Léim ar aghaidh chuig an bpríomhábhar

Dáil Éireann díospóireacht -
Thursday, 31 Oct 1996

Vol. 470 No. 8

Private Members' Business. - Irish Takeover Panel Bill, 1996: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

I was unable to listen to the Minister of State's contribution but I have read his speech and studied the Bill. Fianna Fáil supports the Bill although we have a number of concerns about it.

This Bill follows the break between the Irish and London stock exchanges. A separate Irish takeover panel is being established in law. There is no similar legislation in Britain and its takeover panel does not have a statutory basis. Although I do not disagree with our panel being given a statutory basis, I would like to know why this is being done. In general it is more beneficial to underpin such bodies with legislation. The statutory basis being accorded may be related to the Constitution and the difficulty in delegating judicial powers. In his reply, perhaps the Minister of State would indicate if this is the Attorney General's advice.

If the argument for legislation is that a judicial review of the takeover panel's decisions might have resulted otherwise, judicial reviews may still take place. Section 13 makes specific provision for persons to challenge rulings of the takeover panel by way of judicial review.

Leaving aside the issue of the need for legislation, I have two other concerns. The first is that the Bill is being brought forward at a time when the EU is finalising a directive on this subject. Second, the legislation has been introduced by the Minister of State at the Department of Enterprise and Employment even though the legislation on the Stock Exchange was introduced by the Minister for Finance. I do not know the reason for this. The Department of Finance is very good at talking about Bills but when the work has to be done it hives them off to other Departments. It does not seem to want the burden of implementing, explaining and monitoring the legislation or of mopping up when things go wrong. This Bill was announced by the Department of Finance to great fanfare but it has been introduced by the Minister of State at the Department of Enterprise and Employment.

I understand a directive on take-overs is being drafted in Brussels. This directive will set out the Union-wide rules governing take-overs and standardise practices. Once the directive is finalised there is a strong likelihood another Bill will be required to implement its provisions in the next year or two. I have argued on many occasions that Ministers need to assess whether a Bill is being introduced at the appropriate time. Before we agree EU directives there should be discussions with the relevant interest groups. There is often no consultation in advance and the first we hear about many regulations is when they become law. There is an urgent need to establish a monitoring group on EU directives under the auspices of the national agreement currently being debated. We need greater spotlight on new proposals during the embryonic stage.

When I was Minister of State at the Department of Enterprise and Employment I frequently visited Brussels to discuss labour law. During the intervening period between the first meeting in, say, November and the second meeting in January or February, COREPER and the very competent officials continued their work. However, the files on the positions arrived at do not have a political slant as the relevant Minister is not kept up to date on developments. When I asked the reasons behind certain decisions the very fine official dealing with the directive took it upon himself to brief me between meetings on the progress being made. While I found this very useful. I was frustrated by the lack of direct political input into the directive. On one occasion when I refused to accept the beautifully prepared words set out in the dossier I got into hot water with the Minister, Deputy Ruairí Quinn, but I got my way in the end.

I was involved in the discussions on the directive dealing with working hours which will soon be implemented by way of legislation. In November 1993 we provided for the option of a voluntary opt out. This option has disappeared and I do not know why. I have been contacted by many workers who do not want to lose out on much needed overtime.

Directives are conceived behind closed doors in Brussels and most people only hear about them after they have been signed. There is no proper consultation in advance on the measures being adopted by Ministers. The attitude is that because Europe has said so it must be right. This procedure needs to be changed so that there is full appraisal of the proposals in advance. There is no consultation in this Chamber. Matters can be raised at a committee but this has no effect. During my three years as Minister I was not requested to appear before the Committee on Secondary Legislation of the European Communities which was supposed to check proposals from Brussels. Large employers, unions, small businesses, consumers and other interested parties should come together under the auspices of the national agreement and form a monitoring committee on EU directives.

Given that there will be a directive on take-overs, should this Bill have been introduced now? Would it not have been possible to proceed with the interim take-over panel which includes such eminent people as John Cooke, Senior Counsel, who is chairman, Leo Conway, chief executive, Danny Kitchen, Leonard Abrahamson, Caitríona Murphy, Brian O'Connor and Ann Fitzgerald? Will the Minister ensure this directive will not require further legislation, that it is in keeping with what operates efficiently here and that it does not give rise to more bureaucracy? Perhaps he should argue there is no real need for another directive as we have our own legislation. I am concerned the Minister for Enterprise and Employment is steering this legislation through the House, given that it was the Minister for Finance who introduced the Stock Exchange Act, 1995. This reminds me of the scenario involving the investment intermediaries legislation introduced by the Minister for Finance but implemented by the Minister for Enterprise and Employment. I am worried that the same scenario may arise in regard to this Bill. It does not make sense for the Minister for Finance to be responsible for the separation of the exchanges while the take-over legislation comes under the ambit of the Department of Enterprise and Employment. These demarcations of power are a throw back to a much less complicated time. Making different Departments responsible for various elements of the same function leads to difficulties, as we saw in the Taylor affair.

There is a relationship between the Stock Exchange legislation and this Bill and it would be preferable if the same Minister was responsible for both of them. One would have expected some of the many Government advisers to examine these anomalies and seek to update the responsibilities of various Departments. This second guessing and buck passing between the parties in Government is particularly relevant in other areas. Approximately ten days ago panic erupted over the Channel Tunnel and officials in the Department of the Marine said it had nothing to do with the matter even though correspondence relating to it was on a desk in the Department.

The Channel Tunnel is a long way from the Stock Exchange.

That is the Ceann Comhairle's business, not the Minister of State's. This type of buck passing is presented as being extraordinarily complicated. I am referring to Departments refusing to accept responsibility for certain matters. What happened in regard to the Channel Tunnel will also happen with the Takeover Panel Bill. There will be no communication between the Ministers for Finance and Enterprise and Employment on Stock Exchange developments.

As well as raising concerns about the Bill coming in advance of an EU directive, I want the Minister to clarify whether the legislation on company law and the Stock Exchange will be consolidated. This Bill follows two major statutory instruments on company law which were introduced this year, including a detailed one on dematerialising securities. It also follows the Competition (Amendment) Act. I was delighted to note that many of the concerns I expressed, including several sentences I used, when that Bill was going through Committee Stage were reported in an article in today's Irish Independent. Because of the mess made of the Competition (Amendment) Act, it will have to be followed by another competition Bill when the mergers review group reports. I said at the time it was daft to introduce a Bill to set up a review group when it would have to be followed by another Bill. There is an urgent necessity to consolidate all such company and Stock Exchange law. When a small country such as Luxembourg can do so on an annual basis, surely with the aid of technology it should be possible here.

An article in Business and Finance on 5 January 1995 referred to “The Take-over Tangle” and stated:

When the Irish Stock Exchange splits from its London parent, probably about mid year, the London Takeover Panel will cease to arbitrate on Irish takeovers. But legislation setting up an Irish Takeover Panel is running behind schedule.

I will not carp about running behind schedule because we too easily accept EU directives. Will the Minister give his views on the political vetting of EU directives before they are implemented?

Do the intervention powers apply to this Bill? May I politely ask the Minister?

Those modifications to Standing Orders are in situ.

I thank Deputies who contributed to the debate. Having regard to the scope such a measure offers for debate, it is surprising that we did not have greater participation. Perhaps this is seen as a purely technical measure, but it is a complex one. The work of my officials required assiduous attention to detail. I thought it would have provided an opportunity for a wider discussion on the role of the Irish Stock Exchange and its capacity to be a source of investment funds for industry and business as well as on the more ideological questions raised by Deputy McDowell.

My task is to reply to the questions raised. The measure received a general welcome from all sides. Deputy O'Keeffe raised a central question, to which Deputy McDowell lent his voice, about the definition of "control" in section 1. It is a central concept to the purpose of the legislation. I must confess that intuitively I am persuaded by the arguments advanced by the Deputies in this regard. It would be a serious matter if a Minister were to arbitrarily change that control figure and it is probably correct that the House should have an opportunity to express its view on it. I have not had an opportunity to take expert advice on the matter, but I will do so.

I do not know if it would be necessary, as suggested by Deputy O'Keeffe, to reserve two of the seven places for professionals practising outside the State. Deputy O'Rourke asked if it were necessary to establish the panel on a statutory footing.

Pending the directive.

We have taken care to ensure that we are appraised of the likely contents, trend and direction of the directive. In so far as possible, provision is made to anticipate it. In my introductory speech I pointed out that the working party, after consideration, came to the conclusion that it was necessary to establish the panel on a statutory basis. Essentially, the purpose of this is to avoid uncertainty in takeover and merger activity following the separation of the two exchanges. At heart, it is a question of confidence and credibility. The point was well made that one cannot easily compare the amount of activity on the Irish Stock Exchange with the Stock Exchange in London. We must do everything reasonable to ensure that confidence and credibility is not damaged.

Deputies O'Keeffe and McDowell raised a number of questions about cost and charges. Their fears in this regard are unfounded. It is unlikely that the takeover panel will be called into action once a week. Deputies referred to the extent of such activity in the past but it is not likely to vary in the future. Deputy McDowell explicitly addressed whether charges will be levied on companies listed on the stock exchange or on companies concerned with a specific transaction. That is being considered in detail but there will be a charge on the companies that are publicly quoted and on the transaction which is the subject of the takeover panel's attention.

I refer the Deputy to section 16(1) which gives the panel, subject to the consent of the Minister, the right to impose charges on specified parties with a view to defraying its expenses. The first group on which the levies can be charged are relevant companies listed on the stock exchange. While no details have been completed yet, it may be possible to impose this charge via the stock exchange. The second group expected to make a contribution are companies other than those listed which make takeover offers. Given that some companies which make takeover bids will be located outside this jurisdiction it is considered appropriate that these companies should contribute to the operation of the takeover panel. The third group of charges will be levied on the securities dealings of a relevant company. This can be imposed as a small charge on the dealings which take place on the stock exchange. The panel will be able to impose charges on documentation forwarded to it for perusal and opinions and where guidance is sought on proposals.

This is based on the principle that the industry should be required to fund its minimal costs and it should not be a charge on the taxpayer. Nobody argued that it should be and it is not likely to become a matter of serious contention. The panel will consider the question of charges in more detail.

The people who use it should be charged.

The principle is fair and is accepted.

Deputy O'Keeffe raised questions about the appointment of the chairman by the Governor of the Central Bank. He queried whether that was right and whether it could be influenced by the Minister of the day. It will not break any moulds in Ireland if the Minister of the day exerts influence in the appointment of a chairman to such a body, but that is not envisaged here. A limited company structure has been deliberately chosen rather than that of a semi-State organisation. The Governor of the Central Bank is the appropriate person to make the appointment and nobody will bring his probity into question. The Governor at the time will have everyone's confidence in making this decision and I have no reservations on that.

Deputy McDowell mentioned that the business of litigation may be such that in certain circumstances it could invite the transgressor to tempt fate and it would be worth his while attempting to get away with the transaction because of the amount of time required to initiate prosecution in the preparation of files, referral to the DPP and the issuance of summons. He suggested that it would be better if the panel had the option to go the High Court on foot of a motion. It is a technical point and relates to section 11(5). In most takeover situations time is of the essence. The concerns he raised will be considered but may not prove as big an obstacle as feared. The panel could, in the absence of co-operation, still press ahead with a ruling and the panel or the party, subject to the ruling, could then apply to the court as provided for in sections 12 and 13. I appreciate that the Deputy will reserve the right to come back to this on Committee Stage.

Deputy O'Rourke raised the question of the draft EU Directive No. 13 on takeovers. In 1988 the Commission published a proposal for a draft takeover directive. Following consultation it was clear the original proposal was not likely to prove acceptable to member states. Earlier this year a revised proposal, which was more a framework directive than a detailed proposal similar to the original, was published by the Commission and is at present under consideration by the European Parliament. It is important to note that irrespective of whether the European proposal is eventually adopted, the perceived wisdom in the Irish market is that an Irish takeover panel is needed now and it is not appropriate to wait until the EU proposal is discussed and adopted. In the circumstances I am satisfied it is appropriate to go ahead with the present proposal. Attention has been paid to the likely content of the EU proposal in preparing this. I am satisfied there will be need for a small change to make our statutory proposal compatible with the EU proposal in its present form. All interests relevant to the EU proposal have been consulted and this will be taken into account in defining our attitude.

This raises the question referred to by Deputy O'Rourke of why the Stock Exchange Act, 1995, was introduced by the Minister for Finance and why I am introducing this Bill. Who am I to query why the Department of Finance should decree that it be done this way? I will never do that. This measure is concerned with protecting the interests of shareholders, whereas the Stock Exchange Act, 1995, is concerned with the supervision and regulation of the stock exchange and its members.

Which, in turn, means investors.

I suppose it does. They are distinct and quite separate functions. At the time the Minister for Finance made reference to the fact that this Bill would follow on logically and, in so far as we could gel the dates, it would be introduced at the same time. We have not managed to keep to that timetable, but the interim situation is in safe hands and I hope we can conclude progress through this House reasonably speedily.

Deputy O'Rourke wants to know why we do not attempt to consolidate company and other law in the area of corporate management. The Deputy probably knows that would be an enormous task. Legislation appears to be more complex in the area of corporate company law and in the commerce area generally. I would think that the business of consolidating the legislation is an enormous one. I am sure many practitioners would welcome it, but it is not something that should intrude between now and the passage of this legislation.

Those were the main matters raised and we will have an opportunity to discuss them in more detail on Committee Stage. There has been a general welcome for the Bill.

Will the Minister accept an intervention from Deputy O'Rourke?

Under new rules we, the humble Opposition, are allowed to intervene and the Minister is required to accept the intervention.

It is a voluntary matter. I have asked the Minister if he will accept an intervention from the Deputy.

The Deputy knows it would not require any rules of the House for me to permit her to intervene.

That is very gracious of the Minister.

I asked the Minister for his observation on how EU law and directives frequently gallop ahead without the required political input except at infrequent intervals. Does the Minister consider it would be valuable if those matters were reflected on either in the Dáil or in committee before they become the property of COREPER officials and ultimately Ministers in Brussels?

The Deputy raised a point that goes to the heart of how European legislation has progressed since the European Union was founded. It is a huge bureaucracy and serious questions must be asked about whether there is sufficient democratic assertion of control. There is a necessity for expertise in most of these measures. The enormity of the task is such that without that professional expertise it would be extremely difficult for the Council of Ministers to do its business. I share the sentiment expressed by Deputy O'Rourke that sometimes one finds that matters have progressed to such a stage that one cannot unravel them or backtrack and is presented with a fait accompli. From my direct experience of some matters that have been progressing, I would like to have been persuaded in advance of the merit of a particular direction. The Deputy is correct. It is primarily a matter for the legislative assemblies of the domestic parliaments of the member states. Each member state should make adequate provision to ensure that these measures are thrashed out in the domestic parliament. I was under the impression that our committee system had improved the opportunity for that input.

Deputy O'Rourke holds a different view, but I thought it was an improvement.

Question put and agreed to.