SELECT COMMITTEE ON ENTERPRISE, TRADE AND EMPLOYMENT díospóireacht -
Wednesday, 9 Dec 2009

Companies (Miscellaneous Provisions) Bill 2009: Committee Stage.

Chairman

We are convened for the purpose of consideration of the Companies (Miscellaneous Provisions) Bill 2009. I welcome Deputy Billy Kelleher, Minister of State at the Department of Enterprise, Trade and Employment with special responsibility for trade and commerce, and his officials, Mr. Vincent Madigan, principal officer, Ms Deirdre O'Higgins, assistant principal in company law and financial services, Ms Claire Gordon, assistant principal, Mr. Pat Houlihan, assistant principal in company law administration, and Mr. John Moynihan, accountant. I thank the Minister of State and the officials for their attendance on Committee Stage of this complex Bill. I propose considering this Bill until 1 p.m. at the latest and if we have not concluded by then a further meeting will be arranged. Is that agreed? Agreed.

It is proposed to group amendments Nos. 1 and 2 and amendments Nos. 3 to 8, inclusive. These are the amendments tabled by the Minister of State, who indicated he would table them during the debate on Second Stage.

SECTION 1.

Chairman

Amendments No. 1 and 2 are related and will be discussed together.

Minister of State at the Department of Enterprise, Trade and Employment (Deputy Billy Kelleher)

I move amendment No. 1:

In page 4, lines 8 to 13, to delete subsection (3) and substitute the following:

(3) To the extent that the use of US generally accepted accounting principles does not contravene any provision of the Companies Acts or of any regulations made thereunder—

(a) a true and fair view of the state of affairs and profit or loss of a relevant parent undertaking may be given by the use by that undertaking of those principles in the preparation of its Companies Act individual accounts, and

(b) a true and fair view of the state of affairs and profit or loss of a relevant parent undertaking and its subsidiary undertakings as a whole may be given by the use by that relevant parent undertaking of those principles in the preparation of its Companies Act group accounts.”.

The amendment I am proposing to section 1(3) does not change the meaning of the provision as originally drafted. It expresses more clearly than the original text that a true and fair view of the profit and loss accounts of both the individual and group accounts in question may be given by the use of US generally accepted accounting principles, GAAP. This will add to the clarity of the text as originally proposed. Section 1(3) provides that a true and fair view both of the profit and loss accounts of both the individual and group accounts in question may be given by the use of US GAAP to the extent that the use of those principles in the preparation of the undertaking's accounts does not contravene any of the provisions of the Companies Acts or any regulations made thereunder.

Amendment No. 2 does not change the meaning of the provision as originally drafted. It expresses more clearly than the original text that a true and fair view of the profit and loss accounts of both the individual and group accounts in question may be given by the use of the specified accounting standards. The subsection provides that a true and fair view of the profit and loss accounts of both the individual and group accounts in question may be given by the use of the specified accounting standards.

Taken in the round, the provision is for the Minister to make regulations in respect of specified categories of parent undertakings that do not have securities admitted to trading on an EEA market. A true and fair view of the parent undertakings will be given by preparing the accounts in accordance with specified accounting standards and for a period not exceeding their first four financial years. I hope that brings clarity.

Deputy Mary Alexandra White

It brings clarity.

Amendment agreed to.

Section 1, as amended, agreed to.

SECTION 2.

Deputy Billy Kelleher

I move amendment No. 2:

In page 4, lines 18 to 24, to delete subsection (2) and substitute the following:

"(2) The Minister may make regulations providing for specified categories of parent undertakings which do not have securities admitted to trading on a regulated market and providing that—

(a) a true and fair view of the state of affairs and profit or loss of a parent undertaking in such a category may be given by the preparation by it of its Companies Act individual accounts for a specified number, not to exceed 4, of its first financial years in accordance with specified accounting standards, and

(b) a true and fair view of the state of affairs and profit or loss of a parent undertaking in such a category and its subsidiary undertakings as a whole may be given by the preparation by that parent undertaking of its Companies Act group accounts for a specified number, not to exceed 4, of its first financial years in accordance with specified accounting standards.”.

Amendment agreed to.

Section 2, as amended, agreed to.

SECTION 3.

Chairman

Amendments Nos. 3 to 8, inclusive, are related, consequential on each other and will be discussed together. The Minister of State might have to take some time explaining them because the area is complex. We must try to absorb as much as we can and discuss any issues that arise.

Deputy Billy Kelleher

I move amendment No. 3:

In page 6, line 30, to delete "and".

Amendment No. 4 is the substantive amendment in this group of amendments. The relevant part starts with the insertion of subsection 3(j) into the Companies (Miscellaneous Provisions) Bill 2009 on page 2 of the list of amendments as circulated. This inserts three new sections, 256F, 256G and 256H, into Part XIII of the Companies Act 1990 after sections 256 to 256E, which deal with matters relating to collective investment fund companies authorised by the Central Bank under section 256. In practice, this task is delegated by the Central Bank to the Financial Regulator. The new sections will allow certain collective investment fund companies migrate their registered offices into and out of Ireland, without first having to wind up the company in the current jurisdiction.

I decided to seek leave of this House to amend existing company law in this way following representations from representatives of the Irish collective investment funds industry, which reported that they believe there is currently a short-term window of opportunity for Ireland to attract investment funds business from third countries if our laws were to allow such a mechanism. Following further consultations with the Financial Regulator and the CRO, a mechanism has been devised that will facilitate this. The question of providing a similar migrating mechanism for the generality of companies has been under active consideration for some time at EU level but there are complex issues that are not yet resolved. However, these issues do not apply to collective investment fund companies regulated by the Central Bank.

The mechanism to allow the inward migration of collective investment fund companies is contained in the new section 256F that I propose inserting into the 1990 Act. The new section contains comprehensive details of the new process. The key points can be summarised as follows. A collective investment fund company based in a prescribed jurisdiction may apply to the CRO to be registered as a company in this State by way of continuation. The registrar shall not register that company unless it has also applied for authorisation from the Central Bank and the Central Bank has indicated it proposes to authorise the company to carry on business under section 256(1) of the 1990 Act as an investment fund.

Once satisfied that this and all other registration requirements have been fulfilled, the registrar will register the company on the Irish register of companies and the Central Bank will immediately thereafter authorise the company to carry on business in the State.

The migrated company will then seek deregistration as a company in its original jurisdiction. The overlap in registration is unavoidable but will be for a limited duration. Failure by the company to comply with the deregistration requirements in the other jurisdiction will allow the CRO move to strike the company off the Irish register. The new section also lists various documents that must accompany applications for inward migration. These documents include statutory declarations from a director of the proposed migrating company which demonstrate that the company is reputable and responsible. The statutory declaration covers issues such as approval of shareholders to the proposed migration as well as clarification that no examiners, liquidators or similar person has been appointed to the company.

Regarding outward migrating companies, the mechanism to allow authorised collective investment fund companies migrate out of Ireland is contained in the new section 256G that is to be inserted into the 1990 Act. This mechanism is similar to the inward migrating one but with a few added safeguards to protect investor and creditor interests and to ensure Ireland's reputation as a well-regulated funds centre is maintained. These safeguards include a requirement for the company to apply to the Central Bank for permission to migrate outside the jurisdiction and an appeal mechanism to the court should shareholders or creditors fear their interests would be affected by the migration.

The third section to be inserted into section 256 of the 1990 Act is new section 256H, which outlines further requirements in respect of the statutory declarations to be made by directors of inward or outward migrating companies, which this time essentially amounts to a statement of solvency. This provision also includes sanctions and penalties for directors who make declarations without having reasonable grounds for their opinions.

Amendment No. 5 cross-applies the provisions of the new sections 256F to 256H of the Companies Act 1990 to the undertakings for collective investments and transferable securities, UCITS, regulations. This is also being done on the basis that UCITS funds companies are also regulated by the Financial Regulator.

This group of amendments also makes a number of consequential amendments to the substantive amendments I have just described. The new section 3(i) in amendment No. 4 amends section 256(8) of the Companies Act 1990 so that an overseas collective investment fund company, that is in the process of migrating to this State under the inward migrating mechanisms of the Bill, will be not be subject to the strictures of the section as it would be approved by the Central Bank.

Amendment No. 3 is also consequential on the substantive amendments in amendment No. 4 and is effectively a re-punctuation that is required to reflect the fact that further subsections are now to follow section 3(h) of the Bill. Amendment No 6 provides for the commencement of the various sections of this Bill. All sections will commence on the passing of this Act other than the migrating funds proposal. Amendments Nos. 7 and 8 are the final consequential amendments necessary on foot of the insertion of the new funds migrating mechanism. They amend the Long Title to allow the cross-application of the migrating funds mechanism to UCITS constituted as companies.

I expect to have to make some small adjustments to sections 256G(6) and 256G(7) relating to the parties that can address the court and also give guidance to the court about the criteria they should apply in such applications. I also wish to draw the committee's attention to the fact that I propose to table amendments to section 226A, inserted by section 3(g) of the Bill, on Report Stage. These amendments relate to the requirements on companies to publish information on the company website on the purchase of its own shares. I propose to amend the requirement to publish the price of shares purchased to require that only the range of prices be given, as multiple purchases may be made over the course of a day at various prices. A price range would be more informative than a long list of prices in that it provides more focused information. As a number of purchases may be made over the course of a day, I also propose to delete the requirement to publish the time of each purchase to minimise the administrative burden on companies.

Chairman

We all accept it is important that Ireland is in a position to improve its investment funds offering so it becomes the regulated funds domicile of choice for international fund managers. I understand domestic legislation in Malta and Luxembourg provides for the redomiciliation of investment funds in those jurisdictions. The Minister of State identified inefficiencies in our system and we could continue to lose funds unless corrective action is taken. If we lose funds we will lose jobs and revenue to other jurisdictions that are competitive and remain more attractive. Ireland and Luxembourg are considered two of the best-regulated jurisdictions for investment funds. However, for a considerable period of time a number of offshore jurisdictions have been the domiciles of choice for investment fund managers. We have to get into a competitive position and that is essentially it. I hope I am summarising it. The purpose of the legislation is to increase the number of funds that can avail of the existing Irish regulatory regime. Any fund that redomiciles to Ireland under the Bill will have to submit an application to the Financial Regulator so there is protection

I am quite happy and satisfied with the existing criteria for the authorisation of a fund in Ireland. Issues had arisen. The country's reputation is very important and we want to ensure it is protected with fortification through legislation. We have taken a bit of a hammering here and there. The Bill will provide that funds will be permitted to redomicile here only where legislation in the home country either permits redomiciliation or does not prohibit it. The statutory declaration is very important; a director of a fund will have to furnish a statutory declaration containing vital assurances and confirmation that the fund is solvent. It is also important that a secure or preferred creditor will have to be notified in advance of any proposal to withdraw funds. The necessary consents will also have to be obtained. Approvals have to be obtained in accordance with the relevant legislation on reregistration. What the Bill is doing is visiting the protection of Irish company law upon this.

There is a reciprocity of legislation as what applies here will also apply in other states. I studied UCITS when I found out about them. It is amazing how much goes on in the various markets throughout the world and on the Stock Exchange. UCITS are funds established and protected under EU law. They are a form of investor protection and ensure that the fundamentals of regulatory compliance are adhered to strictly. All UCITS must satisfy basic information — an open offer must be made to the public and they have to be redeemed on demand by the investor. Therefore, the fund is open-ended and flexible and one is not fixed into it. Trustee or independent custodians are involved. Those protections are extremely important.

The Minister of State is reacting to a set of circumstances to which we are compelled to react to protect ourselves, the attractiveness of our taxation base and jobs in the financial sector. All in all, I do not have the expertise necessary to scrutinise this Bill — and I do not mind admitting so — but in so far as I can, and from information I have gathered, the Bill is not as open-ended as we thought it was and it is strict. It puts in place a supervisory jurisdiction on regulation and we know how important regulation is. This is not light-touch regulation by any stretch as it will become part of the corpus of existing company law and tightens the noose of the individual sections amended by amendments Nos. 3 to 8, inclusive, and the various consequential amendments. The Bill contains significant safeguards and I am happy to concur with the Minister on their incorporation into the legislation.

Deputy Billy Kelleher

I thank the Chairman. At all times in the discussion on and drafting of these amendments we were in very close contact with the CRO and the Financial Regulator. Ireland's reputation in financial services is very important with approximately 26,000 people employed at the Irish Financial Services Centre. It is of huge systemic importance to the economy. Reputation is critical in this area, particularly in the context of the global downturn and the meltdown that occurred in some jurisdictions. Our reputation in financial services was never brought into question and that is acknowledged throughout the world. There were no difficulties with regulations or, more important, with the reputation of Irish financial services. Some $1.2 trillion, a significant amount, moved through management funds, but it is of systemic importance. Wearing my other hat as the Minister of State with responsibility for trade, it is well acknowledged internationally that Ireland's financial services and their reputation are above question.

These amendments are concerned with creating a window of opportunity. There may be potential for investments to come to this jurisdiction. However, there is inward and outward migration. If an investment fund wants to come to this jurisdiction, it will also want to know that it can leave. For this reason, the amendment has been tabled.

The Chairman summarised the amendment well. It is quite long, but it deals with funds moving from another jurisdiction to this one. It contains plenty of safeguards. As it forms a part of company law, it also comprises the broader issue of the Financial Regulator and the Companies Registration Office, CRO. If Deputies have further questions, I will try to answer them.

Deputy Cyprian Brady

I welcome the amendment. As the Chairman stated, we increasingly find ourselves trading and doing business in a global market. The good aspect of the Bill is that, while it has the inbuilt flexibility to compete globally, it maintains our strict regulation, which is at its core. We do not have a light touch when it comes to regulation in company law. This amendment will ensure that not only will we have the flexibility to compete, but we will maintain the standards that we have built up over many years. I welcome the amendment.

Chairman

The Minister of State commented on employment, an important matter. I know from the Irish Funds Industry Association, IFIA, that there are significant levels of employment in this area. We want to be in a position to avail of that resource. Countries outside Europe might be looking for investment opportunities. We must ensure our attractiveness and competitiveness in this context.

The safeguards are essential. In this regard, I accept the bona fides of the Minister of State and his officials, who are well versed. However, significant complexities will become apparent in the consolidation of company law. This Bill will only add to that complexity, not detract from it. As I said in passing recently, my legal colleague, Dr. Thomas Courtney, will have a job writing another amendment or updating his comprehensive text on company law in the not too distant future so as to ensure that the details of the issues addressed in this Bill, soon to be enacted, are available to ordinary citizens and those lawyers who practice in this area.

The Minister of State has done a reasonably good job. I understand that the legislation is urgent and must be dealt with before the end of the year. Report Stage is next week, so we will continue to facilitate the passage of something that is for the benefit of Ireland, its economy and our attractiveness for inward investment and jobs.

Deputy Billy Kelleher

Last week, I referred to Dr. Courtney, who is chair of the Company Law Review Group, CLRG. Hopefully, the Bill is drafted in such a way as to fit seamlessly into the CLRG's deliberations. Company law is always evolving, given the new products that are coming on stream and globalisation. Company law can never remain static; it must continually evolve and keep up with the changing pace of the services being provided, globalisation, etc.

This Bill is important on two fronts. In terms of accounting, it will allow companies to use the US GAAP for a number of years. This is of critical importance for some major companies in Ireland that provide significant employment. A question on cost was asked in the House. If we do not implement this legislation, complying with the IFRS or Irish GAAP could cost companies €20 million or €30 million. In a globalised world, I assure Deputies that many countries are trying to facilitate inward and foreign direct investment. As they are competitive, we must remain competitive and ahead of the game. We live or die by our competitiveness in our exports. This Bill is of critical importance in terms of accounting principles and investment funds.

Chairman

It started off with two objectives, but has widened to encompass a number of other significant targets.

Deputy Billy Kelleher

We all like to try to give committees and their members as much time as possible, but some of these issues were brought to our attention after the Bill was published. For example, the matter of people remaining on in inquiries for a period was raised at a later date. This is the purpose of a committee system, in that the Bill can be changed.

Amendment agreed to.

Deputy Billy Kelleher

I move amendment No. 4:

In page 6, paragraph (h), line 33, to delete “ “subsidiary”.” and substitute the following:

" "subsidiary",

(i) in section 256(8), by inserting “, other than a company to which section 256F applies,” after “this Part applies”, and

(j) by inserting the following after section 256E:

256F.—(1) In this section—

‘migrating company' means a body corporate which is established and registered under the laws of a relevant jurisdiction and which is a collective investment undertaking;

‘registration documents', in relation to a migrating company, means the following documents and, when the original registration documents are not written in the Irish language or the English language, means a translation into the Irish language or the English language certified as being a correct translation thereof by a person who is competent to so certify:

(a) a copy, certified and authenticated in the prescribed manner, of the certificate of registration or equivalent certificate or document issued with respect to the migrating company under the laws of the relevant jurisdiction;

(b) a copy, certified and authenticated in the prescribed manner, of the memorandum and articles of association of the migrating company or equivalent constitutive document of the migrating company;

(c) a list setting out particulars in relation to the directors and secretary of the migrating company in accordance with the provisions of section 195 of the Principal Act;

(d) a statutory declaration of a director of the migrating company made not more than 28 days prior to the date on which the application is made to the registrar to the effect that——

(i) the migrating company is, as of the date of the declaration, established and registered in the relevant jurisdiction, no petition or other similar proceeding to wind up or liquidate the migrating company has been notified to it and remains outstanding in any place, and no order has been notified to the migrating company or resolution adopted to wind up or liquidate the migrating company in any place,

(ii) the appointment of a receiver, liquidator, examiner or other similar person has not been notified to the migrating company and, at the date of the declaration, no such person is acting in that capacity in any place with respect to the migrating company or its property or any part thereof,

(iii) the migrating company is not, at the date of the declaration, operating or carrying on business under any scheme, order, compromise or other similar arrangement entered into or made by the migrating company with creditors in any place,

(iv) at the date of the declaration the migrating company has served notice of the proposed registration on the creditors of the migrating company,

(v) any consent or approval to the proposed registration in the State required by any contract entered into or undertaking given by the migrating company has been obtained or waived, as the case may be, and

(vi) the registration is permitted by and has been approved in accordance with the memorandum and articles of association or equivalent constitutive document of the migrating company;

(e) a declaration of solvency prepared in accordance with section 256H;

(f) a schedule of the charges or security interests created or granted by the migrating company that would, if such charges or security interests had been created or granted by a company incorporated under the Companies Acts, have been registrable under Part IV of the Principal Act and such particulars of those security interests and charges as are specified in section 103 of the Principal Act;

(g) notification of the proposed name of the migrating company if different from its existing name; and

(h) a copy of the memorandum and articles of association of the migrating company which the migrating company has resolved to adopt, which shall be in the Irish language or the English language, which shall take effect on registration under this section and which the migrating company undertakes not to amend before registration without the prior authorisation of the registrar;

‘relevant jurisdiction' means the prescribed place outside the State where the migrating company is established and registered at the time of its application under this section.

(2) A migrating company may apply to the registrar to be registered as a company in the State by way of continuation.

(3) Where an application is made under subsection (2), the registrar shall not register the migrating company as a company in the State unless he or she is satisfied that all of the requirements of the Companies Acts in respect of the registration and of matters precedent and incidental thereto have been complied with and, in particular, but without prejudice to the generality of the foregoing, he or she is satisfied that——

(a) the migrating company has delivered to the registrar an application for the purpose, in the prescribed form and signed by a director of the migrating company, together with the registration documents,

(b) the name or, if relevant, the proposed new name of the migrating company has not been determined to be undesirable pursuant to section 21 of the Principal Act,

(c) the migrating company has paid to the registrar such fee as may be specified from time to time pursuant to section 369 of the Principal Act,

(d) the migrating company has filed with the registrar notice of the address of its proposed registered office in the State,

(e) the migrating company has applied to the Central Bank to be authorised to carry on business as a company under section 256(1) and the Central Bank has notified the migrating company and the registrar that it proposes to authorise the migrating company to so carry on business.

(4) An application under this section shall be accompanied by a statutory declaration in the prescribed form made by a solicitor engaged for this purpose by the migrating company, or by a director of the migrating company, and stating that the requirements mentioned in subsection (3) have been complied with. The registrar may accept such a declaration as sufficient evidence of compliance.

(5) The registrar shall, as soon as is practicable after receipt of the application for registration, publish notice of it in the Companies Registration Office Gazette.

(6) Where the registrar receives a notification under subsection (3)(e), the registrar——

(a) may issue a certificate of registration of the migrating company by way of continuation of the migrating company as a body corporate under the laws of the State, and

(b) if he or she issues such a certificate, shall enter in the register maintained for the purpose of section 103 of the Principal Act, in relation to charges and security interests of the migrating company specified in paragraph (f) of the definition of ’registration documents’ in subsection (1), the particulars prescribed by section 103 of the Principal Act which have been supplied by the migrating company.

(7) The migrating company shall, as soon as may be after being registered under subsection (6), apply to be deregistered in the relevant jurisdiction.

(8) The registrar shall enter in the register of companies the date of registration of the migrating company and shall forthwith publish notice in the Companies Registration Office Gazette of the following matters:

(a) the date of the registration of the migrating company under this section;

(b) the relevant jurisdiction; and

(c) the previous name of the migrating company if different from the name under which it is being registered.

(9) From the date of registration, the migrating company shall be deemed to be a company formed and registered under this Act and shall continue for all purposes under this Act, and the provisions of this Part shall apply to the migrating company, provided always that this section shall not operate—

(a) to create a new legal entity,

(b) to prejudice or affect the identity or continuity of the migrating company as previously established and registered under the laws of the relevant jurisdiction for the period that the migrating company was established and registered in the relevant jurisdiction,

(c) to affect any contract made, resolution passed or any other act or thing done in relation to the migrating company during the period that the migrating company was so established and registered,

(d) to affect the rights, powers, authorities, functions and liabilities or obligations of the migrating company or any other person, or

(e) to render defective any legal proceedings by or against the migrating company.

(10) Without prejudice to the generality of subsection (9)—

(a) the failure of a migrating company to send to the registrar the particulars of a charge or security interest created prior to the date of registration shall not prejudice any rights which any person in whose favour the charge was made or security interest created may have thereunder, and

(b) any legal proceedings that could have been continued or commenced by or against the migrating company before its registration under this section may, notwithstanding the registration, be continued or commenced by or against the migrating company after registration.

(11) The migrating company shall notify the registrar in the prescribed form, and notify the Central Bank, within 3 days of its de-registration in the relevant jurisdiction, of that deregistration.

(12) On registration of the migrating company under subsection (6), the Central Bank shall forthwith authorise the migrating company to carry on business under this Part.

(13) If there is any material change in any of the information contained in the statutory declaration mentioned in paragraph (d) of the definition of ’registration documents’ in subsection (1) after the date of the declaration and before the date of the registration under this section, the director who made that statutory declaration, and any other director who becomes aware of that material change shall forthwith deliver a new statutory declaration to the registrar relating to the change.

(14) If the migrating company fails to comply with any provision of this section, the registrar may send to the company by post a registered letter stating that, unless the migrating company rectifies the failure within 1 month of the date of the letter and confirms that it has rectified the failure, a notice may be published in the Companies Registration Office Gazette with a view to striking the name of the migrating company off the register.

(15) If the failure mentioned in subsection (14) is not rectified within 1 month after the sending of the letter referred to in that subsection, the registrar may publish in the Companies Registration Office Gazette a notice stating that, at the expiration of 1 month from the date of that notice, the name of the migrating company mentioned therein will, unless the matter is resolved, be struck off the register, and the migrating company will be dissolved.

(16) At the expiration of the time mentioned in the notice, the registrar may, unless cause to the contrary is previously shown by the migrating company, strike its name off the register, and shall publish notice thereof in the Companies Registration Office Gazette, and on that publication, the migrating company shall be dissolved.

(17) The Minister may make regulations prescribing places as relevant jurisdictions for the purposes of this section, where he or she is satisfied that the law of the place concerned makes provision for migrating companies to continue under the laws of the State or for companies to continue under the laws of that place in a substantially similar manner to continuations under this section.

(18) Every regulation made by the Minister under subsection (17) 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 House within the next 21 days on which that House has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

256G.—(1) In this section—

‘applicant' means a company that applies to be de-registered under this section;

‘relevant jurisdiction' means the prescribed place outside the State in which the company proposes to be registered;

‘transfer documents', in relation to an applicant, means the following documents:

(a) a statutory declaration of a director of the applicant made not more than 28 days prior to the date on which the application is made to the registrar to the effect that—

(i) the applicant will, upon registration, continue as a body corporate under the laws of the relevant jurisdiction,

(ii) no petition or other similar proceeding to wind up or liquidate the applicant has been notified to the applicant and remains outstanding in any place, and no order has been notified to the applicant or resolution adopted to wind up or liquidate the applicant in any place,

(iii) the appointment of a receiver, liquidator, examiner or other similar person has not been notified to the applicant and, at the date of the declaration, no such person is acting in that capacity in any place with respect to the applicant or its property or any part thereof,

(iv) the applicant is not, at the date of the declaration, operating or carrying on business under any scheme, order, compromise or other similar arrangement entered into or made by the applicant with creditors in any place,

(v) the application for de-registration is not intended to defraud persons who are, at the date of the declaration, creditors of the applicant,

(vi) any consent or approval to the proposed deregistration required by any contract entered into or undertaking given by the applicant has been obtained or waived, as the case may be, and

(vii) the de-registration is permitted by the memorandum and articles of association of the applicant;

(b) a declaration of solvency prepared in accordance with the provisions of section 256H; and

(c) a copy of a special resolution of the applicant that approves the proposed de-registration and the transfer of the applicant to the relevant jurisdiction.

(2) An applicant which proposes to be registered in a relevant jurisdiction by way of continuation as a body corporate may apply to the registrar to be de-registered in the State.

(3) Where an application is made under subsection (2), the registrar shall not de-register the applicant as a company in the State unless he or she is satisfied that all of the requirements of the Companies Acts in respect of the de-registration and of matters precedent and incidental thereto have been complied with and, in particular, but without prejudice to the generality of the foregoing, he or she is satisfied that—

(a) the applicant has delivered to the registrar an application for the purpose, in the prescribed form and signed by a director of the applicant, together with the transfer documents,

(b) the applicant has paid to the registrar such fee as may be specified from time to time pursuant to section 369 of the Principal Act,

(c) the applicant has informed the Central Bank of its intention to be de-registered and the Central Bank has notified the registrar that it has no objection to the de-registration, so long as the applicant complies with any conditions that the Central Bank may impose on the applicant, and

(d) the applicant has filed with the registrar notice of any proposed change in its name and of its proposed registered office or agent for service of process in the relevant jurisdiction.

(4) An application under this section shall be accompanied by a statutory declaration in the prescribed form made by a solicitor engaged for this purpose by the applicant, or by a director of the applicant, and stating that the requirements mentioned in subsection (3) have been complied with. The registrar may accept such a declaration as sufficient evidence of compliance.

(5) The registrar shall, as soon as is practicable after receipt of the application for de-registration, publish notice of it in the Companies Registration Office Gazette.

(6) (a) Where an application is made under subsection (2), a person mentioned in paragraph (b) may apply, on notice to the registrar and to all creditors of the applicant, to the High Court, not later than 60 days after the publication of the notice under subsection (5), for an order preventing the proposal or passage of a resolution specified in paragraph (c) of the definition of ’transfer documents’ in subsection (1) from taking effect in relation to the application.

(b) The following persons may apply for an order under this subsection:

(i) the holders of not less than 5 per cent of the issued share capital of the applicant and who have not voted in favour of the resolution, or

(ii) any creditor of the applicant.

(c) Notice of an application for an order under this subsection may be given to the creditors concerned by publication in at least one national newspaper in the State.

(7) The High Court may make an order mentioned in subsection (6) only if it considers that it would be just and equitable to do so.

(8) An order made under subsection (7) shall specify the period in respect of which it shall remain in force.

(9) An order of the High Court under subsection (7) is final and conclusive.

(10) Unless the High Court orders otherwise, when one or more than one application is made under subsection (6), a resolution specified in paragraph (c) of the definition of ’transfer documents’ in subsection (1) in relation to a company shall not take effect until—

(a) where the application or all the applications to the High Court are withdrawn—

(i) the day on which the resolution is passed,

(ii) the day next following the day on which the last outstanding application is withdrawn, or

(iii) the 31st day following the publication of the notice on the creditors under subsection (4),

whichever is the latest, and

(b) where all applications to the High Court are not withdrawn—

(i) the day on which the resolution is passed,

(ii) the day specified in the order or, if no date is specified in the order, the day next following the day on which the period for which the order is specified to remain in force expires or otherwise ceases to be in force, or

(iii) the day next following the decision of the High Court,

whichever is the latest.

(11) When the applicant is registered as a company under the laws of the relevant jurisdiction, it shall give notice to the registrar of that fact within 3 working days of becoming so registered, including its new name, if any, and, as soon as practicable after receiving that notice, the registrar shall issue a certificate of de-registration of the applicant.

(12) The registrar shall enter in the register of companies the date of the de-registration of the applicant and shall, within 7 days of the issuance of the certificate under subsection (11), publish in the Companies Registration Office Gazette notice of the following matters:

(a) the date of the de-registration of the applicant under this section;

(b) the relevant jurisdiction; and

(c) the new name of the applicant if different from the name under which it was registered.

(13) From the date of registration of the applicant in the relevant jurisdiction, it shall cease to be a company for all purposes of the Companies Acts and shall continue for all purposes as a body corporate under the laws of the relevant jurisdiction, provided always that this section shall not operate—

(a) to create a new legal entity,

(b) to prejudice or affect the identity or continuity of the applicant as previously constituted under the laws of the State for the period that the applicant was so constituted,

(c) to affect any contract made, resolution passed or any other act or thing done in relation to the applicant during the period that the applicant was constituted under the laws of the State,

(d) to affect the rights, powers, authorities, functions and liabilities or obligations of the applicant or any other person, or

(e) to render defective any legal proceedings by or against the applicant.

(14) Without prejudice to the generality of subsection (13), any legal proceedings that could have been continued or commenced by or against the applicant before its deregistration under this section may, notwithstanding the deregistration, be continued or commenced by or against the applicant after registration.

(15) The Minister may make regulations prescribing places as relevant jurisdictions for the purposes of this section, where he or she is satisfied that the law of the place concerned makes provision for bodies corporate that are substantially similar to applicants under this section to continue under the laws of the State in a substantially similar manner to continuations under section 256F or for companies to continue under the laws of that place.

(16) Every regulation made by the Minister under subsection (15) 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 House within the next 21 days on which that House has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

256H.—(1) Where an application is made under section 256F or 256G, a director of the migrating company or applicant, as the case may be, making the application shall make a statutory declaration stating that he or she has made a full inquiry into its affairs and has formed the opinion that it is able to pay its debts as they fall due.

(2) A declaration under subsection (1) shall have no effect for the purposes of this section unless—

(a) it is made not more than 28 days prior to the date on which the application is made to the registrar,

(b) it contains a statement of the migrating company’s or applicant’s assets and liabilities as at the latest practicable date before the making of the declaration, and, in any case as at a date that is not more than 3 months before the making of the declaration, and

(c) a report made by an independent person under subsection (3) is attached to the declaration, along with a statement by the independent person that he or she has given and has not withdrawn consent to the making of the declaration with the report attached to it.

(3) The report mentioned in subsection (2)(c) shall state whether, in the independent person’s opinion, based on the information and explanations given to him or her, the opinion of the director mentioned in subsection (1) and the statement of the migrating company’s or applicant’s assets and liabilities referred to in subsection (2)(b), are reasonable.

(4) For the purposes of subsection (3), the independent person shall be a person who, at the time the report is made, is qualified to be the auditor of the company or applicant, or of bodies corporate—

(a) in the case of an application under section 256F, under the laws of the relevant jurisdiction, and

(b) in the case of an application under section 256G, under the laws of the State.

(5) A director who makes a declaration under this section without having reasonable grounds for the opinion that the migrating company or applicant is able to pay its debts as they fall due commits an offence and is liable—

(a) on summary conviction to a fine not exceeding €5,000, or imprisonment for a term not exceeding 12 months, or to both, or

(b) on conviction on indictment to a fine not exceeding €50,000, or imprisonment for a term not exceeding 5 years, or to both.

(6) Where the migrating company or applicant is wound up within 1 year of the date on which the application is made to the registrar and its debts are not paid or provided for in full within that year, it shall be presumed, unless the contrary is shown, that the director did not have reasonable grounds for his or her opinion.".

Amendment agreed to.

Section 3, as amended, agreed to.

Section 4 agreed to.

NEW SECTION.

Deputy Billy Kelleher

I move amendment No. 5:

In page 7, before section 5, to insert the following new section:

5.—(1) The UCITS Regulations are amended by inserting the following after Regulation 36F (inserted by section 77 of and the Schedule to the Investment Funds, Companies and Miscellaneous Provisions Act 2005):

"36G.—The provisions of sections 256F to 256H of the Companies Act 1990 (inserted by section 3 of the Companies (Miscellaneous Provisions) Act 2009) shall apply to any investment company authorised pursuant to these Regulations and for this purpose the references to authorisation shall be read as referring to authorisation pursuant to these Regulations.”.

(2) In this section "UCITS Regulations" means the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2003 (S.I. No. 211 of 2003) as amended.".

Amendment agreed to.

SECTION 5.

Deputy Billy Kelleher

I move amendment No. 6:

In page 7, between lines 16 and 17, to insert the following subsection:

"(2) This Act (other than sections 1 and 2, paragraphs (a) to (h) of section 3, and section 4) shall come into operation on such day or days as may be appointed by order or orders of the Minister for Enterprise, Trade and Employment, either generally or with reference to a particular purpose or provision, and different days may be so appointed for different purposes and different provisions.”.

Amendment agreed to.

Section 5, as amended, agreed to.

TITLE.

Deputy Billy Kelleher

I move amendment No. 7:

In page 3, line 12, to delete "ACT 1990 AND" and substitute "ACT 1990,".

Amendment agreed to.

Deputy Billy Kelleher

I move amendment No. 8:

In page 3, line 13, after "2003" to insert the following:

"AND THE EUROPEAN COMMUNITIES (UNDERTAKINGS FOR COLLECTIVE INVESTMENT IN TRANSFERABLE SECURITIES) REGULATIONS 2003".

Amendment agreed to.

Question proposed: "That the Title, as amended, be the Title to the Bill."

Chairman

We have learned about UCITS. I had a limited knowledge of them, but I have a bit more now. I take this opportunity to thank the Minister of State and his officials for attending today's session. This is a complex matter and getting one's head around it is difficult. We would nearly need company lawyers to deal with the issues, but the Minister of State——

Deputy Edward O’Keeffe

No better man than the Chairman.

Chairman

I would not say that I am very competent in this area. Some people might say that I am not competent in any area. It is important legislation. Notwithstanding its start in life as a small acorn seed, as the Minister of State noted, it has grown to a half oak tree, if nothing else, to use the colloquialism I use at home.

I again thank the Minister of State for helping to explain and expand upon a complex area.

Deputy Billy Kelleher

I thank the Chairman and the members for their co-operation. We look forward to the discussion on Report Stage next week.

Question put and agreed to.

Bill reported with amendments.