We now move the amendment No. 190. Amendment No. 193 is related and we will take both amendments together. Is that agreed? Agreed.
SECTION 134.
I move amendment No. 190:
In page 111, line 2, after "company,", to insert "or any society registered under the Industrial and Provident Societies Acts, 1893 to 1978,".
Amendments Nos. 190 and 193 are really just technical drafting amendments. They are simply intended to ensure absolute consistency between the definition of a disqualification order in section 134 and the substantive provision in section 135 (1) (a).
Amendment agreed to.
Amendment No. 191 is in the name of the Minister. Amendments Nos. 194 to 196, inclusive, and amendments Nos. 199 and 205 are cognate. The proposal is that we take amendments Nos. 191, 194, 195, 196, 199 and 205 together by agreement. Agreed? Agreed.
I move amendment No. 191:
In page 111, line 5, to delete "secretary or auditor", and substitute "or secretary".
The purpose of these six related amendments is to narrow the definition of "officer" for the purposes of Chapters 2 and 3 of this Part, as we have found the inclusion of auditors therein to have implications, particularly in Chapter 3, which, in my view are too far-reaching. By way of example, section 139 (3) provides for (a) where a "restricted person" under section 128 becomes a director of another company, and (b) the company, having been notified that the person concerned was restricted, does not increase its capital, as required, and (c) that company subsequently becomes insolvent. Provided all three of those conditions are complied with the court may impose personal liability for the company's debts on any officer of the company who knew or ought to have known that the company had been notified as at paragraph (b) above. Since an auditor is currently defined as an officer, this would mean that, in this example, the auditor could be made personally liable for the company's debts. That is clearly unreasonable.
What I intend by these amendments, therefore, is to remove auditors from the general definition of "officer" in section 134, and to make specific references to the auditor where I feel it is necessary, for example, in section 135 (2) and (4) and in section 144 (1). The auditor is already specifically mentioned in section 135 (1) (a) in any event, and that can remain.
Where does personal liability arise in this Chapter? I thought this was about disqualification?
There are civil consequences that flow from disqualification in section 139.
Civil consequences of acting while disqualified?
Yes.
Amendment agreed to.
Question proposed: "That section 134, as amended, stand part of the Bill."
I want to make a general point on the section in reference to the definition of the word "court". This refers to the court being the High Court. People may be disqualified under this provision. We agree very much with the approach of disqualifying people from being directors if they have behaved improperly and that this is the right way to proceed rather than the way we were talking about earlier, putting them on a blacklist. Where people are looking for remedies against proceedings that are being taken should be in the High Court. We will have heard recently Mr. Justice Walsh, who has retired, referring to the very high fees that apply in the High Court and how expensive it is to obtain justice in the High Court because of the fees. Would the Minister consider it more appropriate to allow these matters to be dealt with in a lower court? In referring to that I should like to refer also back to the earlier Chapter 1 of this Part where it is stipulated that people may apply to the court for relief against having themselves put in a category that they had to have a higher paid up share capital etc. If the relief has to be obtained by application to the High Court the minimum cost is going to be £2,000 to £3,000. I would think that the Minister should provide that these proceedings could be dealt with in a lower court. That would mean or incur less expense all round. I wonder why the Minister has specified the High Court here?
The reason the High Court is specified generally is that this has been the court that generally was seen to have had jurisdiction in regard to Companies Acts matters from the start of the companies code in the 19th Century. Of course it was probably a great deal cheaper then. I will certainly take on board the Deputy's point about it being so unduly expensive. Its expense arises not just from the relatively minor matter to which former Mr. Justice Walsh referred, of the court fees which I think he was referring to on a plenary summons. It refers to the general costs of going to the High Court with even a relatively simply application which may cost £1,000 or even £2,000.
In principle, I am well disposed to trying to extend the jurisdiction of the Circuit Court. I do not see why it should not have jurisdiction in some company matters at least. The difficulty is — if I start here on section 134, in the middle of this Bill — we would have to go back and make consequential amendments at the very beginning. We would have to effect a huge number of consequential amendments to the 1963 Act which would be a huge undertaking in itself and would unduly hold up this Bill. In principle I do not disagree with what the Deputy says. In so far as this section is concerned this constitutes, if you like, at least one minor chink in the armour of the exclusivity of the High Court. This allows, in certain limited circumstances, either the Circuit or even the District Court to exercise jurisdiction so far as this Part is concerned. It will not be necessary to go the High Court to get an order for disqualification if the matter comes up and the court of its own motion feels that the Act has not been complied with in a way that would lead to the disqualification. This is, I think, the first time that any court, other than the High Court, is specifically being given jurisdiction. I think that is a good thing.
In so far as the future is concerned, it is a matter I might discuss with the Minister for Justice — that in future companies legislation we might consider the expansion of the jurisdiction to the Circuit Court because of the abnormal expense of going to the High Court and the fact that these kind of matters are normally heard only in Dublin. Even when the High Court is on circuit normally it hears personal injury cases only, those types of case. One could not, I think, go before it with a Companies Act matter. The result is that all of this has to be done in Dublin which adds to the existing expense of a great many people throughout the country. The Deputy will appreciate that perhaps this is not the appropriate place to start trying to make that amendment. What is appropriate here is for us to note that there is certainly a view within this committee, which I would share, that the High Court should not have exclusive jurisdiction in these matters.
The Minister is mistaken in thinking that this is such a very difficult job to undertake. Section 2 of the Companies Act, 1963 contains a one line statement: "The court, used in relation to a company, means the High Court." If the Minister wants to change that he simply has to say: "The court, used in relation to a company, means the High Court or the Circuit Court". We should not wait until we next have a Companies Act, some time in the next decade or in the next century, to remedy that.
Next year.
Ministers for Industry and Commerce have been saying "next year" about companies legislation for the past 25 years and it did not materialise.
We are in a different position now. We will be hauled by the Commission before Luxembourg if we do not do a lot of the things we are required to do.
I am not now talking about things that we may be required to do by the Commission. I am talking about general company legislation: which court deals with particular matters within our jurisdiction is something of our choosing, not something about which we will be hauled before the European Court. It seems to me the Minister should avail of the opportunity of the passage of this Bill to introduce amendments on Report Stage to amend the definition in section 2 of the 1963 Act to extend the definition of "court" to include the Circuit Court. That would save a lot of cost. Furthermore I contend it is right to do so in this Bill because it is a very interventionist one; it involves the court being involved in a whole range of things in which it was never involved before. Under this Bill much more frequent recourse to the courts will be required. If, in all cases, that is the High Court it will simply mean that this legislation will become inoperable because of the costs involved. It is urgent that the Minister should do something about that on Report Stage of this Bill. That is precisely the purpose of Report Stage, to allow him to do so. I can well understand he would not want to make such a change now or to do it simply in regard to this Chapter. I would hope that he would give us an assurance here that he would use his best endeavours to introduce omnibus amendments — if they are omnibus. If I am correct it may require one single amendment only on Report Stage. That would satisfy us.
I take on board what the Deputy has said. I did not say at the outset that it would be a difficult drafting job to change it because — as Deputy Bruton said — there is this one line definition in the 1963 Act. In the 1963 Act alone there are about 1,000 references to the court. In this Bill there are probably many hundreds of references to the court. The consequences of the amendment would be very far reaching. As the Deputy rightly acknowledges it is not one I would wish to undertake now. I will ask my officials to give thought to it and talk to the Department of Justice about it between now and Report Stage.
I am entirely in agreement with the Deputy's views about the cost of litigation. Many of the things that have to be done in relation to the Companies Acts in the courts are purely formal. It should not be necessary to go to the High Court with its consequential cost in order to effect them. The other factor to bear in mind is that the jurisdiction of the Circuit Court at present has been eroded by inflation over the past ten years or so. The jurisdiction is patently too low. A significant extension of the jurisdiction generally would be something that should be sought and welcomed. We will give it appropriate thought.
If the Minister gets into circumstances in which he has to consult with the Minister for Justice and get his agreement to do it, it will not happen, not for any personal reasons but because once, one gets into inter-Departmental consultations one must add two years to whatever it is one is endeavouring to do. If the Minister would just undertake it himself in regard to companies legislation that would be quite sufficient.
Question put and agreed to.