Dáil Éireann díospóireacht -
Tuesday, 11 May 1971

Vol. 253 No. 10

Industrial Credit (Amendment) Bill, 1970: Second Stage.

Minister for Finance (Mr. Colley)

I move: "That the Bill be now read a Second Time."

The main purpose of the Bill is to remove certain restraints on the operations of the Industrial Credit Company which experience over the years has shown to be no longer necessary. The opportunity is also being availed of to increase the limits on the company's authorised share capital and borrowing powers and to introduce certain minor amendments to the existing legislation to give the company more flexibility in relation to the appointment of a managing director and general manager and to facilitate them in relation to the submission of their annual accounts to the Minister for Finance. A provision in relation to the position of directors and staff of the company who may become members of either House of the Oireachtas is also included in the Bill.

Under existing legislation—the Industrial Credit Act, 1933—the ICC may issue loans to companies operating in this country, whether or not they are registered here, but they may not take up shares in foreign-registered companies even to finance their Irish operations. The restriction in relation to share investment in foreign-registered companies was originally based on the principle that while loans can be secured by a charge on the assets within the State share capital cannot, and that, accordingly, there was no way of ensuring that finance injected into a company in the form of share capital would be used for a particular purpose. This differentiation is not considered to be justified in modern conditions and it sets an unnecessary limitation on the scope of the ICC's facilities. Section 3 of the Bill has the effect of removing this limitation and gives the ICC powers to invest in the share capital of any company which operates a business in this country, whether or not it is registered within the State. The company will take precautions to ensure that any such share investment is used for the benefit of projects within the State.

Section 3 of the Bill also provides that the ICC may issue unsecured loans. Under present legislation the ICC may not lend money without security and this restriction is considered by the company to be anomalous. At times there are practical difficulties in obtaining adequate security for a loan and potentially desirable clients may be deterred from approaching the ICC for facilities because of their inability or unwillingness to give security for a loan. Besides, there may be occasions where the ICC might consider it desirable to give both a secured loan and an unsecured loan for a particular project. Competitor organisations are free to issue loans without security and the ICC feel that the existing legislation places them at a disadvantage. In the event of the winding up of a business concern loan capital even though unsecured would rank before share capital in the distribution of the assets. I might add that over 80 per cent of the ICC's investment in industry is in the form of loans including hire-purchase and leasing.

With the advent of freer trade it is already apparent that the need for Irish businesses to have external associations for the marketing of their goods abroad is becoming increasingly important. While the ICC may at present assist Irish-based companies in the acquisition, establishment or development of overseas subsidiary or associated companies, they can do so only by lending to or investing in the Irish parent company. They may not assist the overseas subsidiary or associated company direct. This is considered to be a shortcoming which should be removed so that, if a particular situation requires, the ICC may provide finance directly to a subsidiary or associated company rather than to the parent company. Section 3 of the Bill gives the extra power to the company in this regard subject to the overriding safeguard that such investment is likely to be of benefit to a trade or industry within the State. Before a company can qualify for subsidiary or associated status for the purpose of this section, more than one-fifth—in nominal value—of their voting shares must be held by the parent company.

In removing these various restrictions it has been considered preferable to restate in full the principal objects of the company rather than merely to amend the existing provisions of the 1933 Act. Section 3 has been drafted with this in mind.

The present authorised share capital of the ICC is £10 million while the limit on the company's borrowing powers is £15 million. The issued share capital is now approximately £8.8 million, virtually all of which is held by the Minister for Finance, while total borrowing by the company is approximately £12 million. The company's activities have expanded rapidly during the past few years; for instance, the provision made in the Public Capital Programme for 1971-72 for assistance to industry by the ICC is £9.3 million —including £1.8 million for loans by its subsidiary, Shipping Finance Corporation—compared with an outturn of £6.3 million—including £2.0 million for Shipping Finance Corporation—in 1970-71. It is expected that the present expansionary trend will continue and, accordingly, it is desirable to ensure that the statutory limits of share investment and borrowings will be adequate to meet the company's needs during the next four or five years. It is proposed, therefore, to raise the share capital limit to £12 million—section 2—and the borrowing limit to £30 million— section 5. It is hoped that an increasing share of the company's new capital requirements will be forthcoming from non-Exchequer sources including receipts from its recently introduced deposits scheme.

Under existing legislation the ICC must have a managing director. The board of the ICC wish to have this compulsory provision modified so as to give them the discretionary power to appoint a managing director if they see fit, and also to appoint a general manager. The existing statutory arrangements are considered to be too inflexible as they require that the chief executive must always be chosen from among the small number of board members. In fact since May, 1969, when the latest serving managing director retired, the post of chief executive has been filled by a general manager in anticipation of amending legislation. Section 4 of the Bill covers the proposed change in the arrangements.

I have mentioned earlier that provision is being made in section 5 for raising the statutory limit on borrowing by the company to £30 million. The same section also provides that the company may borrow in currencies other than Irish currency. The existing statutory provisions relating to borrowing by the company have been interpreted as empowering the company to borrow in Irish currency only. Suitable opportunities for foreign borrowing may arise from time to time and in fact arrangements for a loan from the World Bank have been substantially completed. It is considered that there should be no restriction on foreign borrowing where it is in the national interest. Since the 1933 legislation no borrowing could be undertaken by the company except with the consent of the Minister for Finance and it is not the intention to alter this arrangement. For the sake of simplicity, section 5 sets out in full the new proposed borrowing powers which will replace the earlier provisions.

At present the ICC are required to submit their annual accounts, duly audited, to the Minister for Finance within 90 days after the end of each accounting year. As the volume of their business grows the company are finding it increasingly difficult to meet this deadline and have asked for some relief. Provision is being made in section 6 that in any year, on application by the company, the Minister for Finance may extend the 90 day period to whatever extent he considers reasonable.

Existing legislation empowers the Minister for Finance to guarantee the company's borrowings. As a consequence of the extended borrowing powers being provided for in section 5 it is necessary to extend similarly the Minister's existing powers to give guarantees. This is the purpose of section 7. For instance, the World Bank loan to which I have already referred will need to be guaranteed under this section.

I should mention here that at the Committee Stage of the Bill I propose to introduce an amendment to section 7 to provide that in addition to guaranteeing principal and interest of a loan, the Minister may guarantee any incidental expenses payable by the ICC in relation to such a loan. The World Bank has specified that a condition of the loan at present being negotiated shall be that, in addition to guaranteeing the principal and interest, the Minister for Finance must also guarantee the commitment fee payable in respect of the loan and also any premiums for which the ICC may be liable in the event of their repaying all or part of the loan prior to the scheduled dates for repayment.

The Bill also makes certain provisions—section 8—as regards membership of the Houses of the Oireachtas by directors, officers and servants of the company. These provisions which for some time past have been included in legislation relating to State-sponsored bodies are not in the ICC legislation and it is considered that the opportunity afforded by the present Bill should be taken to extend them to the ICC. Since the Bill was drafted, however, I have come to the conclusion that subsection (2) (c) should only apply where the staff member would qualify for an Oireachtas pension. I consider that the simplest way of rectifying the matter is to delete the subsection entirely at the Committee Stage and to provide for the matter in a general Bill dealing with the directors and staff of State-sponsored bodies who become Members of either House of the Oireachtas which is at present being prepared.

The intention of the general Bill will be to introduce uniform arrangements for all State-sponsored bodies including those which already have their own provisions governing this matter in their individual legislation. So far as superannuation provisions are concerned the intention will be to ensure that the period of Oireachtas service of a staff member may not be reckoned both for an Oireachtas pension and for a staff pension. If, however, he does not qualify for an Oireachtas pension, he will, on payment of the appropriate pension contributions, have the period of his Oireachtas service, during which he was seconded from his employment, reckoned for pension purposes under his occupational scheme.

The Industrial Credit Company have been in operation since 1933 when they were established to provide financial facilities for industry. The company are operated on commercial lines with due regard to their role as an instrument of national development. Their facilities have been availed of over the entire range of industry and in all parts of the country by large, medium and small undertakings. They provide a full range of industrial financing facilities to promote both the establishment of new industries and the development of existing ones. Since their incorporation they have provided capital for Irish industry by way of loans, share investment, machinery finance and guarantees to the extent of more than £52 million and in addition they have underwritten capital flotations in excess of £21 million. Their recent entry into the field of finance for the distributive sector, the establishment of a separate company—Mergers Ltd—to initiate and facilitate mergers and the introduction of a scheme for the provision of finance for under-capitalised concerns are all indicative of the company's flexibility in servicing the varying requirements of the business community. The new mergers subsidiary specialises in the field of mergers and takeovers, undertaking share evaluations, advising on terms and assisting in negotiations for merger.

The capital requirements of both existing and new industries have changed materially in recent times both as to their nature and extent, and the current activities of the ICC must, therefore, be seen against a much more sophisticated and developed situation than that which prevailed up to a few years ago when demands for capital were relatively small and the sources from which these demands might be met were very few. It is essential that the company should be in a position to provide capital on very flexible terms towards the further development of Irish industry. For this reason it is considered that in the present industrial environment the existing restrictions on share capital investment and unsecured loans should be removed. It is equally important that adequate funds be available for the company's expanding activities. I recommend the Bill for the approval of the House.

Mr. Donegan

This is a Bill to bring up to date the legislation governing the Industrial Credit Company and, as such, it must be recommended. Because of the many changes that have occurred in a short time in relation to finance and business—with the world becomeing smaller and with the association of companies here with companies overseas—it is only natural, as the Minister has said, that legislation that was enacted so many years ago would now be out of date. Therefore, it is time that the legislation be brought up-to-date.

I think that the Bill can also be commended because of the fact that opportunity has been taken to make certain fundamental changes that had nothing to do with the times but which were necessary in any case. I refer first of all to the question of the managing director or the general manager. It could be true that the board might desire to take in a general manager who would be charged with the administration of the company while the board would oversee his direction, his executive work and in that way divorce themselves, perhaps, from the day-to-day decisions which he might make and might be more fitted to make if he had more time available and perhaps was not related in his thinking and discussions all the time and entirely to the board itself. The tradition of this board of ICC is that eminent citizens in the business world, and from the trade union world also, have been placed on it and charged with developing the business of lending money for Irish industry but at the same time the idea certainly recommends itself to me that a general manager who might not be on the board might in the first years of his operation be in the best situation and that after some time it might become obvious that the best thing might be to put him on the board changing his functions and his status also to make him managing director. In large businesses all over the world the principle of the general manager who is not on the board and who might have the highest salary within the company is one that has found favour and from that point of view it is a good thing.

In regard to the question of share capital or taking share capital in companies outside the country or taking share capital in companies inside the country—which can be done already: we saw some evidence of it last week— this again is a good thing because it is clear that if an exporting company here had a marketing company in Britain or anywhere else, or had a company which was selling manufactured goods, then it might well behove the Industrial Credit Company to agree to invest in a company registered outside the country which had been set up specifically and with Irish control for the purpose of further processing semi-manufactured Irish goods or doing anything else you like with goods that originated here and had provided employment in Ireland. That is something that can obviously happen as the world grows smaller.

The next point mentioned by the Minister is also something which, when you consider it, is clearly necessary, the matter of unsecured loans. Most companies here, particularly if they have existed for a long time and are home-orientated and not enjoying the benefits of freedom from income tax for new exports, have given debentures to banks and have perhaps given second and third debentures or have entered into pari passu debentures with banks and lending organisations and having done so find themselves not legally empowered to give security for a further loan.

One of the instances of this that I can think of—I am sure my legal colleague Deputy O'Higgins would be much better able to explain it than I am—would be a case where a bank, say, and an outside lending association had entered into a pari passu debenture with the company giving them in broad terms equal rights in the event of the company going into liquidation or in the event of either one desiring to get its money back. If these two lending organisations, an ordinary commercial bank, for instance, and a merchant bank or somebody else refused to allow the ICC to enter into a further pari passu debenture or to wipe out the pari passu debenture already given and create a new one embracing the three of them on equal terms then, in fact, it would not be possible, in my view, for that company to give security for a loan to the Industrial Credit Company. That is the legal position as I see it. I may not be absolutely correct but I believe this trouble does arise. If this is so and if it is clear that the amount of money already borrowed from the other companies or lending agencies was such as not to render the risk too great, surely the position would be that the ICC would be correct in lending an unsecured loan particularly if such loan were to be repaid over a short period and if it was a condition of the loan that at the end of each financial year the balance sheet, profit and loss account and trading account of the company concerned would be presented for the scrutiny of ICC? For the first reason I gave, that other bodies that had lent money refused to enter into a further pari passu debenture, it would appear that the Industrial Credit Company to date would be precluded from giving the loan. Secondly, another reason might be that the amount of money required from the ICC might relatively be so small as not to merit completely upsetting one pari passu debenture ranging over one, two or three lending agencies and proceeding to enter into another, which if the repayment period were short would mean you would have a situation in four or five years time in which further legal complications would arise and matters would require to be dealt with which need not arise at all.

I take the Minister's point that loan capital ranks before share capital so that in the event of a secured loan of any sort, pari passu debenture or ordinary debenture or just a plain mortgage, the loan made by the ICC which, under this particular section would rank second to the previous loans, would at the same time rank before the share capital of the shareholders in the company. This appears to me to be a safe situation and if proper examination is made of the accounts and properties of the company and the books, if necessary, to see whether there was a high proportion of bad or slow debts indicating that there was little or no risk involved, it is my considered opinion that this is a good step forward and power should certainly be given to the ICC to make these loans, power which it did not have up to date.

I have dealt with the question of investment in a company overseas. There is also the question of lending money to a company overseas. It works two ways. If a company overseas is coming here to spend a considerable amount of money and if they are investing a good deal of their own money and we are sure of this— on occasion we have not been too sure that they were—and if a loan is required by them for the erection of their factory or the establishment of their business or whatever it is, then surely that should be given provided the stake they are putting in is such as to give us the insurance that they will not do the traditional thing of lopping off the arm at a later stage. In the international world of trade if things do not go right it is the Irish subsidiary which is lopped off and the parent company in Frankfurt or London goes gaily on its way without let or hindrance. The judgment should be whether or not the arm that will be here will be in greater part fed with the blood of the parent company as well as the finance of the Industrial Credit Company so that the lopping off of the arm—and I only mentioned this in passing because it relates to the decisions of the board of the Industrial Credit Company—would be a painful procedure for the parent company.

We in this House find that all State companies come back to us for permission to borrow or lend more money or to issue further share capital. This is normal and natural and the figures given by the Minister indicate we are reaching the upper limits. If the legislation which the Minister has put before the House today is necessary then the right thing to do is to increase the permitted lending powers. It will be the duty of the Minister for Finance and his officials to watch the progress of the company and if it is felt there was an excess of enthusiasm in regard to lending or anything like that then this House is here to see to it that wisdom as well as the enthusiasm. which should and must prevail as we approach the Common Market and the world of freer trade, prevails.

In relation to borrowing from outside the country why should a Government agency not do it as the Government themselves are doing it? It must be remembered that dividends earned by people who invest from outside the country will, in respect of tax, pay that tax to a foreign power. This is something we do not like and as far as possible we should aim at a situation where lesser amounts are borrowed from outside the State and greater amounts are borrowed from within the State.

The restriction that the company must produce certified accounts within 90 days places a very heavy responsibility and worry on the shoulders of their auditors and accountants. I do not think there is any way of doing this except by the bringing in of a large number of accruals which would be decided for the following year's accounts. That is not a criticism of the auditors or accountants but there are many things in relation to a business deal which cannot be settled within 90 days. Any firm of auditors or accountants who have the duty of putting their signature to a set of accounts have this problem. The normal way of dealing with it is to take in an accrual which is corrected in the succeeding year's accounts but auditors and accountants hate this practice, they regard it as a bad one and they try to do the minimum of it. Sometimes things are beyond their control: ships are at sea and like the gentleman in the "Merchant of Venice" there is nothing they can do except estimate what the outcome will be and produce an accrual of a fixed figure which is corrected in the succeeding year's accounts. It would be far better when a case was made to the Minister that they could not make the grade in time if the 90-day period were extended because in that case the accounts would be more accurate. I am not suggesting that they have not been accurate in the past but if people are asked to do the impossible they sometimes have to compromise.

A guarantee by the Minister is absolutely necessary because when we face free trade we shall have to take risks. I am not going to name names but I know of a company who took a risk in the last fortnight or three weeks by the injection of share capital by the Industrial Credit Company for a considerable sum of money so that it would carry on and become viable not this year or next year but the year after. This was a calculated risk. Another calculated risk taken by the Industrial Credit Company without the available legislation and which, having been taken was the subject of a note in the annual report for some years afterwards, and was the cause of the Government passing the Taisci Stáit Act whereby they could give above £250,000, was the £1,800,000 lent to various companies by the Industrial Credit Company some years ago on the break-up of Dundalk Engineering and the Dundalk Railway Works. Various loans were made and an instruction was given by either the then Minister for Finance, the then Minister for Industry and Commerce or the then Taoiseach, I know not which, certainly a Cabinet instruction was given, to give the money and each year in the accounts produced by the Industrial Credit Company a statement appeared that the board wanted to draw attention to the fact that this was not a commercial risk. At a later stage the matter was dealt with by further legislation and the set-up was created whereby the Cabinet itself could make the decision.

In the next few years there will be times when it will be absolutely necessary for the Industrial Credit Company to give loans to companies on the basis of a calculated risk which will in my view go beyond what ordinary financial houses in the city would regard as a commercial risk. That is not to say that if freer trade arrives it will be possible for any State agency to buttress up companies with any volume of money available to it which are not going to succeed. This is a financial and physical impossibility. Nothing will decide that but the terms of trade, productive capacity and competition largely from abroad. In years to come the Industrial Credit Company will have to go beyond the stage of lending money, as it did in the two cases I have mentioned, on the basis of ordinary commercial risks. If we lend money to ten companies which are beyond commercial risk, but in our view not beyond salvation, and nine come home but the tenth does not, this has to be accepted in the pattern of the Anglo-Irish Free Trade Area Agreement, the EEC and the movement towards freer trade generally. There is a responsibility on the legislators and on the people to some extent, not to an unnatural, abnormal or unfair extent, to attempt to defend the jobs that are on the verge of being lost on the basis of whether or not the lending of further funds for rationalisation would or would not be a commercial risk.

That is about all I want to say on the Bill except, perhaps, to repeat that it is legislation which will have to be examined in great detail in Committee. I do not think it is a political measure or anything that should put us into a controversial mood. It is a serious Bill which will have to be examined in the light of the serious things it contains, and during its passage through both Houses we will have to improve it with whatever expertise we possess on either side. There is the particular point of protecting jobs in industry. Apart from trying to create new jobs, we must try to protect existing ones.

From the point of view of agriculture, this involves what I might call the defensive point of view. This Bill will help to defend jobs in industry but I should like to put a thought into the mind of the Minister for Finance in regard to the Agricultural Credit Corporation. Does he think that legislation enacted in that respect is so up to date that it will help agriculture as we hope this Bill will help industry? I think there is a need to look again at this matter even if we have had legislation in recent years dealing with the ACC. Does that body, who are very similar to the Industrial Credit Company, need the sort of amending legislation we have before us today?

Mr. Tully

I assume this Bill has been introduced in the main to deal with the increase in the authorised share capital from £10 million to £12 million and of the statutory limit on borrowing from £15 million to £30 million, thereby tying up many loose ends. It seems extraordinary that although the authorised share capital is being increased by only £2 million, the statutory limit on borrowing is being doubled. This throws out the question of the intentions of the Government. It would appear they do not intend to get too much involved.

I suppose this is an appropriate time for the introduction of a Bill like this. I was interested in Deputy Donegan's final comments in regard to employment because I believe that the one thing that is necessary now is to try to ensure the survival of firms which run the risk of going to the wall, either because their markets have been taken from them or that they are not able to get new markets because of the necessity to retool. The biggest crime against this country being committed at present by the Government is that they do not seem to be taking the necessary steps to ensure that companies which are finding difficulties are given all the assistance they require, and quickly.

Moving through the country at the present time it is remarkable to find people who will say that the firm who are employing them are closing down. There are more than half a dozen reasons given for such closures, one of them being the Anglo Irish Free Trade Area Agreement and another being a change in public taste. Was any effort made to try to help such companies to diversify, to change their system of operation, to have new forms of manufacture? If a firm is not large I am afraid little effort is being made in this direction.

The point I wish to make is that throughout the country districts and in small towns there are a large number of small industries which were built on a shoestring, being run on a shoestring, which have been giving employment to 20, 30 or 40 people each. From time to time such small companies have been able to get a grip on certain markets and thus to ensure their continuance for many years to come. However, such companies have found that when they looked for assistance they were asked if they had got the necessary know how, whether their premises were big enough and if they had done market surveys which would guarantee that what they were doing would be a success. The net result of such action is a loss of jobs.

Can I make it any plainer? The loss of 20 jobs in a town of 2,000 is far more disastrous than the loss of 100 jobs in a town of 20,000, because such small industries have been the life blood of small towns and villages. I know of one particular company which years ago looked for £10,000. After a lot of negotiation they were told that if they could put up £10,000 themselves it might be possible to arrange another £5,000. If that company had been able to secure £10,000 they would not have asked for £10,000. However, they struggled on and on and became successful. Some of the officials who had been instrumental in ensuring they would not get the £10,000 met them at an international fair and said: "You are doing pretty well. Can we help you?" I think the House can guess the reply they got.

I am not decrying the ICC. All I am trying to say is that although this House is prepared as quickly as necessary to make available the money the Minister is asking for today, we believe that in return the ICC must ensure that those companies who need money can get it quickly. I repeat that it is not always the big company which needs the money and which should get it. The small modest company also must be considered. We should not have the philosophy that if a company wants only £5,000 it is hardly worthwhile investing £5,000 in such an undertaking. They all mean jobs.

Deputy Donegan said that many people will be depending on certain industries being kept going. I do not agree with one of his points as to what will happen in Europe. I do not think we will go into Europe. I think it would be a bad day if we ever did. I think it was bad when the free trade area agreement was signed. Deputy Donegan did not think so at the time but he does now. The trouble is that such agreements did not take into account the undue and unfair pressure they put on small industries in this country which are keeping people in employment.

The question of the balance of payments comes in. There is the question of the manufacture of goods here which otherwise would be imported. All these must be taken into consideration. There has been reference to the taking of shares in foreign companies. This has been done in the case of An Bord Bainne. I suggest that we should tread very warily here because when it comes to international markets £10 million or £12 million is a very small matter. I could not agree more than I do with Deputy Donegan who referred to the foreign companies investing here. We ought to be very careful about the companies to which we give large loans. We have had more than one example of the parent company lopping off the arm and moving back home where they have enough "arms" to enable them to carry on, leaving us with nothing but a bleeding remnant which is of no use to the people who lose their employment as a result of this move.

This Bill should get the full support of the House. I agree that it is rather harsh to tie down the auditors to 90 days, particularly in view of the fact that it is not easy in this city to get an auditor to prepare books to a deadline. I was responsible for trying to meet a deadline with audits over a number of years and I am well aware of how difficult it is to get a firm of auditors to ensure that they will have everything prepared on a certain date. I have seen some bad results from computers. The day on which the computer takes over the audit will be a bad one for all who are responsible for preparing books for audit. The 90-day limit may be a bit short, but some limit should be fixed. The Minister will remember an insurance company which got away with something clever a few years ago because of the fact that the then Minister was a little bit lenient with regard to the limit and this had disastrous effects on some people and annoying results for others, including myself, who were insured. The limit should not be too rigid. It should not be possible to apply to the Minister for an extension at any time. That is what happens at the present time. The Bill was necessary. There may be something in it which has been missed in reading it quickly here. This Bill should be recommended to the House.

Mr. Clinton

All of us in this House favour amending legislation to give additional assistance to industry at a time when industry is going through a very bad period and when many people are becoming unemployed because of the difficulties being experienced generally. Any assistance which industry can get to help it over this period should be welcomed by every Deputy. This is a period of rapid change. These difficult times will pass if industry is helped to weather the storm. This legislation is the only way by which we can assist our industries to weather this storm.

The Minister referred to the existing statutory provisions relating to borrowing by the company. There is reference to the fact that these provisions have been interpreted as empowering the company to borrow in Irish currency only. Reference is made to the fact that the change which is proposed in this Bill empowers the company to borrow outside the country. Reference is made to arrangements for borrowing from the World Bank. I was not in the House when the Minister was making his statement so I do not know whether the Minister told the House of the specific purpose for which this borrowing is being done. So far as I know, it is necessary to specify what the borrowing is for if money is to be borrowed from the World Bank. That does not appear in this statement of the Minister. There is a reference which I would like to comment on. The Minister said:

As a consequence of the extended borrowing powers being provided for in section 5 it is necessary to extend similarly the Minister's existing powers to give guarantees.

In what way is it extending the Minister's powers to give guarantees and to what extent can a Government guarantee be safeguarded by a counter-guarantee from outside? I understand that it is fairly normal when the Government guarantee a loan that a counter-guarantee is given and that to a considerable extent this safeguards the position of the Government in case a company goes under for one reason or another. I think it is to the extent that the shareholder loses all his money before the State lose any money as a result of guaranteeing the loan. Perhaps the Minister would refer to this point when replying.

I am glad that the powers of the company have been extended to increase the borrowing powers and to enable greater assistance to be given to companies which are in difficulties at the present time.

Mr. Colley

I am grateful to the Deputies who have spoken for the welcome they have given the Bill. It is quite clear that the provisions which I have outlined are designed to improve the operation of the Industrial Credit Company in the light of modern conditions and of the competition with which they are faced in their business but, in particular, it is clear that the objective on all sides of the House is to ensure, in so far as we can, that the assistance available to Irish industry is as efficient as we can make it. The provisions in this Bill are designed to help the Industrial Credit Company to provide that kind of service for Irish industry.

There are a few points on which I wish to comment. Deputy Donegan commented on the proposal about the chief executive, and was in agreement with it. It is intended to give greater flexibility so that the chief executive of the ICC may be either a managing director or a general manager. I have indicated that as things stand at the moment the chief executive has to be the managing director and has to be chosen from among the board. This is a very restrictive situation. That is not to say that the chief executive might not at some time in the future be managing director. It is giving a wider discretion in the choice of chief executive. In so far as the loan from the World Bank is concerned what is involved is a loan for the general purposes of the Industrial Credit Company, that is for the development of Irish industry but through the agency of the Industrial Credit Company.

Mr. Clinton

Is that sufficiently specific for the World Bank?

Mr. Colley

No, I am just giving it in very rough terms. The loan has been negotiated in considerable detail and all the activities of the Industrial Credit Company have been examined including their terms of reference under the legislation. As I have indicated, there is one small provision which we want to put into this Bill which is meeting one of the requirements of the World Bank. The specific loan is directed to the Industrial Credit Company for the purposes of its operations. In so far as we have to borrow abroad—I do not want to start wandering around on that because I dealt with it recently—it is generally agreed that to the extent that we can borrow from the World Bank we should do so because the terms available are more attractive to us than those available from other normal sources of borrowing abroad.

I should like to confirm something I said when introducing the Second Stage. Not only large companies and not only medium companies benefit from the activities of the Industrial Credit Company. Quite small companies also benefit. The reports of the Industrial Credit Company make this clear but I have personal knowledge of quite a number of small companies which have availed themselves of the assistance of the Industrial Credit Company. This assistance, in many cases, particularly in the case of smaller companies, can be much more than money. The Industrial Credit Company have available to them a great deal of expertise in financial management and make available to applicants the benefit of this expertise. I know myself of some smaller companies which were able to make considerable use of not only the money but the expertise made available to them by the Industrial Credit Company.

With regard to the provision about the period within which the audited accounts must be submitted Deputy Tully suggested that there should be a fixed limit. This is a suggestion I considered because it is attractive on the face of it. Nevertheless, I came to the conclusion that what we have provided here is probably better in the sense that we are trying to stick to the 90 days in so far as this can be done and to provide that where the company cannot comply with it, it will be obliged in each and every year in which it cannot comply with it, to come to the Minister for Finance and make application and then if it does so the Minister will satisfy himself as to the reasons for the delay before he fixes the period within which the accounts must be submitted. In this way it is probably likely that we achieve two things—reasonable pressure on the company to furnish its accounts as quickly as possible and, secondly, provide a degree of flexibility which will cover different kinds of situations which could arise. I hope that on reflection the Deputy will agree with me that this is probably the best way to deal with this matter.

Question put and agreed to.

An Leas-Cheann Comhairle

Next Stage?

Mr. Colley

Now?

Mr. O'Higgins

May we have a look at it? I am not so sure. Would the Minister like to start on it? If there are difficulties what would the Minister propose if we start now?

Mr. Colley

This would depend on the difficulties, I suppose. Does the Deputy contemplate any difficulty which might prevent us from going ahead today?

Mr. O'Higgins

I am a little concerned in relation to some of the wording used in section 3.

Mr. Colley

Perhaps we could start and see what develops?

Mr. Tully

Has the Minister a time limit in his mind?

Mr. Colley

Today. I do not know whether it has been explained through the Whips what the difficulty is. What I have in mind if possible is to try to get all Stages in this House today and in the other House tomorrow. The reason for this is the World Bank loan situation.

Mr. Tully

We thought so but we thought the Minister might have told us.

Mr. Colley

I am sorry. I thought it had been explained.

Mr. O'Higgins

Do I take it that we can have a look at it on Report Stage?

Mr. Colley

Yes, it depends on whether I can satisfy Deputy O'Higgins as to what course we take at this stage.

Agreed to take remaining Stages today.