Amendment No. 1 is ruled out of order as it does not arise out of committee proceedings.
Companies (Miscellaneous Provisions) Bill 2009 [Seanad]: Report and Final Stages.
Amendment No. 1 not moved.
I move amendment No. 2:
In page 6, lines 27 to 31, to delete all words from and including "information" in line 27, down to and including "purchased;" in line 31 and substitute the following:
"information for total purchases on the recognised stock market concerned on each such day:
(a) the date, in the place outside the State where the recognised stock market concerned is located, of the overseas market purchase;
(b) the purchase price at which the shares were purchased, or the highest such price and lowest such price paid by that company or subsidiary;”.
Amendment No. 2 provides for the amendment of section 226(a) of the Companies Act 1990 which is being inserted by paragraph (g) of section 3 of this Bill. Section 226(a) outlines information that is required to be published on the company website following the purchase by a company of its own shares on a recognised stock exchange outside the State. As it currently stands, the section requires that for each purchase of its own shares, a company must publish the time of the purchase and the price paid for the shares.
It has since been brought to my attention that companies may make several purchases of their own shares on a single day at different prices. In order to provide more focused information and to avoid an unnecessary administrative burden on companies, I propose to amend the requirement to publish the price of shares purchased to provide an alternative option that will require companies to publish the highest and lowest prices paid only. I also propose to delete the requirement to publish the time of each purchase in order to avoid the necessity for a lengthy list of times, and to restrict the requirement to the date of purchase only.
Does this refer to amendment No. 2? Amendment No. 1 was not moved.
It was ruled out of order.
This is an important piece of legislation. As we know, Ireland is one of the most important jurisdictions in the world for the establishment and servicing of internationally distributed investment funds. As the Minister of State noted, about 10,000 such funds are serviced in Ireland, providing employment for more than 9,500 people who work——
On a point of clarification, this amendment does not refer to the migration of funds but merely deals with the publication of the purchase of shares on company websites.
I apologise. Is this the amendment of section 226(a)?
That is correct.
It is very important. I support that the level of information required should be published. Having the detail of the information is important so that people are fully informed. It may be on the company website but anybody who knows me will know I am not very much into technological material. However, this is important for the generations who are, who will be able to follow companies, particularly those that purchase their own shares on a stock exchange outside the State. That is the basic point and it is important. It will obviously provide very detailed and focused information. Very often companies complain that the Minister is imposing further bureaucracy and administrative burdens on them. The Minister is proposing to amend that requirement to publish the price of shares purchased and to provide an alternative method that would require companies to publish only the highest and the lowest prices paid. Under this amendment one does not have to publish the time of each purchase in order to avoid the necessity for a lengthy list of times and to restrict requirement to the date of the purchase only. Those are laudable objectives because there is no point in strangling legislation at birth, so to speak. An issue we frequently discuss in this House is loading legislation with bureaucracy, which is self-defeating in the long term. This measure brings some common sense to the issue, which I applaud. The Minister and his officials are right to do this in this area and I will wholeheartedly support the amendment.
I thank the Deputy. The purpose of this measure is to introduce a simplified approach to companies that purchase their own shares. That is not an unusual practice for companies. If they have surplus cash amounts they would sometimes purchase their own shares.
Anglo Irish Bank was purchasing its own shares.
Under this legislation it will have to publish the lowest price, the highest price and the date of purchase as well. To be honest with the Deputy, I do not believe it is for that purpose. We should keep the debate focused on the primary purpose of the Bill. We welcome Deputy Penrose's comments in that regard. The measure is to make it administratively simple but, more importantly, to ensure that the information is simplified to ensure people can access it——
To make it clear.
——and clearly understand it when it is published.
Amendment agreed to.
Amendment No. 3 is in the name of the Minister. Amendments Nos. 3 to 5, inclusive, are related and may be discussed together by agreement.
I move amendment No. 3:
In page 16, lines 12 to 15, to delete all words from and including "apply," in line 12 down to and including "Court" in line 15 and substitute the following:
"apply to the High Court, on notice to the applicant, the Central Bank, the registrar and all creditors of the applicant".
Amendments Nos. 3 to 5, inclusive, are related. They make minor adjustments to the new mechanism agreed on Committee Stage last week that will allow certain collective investment fund companies migrate their registered offices into or out of this country without having to first wind up the company in their current jurisdiction.
These Report Stage amendments will amend subsections 6 and 7 of the new section 256G that will be inserted into the Companies Act 1990 by section 3 of this Bill. All three amendments deal with the court actions that shareholders or creditors can initiate if they wish to halt a planned migration of a fund from Ireland.
Before turning to the precise nature of the adjustments contained in the three amendments, I will explain why these proposals are deemed to be of such urgency that they are being addressed by way of Dáil Committee and Report Stage amendments to a Bill that has already been passed in the Seanad. I have always made the case that amendments should be published in good time to allow them to be examined so that people may decide whether to support them or otherwise.
The proposals arise in response to a recent approach by the Irish collective investment funds industry who reported that it believes there is currently a short-term window of opportunity for Ireland to attract investment funds business from third countries if our laws were amended to allow funds that are constituted as bodies corporate to migrate here without first having to wind up in their current jurisdiction. The funds entities in question are seeking to relocate to well-regulated jurisdictions, another critically important point, and Ireland has a well-regulated system in place regarding funds. This would respond to investor concerns arising from the recent financial turmoil.
As the Government is committed to doing all in its power to facilitate economic growth, and all the more so in the current challenging environment, it resolved to examine and respond to this request as speedily as possible.
Following detailed consultations with the funds industry and with the Financial Regulator and the Companies Registration Office a mechanism has been devised that will facilitate inward and outward migration of funds entities. This arrangement has appropriate safeguards in place to protect Ireland's reputation as a well regulated fund management centre, and the new mechanism is being restricted to funds whose activities will be or are regulated by the Financial Regulator. In addition to meeting the short-term window of opportunity identified by the funds industry I should add that this mechanism will also have long-term application and will add to the overall funds regulatory regime available in the State.
In this regard amendments Nos. 3 to 5, inclusive, deal with the High Court action that creditors or shareholders may initiate if they wish to halt the deregistration of an outward migrating fund. Amendment No. 3 will alter lines 12 to 15 of page 16 of the Bill as passed by the select committee last week. This amendment will add the migrating company and the Central Bank to the list of parties on whom notice must be served when a creditor or a shareholder applies to court to halt the deregistration in this State.
At present the Bill provides that notice must be served on the CRO and fund creditors, but there is merit in the migrating company being served with notice, given that its proposed migration will be the subject of a court case. I believe there is also merit in putting the Central Bank or Financial Regulator on notice as it is they who will have supervised the fund up to this point and it is they who will make a decision in the first instance on whether to allow an outward migration. This may put them in possession of facts that would be valuable to a court in arriving at its decision.
Amendment No. 4 — to be inserted between lines 39 and 40 of the same page of the Bill — also gives the migrating company and the Central Bank the right to participate fully in the court hearing. This should ensure that the court has access to all relevant facts before it makes a decision on whether to make an order in the case.
Amendment No. 5 seeks to give guidance to the court about the issues it should take into account in making its decision. The amendment provides that in order to halt proceedings, the court will have to be satisfied that the deregistration would not only be detrimental to the petitioning creditors or shareholders, but that it would also be materially prejudicial to the creditors of the fund taken as a whole, or to the shareholders of the funds taken as a whole, or to both the creditors and shareholders taken as a whole.
According to the European Fund and Asset Management Association, Ireland is the fifth largest investment funds jurisdiction in the EU behind countries such as France, the United Kingdom, Germany and Luxembourg. If we consider jurisdictions in terms of the international distribution of funds rather than the sale of funds, Ireland is the second largest investment funds jurisdiction in the EU behind Luxembourg.
The rationale put forward by the Minister of State is that many of the countries that recently joined the EU have now become extremely competitive in this regard. They are actively trying to develop an investment funds industry and establish themselves as a place of domicile in an attempt to attract business for the more established jurisdictions.
On the previous occasion the Minister of State spoke to us he indicated there was significant revenue involved and that each fund attracted to be domiciled here results in the creation of an additional one and a half jobs but in the past five years, from 2004 to 2008, the net number of funds established in Luxembourg was approximately 1,400 whereas we lost funds in that regard. We have lost out on an opportunity to create jobs and that is why we must move with the times. It is necessary to ensure that we in Ireland improve our investment funds flow offering to ensure we become the regulated funds domicile of choice for international asset managers, and that is what the Minister of State is trying to do. We must offer an environment and a base that is as competitive as possible and that we match what is on offer in other competing jurisdictions.
In that regard we must keep abreast of what is happening. The Minister of State has tabled amendments which amend part of the new section 256G that will be inserted into the Companies Act 1990 by section 3 of the Bill. The amendments will alter section 256G and sub-sections (6) and (7), both of which deal with procedure connected with the court cases that can be initiated by the shareholders or creditors who have a desire to halt the deregistration of funds coming from the Irish companies register. It is important that facility is available. The Minister is doing that in amendment No. 3 by adding the migrating company and the Central Bank or Financial Regulator to the list of parties to whom notice must be served when a creditor or a shareholder applies to the court under section 256G. Until now notice had to be served on the Companies Registration Office and on the company creditors. There is much merit in including the migrating company to ensure it will be served with the relevant notice, given that any proposal on migration companies would be subject to a court case or the potential of a court case.
If supervisory jurisdiction is to be vested in the Central Bank or the Financial Regulator it is important that they would also have the appropriate and adequate notice to invoke their jurisdictional and supervisory powers to deal with the funds. A decision must be made in the first instance with regard to whether the outward migration should be allowed. The matter will then become subject to a court.
Amendment No. 4 gives the Central Bank and Financial Services Authority of Ireland and the migrating company the right to participate fully in any court hearings. That is extremely important because the courts should not be making decisions in the abstract, with only one side of the argument being heard. The amendment is extremely important because it will give the court access to all the relevant details and facts before it makes a decision on whether to make an appropriate order in any case.
Amendment No. 5 is also important and the courts should take note of it, particularly in commercial law cases. The amendment gives some direction or assistance to the courts in respect of the factors or issues that should be taken into account when they are making their decisions. The courts should be given as much guidance as possible, particularly as they are always trying to divine what the Oireachtas intended when it passed certain legislation. They have used literal, teleological and schematic interpretations in the past and they have the power to consider what is said in these Houses in debates on legislation.
The amendments will add to the Bill. In that context, I wholeheartedly support them.
The courts have even considered the content of the Second Stage contributions of Deputies and Members of the Upper House in order to discover the intention behind legislation. The Second Stage debate often frames the overall direction legislation takes.
The funds industry is critically important and approximately 10,000 people are employed in it. Some 26,000 or 27,000 people are employed in the Irish Financial Services Centre, IFSC. The reputation of the country is also critically important. As Minister of State with responsibility for trade, I am in a position to state that the IFSC is internationally recognised as a fine centre of its kind. The regulation which governs the way the IFSC operates is extremely important.
There has been turmoil in the financial markets in recent times. As a result, it is important that a message be conveyed internationally to the effect that the IFSC is a good place to do business — particularly in view of the fact that there is proper regulation and that proper oversight and governance mechanisms are in place there — and that it is competitive. When people consider where they wish to locate funds, establish headquarters, etc., we hope they will look favourably on Ireland in the context of what it has to offer, namely, Greenwich mean time applies here, we have good connectivity with the United States, Europe and elsewhere, and the populace speaks English. These are great advantages in the context of promoting the IFSC as a place in which to locate operations, etc. The Government and the relevant State agencies will be doing everything in their power to promote the centre.
It is important that legislation to facilitate the migration of investment funds into the country should be in place. If there is only one-way traffic, companies will be extremely reluctant to locate here in the first instance. We must, therefore, be in a position to facilitate inward migration. If companies are willing to move in, they will also like to know that they can move out again if they so wish. We must get the balance right.
Amendments Nos. 3 to 5, inclusive, demonstrate that we are serious with regard to ensuring that proper governance and oversight mechanisms and proper regulations are in place. They will also ensure that funds companies will be notified in respect of proceedings.
The Deputy is correct in stating that we do not want to be overly prescriptive in the context of directing the courts and imposing on them a narrow focus. However, we want to be able to indicate clearly the intention behind the legislation. A court must be satisfied that a deregistration would not only be detrimental to the petitioning creditors or shareholders but that it will also be materially prejudicial to the interests of shareholders and creditors or both taken as whole.
The Bill has evolved during its passage through the Houses. It was never intended to rush through Committee or Report Stage amendments in either House. Representations were made to the Department, which wanted to respond and that is why the Bill evolved. Another factor in its evolution relates to the changing circumstances internationally and the turmoil that arose. Opportunities now exist in the context of the movement of funds and the volatility that exists. Financial services companies want to establish operations in secure centres that are well regulated and recognised internationally. Ireland is so recognised.
If the Chair will indulge me, I wish to refer to an amendment that was ruled out of order. It is important to state that in the context of generally accepted accounting principles in the US and with regard to the Minister to be in a position to make an order in respect of other jurisdictions where such principles hold sway, primary legislation was mentioned as being a necessity. In that context, section 2(4) states, "Every regulation under this section shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the regulation is passed by either such House". The Minister may make an order in respect of accounting practices other than those used in the US. In that context, strict criteria are laid down with regard to the accounting practices that can be used. In addition, the Bill promotes democratic accountability and this should meet the concerns raised by Deputies. Orders must be laid before the Houses and either House can reject an order within a set period.
I would like the Bill to pass through the Houses with full cross-party support. This will send out a strong message with regard to Ireland as a location where high standards of corporate governance apply across the board. That is critically important in the context of where we are trying to place Ireland internationally in respect of attracting funds and also foreign direct investment and the job creation, etc., that flows therefrom. I hope I have allayed the concerns expressed by Deputies in the context of the Minister having powers that are too wide-ranging or being in a position to make up his own rules. As regards the latter, my officials would certainly never allow me to make up my own rules. In the interests of democratic accountability, it will be necessary for the Minister to lay any orders before both Houses.
Amendment agreed to.
I move amendment No. 4:
In page 16, between lines 39 and 40, to insert the following:
(d) The Central Bank and the applicant concerned shall be entitled to make representations to the High Court before an order under this subsection is made.”.
Amendment agreed to.
I move amendment No. 5:
In page 16, lines 41 to 43, to delete all words from and including "considers" in lines 41 and 42, down to and including "so." in line 43 and substitute the following:
"is satisfied that—
(a) the proposed de-registration of the applicant would contravene the terms of an agreement or arrangement between the applicant and any shareholder or creditor of the applicant; or
(b) the proposed de-registration would be materially prejudicial to any shareholder or creditor of the applicant and the interests of shareholders and creditors or both taken as a whole would be materially prejudiced.”.
Amendment agreed to.
Bill, as amended, received for final consideration.
Question proposed: "That the Bill do now pass."
It is appropriate to comment on the Bill, as amended, at this point. Fine Gael will not be opposing the Bill but it is important to place a few reservations on record.
I will not allow the Deputy to stray very widely at this point. Normally at the end of the debate on legislation we take brief comments from Members.
I will be brief.
It is Christmas.
The intention behind the Bill, namely, to facilitate companies which may wish to establish headquarters here, attract funds and other matters. Everyone in the House must support that intention. However, I wish to record my party's concerns in respect of the legislation.
The first of these relates to the powers of the Minister. I have been a Member of the House for almost three years and I have yet to witness a statutory instrument being challenged by resolution of the House. The way in which secondary legislation is dealt with is inadequate. Due to other demands, we would never use Private Members' time to deal with such matters.
I have a number of concerns with regard to the country's reputation. I was encouraged by the comments made yesterday by the Governor of the Central Bank and Financial Services Authority of Ireland in respect of this matter. We must ensure that we do everything possible to restore the country's reputation. In that context, we must be extremely careful with regard to responding too quickly to corporate-driven legislation. There has been a great deal of discussion with regard to developer-driven planning. In many instances, corporations tend to drive certain items of legislation. The introduction of such a substantial amendment at such a late stage is an example of that.
As a result of the assurances we have been given by everyone I contacted about the matter, including Revenue and others, I am happy to allow the Bill to pass. However, it is important to put on the record the concerns my party has about how secondary legislation is produced, the ministerial powers granted in this Bill, the fact other accounting procedures are recognised and an amendment came so late, and re-emphasise the importance which must be attached to proper regulation. If we are encouraging companies to come here from Luxembourg, the Cayman Islands or Bermuda, we must ensure they are coming here in order to improve their reputations not to damage ours.
I have my own reservations about secondary legislation. I have argued about it in regard to the Diseases of Animals Act in 2001 and the 1966 Act. Many of these issues can be dealt with in the consolidation Bill. It is important that is put in place. The powers of the Minister to make regulations are somewhat circumscribed, in terms of designating other accounting standards for use by a specified category of parent undertakings incorporated in Ireland. The measures are purely transitional. There is a time limit and a defined period.
I agree with Deputy Varadkar. We are all snowed under. Sometimes a statutory instrument is introduced by secondary legislation and we do not have time to scrutinise it, which is part of the problem. Perhaps it should be laid before the committee and we should work out a separate way of dealing with it. It could be laid before the House formally and then transferred for scrutiny by the committee, which can assess the situation and determine how many companies have applied. It will be entitled to determine the circumstances regarding the qualifying companies and there is a restricted period of four years. It will all be brought to an end on 31 December 2015. The Minister will apply the same standard to the United States as will be applied to everyone else. The measure may not be applicable, which is fair enough.
I hope there will not be extensive recourse to section 2. I agree with Deputy Varadkar that our reputation is of the utmost importance. The jobs in this sector are high quality and are at the upper end of the market. We need to keep our scrutiny, supervisory and financial control sections in place. There is a fair degree of scrutiny and supervisory jurisdiction being inserted in this Bill. We have a belt and braces approach. I would be surprised if issues arose regarding companies. We are a place of domicile in terms of funds and our jurisdiction and supervisory regime is such that, because of our reputation, people want to come here.
The reason there is a significant amount of volatility as a result of the world financial crisis is that funds are now looking for homes, which they will only look for where they can be guaranteed that there is certainty, scrutiny, supervision and significant Government controls asserted through the legislative framework. It is important that our reputation is accentuated. Some of the amendments which were tabled were late and I accept the Minister's bona fides in that regard. The amendments stitched into the Bill improved the situation significantly. I am taking everything at face value. I know the Bill had to be passed before the end of the year and it is now ready to go.
I thank Deputies and, in particular, the Chairman of the Joint Committee on Enterprise, Trade and Employment, Deputy Penrose, and Oppositions spokespersons, for their co-operation. The amended version of the Bill will go before the Seanad tomorrow. There is an urgency about it because we are small nation competing against others for these types of funds. It is high end. It is important that we are flexible but have the proper regulation. I can assure Deputies that is the perception out there and the factual situation is that Ireland is seen, in the context of financial services and funds, to have good governance, oversight and regulation.
I thank the Companies Registration Office, the Central Bank and the Revenue Commissioners, which were all consulted, for giving their views on the Bill. As we are in the festive season, I thank the Acting Chairman, the staff and fellow Members of the House and wish them all a happy Christmas. I thank my officials here in the bull pen and wish them a happy Christmas.
Question put and agreed to.
The Bill, which is considered to be a Dáil initiated Bill in accordance with Article 20.2.2° of the Constitution, will be sent to the Seanad.