should be glad to hear it.
Circulate the Bill.
Deputy Donegan knows it does not alter the position by one iota. The law is there. It is a question of enforcing it.
Let the Bill be debated.
It does not add anything to the law. Fine Gael Deputies had the opportunity to put the case but they did not make any attempt whatever to meet the case which they must have known I was about to make. The law is there. The only difficulty arises in enforcement and no suggestion has been made to improve enforcement. It is clear that the Bill was not introduced bona fide at all.
The Minister knows that an alternate director is not included in the Act.
May I suggest——
The Deputy may ask a question.
The Minister said he would welcome any suggestion that would assist him to enforce that which he alleges to be the law and which comprises the contents of this Bill. Would the Minister make a specific inquiry from the registrar in relation to an alternate director, or has he made such inquiry during the past 12 months? If false information is tendered to the registrar by a company——
This is a matter I have considered. I have not rejected this course but the Deputy will appreciate that the problem concerns the people who do not want to comply with the law. They may take the chance of giving false information. The vast majority are lawabiding.
I assume the Minister has not a copy of the Bill.
Yes—I said they could circulate one to him.
We are in the unfortunate situation that we have not got a copy. We will vote for the printing of the Bill. The case that has been made on this side of the House is convincing. So also is the case made by the Minister, but we are not in a position to judge until we have seen the Bill. We will, therefore, vote for its printing.
I was under the impression that the Bill had been circulated.
(Cavan): The Minister refuses to allow it to be circulated.
If the Minister thinks it should be circulated——
Circulate it.
The House has had the opportunity of debating it and it is clear that Fine Gael do not wish to debate it on its merits.
It is unfair to ask us to judge it on its merits on the basis of the arguments from both sides, because we have not seen the Bill.
The Minister has legal Deputies behind him. Deputy de Valera and I have debated the meaning of Bills across the floor of the House. Publish this Bill and then Deputy de Valera and I can debate it across the House.
Let us see the Bill.
Question put.
The Dáil divided: Tá, 42; Níl, 58.
Tá
- Belton, Luke.
- Belton, Paddy.
- Burke, Joan T.
- Byrne, Patrick.
- Clinton, Mark A.
- Coogan, Fintan.
- Corish, Brendan.
- Cosgrave, Liam.
- Costello, Declan.
- Costello, John A.
- Crotty, Patrick J.
- Dillon, James M.
- Dockrell, Henry P.
- Dockrell, Maurice E.
- Donegan, Patrick S.
- Donnellan, John.
- Dunne, Thomas.
- Dunne, Seán.
- Esmonde, Sir Anthony C.
- Farrelly, Denis.
- Fitzpatrick Thomas J. (Cavan).
- Gilhawley, Eugene.
- Governey, Desmond.
- Hogan, Patrick (South Tipperary).
- Hogan O'Higgins, Brigid.
- Jones, Denis F.
- Kenny, Henry.
- L'Estrange, Gerald.
- Lindsay, Patrick J.
- Lyons, Michael D.
- McLaughlin, Joseph.
- O'Donnell, Tom.
- O'Higgins, Michael J.
- O'Higgins, Thomas F.K.
- O'Leary, Michael.
- Pattison, Séamus.
- Reynolds, Patrick J.
- Ryan, Richie.
- Sweetman, Gerard.
- Timmins, Godfrey.
- Treacy, Seán.
- Tully, James.
Níl
- Aiken, Frank.
- Allen, Lorcan.
- Andrews, David.
- Blaney, Neil T.
- Boland, Kevin.
- Booth, Lionel.
- Brady, Philip.
- Childers, Erskine.
- Colley, George.
- Collins, Gerard.
- Corry, Martin J.
- Crinion, Brendan.
- Cronin, Jerry.
- Cunningham, Liam.
- de Valera, Vivion.
- Dowling, Joe.
- Fahey, John.
- Faulkner, Pádraig.
- Fitzpatrick, Thomas J. (Dublin South Central).
- Flanagan, Seán.
- Foley, Desmond.
- French, Seán.
- Gallagher, James.
- Geoghegan, John.
- Gibbons, James M.
- Gogan, Richard P.
- Haughey, Charles.
- Healy, Augustine A.
- Hillery, Patrick J.
- Brennan, Joseph.
- Brennan, Paudge.
- Briscoe, Ben.
- Browne, Patrick.
- Burke, Patrick J.
- Calleary, Phelim A.
- Carter, Frank.
- Hilliard, Michael.
- Kenneally, William.
- Kitt, Michael F.
- Lalor, Patrick. J.
- Lemass, Noel T.
- Lemass, Seán.
- Lenihan, Brian.
- Lynch, Celia.
- Lynch, John.
- MacEntee, Seán.
- Meaney, Tom.
- Millar, Anthony G.
- Molloy, Robert.
- Mooney, Patrick.
- Moran, Michael.
- Nolan, Thomas.
- Óolan, Donnchadh.
- Ó Ceallaigh, Seán.
- O'Connor, Timothy.
- O'Leary, John.
- O'Malley, Desmond.
- Smith, Patrick.
Tellers:—Tá: Deputies L'Estrange and T. Dunne; Níl: Deputies Geoghegan and Mrs. Lynch.
Question declared lost.