In this section, as I understand it, subsection (11) is a new subsection?
SECTION 130
Question proposed : " That Section 130 stand part of the Bill."
And the position used to be that you had not got to forward or file statutory reports but you had to have statutory meetings. It was the greatest cod that ever happened. In private companies, it never happened. Minutes were written as if the meeting were held. I think it is an excellent thing if it is knocked out.
That is true. I believe it was never done by private companies and we are conforming to practice.
You always forgot that the three months had passed before you started.
In regard to companies limited by guarantee and having share capital, are they in practice as well as in theory public companies?
It all depends really on whether they comply with the requirements in Section 33.
They are being treated here as public companies?
Not necessarily They can be either public or private.
In so far as they are private, I am wondering about the provisions of subsection (4) (c)—" . . .an abstract of the receipts of the company and of the payments made thereout". This seems to me to include their whole trading and if they are in fact private companies, should that information be on the record?
Is it not only their trading in the first three months.
Yes, but——
The receipts involved would mainly be receipts for shares or debentures.
It looks like that but I think it is wider than that.
Yes, it would cover receipts from all sources but I do not think you would be revealing any information of substance. But subsection (11) says that this section shall not apply to private companies. They are all excluded, anyway.
Except that subsection (1) says " every company limited by shares and every company limited by guarantee and having a share capital . . .".
Yes, you can have private companies in that category but they would be excluded by subsection (11).
As I understand this, a company limited by a guarantee and having share capital could be a private company but a company limited by guarantee and not having share capital could not be a private company. I think that is the situation.
That is right. That will be the situation under the Bill. Going back to Section 33, you must have share capital before you can become a private company.
I should like to have that very carefully examined because I think there is a very great number of advantages in the formation of companies limited by guarantee without having share capital. Many associations form themselves into companies and I do not think such companies should be public companies and have all the burdens of public companies and all the duties involved.
I am afraid I overlooked that point. I intended to go into it at a later stage. I do not think it is relevant on this section.
No. I have a note here that would show that the matter is to be further considered as I think was also a suggestion I made of giving permission to the Commissioners of Charitable Donations and Bequests to exempt general charitable companies limited by guarantee and not having share capital.
Question put and agreed to.
SECTION 131.
Question proposed : " That Section 131 stand part of the Bill."
This deals with annual meetings?
Yes.
Is there any change in this section?
There are some changes.
Perhaps the Minister would help by telling us what they are.
They are mostly fairly minor changes. In subsection (1) the words, " as its annual general meeting in addition to any other meeting in that year and shall specify the meeting as such in the notices calling it," are new but I do not think they add anything of great substance. Subsection (2) is new. It arises out of recommendations of the Committee at paragraph 136 of their report. The position was that under Section 64 of the 1908 Act a company had to hold an annual general meeting in every calendar year. That meant a company incorporated on 29th December was obliged to hold a meeting in the same year.
Even though it could not give the notice prescribed for it.
That is right. Subsection (2) overcomes that sort of difficulty.
I do not quite understand the provision in subsection (2)—why there is the exemption for the following year. It seems to me that the exemption should be for the year of incorporation because it is not convenient to hold the annual meeting of the company after its incorporation, but in the year following its incorporation, it should be perfectly normal.
I take it what is meant is the calendar year. Therefore if it goes 16 months after incorporation, that is a meeting and that would virtually cover the next year as well.
That is the reason.
It is the centre of a two year span if it is the calendar year.
We can cite a number of examples to show that it is necessary to refer to both the year of incorporation and the following year.
Is there anything else new in this section?
In regard to subsection (3), under the Act of 1908 the person empowered to call a meeting was the court. That power is now being given to the Minister to make things easier. Subsection (4) is consequential on subsection (3). Subsection (5) is associated with subsections (3) and (4). That is all. They are only minor changes.
Subsection (3) provides that " . . . the Minister may on the application of any member of the company, call or direct the calling of a general meeting of the company . . . " and direct that one person may be a quorum. That is to meet a particular case?
Yes. If a company had in its articles a requirement that two members would form a quorum and if, for some reason or other, only one of them was available, it is very desirable in that situation that the Minister should have power to say that one member should be a quorum.
In other words, whatever business is to be transacted is to be transacted by one.
They are only minor alterations.
I wonder is this a minor alteration—the fact that the company has to apply to the Minister instead of the court?
It is a matter of conveniencing the company really, because the application to the court would necessarily involve expenditure. That expenditure will be obviated by making the aplication to the Minister.
The only thing I am perturbed about is " the Minister may." The court must act judicially and give reasons if they decide not to call it. The Minister may not have to do that. He may refuse to call it. He may have reasons for not calling it. I am against taking this sort of discretionary power away from the courts and giving it to the Minister. I can see the grounds of the expense involved, but if there is a summary summons to the High Court, there is not any great expenditure involved. It does leave you open to the criticism that this is not as fair as a company applying to the court.
The right is given to one person, who may be a rather small shareholder. It would be rather onerous on him if he had to make application to the court. If he goes to the Minister, he will get a fair hearing. The Minster has that enabling power under which he is entitled to use ordinary discretion. I do not know if there is any grave difficulty involved by giving that power to the Minister rather than to the court.
I am all in favour of making things as easy as possible and as cheap as possible for the companies. Would you not put in an alternative by which an application to the court may also be made, if required?
A sort of opportunity of going to the court on appeal if the Minister refuses it?
Actually, it is not quite a case for the court, because there is a simple direction that the meeting must be held. It is a very simple matter of fact as to whether the meeting is held or not. It is merely a matter of somebody bringing it to the notice of the competent authority. I agree with Deputy Costello's principle, but I think in this case there is not a judicial function involved. It is a police function, if you like to put it that way. I think the Minister is the proper person.
To provide for an appeal to the court would be setting up rather elaborate and cumbersome machinery.
I do not think it is necessarily cumbersome. You can apply by summary summons to the High Court and get it in a fortnight. I feel there might be some cases in which the Minister might not think it worth while to call a meeting. All the members may have left the country or something like that, and he may not think it worth while to call a meeting. He may decide, perfectly bona fide, not to call it.
On the other hand, the Minister has the primary responsibility for seeing that this law is properly carried out. I take it the Minister would automatically in the course of his duty ensure that a meeting is called, because the company is obliged to call it by the law.
The Minister has discretion. He may delve into it and find the complaint ungrounded. Otherwise, the calling of the meeting is automatic.
Could somebody explain what is proposed? You have a private company with four shareholders which has not filed or is late filing its return. The Registrar of Companies knows it has not filed or is late and sends out the ordinary reminders. The Registrar does not know that this meeting has not been called. All he knows is that the return following the meeting has not been made. How is the Minister going to know that there has been default?
It is on the application to the members of the company.
How is the Minister going to know?
When the application is made.
All the Minister knows is that there has been no return. He does not know that there has been default.
If he gets a complaint from one of the aggrieved people that there has been default, he has to make some inquiries?
Yes.
Surely he has not got to do that? All the Minister is doing is directing the calling of a general meeting of the company. As I see it, the holding of the general meeting of the company would be the means whereby he would find out whether there had been an annual general meeting or not. If there had been an annual general meeting already, the whole thing should be sorted out at a special general meeting of the company, summoned at the direction of the Minister. If there had not, the default would then come to light and would be remedied.
If that were so, it should be the Minister who would call the meeting.
You are giving the Minister wide powers. You are giving him power to change a company's articles and power to declare that one member of the company in person or by proxy shall constitute a meeting. It is not a minor amendment. You are giving the Minister considerable powers. All I am suggesting is that there should be some general provision by which an application may be made to the court in certain circumstances. The 1908 Act was very simple. It states :
When default has been made in holding a meeting of the company in accordance with the provisions of this section, the court may, on the application of any member of the company, call or direct the calling of a general meeting of the company.
We should not legislate on the basis of uterimi fidei; we should legislate on the basis that mistakes can be made. There may be default on the part of the person involved in this operation. The Minister may not be able to make the inquiries. He may direct that the quorum instead of five will be one. Various things could be done by the Minister which it is not idle to anticipate. I feel we should take care before we pass this section. I would be inclined to give some sort of power of application to the court in relation to any of the rights involved in this section and the functions exercised by the Minister.
Three courses are open to us. First, we can preserve the subsection as it stands. Second, we can preserve the subsection and provide the right of appeal to the court; or, third, we can revert to the position under the 1908 Act. The law in Britain and Northern Ireland has been changed since 1908 and the Board of Trade or the Ministry now take the place of the court in Section 64 (2) of the 1908 Act. I have not any hard and fast feelings about what is the best thing to do. I am trying to meet what I regard as the general feeling of the people that these matters ought to be made as simple and as inexpensive as possible.
I agree.
I would be in favour of the section as it stands.
I would, too. What is involved in this is merely ensuring that the law is complied with. I would expect that the direction that might be given by the Minister under this subsection would be designed solely to ensure that the law is complied with.
I take it the main function of subsection (3) is to remedy a grievance which some shareholder has, the grievance being that the meeting of the company has not been held. The question is: what way should you get it held? Either by approaching the Minister, which can be speedy and inexpensive; or by going to the court, which can be costly and slow. If by either method you ultimately achieve the same objective—the holding of the meeting—is it not better to use the inexpensive and speedy machinery of getting the Minister to give a direction providing for the calling of the meeting? I hardly think in a case of this kind it is fair to impose the obligation of going to the courts, with possible delay in the hearing of the case, on the company or on those who may be the defendants in a case of this sort if there is an equally efficacious way of remedying the situation by appealing to the Minister.
That is exactly the logic behind this subsection.
Furthermore, as compared with the old Act, there are powers given which I think are an improvement in the subsection.
They follow the powers of the court. Let me put this on record. Leaving aside the question of expense, the method of going to the court in this old provision would be infinitely quicker than getting a decision out of the Department of Industry and Commerce, with all respect to present and past Ministers.
I think it is one of the fast ones.
But the comparison does not reflect great credit. They are not as bad as certain ones we know on the other side of Merrion Street.
There is one small matter not actually in the section. When an annual general meeting is held, the minutes of that meeting are normally written. When should these minutes be signed in order that they are evidence? I think there are two practices.
There is a section dealing with this coming up.
All right.
May I come back to get enlightenment? What is the purpose of the " Minister may "? If the Minister gets a complaint from a member of the company, is he going to start holding an inquisition as to whether the meeting has or has not been held? If he is, it is going to be infinitely longer procedure. The advantage of the court procedure is that it has to be done on affidavit. I think it should be either " shall " or in some other form.
Is there anything to prevent the Minister if he thinks it necessary from asking for an affidavit himself?
We have had no experience of it, I must admit. It is the first time this provision is being introduced. We do not know what the procedure would be. I should imagine it would be easy to establish a procedure whereby the Minister could establish whether or not a meeting has taken place. The company could be called upon to give such evidence and if it failed to do so, the Minister would normally act, under the section. That is a matter of fact.
I imagine that this section would work well in the majority of cases. There may be a minority of cases in which it might be open to fraud or abuse of some sort or other. I would be in favour of making it possible to apply to the court in certain circumstances.
In the case where somebody fraudulently misrepresents the position to the Minister, saying that a meeting has not been held or that shareholders were out of the country, would that position not come to light fairly quickly when the meeting was held on the direction of the Minister?
The Minister has the power to amend the articles but I am thinking of the three or four men company and of one person going to the Minister and saying " My colleagues have left the country ", and they may have and the Minister may decide he will call the meeting and make the quorum one. They may pass the accounts or dud accounts, giving directors fees. All that could be done and the person could skip the country. I am not saying that this is going to happen but it is the sort of thing for which we should legislate. I am suggesting that in certain circumstances an application to the court should be available.
May I suggest that we will be coming to Section 135 and I would be prepared to argue that as it gives certain powers to the court to call a meeting, it does perhaps cover the case Deputy Costello has in mind. If I do not satisfy him, I will come back to Section 131.
Would the Minister consider strengthening the section by giving himself power to hold such inquiries as he deems desirable? In case he does run into the possible fraudulent case, he might not have sufficient power, easily used, to deal with anything of that kind.
I could do that.
Could the Minister say if he has any information about how this section is working in Britain or in the North?
Our information is that it has improved on the law which existed prior to 1929 but as regards the procedure, we have not any knowledge. We would expect that the applications under subsection (3) would probably be few and far between.
Question put and agreed to.