Thursday, 22 September 1988
Seanad Eireann Debate
Mr. Manning: We are on section 155 which we very much welcome. This is a follow on from a very important statement made by the Minister yesterday whereby the process is now being reshaped to ensure that companies which have a chance of being saved will so be saved. This is part of that and this section is certainly welcomed by this side of the House.
“(5) Where the court approves the affirmation or repudiation of a contract under this section, it may in giving such approval make such orders as it thinks fit for the purposes of giving full effect to its approval including orders as to notice to, or declaring the rights of, any party affected by such affirmation or repudiation.”.
Minister of State at the Department of Industry and Commerce (Mr. S. Brennan): This amendment deals with the power of the court to make certain orders, for example, where there are onerous contracts. The current section 156 of the Bill is basically a condensed version of section 290 of the 1963 Act and allows a liquidator to disclaim onerous property in the case of a company being would up. When a liquidator goes into a company he can disclaim onerous contracts if he  requires to do that. However, it has been put to me that section 156 errs on the side of brevity and that more or less all of section 290 should be repeated in section 156. It would perhaps be unwise to do this and it might over-complicate section 156. The draft amendment which I have here would achieve the same thing by giving maximum flexibility to the court in this respect so that the court can make whatever orders it sees fit to give effect to the company's proposed disclaimer under the section. The basic intention is that an examiner could have the same approach as a liquidator. When he arrives to a company which has onerous contracts or onerous properties he can actually disclaim those contracts. That is the power liquidators have at the moment: if there is a contract in place, they have power to disclaim the contract. What I am doing here is also giving the examiner the power to disclaim what are known as onerous contracts.
Mr. B. Ryan: This is the section facilitating or enabling the appointment of a creditors' committee. Section 157 (3) states: “An examiner shall provide the committee with a copy of any proposals for a compromise or scheme of arrangement and the committee may express an opinion on the proposals on its own behalf or on behalf of the creditors or classes of creditors...” Is there not a slight contradiction between giving the creditors an absolute right to a copy of such proposals and the very careful formulation, as amended in earlier sections, to avoid information which could be critical or damaging to the future of the company falling into the hands of people who would abuse it? My colleague, Senator O'Toole, made the point that it is possible that some of the largest creditors could  also be competitors and that proposals about arrangements for the future of the company could well give the competing company an advantage. I say this in light of our discussions yesterday about access to information and the need to be careful about making sensitive information available. I do not have very strong views on these matters but there is perhaps a conflict between the intent of section 157 (3) and the earlier care for protecting sensitive information.
Mr. S. Brennan: I will take a look at that. There may be something in it but, in general, creditors, by definition, are owed money. In any scheme or arrangement they are likely to have to take a cut or to enter into some other arrangement with the examiner. I do not see how we can entice an examiner to entice the creditors to be reasonable and then not give them a copy of the scheme so that they can see who else is carrying the can. I take the Senator's point and I am as anxious as he is, to ensure that this does not become a general plaything in the Press or in business circles because that would be unfair to the companies, very fine companies in many cases. I do not see how I can prevent a copy of the proposals going to creditors who are, after all, the people whose agreement we need most of all. I will see if I can find a way to marry both.
Mr. Manning: I should like to raise two questions, the first of which deals with the need for the commitee. As I understand it the examiner will issue his report and he has about three months in which to do this. I ask the question in order to get the Minister's view on whether bearing in mind some of the points raised by Senator Ryan, the appointment of the committee could hold up the examiner in the preparation of his report, which I believe should be the first priority.
Secondly — and I may be wrong here — is there any definition of a committee in the Bill? Will the size and composition of the committee be at the discretion of the examiner? I can see a situation in which there is competition and in which, in effect, every creditor would like to  believe that he or she had an equal reason for being on this committee and that the committee could be a very unwieldy affair. The definition of “committee” may already be in the Bill and, if so, what I have said is redundant but if not, would the Minister address that point and the wider point of whether the committee may slow down the whole procedure?
Mr. S. Brennan: I thought that it would be useful in a very tight time frame. I saw this as a way of speeding up the process rather than slowing it down. It is the examiner who will appoint the committee and I presume he or she will do that quickly if he or she decides to have one. They do not have to appoint a committee but they may decide to appoint a committee. The kind of circumstances in which they would do that is if, for example, there were large numbers of creditors and dealing with them all would be extremely unwieldy. The creditors may agree at an initial meeting or contact with the examiner or his staff that they would appoint this committee in order to speed up the process because the examiner might be dealing with a committee of not more than five members, as stated in subsection (2). That, in theory, could speed it up.
The alternative might be to deal with hundreds of creditors all over the globe. I do not think a wise examiner would not appoint the committee if he or she felt that it would slow him or her down. It would be unfair and unwise to do that. It is an option we are giving him to help him to speed it up. Even though in general one regards committee appointments as a process for slowing things down. I think that in these circumstances it could actually speed it up because we are dealing with fewer people. In a tight time frame of three months, plus the extra month which I am allowing, he might need it.
The Senator asked about the definition that a committee “...shall consist of not more than five members and shall include the holders of the three largest unsecured claims...” The reason I put  in the words “three largest unsecured claims” was that I wanted to give a weighting in this committee to the unsecured creditors because they are the people who are usually left on a limb. Does that answer the question?
Mr. S. Brennan: This is a drafting amendment. Amendment No. 232 will simply delete subsection (2) of section 159. It takes out the words, “A member or creditor may vote in person or by proxy to accept or reject the proposals”. This subsection which allows for voting in person or by proxy is unnecessary in this legislation since provision for this is made already in both subsections (4) and (5). I am happy to say that it is a straightforward drafting amendment because it is already provided for.
Mr. S. Brennan: This amendment seeks to ensure that the Revenue Commissioners are able to co-operate and are in a position to co-operate, as I know they would wish, with any such schemes. The aim of amendments Nos. 233 and 234 is to make sure that the State as a creditor, particularly in the form of the Revenue Commissioners, should be entitled to participate fully in a rescue scheme under this part of the Bill and, indeed, be bound by any such scheme without any question that any such State participation might be precluded under some other general statute. For example, the Revenue Commissioners may have felt in the past that they were not entitled to participate fully in a rescue plan because of a duty to collect every penny of tax outstanding. It would clearly be undesirable if the Revenue authorities felt they were constrained in the same way under this part of the Bill. The amendment to section 159 makes it clear, therefore, that State authorities, including the Revenue Commissioners, are entitled to accept compromises regardless of any power of the court to impose such arrangements on them and regardless of any apparent duty on them to do otherwise.
On the related amendment No. 234, while the court's power to bind creditors to a rescue plan under section 166 could be regarded as superseding any general duty of the Revenue Commissioners, legislative or otherwise, to collect due taxes, it might be as well to make this clear in this Bill specifically as amendment No, 234 does.
Mr. B. Ryan: This is just a brief reiteration of the point I raised earlier. The meeting of members or creditors to discuss the proposals for an arrangement or a compromise will have at their disposal the contents of the proposals as outlined in section 158. As section 158 is drafted much of the information we were worried about in earlier sections will become available to all the creditors. Perhaps we were being excessively careful because we restricted at an earlier stage the access of interested parties to the examiner's first reports, but we now seem to be saying that most of what we were worried about then becoming available to the general public is effectively going to become available via a creditors' meeting in section 159. I accept happily that I may have misunderstood the section, but that what it appears to be doing. We do not seem to be pursuing a consistent line throughout this Bill about withholding sensitive information. Perhaps either the earlier sections or amendments which were very carefully drafted should be dropped or these sections should be rethought to preserve some sort of consistency.
I appreciate the problem. How can you persuade creditors to a compromise if they do not have access to all the information? However, that has to be balanced against the interests of the company. If you start withholding information early on you will probably make creditors extremely suspicious anyway. I would like to hear the Minister's view on this.
Mr. S. Brennan: In the earlier parts of the Bill we did not really restrict creditors' access. We restricted, perhaps, access by various other interested parties. We did not restrict creditors access to it. My problem is as the Senator raised previously and quite rightly, and I see his point, that a creditor can be a creditor for a very small amount and yet have access to full information.
I have a real difficulty in that if I do  not get creditors' agreement then we do not have a plan, and if you cannot give creditors the full information as to who else is carrying the can you cannot expect them to agree to the plan. Certainly if I was a creditor of a company I would wish to know if I was being asked to carry a cut or some burden and to know who else in the company was carrying a burden, and I would be slow to give my agreement unless I knew that I was not the only one being asked to do so. If I am owed £100,000 and I am asked to take £60,000 in some kind of a scheme the first question I would ask is what the rest of them are carrying, and if I found that it was a fair, just and balanced scheme throughout the whole company then I would have to say “yes” or else risk getting nothing in the liquidation. I do not know how I could get around that problem. If Senators have any ideas on it I will certainly have a look at them between now and Report Stage.
Mr. B. Ryan: Amendment No. 223 provides: “The examiner shall also supply a copy of his report under this section to any other interested party”. This is the report the examiner is supposed to supply under section 151. Part IX of the Bill defines an interested party as a number of categories one of whom is a creditor. The amendment goes on to say: “on written application, with or without the omission of such parts of the report as the court thinks fit. Amendment No. 230 states: “... provided that such delivery ...may, if the court so directs, be subject to the omission of such parts of the report as the court thinks fit.” and it refers to the information that would be likely to prejudice the survival of the company.
In those cases we are talking about interested parties but the interested parties include the creditors. If it is necessary, and it appears to be, that the creditors have full access to all the information available about the company, then perhaps the restrictions in the earlier sections in so far as they apply to creditors are effectively meaningless and perhaps may damage the company because they  might create suspicions. I do not know where the balance of advantage lies but it appears there is a kind of contradiction in restricting information. It would be more consistent perhaps to say that creditors are entitled to all the information the examiner assembles in a report because I do not think that creditors are going to have a vested interest in closing down a company if that involves them in substantial losses. There is an argument that some of them might be competitors. There is an uncertainty, an uneveness, and inconsistency there.
Mr. S. Brennan: I am interested in what the Senator says and I will have a look at the confidentiality measures in this to see if I can harmonise them. We have restricted the original report. The examiner makes a report within 21 days about the state of the company and so on. We have restricted that information because that is the first blast of news and it is important that that would be very restricted for that reason. Where we did not restrict it so much was when the proposals are finally put by the examiner. At least now he has gone to the company, he has talked to creditors and in theory at this stage he should have agreement. It should probably be a formality putting it to the meeting. He probably should have agreement, perhaps before the meeting and at that stage confidentiality may not be as essential. We will have a further look at it.
An Cathaoirleach: Amendment No. 234 has been discussed with amendment No. 233.
Government amendment No 234:
In page 124, line 23, after “shall”, to insert “, notwithstanding any other enactment,”.
 Amendment agreed to.
An Cathaoirleach: Amendments Nos. 235 and 238 are related and may be discussed together.
Government amendment No. 235:
In page 124, lines 37 to 39, to delete subsection (9), and substitute the following subsection:
“(9) A compromise or scheme or arrangement, proposals for which have been confirmed under this section shall come into effect from a date fixed by the court, which date shall be not later than 21 days from the date of their confirmation.”.
Mr. S. Brennan: What is involved here is a change in drafting and amendment No. 238 seeks to change the wording. Both of them are wording changes to clarify what we have already agreed.
Amendment agreed to.
Government amendment No. 236:
In page 124, between lines 43 and 44, to insert a new subsection as follows:
“(11) Where the court refuses to confirm proposals under this section, it may, if it thinks it just and equitable to do so, make an order for the winding-up of the company, or any other order it thinks fit.”.
Mr. S. Brennan: This gives the court power to wind up a company; for example, if the court refuses the plan, it can make any other order. It can ask the examiner to try again. Amendment No. 236 is to fill a procedural gap which, I think, may exist in section 160. While the necessary order making powers and other procedures are certainly in place where the court confirms rescue proposals under section 160, the section does not provide for what will happen if the court refuses to confirm the proposals. The amendment would fill this gap simply by allowing the court to make a winding-up  order or any other order which it thinks fit. This might seem obvious but it is desirable to make it clear. It may not be entirely necessary but it is essential that we remove any doubt about it. If the court refuses the plan of the examiner, the court can then go ahead and wind up the company or it can make some other order, for example, telling the examiner to go back and try again.
Amendment agreed to.
Section 160, as amended, agreed to.
Government amendment No. 237:
In page 124, lines 44 to 48, and in page 125, lines 1 to 7, to delete subsections (1) and (2), and substitute the following subsection:
“(1) At a hearing under section 160 in relation to proposals a member or creditor whose interest or claim would be impaired by the proposals may object to their confirmation by the court on any of the following grounds—
(a) that there was some material irregularity at or in relation to a meeting to which section 159 applies,
(b) the acceptance of the proposals by the meeting was obtained by improper means,
(c) that the proposals were put forward for an improper purpose,
(d) that the proposals unfairly prejudice the interests of the objector.”.
Mr. S. Brennan: Amendment No. 237 is straightforward enough. There are three reason for it. First, there is an inconsistency between subsections (1) and (2) of section 161 on the one hand and subsection (3) on the other hand. Subsection (1) talks of objections to a decision of a meeting of creditors and so on while subsection (3) talks of objections  to confirmation by the court of the proposals. The wording should be the same in both cases and potential objections should in each case be to the confirmation by the court of the proposals. Secondly, while subsection (1) currently allows interested parties to object to a decision of a meeting, only paragraphs (a) and (b) of subsection (2) really relate specifically to such a meeting. Finally, since subsections (1) and (2) relate to the same topic, in other words objections by persons whose claims would be impaired, we felt it would be convenient simply to combine the present subsections (1) and (2) in a single subsection. We are trying to tidy up that aspect of it.
Amendment agreed to.
Section 161, as amended, agreed to.
Government amendment No. 238:
In page 125, line 20, to delete “commencement”, and substitute “coming into effect”.
An Cathaoirleach: Amendment No. 238 has been already discussed with amendment No. 235.
Amendment agreed to.
Section 162, as amended, agreed to.
Government amendment No. 239:
In page 125, line 27, to delete “the compromise or scheme of arrangement”, and substitute “the proposals”.
Mr. S. Brennan: This section basically tackles the question of how you can get an order revoked, specifically in the case of fraud. This is an order that would have been made confirming the plan submitted by the examiner. Amendment No. 239 is a straightforward drafting amendment. Under section 160 the court does not  confirm the actual compromise but rather the proposals for compromise and so on which are before it. The section is simply a procedure for revoking the confirmation of the plan if fraud or something of that order is discovered subsequently.
Amendment agreed to.
Section 163, as amended, agreed to.
Government amendment No. 240:
In page 125, before section 164, to insert a new section as follows:
“.—(1) A person shall not be qualified to be appointed or act as an examiner of a company if he would not be qualified to act as its liquidator.
(2) A person who acts as examiner of a company while disqualified under this section shall be guilty of an offence.”.
Mr. S. Brennan: Amendment No. 240 is intended, first, to remove an overlap which currently exists between subsection (1) of this section and Part VII of the Bill on disqualification generally. This, as Senators know, deals with the question of qualifications of examiners. For example, a person who is disqualified under that Part is already, by virtue of section 125, disqualified from becoming an examiner and there is no need to repeat the prohibition here. Secondly, on reflection I think it is not a good idea to prohibit a person to whom section 117 applies, in other words a restricted director, from being an examiner. We do not apply a similar prohibition on such persons acting as liquidators or receivers. Furthermore, section 117 is not a punishment section as such but is really intended more as a safeguard for creditors of any future company that a restricted director becomes involved with. Finally, subsection (2) of the amendment amends the present section 164 (4) by adding the words “under this section” again. This is to prevent an overlap with Part VII, Chapter 3 of the Bill which already provides criminal penalties for contravention of the disqualification order. Section 164, as Senators can see, deals with the question of the qualifications of an examiner who may act as an examiner.
Amendment agreed to.
Question: “That section 164 be deleted”, put and agreed to.
Government amendment No. 241:
In page 126, lines 1 to 3, to delete subsection (1), and substitute the following subsection:
“(1) The court may from time to time make such orders as it thinks proper for payment of the remuneration and costs of, and reasonable expenses properly incurred by, an examiner.”.
Mr. S. Brennan: We have prepared amendment No. 241 as a kind of check on the examiner to make sure that any expenses which the examiner incurs are reasonable and that he or she does not overstep what may be regarded as reasonable in the way of operating expenses during his or her stay in the company. For example, the holders of fixed security over the company's assets would naturally be concerned that their security could be eroded by an examiner who brought in a cast of thousands, one could say, as staff to a company. We think there is no better way to make sure the examiner does not overdo it as regards his or her expenses than to give the court a kind of overview on the matter. The courts have shown an increasing willingness in recent times to question the extent of liquidators' expenses and I think they will be prepared to do the same here. I think Senators will be aware of some public comment about the level of these expenses. I am trying to ensure in this Bill that in the case of examiners the  court will only permit reasonable expenses properly incurred. That is the phrase which I have put into the amendment.
Mr. Manning: I certainly welcome this because there is no doubt that over the past number of years there has been grave public disquiet, often, I think, fairly well founded, about the level of expenses run up in this way. It can be very galling indeed for creditors or for others to see what they will often regard as simply the ripping-off of the assets at this early stage through the type of expenses which are often needlessly incurred and also which frequently lack any sort of transparency and where it is not seen to whose benefit the expenses have been incurred. I would like to ask the Minister at this stage if the court is the best, the least expensive and the most flexible way of controlling these costs or whether there should be some sort of scale of fixed charges which might remove the need to go to court and the court would be there only as a last resort? Would that not be preferable? I am at least glad that this problem, which is probably one of the biggest single causes of ill-will at this stage in the proceedings, is being tackled. I am not convinced that there might not be some way prior to involving the court of tackling this problem.
Mr. S. Brennan: The reason I inserted this here is that I, too, have been concerned about public comment——
Mr. Manning: And the reality.
Mr. S. Brennan: ——in this area. What we are trying to do here is to deal with the examiner because that is what this section of the Bill deals with. In the case of the examiner we added phrases which are essential, such as “reasonable expenses properly incurred”. Going through my mind all the time is whether or not we can find some other formula which we could apply without going to court. I know Senator Robinson touched on this yesterday. One thing we have to try to do in this legislation is to keep the  court visits to a minimum, although a lot of them are necessary. I will give further thought to how we might solve that problem.
One of the problems with fixed charges and scale fees and so on is the anti-competitive nature of that. That can run into trouble with the Fair Trades Commission. Fixed charges could be the opposite; they could be anti-competitive. Someone may come along and wish to do the job cheaper and, if they are all on the same fixed charge, there is no competition. The other question is how can you have competition if the person is in place? I too am interested in that subject and in finding a solution that is fair to the professions and at the same time has no excesses. That is the balance we would like to achieve. For the moment this meets the question of the examiner and we will certainly be giving a lot of thought to the broader question as this Bill winds its way from here to the Dáil.
Mr. Mulroy: I would also like to welcome the amendment because there has been a lot of adverse criticism about expenses incurred by liquidators to the detriment of the creditor. I would like to ask the Minister if there is any definition of the qualifications an examiner might have or might require. Would this examiner be a trained administrator and is there a possibility that he could be a Government official who is specifically trained to take on this onerous task?
Mr. S. Brennan: That is back in section 164 but perhaps it would be no harm to refer to it. We said in section 164 that a person shall not be qualified to be appointed or act as an examiner of a company if he would not be qualified to act as its liquidator. Then there is a section about removing him. On the question of who may be appointed as a liquidator, that is clear. It is in section 114 of the Bill which is to do with independence, and there is a list of people who cannot be appointed a liquidator of a company, for example, a person who is a partner or an officer or servant of the company, a parent, spouse, brother,  sister or child of an officer of the company that is, anybody who is not independent, such as servants of the company and so on. Therefore, an examiner must meet the same strict criteria of a liquidator. Let me say publicly that this is not confined to accountants. You do not have to be an accountant to be a liquidator or a receiver and you do not have to be in the accountancy profession to be an examiner either. I would welcome a broader approach to it. I think accountants have served it well but a broader approach might be wise in some cases where broader management experience, particularly in company doctoring and company rescuing, might be advisable.
Mr. Mulroy: The concern of companies and of directors would be that the person appointed may not have the required specific knowledge and experience to carry out the task. There has been a lot of criticism in the past of liquidators who have been appointed to put companies into liquidation as they had not got the expertise required to dispose of the assets of that particular company. I am criticising the fact that there is not a more clear job specification for the role of an examiner or a liquidator. I accept that people should be at arms length but that does not necessarily mean that they have the qualifications to dispose of the assets of a highly technical company.
Mr. S. Brennan: That is a very good point and one that is always debated when company law is debated. The Senator need not worry about it in this legislation because the petitioner who wants the examiner appointed will propose a name which must be agreed to by the court. Presumably, and it is worth putting it on the record, the court would not agree to the appointment of a person the court felt was not competent to carry out the duties of examiner. I am relying on the judgement of the court for that. Company law in the past seems to have avoided listing specific qualifications. It does not say you have to be an accountant or an auctioneer, or that you have to have  X years experience in business, or that you have to qualify under all three headings. Neither does it say you have to be an amateur psychologist which perhaps you have to be as well. Perhaps this is wise because if we started to make it the preserve of any particular background, it would tie everybody's hands.
The question is should you say in legislation that a liquidator or an examiner should be any of those three things. They might need skills in those areas, but if you ever write down that it has to be an auctioneer because he has to dispose of assets, then how do you ensure that that person is also able to negotiate with creditors who might have nothing to do with property? It is better to say that the person has to be independent and accepted by the court and accepted, in the case of liquidators, depending on the way it is done, by creditors. To say that it must be a person who is acceptable at the end of the day seems to be the practical way to do it. I know what the Senator is trying to get at but I do not know how we could do it.
Mr. Manning: I am very interested in what the Minister had to say. It would be quite a job to define just what the qualifications should be in this case. One has to start with the assumption that there will be basic qualifications but, watching liquidations over the years, I found that the biggest cause for complaint seemed to be the feeling that the liquidator was not disinterested, that the liquidator may have had some other axe to grind. This is particularly true in the country when the liquidator may come down from some large anonymous firm in Dublin. I remember one case in which there was a liquidator and he insisted on very large scale security for the particular factory. It quickly emerged that the head of the security firm was a brother-in-law of the liquidator. This gave rise to great local anger where people had lost jobs and where local creditors may well have been paid out of the money that was going into the security firm in an area where there was no great need for security and where there was not going to be any great rip  off and where much less would have done. This is a problem which concerns many people in business. In adding to the Minister's list of qualifications, such as psychology and so on I suppose, above all, fairness and honesty and being disinterested are the chief qualities one looks for in this case.
On the question of costs, like the Minister I am not happy either with the formula with which he has come up. It is important that it is there but it could be improved. I would like to ask the Minister if in the question of a fixed scale of fees which would be supervised by his Department or by some regulatory agency it would still be possible to have competition. There is nothing to stop people going below the fixed scale of fees. If it is competition we are looking for, I presume somebody could do a deal at a rate and under the fees. Even apart from that I think that a fixed scale of fees has a great deal to recommend it in this particular case. At least there is this glas-nost, this transparency. What is there is there and is fixed and the hidden charges are not going to appear later on and the courts have not been needlessly involved. I know the Minister cannot answer that today but I would like him to think about it a little further.
Finally, have the professional bodies themselves with whom the Minister's Department have consulted any particular preferences or views on this matter?
Mr. O'Shea: The question I would like to ask is in the situation where the examiner incurs expenses, for instance, engages consultancy services and so on and subsequently the court finds that these expenses were not properly incurred, what is the position of consultants who provide services in good faith?
Mr. S. Brennan: In circumstances like that the examiner could be held personally liable but if it is a bill properly incurred then the examiner obviously would be entitled to pay the particular bill. He could be held personally liable if  he entered into commitments which were not reasonable, which is the case with liquidators at present.
Amendment agreed to.
Section 165, as amended, agreed to.
Government amendment No. 242:
In page 126, lines 23 to 29, to delete subsection (1), and substitute the following subsection:
“(1) An examiner or, where appropriate, such other person as the court may direct, shall within 14 days after the delivery to the registrar of companies of the following documents, cause to be published in Iris Oifigiúil notice of such delivery—
(a) a copy of every order made under section 153 or 160,
(b) a copy of the examiner's report under section 154,
(c) a copy of any proposal confirmed under section 160.”.
Mr. S. Brennan: This amendment is to page 126, lines 23 to 29. I wish to delete subsection (1) and to substitute it with a new subsection part of which states:
An examiner or, where appropriate, such other person as the court may direct, shall, within 14 days after the delivery to the registrar of companies of the following documents, cause to be published in Iris Oifigiúil notice of such delivery—
The three documents to be published are listed in the amendment.
It arises for three reasons, mainly technical. The phrase “as soon as may be” is too indefinite. First, requiring the various notices mentioned in the amendment to be published in Iris Oifigiúil as soon as may be is as I have said indefinite and in reality would be difficult to enforce. I think therefore that a definite time limit is preferable and I have proposed the  figure of 14 days in the amendment. Secondly, I think that the present subsection (1) (a) is much too sweeping since there is a multitude of cases under Part IX to which the court can make orders of various kinds and it would be very unwieldly indeed to have notice of each and every one published in Iris Oifigiúil. An additional snag too of course is that in most cases the court order concerned would not be required to be copied to the registrar in any event, thereby making the present paragraph (a) unworkable. Under the amendment therefore the only orders for which notices of delivery would have to be published would be those under section 153 where the court would make an order for winding up following an unfavourable report by the examiner or under section 160 which is confirmation of proposals by the court. These are the really important orders that the court would make under Part IX.
Finally, I think that the present subsection (1) (b) is also too wide and we have decided, by an earlier amendment to section 150, subsection (3), that the only report of the examiner which should receive general circulation should be the one he makes under section 154, in other words, his final report and not any other report that he might wish to make. That basically is our amendment to section 166. Basically it is designed to ensure publication of particular orders and to make the thing more workable.
Amendment agreed to.
Section 166, as amended, agreed to.
Government amendment No. 243:
In page 126, before section 167, to insert a new section as follows:
.—The whole or part or any proceedings under this Part may be heard otherwise than in public if the court considers that the interests of the company concerned or of its creditors as a whole so requires.
Mr. S. Brennan: This amendment seeks to insert a new section to provide for the hearing of proceedings other than in public. In other words, there may be circumstances where the court considers that it is in the interests of the company concerned or its creditors as a whole to hear the particular court session in camera. I am providing for that.
Mr. Hogan: I welcome this amendment is so far as it reiterates what we said here yesterday in relation to the confidentiality of some information. If this information got into the hands of its competitors it could lead to serious damage being caused to the potential viability of the company and for that reason it would be no harm to leave it at the discretion of the court in law as to whether to hold the proceedings in camera.
Amendment agreed to.
Government amendment No. 244:
In page 126, line 41, to delete “(ii)”.
Mr. S. Brennan: This is a drafting amendment. It is consequential on an amendment we have already made to section 107 in Part V of the Bill. With that amendment, amendment No. 155, we changed around the treatment of “reckless trading”, adding a new definition of that term and so on. This means that the proper reference in section 167 (2) of the Bill should now be to “section 297A (1) (a) of the Principal Act”.
Amendment agreed to.
Section 167, as amended agreed to.
Government amendment No. 245:
In page 126, before section 168, but in Part IX of the Bill, to insert a new section as follows:
.—(1) Any order made by a court of any country recognised for the purposes of this section and made for or  in the course of the reorganisation or reconstruction of a company may be enforced by the High Court in all respects as if the order had been made by the High Court.
(2) When an application is made to the High Court under this section, an office copy of any order sought to be enforced shall be sufficient evidence of the order.
(3) In this section, ‘company’ means a body corporate incorporated outside the State, and ‘recognised’ means recognised by order made by the Minister.
Mr. S. Brennan: What I seek to do here is to allow Irish courts recognise foreign similar orders. The note in the margin reads: “Enforcement of reconstruction orders made by courts outside the State.” It has been suggested to me that a section on the lines of amendment No. 245 will be a useful addition to this Part of the Bill and that it would reflect the growing tendency of national courts to recognise each other's orders. This is increasingly becoming the case nowadays, what with International Conventions on Bankruptcy, mutual assistance on enforcement of judgements and so on. There is a precedent in the 1963 Act. This has already been done in the case of company liquidations by virtue of section 250 of the 1963 Act which allows the High Court to enforce a winding up order made in a country recognised by the Minister. By virtue of an order made in 1964 the countries recognised for the purposes of section 250 are the UK and Northern Ireland. The UK Insolvency Act, 1986, section 426 contains a somewhat similar reciprocal recognition provision.
Mr. Hogan: Throughout this Bill there is a failure to recognise that many of our companies are foreign owned. I suppose Ireland is unique in that the proportion of foreign owned companies is much larger in this country than in other countries. We are very dependent on these foreign owned companies which are so  important to the Irish economy. Therefore, there are very many reasons why we would recognise international conventions here more so than in most other countries. That is why I welcome the amendment. It is very essential that we would do so. I have heard of cases where directors in other parts of the world are making policy decisions in relation to the management of a company in this country while a less important director in this country, a solicitor for example, could be held responsible for the day to day operations of the company and be left holding the baby as it were in relation to any practices in the company that might be deemed to be inappropriate. This is an issue that we probably cannot address in our law because we are talking about people outside our jurisdiction. It is something that we should recognise and where we can close any loopholes, through international conventions and international agreements——
Mr. S. Brennan: Through the EC.
Mr. Hogan: ——Perhaps, but I think that it is important that we should do so. Otherwise we will have people in this country being invited to become directors of foreign owned companies, for reasons that foreign owned companies wish to have directors in this country as part of their operations, and the responsibility on these directors is going to be too great for some of them unless we have some international arena in which we can copperfasten the rights of directors in our native country. I welcome the amendment as presented by the Minister of State and I expect that this is a very esential development in the wider international arena for many of our companies.
Mr. S. Brennan: Before we move on to deal with Part X of the Bill I want to take this opportunity to thank Senators because we have completed, to my mind, a major positive part of this Bill which  will make a major contribution to company law reform. I have said, both publicly and privately during the last 24 hours, that Part IX of the Bill amounts to a rescue clause. I am happy that it will save a lot of companies that would otherwise go into liquidation. They will be put into intensive care for a three to four month period. It is quite a radical proposal. I am very pleased about Senators' reaction to it. I assure Senators that the suggested changes they made to it as we debated it have been very useful and I will certainly try to take them on board because the key objective here is to get this rescue part correct. I thank Senators for this very useful debate on this most important part of the Bill.
Amendment agreed to.
Section 168 agreed to.
Question proposed: “That section 169 stand part of the Bill.”
Mr. Hogan: There are reasons why auditors might wish to cease to act as auditors in a company. In some cases it is important for auditors to be able to clear the air in an awkward situation. It is important from the point of view of the auditing profession that an explanation should be involved in order to clear the good name of the auditor. In relation to the appointment or the removal of auditors, will the Minister let us know if all the loopholes inherent in an awkward situation are covered in this legislation in order to assist the accountancy profession in protecting their good name.
Mr. S. Brennan: In section 171 where an auditor steps down he has a mechanism for stating his reasons. I thought about putting a similar mechanism into section 169 in the case where the auditor was fired but it is unnecessary because an ordinary resolution at a general meeting is what is required to remove the auditor and to call a meeting of the company  one would normally have to give 21 days notice. An auditor has the option of resigning in that period once he sees the notice and, therefore, using the clause to explain the situation fully as he sees it. There is a provision for the auditor, if he wishes, on his removal, to submit his resignation and therefore be able to make a full statement under section 171.
Mr. Hogan: I appreciate the points being made by the Minister. In the earlier discussion in relation to the examiner I mentioned that there might be situations where “retirement” might be the operative word rather than “resignation”. My point applies in particular to the auditor. The auditor is appointed at the annual general meeting and if he is in an awkward position in a company he might drag his feet and wait until the next annual general meeting occurs and retire gracefully. That could occur if an auditor found information which it might be distasteful to disclose from his own point of view and from the point of view of the company. While accepting the Minister's remarks in relation to the examiner, from the point of view of the auditor the section is more open to abuse. Perhaps the Minister would comment on the importance of including the word “retire” as well as “resign” to cover any malpractice that could take place and to cover awkward positions in which auditors might find themselves in the course of discharging their duties to a company.
Mr. S. Brennan: The word “retire” is a softer word than “resign”. In section 171 the auditor may resign and may make a statement to the effect that there are no circumstances connected with the resignation to which it relates that the auditor concerned considers should be brought to the notice of the members or creditors of the company or a statement of any such circumstances as aforesaid. If the auditor decides to resign because he does not like something and that is the honourable thing to do in those circumstances, he may make a statement along these lines which covers him completly and explains why he had to take  that step. The question of retiring is more appropriate in the circumstances where the auditor does not go forward for reappointment. The auditor's is an annual appointment made by the shareholders of the company. An auditor can quite simply convey his wish to the shareholders not to be reappointed. I would call that retiring and at annual general meetings the phrase is often used “the auditor wishes to retire”. If there is something in a company about which the auditor is concerned and he wishes to make a statement, then resigning is the right thing to do and I would not like to soften that. He should resign and make a statement.
Question put and agreed to.
Section 170 agreed to.
Government amendment No. 246:
In page 128, lines 48 to 50, and in page 129, lines 1 to 19, to delete subsections (3) to (5), and substitute the following subsections:
“(3) Where a notice under subsection (1) is served on a company—
(a) the auditor concerned shall, within 14 days after the date of such service, send a copy of the notice to the registrar of companies, and
(b) subject to subsection (4), the company shall, if the notice contains a statement referred to in subsection (2) (b), not later than 14 days after the date of such service send a copy of the notice to every person who is entitled under section 159 (1) of the Principal Act to be sent copies of the documents referred to in the said section 159 (1).
(4) Copies of a notice served on a company under subsection (1) need not be sent to the persons specified in subsection (3) (b) if, on the application of the company concerned or any other person who claims to be aggrieved,  the court is satisfied that the notice contains material which has been included to secure needless publicity for defamatory matter and the court may order the company's costs on an application under this section to be paid in whole or in part by the auditor concerned notwithstanding that he is not a party to the application.
(5) A person who fails to comply with subsection (2) or (3) (a) shall be guilty of an offence.
(6) If default is made in complying with subsection (3) (b), the company concerned, and every officer of such company who is in default, shall be guilty of an offence.”.
Mr. S. Brennan: The effect of amendment No. 246 is to delete subsections (3) to (5) of section 171 which deals with the resignation of auditors and in their places substitute four new subsections. The new subsection (3) shifts the obligation of notifying the registrar of companies of the resignation of an auditor to the resigning auditor and away from the company. Since it is in the auditor's interest to inform the registrar of his resignation, the obligation to do so is more likely to be complied with if it is placed on the shoulders of the auditor in question, rather than left with the company to comply with. It is more practical.
In relation to the new subsection (4) I felt that the present section 171 (4) was somewhat misleading in its wording. It referred to the rights conferred by this section being abused to secure needless publicity and so on. It struck us that the only right involved in the section is the auditor's right to resign, when what we really meant was that the auditor should not use the opportunity to make a statement in order to defame someone. The provision would be more straightforward if, instead of talking about the abuse of rights, it simply included a similar reference to the effect that the notice or statement from the auditor should not include material which could defame someone or secure needless publicity.
The new subsections (5) and (6) would  simply increase the penalty for non-compliance with the section and would introduce a new penalty for auditors who resign without making the statement required by a subsection of this section. Perhaps I misled the House earlier on. The auditor is required to make this statement. I may have given the impression that it was optional, but he must make the statement.
Mr. Hogan: I am still not happy about the fact that cases could arise in which auditors would be put in an awkward situation. By their nature they are very genial individuals and are not harsh with the company, and softer words would more appropriately describe their motivation in relation to the company with which they are dealing. After all, they are appointed by the shareholders of the company for whom they are carrying out the audit. It is essential that auditors would bring to the notice of their shareholders — and perhaps the Minister if so required — the importance of clearing up whatever malpractice is going on in the company and the direction in which the company's finances are going. The problem of reconstructing that company could be considerably dethroned from the examination procedures that we have just discussed under Part IX of the Bill. The sooner the auditor is able to point to the direction — perhaps the wrong direction in this case — in which the company is leading the better from the point of view of the shareholders and the sooner an examiner can be appointed who will be able to reconstruct that company the better the position.
The auditor is unique from other people appointed to a company in that he is appointed at an annual general meeting and can drag his feet in the last quarter of the year and gently get out of his obligations at the following annual general meeting, not by resigning but by not seeking reappointment which, in effect, is retiring. Some tightening up of the procedures is needed to ensure that that particular loophole is plugged and  that account is taken that that practice might take place. Also in the course of the year, a change may take place in auditors for reason perhaps of death. What will happen if the death of an auditor takes place? Have we taken account of that in the section we are dealing with? I would be grateful to the Minister for his enlightened wisdom on this matter if he could assist me in not putting down an amendment on Report Stage.
Mr. S. Brennan: I dread the thought of that, Senator. I think what we can do to meet the Senator's wishes — and perhaps it might be worth thinking about — is to include a provision which would insist that an auditor who does not go forward for reappointment makes a statement. If he can, I will certainly draft something suitable to ensure that the auditor makes a statement if he is not going forward for reappointment. I will have to check the legalities and parameters of that. I am well disposed to doing something like that if I can.
Amendment agreed to.
Section 171, as amended, agreed to.
Government amendment No. 247:
In page 129, lines 20 to 34, to delete subsection (1), and substitute the following subsections:
“(1) A notice served on a company under section 171 which contains a statement in accordance with subsection (2) (b) of that section may also requisition the convening by the directors of the company of a general meeting of the company for the purpose of receiving and considering such account and explanation of the circumstances connected with his resignation from the office of auditor to the company as he may wish to give to the meeting.
(2) Where an auditor makes a requisition under subsection (1), the directors of the company shall, within 14  days of the service on the company of the said notice, proceed duly to convene a general meeting of the company for a day not more than 28 days after such service.”
Mr. S. Brennan: Amendment No. 247 is what I would call a tidying-up exercise. The existing subsection (1) makes for certain complications. What will happen under the present text is that where an auditor resigns under section 171 and makes a statement that there are circumstances attached to his resignation which he wants to be brought to the attention of the shareholders he is also allowed, by subsection (1) (b) by way of a separate notice, to requisition a general meeting to discuss the matter which is the intention behind this section. On further reflection I see no good reason why the various requirements here could not be complied with by the auditor by way of a single notification rather than by two separate notices as is proposed in the existing text.
Subsection (1) of the amendment tidies up this bit of loose drafting and makes it clear that if the auditor wishes, at the time of resignation, to call a general meeting or to explain or discuss matters connected with the resignation, then he must do so in the notice or statement of resignation. The new subsection (2) is merely a restatement of the existing provision that the directors of the company, on receipt of a notice requisitioning a general meeting, should set about doing so within certain periods. I have, however, reduced by seven days the time limits for arranging and convening the general meeting because I believe the original limits were simply too generous. That is the amendment to section 172 which deals with the requisitioning of general meetings of a company by the resigning auditor.
Amendment agreed to.
Government amendment No. 248:
In page 129, to delete “a statement”, and substitute “a further statement”.
Mr. S. Brennan: This is a minor amendment.
Amendment agreed to.
Government amendment No. 249:
In page 130, lines 30 to 34, to delete subsection (5), and substitute the following subsection:
“(5) If default is made in complying with subsection (1), (2) or (4), the company concerned, and every officer of the company who is in default, shall be guilty of an offence.”.
Mr. S. Brennan: This amendment merely increases the penalties for not complying with the requirements of the section. I decided on this amendment for the simple reason that we considered the published maximum penalties of £1,000 for summary conviction and £5,000 for conviction on indictment as inadequate to act as a real deterrent. The effect of the amendment is to bring section 184 (1) of the Bill into play. The effect of applying section 184 to offences under this section will be that a person convicted will now be liable on summary conviction to a maximum fine of £1,000 or 12 months imprisonment and on conviction on indictment to a maximum fine of £10,000 or three years imprisonment. An additional effect of increasing the penalties in this way, of course, is that it creates a certain degree of consistency in the area of penalties which is very desirable.
Amendment agreed to.
Section 172, as amended, agreed to.
Government amendment No. 250:
In page 132, lines 10 to 12, to delete “, and he would not, if this section had been in force immediately before the appointment, have been disqualified for the appointment under this section”.
Mr. S. Brennan: Amendment No. 250 is a drafting amendment. Subsection (5) as it stands does not convey the intended message which is that on the coming into force of section 173 — which is concerned with the qualification of auditors — a two-year breathing space is provided in order to allow unqualified auditors to disengage themselves from the company concerned. The amendment would effectively delete the last three lines or so of the subsection which, in my view, serve only to confuse the issue.
Amendment agreed to.
Acting Chairman (Mr. Hussey): Amendments Nos. 251 and 252 are related and may be discussed together.
Government amendment No. 251:
In page 132, lines 13 to 21, to delete subsection (6), and substitute the following subsections:
“(6) Subject to subsection (5), a person shall not act as auditor of a company or as a public auditor at a time when he is disqualified under this section for appointment to that office.
(7) If, during his term of office as auditor of a company or public auditor, a person becomes disqualified under the Companies Acts for appointment to that office, he shall thereupon vacate his office and give notice in writing to the company, society or friendly society that he has vacated his office by reason of such disqualification.”.
Mr. S. Brennan: Amendment No. 251 would replace subsection (6) of the present text with two new subsections. They are mainly drafting problems here because in my examination of the existing subsection (6) three points struck me. First, it was not clear that its provisions were subject to the transitional provisions of subsection (5) as was the intention, secondly, we picked up the misspelling of “disqualified” in the second line of the subsection — I trust you are impressed  with that bit of work — and most important, we recognised that the reference to the Companies Acts in this section was an overlap with Part VII of the Bill which deals with the general area of disqualifications of directors.
Under Part VII a person who is subject to a disqualification order is, in addition, to being disqualified as a director also disqualified from being an auditor of a company. There are very severe penalties in Part VII for contravening such a disqualification order. The new subsection (6) of section 173, therefore, confines itself to cases where an auditor is disqualified from holding office under this section specifically and not under the Companies Acts generally. The new subsection (7) is basically a restatement of lines 15 to 20 on page 132 of the Bill. In this case we need the wider reference “under the Companies Acts” no matter how the auditor has been disqualified. In other words whether under this section, Part VII, or whatever, he should be required to vacate his office and notify the company accordingly. The related amendment No. 252 reflects the fact that we are proposing to break up the present subsection (6) into two subsections. There is a maze of drafting improvements.
Amendment agreed to.
Government amendment No. 252:
In page 132, line 23, after “subsection (6)”, to insert “or (7)”.
Amendment agreed to.
Question proposed: “That section 173, as amended, stand part of the Bill.”
Mr. Mulroy: I would like to pose a question about the qualifications of auditors. I understand there has been an influx of people from outside the EC countries — Australia, Canada, America and other countries — who do not have proper knowledge of Irish tax laws and Irish company law and that these people are receiving recognition and authorisation  as auditors. I wonder under what procedures are these people allowed to practise. Could the Minister comment on this? It is particularly important from now on, especially within the EC, with the growth and expansion of the financial services. I do not think Ireland should be seen as a back door into the EC for such people.
Mr. S. Brennan: I will certainly examine the Senator's suggestion that there has been an influx of people. I would be concerned at that. My information at the moment is that that is not the case but that the procedure is that the legislation recognises recognised bodies of accountants and any member of such bodies is automatically recognised. In theory someone from abroad could be a member of one of those bodies, but that is very limited. There is a very special procedure to allow the Minister to recognise auditors:
...Having regard to the obtaining by him of an accountancy qualification that is, in the opinion of the Minister, of a similar standard to that of such membership as aforesaid, for the time being authorised by the Minister to be so appointed...
— in other words someone with similar qualifications from elsewhere. I am told that in the past number of years there have been perhaps as few as one or two such authorisations. This is absolutely negligible. I will examine the position to see if the Senator's fears about the influx are founded.
Mr. Mulroy: In section 174 we will deal with whether there are reciprocal arrangements. In Ireland, I understand, we recognise all of the UK institutes and their qualifications, but the UK do not necessarily recognise all of our institutes. I wonder if we should put something in the Bill whereby the Minister may revoke or suspend their recognition or authorisation. Could the Minister comment on this?
Mr. S. Brennan: In general Irish  accountancy bodies such as the Institute of Chartered Accountants are fully recognised by our UK counterparts. There is one difficult case — I have had meetings with the parties involved — where that recognition does not apply. One particular institute is not fully integrated with one in the UK. That is very much an internal difficulty in the institution. I have to be careful about that until I can look at it further. The general rule is that there is recognition between the UK and Ireland of accountancy bodies, and full agreement on that. I will see if I can resolve that one case, but it is very difficult and there is a lot of history behind it.
Mr. Hogan: It is stated in section 173(1):
A person shall not be qualified for appointment either as auditor of a company or as a public auditor unless — (a) he is a member of a body of accountants for the time being recognised for the purposes of this section by the Minister...
Many accountants act individually, without being members of a body of accountants. In fact, there is a widespread opinion abroad that there are people who are acting in an unauthorised way in the accountancy profession — perhaps that happens in many other professions as well — and that unauthorised auditing is taking place. Perhaps the Minister should consider some form of registration for individuals who are acting as auditors but who are not members of an approved body in order to tighten up the legislation so that those people could still be brought in under the provisions of the legislation we are enacting. If the Minister insists on auditors being members of a recognised body I am afraid it will exclude people who act outside those recognised bodies and remove them from the impact of the legislation.
Mr. S. Brennan: I am aware of the Senator's concern. We have to distinguish between two things here. First, we are talking about auditors. There are  many people who provide accountancy services but do not do any auditing. That is a different ball game. It borders on financial and management consultancy which is a different area. Very often other qualifications are more appropriate in those areas. There is a gap between financial consultancy provided by the MBA type of people with a masters degree in business administration or perhaps doctorates in various branches of business. There are many people providing that kind of corporate strategic financial advice. That is a different business from auditing.
In regard to auditors the position is very strict. You cannot be an auditor of a company unless you are a member of a body of accountants. To answer the Senator's question directly, it is an offence for somebody who is not either a member of a body of accountants recognised by the Minister or, under section 173 (1) (b) of this Bill, authorised by the Minister as having similar qualifications, to audit a company and it can be dealt with by law.
Mr. Hogan: In other words the Minister is saying that auditors cannot act without being members of a recognised body.
Mr. S. Brennan: I am saying precisely that with one rider, which is contained in section 173 (1), that you must be either a member of a body of accountants for the time being recognised for the purposes of this section by the Minister, or you are, having regard to the obtaining by you of an accountancy qualification that is, in the opinion of the Minister, of a similar standard to that of such membership as aforesaid, for the time being authorised by the Minister to be so appointed, or you were authorised by the Minister before 3 February 1983, which is the old legislation. So there is no question of anyone else acting as an auditor. If they do it is illegal, unless they are members of a body or have ministerial authorisation under either of those sections, and they are very limited. You  are talking about a handful of cases but they would be acting within the law.
Question put and agreed to.
Section 174 agreed to.
Acting Chairman: Amendments Nos. 253, 254, 255 and 256 are similar and may be discussed together.
Government amendment No. 253:
In page 133, line 41, to delete “they are satisfied that”, and substitute “, in their opinion,”.
Mr. S. Brennan: Section 175 deals with the audit report and what should be contained in it. The effect of amendments Nos. 253 to 256 involves the substitution of the phrase “in their opinion” for the phrase “they are satisfied that” in paragraphs (b), (c) (e) and (f) of section 175 (4). In the published Bill we used the wording “they are satisfied that” in place of the wording “in their opinion” which is the wording used in the 1963 Act, second paragraph, Seventh Schedule. I decided on the present wording because at the time I believed it was a clearer way of putting the onus on auditors to make a categorical “yes” or “no” statement and was free of qualifications as to the various matters on which the auditor had to report. However, having reflected further on the matter and having taken account of the views expressed by a number of people, including Senator Lydon on Second Stage, I recognised that the new wording was perhaps impractical and could give rise to prohibitively expensive 100 per cent audits. I recognised also that the original wording had been tried and tested in court and elsewhere.
Having taken all these views and opinions into account I accept that the wording could create more difficulties than solve problems and that it would be best to revert to the wording of the Principal Act. These four amendments  revert to the wording of the Principal Act of 1963.
Amendment agreed to.
Government amendment No. 254:
In page 133, line 43, to delete “they are satisfied that”, and substitute “, in their opinion,”.
Amendment agreed to.
Government amendment No. 255:
In page 134, line 2, to delete “they are satisfied that”, and substitute “, in their opinion,”.
Amendment agreed to.
Government amendment No. 256:
In page 134, line 19, to delete “they are satisfied that”, and substitute “, in their opinion,”.
Amendment agreed to.
Question proposed: “That section 175, as amended, stand part of the Bill.”
Mr. Hogan: There is a danger that an auditor's report could become very unwieldy and lengthy if we proceed along the road we are proceeding. The same could be said of the examiner's report in the last part of the Bill. The Minister made certain changes to that in order to ensure that we would not have a very unwieldy and lengthy document which might take a considerable length of time. The information that should be incorporated in the auditor's report should be dealt with in the same way as it is dealt with in the UK — reporting by exception. Rather than having a list of information that is required by an auditor, a list of information that is not required is probably a much easier way of dealing with the matter. Perhaps the Minister would comment on that?
Mr. S. Brennan: I think that when the chips are down we have to get the auditor  to make certain statements. Management by exception is all very well but when it comes down to it we are asking the auditor to make a few categorical statements and to sign his name to them professionally. He has to say whether he is satisfied that proper books of account are being kept by the company. He has to say whether he has obtained all the information and explanations which, to the best of his knowledge and belief, are necessary for the purpose of the audit and whether he is satisfied that proper returns adequate for the audit have been received from branches of the company not visited by him and so on. He has to say whether the balance sheet is in conformity with the books and accounts.
Given the enormous reliance that people — potential investors, creditors and so on — place on the auditor's report I think it is safer that the auditor is required to spell out “yes” or “no” to these specific questions. That would not have to be unduly lengthy; in fact the average auditor's report runs to one page. A huge set of accounts can run to one page. Accountants have it down to a fine art now. They can say that they wish to state under the Act that they are satisfied that proper books are being kept and so on. We are talking about one page. I think it is better that they say these things and sign them rather than say that they omitted to mention that it was an exception. This is safer considering the reliance on it.
At the end of the day the auditor does not sign the accounts so much as he signs the auditor's report. That is the key signature and it is important that he is signing something that is spelled out and which, as I said, seldom runs to more than one page.
Question put and agreed to.
Government amendment No. 257:
In page 134, before section 176, to insert a new section as follows:
“.—(1) If, at any time, the auditors of a company form the opinion that the company is contravening, or has contravened, section 180 by failing to cause to be kept proper books of account (within the meaning of that section) in relation to the matters specified in subsections (1) and (2) of that section, the auditors shall—
(a) serve a notice on the company as soon as may be stating their opinion, and
(b) not later than 7 days after the service of such notice on the company, notify the registrar of companies in the prescribed form of the notice.
(2) A person who contravenes subsection (1) shall be guilty of an offence.”.
Mr. S. Brennan: I am proposing in this amendment the entire deletion of section 176 of the published Bill which deals with the duty of auditors if proper books of account are not being kept. I am proposing to delete that section and in its place to substitute a new and much shorter version of section 176. The published section 176 is concerned with the duty of auditors in a situation where proper books of account are not being kept. It has been pointed out — and I agree — that section 176 as published is protracted, cumbersome and unwieldy. It does not really carry any assurances either of compliance or of effectiveness. I have given this matter some thought and consideration and I am satisfied that the problems associated with proper book-keeping in companies, which this section sets out to tackle, are already well covered in section 175 (4) (b) and sections 180 to 182 of the Bill. Against that background I felt that the complicated procedures laid down in section 176 as published should be very much simplified.
Amendment No. 257 would disregard most of the published text of section 176 and substitute a clearer and more concise  section. This would, in effect, restate the essential provision of section 176, which is that when an auditor is of the opinion that a company is not keeping proper books he should notify the company and the Registrar of Companies. If the auditor fails to follow this procedure he will be guilty of an offence. This is a much neater solution to the problem, bearing in mind that all the other provisions, for example, sections 180 to 182, on the keeping of proper books and so on will still remain.
Mr. Hogan: I suppose we are speaking about the liability of an auditor and the duty he or she has in terms of keeping proper books and information. On the question of liability of an auditor, the liability of an auditor is regarded as unlimited but in reality or in practical terms it is not. There will be limited liability in relation to his or her assets if he or she gives improper or false information or does not in accordance with the general practice by which the auditor is supposed to act. There is a genuine concern in the auditing profession that auditors will not have the benefit of limited liability if false information is provided because the person managing the firm will have unlimited liability. Auditors are worried about this and it needs to be clarified.
Mr. S. Brennan: If an auditor fails to make these notifications, he or she will be guilty of an offence under the legislation. That is the first point I want to make. If an auditor is of the opinion that proper books of account are not being kept, he or she will not sign the audit certificate which we spoke about a moment ago. There is a balance between putting the onus on him to notify that proper books of account are not being kept and making it an offence if he does not. At the same time, he would not sign the audit report unless that situation was improved and tidied up.
The other point the Senator made is a broader one and I am not sure whether I can deal with it successfully here. The  general liability of auditors and the prospect of whether they should have limited liability extended to them was discussed by the institutes themselves, and, in particular, by one institute in the UK but no advance was made on it because one is dealing with a very personal service and subjective assessments. Most reputable auditing houses now have professional negligence insurance and professional liability insurance and Senators will be aware of many cases in those areas. This is going to come up shortly in the context of the Eighth EC Directive on Auditors.
This Bill would not attempt to consider introducing limited liability in the area of the professional service. We are talking here about a broader area, solicitors, accountants, even doctors and so on. We are talking about a very professional personal service, but it is a matter which I imagine over the next couple of years, in the EC context in particular, will have to be discussed. I know of many professional people who are very concerned about doing a job and not having much protection in the way that a business man or woman would have protection. I am aware that that is the case. They can get indemnity insurance through limited liability. They can indemnify themselves against any action being taken against them, though that is very expensive. However, that is a broader debate which I look forward to having some time, and one we will have to have. The impetus here and the initiatives should come perhaps not so much from Governments as from the institutes representing the professionals when they can find a satisfactory way forward.
Amendment agreed to.
Question: “That section 176 be deleted” put and agreed to.
Government amendment No. 258:
In page 136, before section 177, to insert a new section as follows:
.—(1) If a person who is subject or  deemed to be subject to a disqualification order—
(a) becomes, or remains after 28 days from the date of the making of the order, a partner in a firm of auditors,
(b) gives directions or instructions in relation to the conduct of any part of the audit of the accounts of a company, or
(c) works in any capacity in the conduct of the accounts of a company,
he shall be guilty of an offence.
(2) Where a person is convicted of an offence under subsection (1), the period for which he was disqualified shall be extended for a further period of ten years from such date, or such other further period as the court, on the application of the prosecutor and having regard to all the circumstances of the case, may order.
(3) In this section—
(a) ‘company’ has the meaning assigned to it by section 124, and also includes any society registered under the Industrial and Provident Societies Acts, 1893 to 1978,
(b) ‘disqualification order’ has the meaning assigned to it by section 124.”.
Mr. S. Brennan: Section 177, as Senators will be aware, deals with prohibition on acting as auditor while a disqualification order is in force. As in the case of the previous amendment, I am proposing here the deletion of the published section 177 and its substitution by a new amended section. I decided on this approach because I recognised that there were considerable problems associated with the published section, most of which have to do with overlap between it and Chapters 2 and 3 of Part VII which are concerned with disqualification and enforcement. Rather than chop and change I felt that it would be better and neater and less confusing simply to delete  the existing section and substitute a new amended section 177 in its place. I will go into more detail if the House wishes but I think it is a relatively straightforward piece of overlap which I am keen to tidy up.
Mr. Hogan: While it is desirable to have a prohibition on acting as an auditor while a disqualification order is in force, nevertheless a balance must be struck between that and allowing a person to earn his or her livelihood. Under this section we are preventing an auditor from acting even in an accountancy practice. This needs to be clarified. While I agree that it is a very serious matter, if we are being too harsh we must weigh that against the need for the deprived individual to earn some sort of livelihood even in an accountancy practice.
Mr. S. Brennan: It is worth reminding ourselves that to be disqualified in the first place you have to have been convicted of an indictable offence involving such offences as fraud and dishonesty. We are talking about a person who has been convicted of those very serious offences. As long as that disqualification order remains in force it would be most unwise to allow such a convicted person to act as an auditor of a company.
Mr. Hogan: Perhaps my liberal leanings, which would not be conducive to my popularity in Carlow-Kilkenny, are getting the better of me today because I am much more in favour of rehabilitation than the big stick. While a person may have made a mistake it should not be the end of the world in relation to his or her profession. There should be an opportunity for the person to be rehabilitated in some way. While I take account of the seriousness of the offence and the implications involved for a company — I take the Minister's point — nevertheless, there must be some opportunity for a person to earn a living in the profession in which he or she is qualified. There could be some way in which after a period of time such people could become  involved in their own profession again. No matter what walk of life you are speaking about, there are people who are indicted for enormous criminal offences who shortly afterwards can become even chief executives of companies.
Mr. S. Brennan: I assure the Senator that I am all for rehabilitation. It is a great virtue whether in political or other life. We are talking about a convicted person and it is important that we keep the focus on that. All we are doing is saying that a person who has been convicted cannot be involved in auditing in any way. That means that such persons cannot assist or be a partner or be involved in any way in auditing. That does not prevent that person earning a livelihood. It prevents him auditing companies. He can do some other noble task like becoming involved in other businesses or giving ancillary type of accountancy advice, even taxation advice. He is disqualified from the auditing function only. If we place so much reliance on the signature of the auditor it is very important that an independant person, creditor or investor, looking at that signature knows he is dealing with somebody who has not been so convicted. In fairness, a disqualified person can get relief from that disqualification by applying to the court under section 125 (9) of this legislation and if the court decides the disqualification should be lifted it can be lifted.
I have just been told there is a mistake in the published amendment. It is important that we correct it. Amendment No. 258 (1) (c) reads: “works in any capacity in the conduct of the accounts of a company”. It should read: “works in any capacity in the conduct of an audit of the accounts of a company”. I need the permission of the Seanad to include that phrase or have it as read in that way.
Amendment agreed to.
Question: “That section 177 be deleted” put and agreed to.
 SECTION 178.
Question proposed: “That section 178 stand part of the Bill.”
Mr. Hogan: I welcome the fact that the auditor will have powers in relation to subsidiaries because we all are aware of the tremendous difficulty in getting the entire information from a holding company if some of that necessary information is held in a subsidiary. We are all well aware of the efforts people can make to hide some of the facts in relation to a holding company through subsidiaries and the powers of the auditor are essential to extend its ambit into the subsidiaries in order to get the full facts of the entire company. The response time proposed is within two days. Is this time unrealistic? Perhaps it should be replaced by “as soon as is reasonably possible.” It is unlikely that there will be any delay on the part of the auditor. Nevertheless providing a specific time limit of two days is a bit harsh. If there are a considerable number of subsidiary companies involved it could take much longer than two days. I ask the Minister to delete the reference to two days in subsection (2) of this section and to replace it with “as soon as is reasonably possible.”
Mr. S. Brennan: I would be opposed to not having a time limit. I take the point about two days. In politics it is a very short time but it may not be as short in company law. I am happy to increase that to five days if it meets the Senator's requirement.
Question put and agreed to.
Government amendment No. 259:
In page 137, lines 36 to 42, to delete subsection (5).
Mr. S. Brennan: I am proposing here to delete subsection (5) which deals with penalties. The effect of this deletion is that the standard and more severe penalties set out in section 184 (1) of the  Bill will now apply to this section. I am making this proposal because on reflection I can see no good reason why offences under this section should be considered less serious than the majority of other offences in the Bill. I suggested this amendment also because it adds that degree of consistency to the Bill which we should try to ensure in so far as we can.
Mr. Hogan: I welcome this amendment because it gives very strong powers to the auditor and introduces penalties for false information given by officers of the company to the auditors. As we are all aware, the final report of the auditor will be determined by the information supplied by the principal officers of the company. However, it has been said that the definition of officer of the company could include all employees of the company and even perhaps somebody in stock control or a storeman who might make some small error in relation to the bookkeeping. That person could face penalties for supplying wrong information if we take it to its extreme. Perhaps the officers of the company who fail to provide information or give misleading information to the auditor should be specified rather than including everybody in the company who may have no control whatsoever over the matter or who might make a very simple error which would lead to misrepresentation of the facts.
Mr. S. Brennan: An officer of a company would have to do this knowingly or recklessly. The Bill states that “an officer of a company who knowingly or recklessly makes a statement to which the section applies that is misleading, false or deceptive in a material particular shall be guilty of an offence”. There is no question of some innocent employee in the stores making a statement and suddenly being faced with penalties. It will have to be done deliberately, knowingly, recklessly and deceptively. An auditor of a company has to be free to interview any member of the employees and inquire as to whatever is relevant. He may wish to inquire from the store people as to the  control of stocks and the financial controls that are put in. The clause does not refer to ordinary routine information or to a mistake. If a mistake is made and it is genuine it would not apply to it. We are talking about a person who works for a company knowingly or recklessly making a statement which is designed to be false or to deceive. That is an offence and I think that is reasonable. The auditor has to get the information and he has to be able to rely on it somewhat.
Mr. Hogan: I am not quite happy that it is always the case in a particular company that all employees should be responsible for the activities of that company. As the Minister is aware, to put it bluntly, the buck stops with the management of a company. Unfortunately cases may arise but I cannot give any example because I am speaking hypothetically. If we arrive at a definition of “officer” in relation to the company as any employee of the company we are putting an onerous responsibility on them and perhaps indicting people who might not necessarily be responsible for supplying the misleading information in the first place. It should be confined more to the management of the company who should, in effect, take full responsibility for the day to day operations of the company. It is harsh to expect that all employees of the company would be 100 per cent on top of the job all the time in relation to supplying information.
While I appreciate the point the Minister is making in relation to knowingly or recklessly making a statement which would be misleading, false or deceptive in a material sense, nevertheless he is opening it up to the interpretation of lawyers and justices at the end of the day to say what is knowingly reckless, misleading or false. If all the employees of the company are subjected to that rigorous interpretation I am concerned tha some people could end up being treated unjustly.
Mr. S. Brennan: I understand the Senator's point but I think there is a  greater good here. The audit report will be read by investors, employees, creditors and people who deal with the company and they will have to be able to rely on it. If an auditor gets a kind of formal statement from an employee — we are not talking about gossip or casual statements but about a formal statement — and it turns out that the person made the statement knowingly or recklessly and it was designed to be false or deceptive, that employee will bear a very great burden. I will think about the matter and see if we can in some way make it less onerous but I would be slow to move radically on it because I am concerned that the opposite could happen and an employee could be used to feed information to the auditor knowing that the employee was not liable for any offence. The auditor could then end up with perhaps a different view of the company.
Mr. Mulroy: In companies the auditor has checks and balances built into the information that he receives from employees. I think he will be in a position — and, indeed, it is his duty — to check when doing an audit that the facts and figures he gets from employees are correct. This would be an adequate measure to deal with it.
Amendment agreed to.
Section 179, as amended, agreed to.
Sitting suspended at 12.50 p.m. and resumed at 2 p.m.
Government amendment No. 260:
In page 139, lines 32 to 35, to delete subsection (10).
Mr. S. Brennan: Section 180 deals with the keeping of books of accounts of companies and how those books should be kept. In this amendment I am proposing to delete subsection (10). Like the previous amendments, amendment No. 260  would delete the present penalties provision from section 180 in order to bring section 184 and its greater penalties into play. My reasons for proposing this amendment are precisely the same as those which I explained on the previous amendment, in other word, to have consistency with the other penalties in the Bill.
Mr. Mulroy: On the whole question of keeping books, how detailed do these books need to be in a small company? For instance, will it be necessary for a company to keep a continuous and accurate stock check of all the material and will they need to keep a register of fixed assets? I can envisage problems for very small companies in maintaining a full time storeman to keep account of every thing in stock. I wonder how detailed these books are required to be.
Mr. S. Brennan: That is a good point. All we can do in legislation is to put down the objective which is, for example, that proper books will be kept whether in document form or in book form that correctly record and explain the transactions of the company. To be able to record correctly and explain the transactions you would need to record accurately the stock samples that the Senator mentioned so as to enable the financial position of the company to be determined with reasonable accuracy, to enable the directors to ensure that any balance sheet or profit and loss account and so on complies with the Companies Acts and enable the companies to be properly audited. Those requirements make it essential that the books are kept in such a detailed fashion as to enable all of those things to be met.
I think it is enough to say, for example, in paragraph (b) at the top of page 138, that they must keep books in a format that will at any time enable the financial position of the company to be determined with reasonable accuracy. Any failure to keep documentation or keeping documentation that would not give enough information to achieve that objective obviously would not be enough in the book keeping line. That probably meets  it. The alternative is to list fixed assets, for example. The Senator mentioned the fixed assets. Obviously they would have to keep a very concise list of fixed assets because without them you would not be able to enable the financial position of the company to be determined as you would need the balance sheet and so on. That covers the point.
I know what the Senator is saying but I think this is a better way to do it because it sets down the objective and the outcome rather than telling the companies in detail how to actually do it. I forgot to mention that they are covered because the accountancy professions very often have their own standard statements of accounting practice and they often lay down the detailed ways that a company should keep its accounts and most auditors will insist on that.
Mr. Mulroy: One of the greatest problems for small companies in particular is to keep an account of their stock items because the stock of a company changes on a daily basis. They are buying in components and they are turning those components into the finished product. It is not a great problem where companies have a production run of a standard item but it can cause grave difficulties for small companies that are producing custom built items where each particular product is unique to its particular application. This will cause grave difficulties for small companies that cannot afford a full time storeman.
Mr. S. Brennan: I have great sympathy with small companies who, for resource reasons, find it difficult to meet the high standards we are trying to set. Lowering the standard is not the answer to that. I genuinely believe the answer to that is to try to enable the companies to get up to the standard. You really could not conceive of lowering the standard which we are setting here which says that the company has to keep the type of books and the type of information which enables it to determine its financial position with reasonable accuracy. If we attempted in any way to lower that jump,  I think in the long term the companies would not strive to get up to that high standard. We have to put down a standard and get them up to it.
How could a company know its financial position if it did not actually keep an accurate account of its stock? I know it is difficult and I know it is expensive but stock is one of the most precious assets of a company and a movement in stock could throw out a whole balance sheet or a whole profit and loss account, so they have to keep an accurate record of it and have it measurable at any particular time. I do not know how we could get around that.
Mr. Mulroy: I take the Minister's point. It is a very important aspect of running a business but there will be a lot of small, indigenous companies that will be very unhappy with this legislation. The fact is that there are many companies who do not employ a full time storeman. If they are liable to be prosecuted and imprisoned for not keeping an accurate account of their stock, it is a serious imposition. We must aspire to higher standards but the fact of the matter in this country is that companies cannot afford the luxury of a full time storeman.
Mr. S. Brennan: I should remind Senators that the existing legislation means you have got to keep a record of your stock. The Senator is making the point about the general burden on small business. On reflection if the Senator gives it further thought he will agree that for a company not to be fully aware at all times of its exact stock levels would be absolutely disastrous. A company has to have that information. One could not possibly attempt to run a company without it. It may not need a full time storeman. The stock control system that is put in place depends on the size of the company. I am sure there are many good firms who are prepared, for a small fee, to put in a good stock control system.
Amendment agreed to.
 Section 180, as amended, agreed to.
An Cathaoirleach: Amendments Nos. 261 and 262 are related and may be discussed together.
Government amendment No. 261:
In page 140, lines 5 to 8, to delete paragraph (b), and substitute the following paragraph:
“(b) he had reasonable grounds for believing and did believe that a competent and reliable person, acting under the supervision or control of a director of the company who has been formally allocated such responsibility, was charged with the duty of ensuring that that section was complied with and was in a position to discharge that duty.”
Mr. S. Brennan: This section deals with the liability of officers of a company to penalty where proper books of accounts are not kept. We are on amendments Nos. 261 and 262. Amendment No. 261 would substitute a new paragraph for section 181 (2) (b) while amendment No. 262 would alter the wording of section 182 (4) (b). The main problem with the existing text of these two provisions is that, as currently worded, they have the unfortunate effect of allowing each of the directors to claim that he thought one of the other directors was the competent and reliable person mentioned in the defence provision, in other words a kind of circular defence for all of them. This would enable all of the directors to escape liability and to that extent it is a fairly technical amendment.
The two amendments address this problem by forcing the dependent to show that he believed on reasonable grounds that the competent and reliable person concerned was acting under the direct supervision of a director who had been formally charged by the board with responsibility for proper bookkeeping. I stress the term “formally charged”.  There is also a second minor drafting problem with section 181 (2) (b). The reference in the third line of the published text to “this section” should of course read “that section”, meaning section 180. Amendment No. 261 also corrects this error.
Amendment agreed to.
Section 181, as amended, agreed to.
An Cathaoirleach: Amendment No. 262 has already been discussed with amendment No. 261.
Government amendment No. 262:
In page 141, line 2, after “person”, to insert “, acting under the supervision or control of a director of the company who has been formally allocated such responsibility,”.
Amendment agreed to.
Government amendment No. 263:
In page 141, line 9, after “176”, to insert “, 179”.
Mr. S. Brennan: This is a technical addition to subsection (6) of the section. Section 182 creates the possibility of civil liability on the part of officers of a company who have been convicted of offences under sections 176 or 186 in relation to statements concerning the keeping of proper books of accounts by the company. For this purpose “officer” means any person convicted under these sections, for example, employees, auditors or whoever. Amendment No. 263 would add another reference to section 179 which deals with the offence of making false statements to auditors specifically. This would mean that a person who was convicted of an offence of making false statements to auditors would find himself subject to section 182.
Amendment agreed to.
 Section 182, as amended, agreed to.
Government amendment No. 264:
In page 141, lines 12 and 13, to delete “section 180 and 181”, and substitute “sections 180 to 182”.
Mr. S. Brennan: On page 141, lines 12 and 13, I am proposing to delete the words “sections 180 and 181” and substitute them with the words “sections 180 to 182”. Amendment No. 264 is the final one to Part X of the Bill and it is a straightforward one. As I think I have said already, section 183 is intended to provide a transitional period for the phasing in of the new arrangements for keeping books of accounts. The sections involved are sections 180 and 181. These sections are concerned with the keeping of books and with criminal sanctions for failing to keep proper books. The amendment which I am now proposing is for the inclusion of a further section, section 182, to be included within these transitional arrangements. As Senators are aware section 182 is concerned with civil sanctions for failing to keep proper books and its omission from this transitional section 183 was pointed out to me during our reexamination of this Part of the Bill. The proposed amendment, therefore, merely corrects the reference in section 183 to read “sections 180 to 182”.
Amendment agreed to.
Section 183, as amended, agreed to.
An Cathaoirleach: Amendment No. 266 is an alternative to amendment No. 265 and both may be discussed together.
Mr. O'Shea: I move amendment No. 265:
In page 141, before section 184, to insert a new section as follows:
“184.—(1) Notwithstanding anything contained in the Companies Acts no company shall make a contribution to any political party without public disclosure of same.
(2) Any contribution referred to in subsection (1) shall also be shown separately in the audited accounts of the company.”
Essentially, what is of concern to the Labour Party is the public perception of politicians and political parties and how they relate to companies. For instance, in the United States I understand that political contributions of over £1,000 from an individual and over £50,000 from a company must be declared. We in the Labour Party believe that the public have a right to know what contributions are being made by companies to political parties. We feel that this is something that is healthy in a democracy, that all such information should be disclosed and, as I said earlier, the perception of politicians and political parties will be all the better when such information is made known. It is also very important, in terms of companies, that shareholders should know what political contributions a company may be making. I have seen it stated in printed form that contributions of maybe £10,000 are made and we hear of contributions larger than that. It is an open secret that such contributions are made. Also I believe that members of political parties have a right to know how their political parties are being funded. I would like to hear the Minister's response to this amendment.
Mr. S. Brennan: What is being proposed in the amendment is that there should be public disclosure by companies of all contributions made by them to political parties. I would like to stress, first of all, that I do not think that it is appropriate to raise this issue in the context of the Companies (No. 2) Bill. The question of political contributions is really part of the broader issue of the funding of political parties generally. If it needs to be looked at it certainly should be looked  at in that broader context. While the inclusion of a provision of the type proposed in the amendment may have some attractions, there must be some doubt as to the enduring benefit of the availability of this information. There is the possibility that it could become the source of discontent, invidious comparisons and unreasonable claims, for example.
If one decides to require disclosure of political donations by companies, entities which are governed by separate legislation, such as banks, insurance companies, partnerships, industrial and provident societies, friendly societies and even individuals, might logically be required to make similar disclosures. This raises questions far beyond the scope of this Companies Bill and I am satisfied at this stage that this type of Companies Bill is not the vehicle for taking this type of action. I should say furthermore that I am not aware that any evidence whatsoever has been produced in recent receiverships or liquidations which indicates that the company's difficulties were caused, worsened or indeed affected in any way by any such contributions or for that matter by any other kind of sponsorship. Needless to say, I would be very concerned if the provision of political contributions had adversely affected the trading performance of companies or if it had resulted in any company failures. I regret I am unable to accept this amendment and stress again that, if there is a need for action in this area, this Companies Bill is not the correct vehicle to do so.
Mr. O'Shea: As I stated earlier in relation to companies, surely the shareholders have a right to know what political contributions are being made on their behalf by the company. This Bill before the Oireachtas is going to be enacted by the public representatives of the country on the whole basis of the disclosure of information. There is a feeling among the public that all is not well with the political establishment. I do not believe there is anything untoward happening in this area. It is important that the exact level of contributions be made  known so that people will be very well aware of what contributions particular companies are making to political parties and they can measure these against any misgivings they may have regarding favours, treatment or otherwise a company has received.
Mr. S. Brennan: If a company wishes to give the information, it can give the information. There is no law saying that companies cannot divulge the breakdown of their profit and loss account. A profit and loss account in a private company would contain various headings such as rents, rates and so on, and one item in it might be subscriptions to various charities and possibly to political parties. That profit and loss account would be available to the shareholders and on querying the chairman of the company, if the chairman or managing director decides to give a breakdown of that item, there is little difficulty in getting that information. I am not prepared to make it a legal necessity for the boards of companies to give out that information. In a public company the chairman at an annual general meeting may or may not wish to give a breakdown of the various items in the profit and loss account and this is a healthier arrangement.
Mr. Ross: We are taking amendment No. 266 with amendment No. 265?
An Cathaoirleach: Yes.
Mr. Ross: Senator Norris asked me to apologise on his behalf if he was not here. The Senator did not realise we would deal with the amendments so quickly, nor did anyone else.
I understand to a certain extent what the Minister is saying but I do not understand why people should want to hide this thing. Why should companies want to hide it, and why should they have the right to hide it? If there is something to hide and if the Bill is protecting companies in this way there must be some skulduggery going on. It is right that individuals, companies, trade unions, institutions and entities of any sort should be  allowed to make contributions to political parties whose philosophy and ideals they believe in or to individuals in political parties whose view they support, but the idea that this should be a matter of great secrecy is absurd and it only leads to the conclusion amongst the public and critics of the system that those who are contributing to political parties are getting something in return. I am talking about perceptions here and not necessarily what happens. However, that is the danger that exists in not allowing an amendment of this sort.
There is no doubt that there is some sort of belief among the public that if companies give money to political parties they will get political favours in return. That is a natural conclusion on this rather odd anonymity which exists at the moment. It is all very well for the Minister to say that it is up to the companies to disclose this, but that is a bit unrealistic as not many companies disclose it and I suspect that the donors would not be very pleased if a company were to disclose how much they received from them. I suspect it would reduce the amount of contributions which flow into political party funds.
There is a suspicion among those who proposed these amendments that large political parties feel they would get less money and would possibly be compromised in some way by revealing the names of those who gave them money. That is not necessarily true. They have not very much to lose because many institutions, with some of whom I had connections in the past, have for some very strange reason given money to at least three political parties. This is an absurdity and it is something which companies would find embarrassing if it were exposed. All they are doing is covering themselves so that whoever gets into power, they have given a contribution and, therefore, in some way they feel they have a claim and a leverage. If it was exposed to public view that a company had given money to three political parties they would be rightly the subject of ridicule and they would not be very strong on ideology or belief. It would be  in the interests of the political parties and of the system and it would raise certain people and certain entities above suspicion if this amendment were allowed.
There are not necessarily grounds for serious suspicion. I do not believe that if someone donates £100,000 one becomes a director of a semi-State body. That does not happen but there is a perception that it happens and the easiest way to destroy that perception is to accept this amendment. I do not understand why the Minister wants to protect these people and these companies.
Mr. Hogan: I am glad these amendments were placed for debate today because they strike at the heart of the funding of political parties here. Whether we like it or not, it is widely known that political parties find it extremely difficult to generate finance to run their affairs in a professional way and most political parties have to run various lottery-type activities in order to generate sufficient funds to keep their head office staff going. If we are serious about protecting our democracy, like they are in the US, either the State decides to give a greater contribution to political parties in order to discharge in a more professional and efficient way their contribution to democracy, or they will have to depend on contributions from other sources. Unfortunately because the State does not make a substantial contribution to the political parties there is no other avenue open to political parties but to get individual or collective subscriptions. The trade unions, for example make substantial contributions to a political party. The amount donated is not given widespread publicity. I am sure that within those trade unions there is diversity of opinion, the same as there would be among shareholders in a company, as to what political parties should benefit from the contributions.
The overall common good is served if political parties have sufficient finance from those sources in order to properly discharge their duties in the interests of  democracy. Senator Ross is creating suspicion by saying that there is a suspicion that there is skulduggery in companies if contributions are hidden. The Minister has rightly pointed out that the chairman and managing director on being questioned at an annual general meeting can give that precise information in the breakdown of the profit and loss account. There is no reason why people cannot get that information in a public company. If an individual decides to give £1 million or £1 to a political party, that is his business and I do not see why that should have to be disclosed to anybody. Nobody would ask Senator Ross what political party he contributes to or how his campaign——
Mr. Ross: They know the answer.
Mr. Hogan: ——to become a member of Seanad Éireann is funded. Nobody would ask the Senator for that information and nobody would want to know it. As a very upstanding, noble Senator I am sure he would not want anybody to know the source of funding for his election to Seanad Éireann.
It is important that we should discuss the matter and it is also important that we treat the matter in the context of the various political parties' funding arrangements at the moment. If we do not protect democracy we will allow political parties to run into deficits in their finances which will be an enormous drain on the quality of people who will want to stand for election which in turn will effect the efficiency and professionalism with which a political party can discharge its duties. I see absolutely nothing wrong in saving the State getting more involved in the funding of political parties and making public individual or collective contributions made to those parties.
Mr. O'Shea: Senator Hogan mentioned a political party that gets funding from a trade union. I will name the party. I am a member of it. The important point here is that the contribution to the political fund of a trade union is an optional contribution. A member of a trade union  may refuse to give it. The executive of the union decide how that money is disbursed and people know they are giving money to a political party through their union. What baffles me is that in a country like the USA, with a very sophisticated and well developed company situation — most of the multinational companies throughout the world originated in the United States — there is a legal provision that contributions over £50,000 must be declared. Why must we be different? A very important point to be made here regarding young people is that in many ways they are disillusioned with the political establishment. Many young people are emigrating unfortunately. As I have stated before, I am not alleging that there is any skulduggery but I believe it is important that the public perception of political parties and politicians is improved by the release of this information regarding political contributions. I cannot see any justifiable reason why a company should make contributions to political parties from the funds of that company without the shareholders' knowledge. The Minister broadened this out into the whole area of the funding of political parties. I contend that we should stick with the Companies Bill and the points relating to it. I believe there is no real argument for not disclosing this information to the public.
Mr. S. Brennan: I do not wish to argue the issue of political funding of political parties here today. I am dealing with the Companies Bill, legislation designed to improve and reform company law. The question of political subscriptions cannot be confined within this Companies Bill.
Mr. Ross: Hear, hear.
Mr. S. Brennan: Therefore, I am unable to tackle it in that way. There is the whole broad subject of political funding, the question of how much the State should fund, if any, whether we should continue to rely in the future on private subscriptions and national collections which the political parties do. I speak with some experience in this area,  as I was general secretary of my own party for many years and I know the difficulty of trying to get funds into political parties. It is a very broad subject whether individual candidates should be required to disclose their funding at some stage.
This is a very big area there and I have my own view on it. When the time comes I will certainly express them but to try to tackle the question of how you fund political parties in the context of the Companies Bill is just not practical for me to attempt to do it here. That must be my basic premise. The issue is broader than just this Bill because there are two sides to it, one is the company making the donation but the other is the whole question of the future role of the private company, the public company, the individual and the State in the future funding of political parties of the State. That is a debate I am sure we will have in the years to come.
I agree with Senator Ross that there are no grounds for serious suspicion. I am certainly not aware of any. Again, drawing on my own experience in my role as a party secretary in years gone by, there have always been very strict regulations and guidelines for political parties, particularly those in Government, to ensure that any information about donations is entirely at a distance from the main thrust of the political machine. That is all I would like to say in that area. This is a Companies Bill and if we are to discuss the future role of how we fund political parties, this is not the Bill on which to do it.
I am trying to reform company law here. If company chairmen or company directors want to give that information, the onus is on them to give it. If I felt that these contributions were in any way damaging the company — we are not talking about the future of political parties here — by eroding its assets I would certainly take action. I have no evidence to suggest that it damages the company and I want to stress that I am here today to reform company legislation, not to  dictate the future role of political funding of political parties.
Mr. Ross: I know, a Chathaoirligh, you thought we were finished. I am sorry we have not.
An Cathaoirleach: No.
Mr. Ross: I would like to ask the Minister a question. He said it is open to chairmen of companies to reveal this information if they want to. From my experience that is rarely done.
Mr. S. Brennan: It is very rare.
Mr. Ross: That tends to underline the point we are trying to make that, in fact, those who give those donations would not thank them for doing it, otherwise it would be in every company's annual report. It would be open to everybody to know that these contributions had been made and the fact that it is up to the companies — or it is optional for the companies to do it or not do it — would suggest that there is a reason why they do not. The reason they do not do it is that those who give a donation do not want it to be disclosed. If we trace it back, the reason they do not want it to be disclosed. I suspect, is that they think it gives them certain influence. I have no doubt that it does give them certain potential influence even if they do not use it.
Perhaps the Labour Party are being disingenuous about this and I do not quite understand what Senator O'Shea's point was — so he can interrupt me. If he is saying that the contributions of trade unions should not be fully disclosed but the contributions of companies should be, he is being totally inconsistent. It is very important that we are absolutely consistent on this matter. If we say companies should disclose it, we should also say full disclosure should be made by trade unions and full disclosure should be made by all individuals. That may be  unpalatable but it is the logical conclusion. It is something I personally support.
This is a very important matter and every single contribution to a political party should be disclosed. The reason for this is fairly simple and it might be demonstrated by the trade unions themselves. Trade unions undoubtedly contribute an enormous amount of money — I do not know what the figures are — to the Labour Party — and it is a disproportionate amount of money — both here and in the UK. It would be utterly wrong to suggest that as a result trade unions do not have an enormous amount of influence on the Labour Party and on their policy and on their make up and on the decisions they make. The corollary of that surely is that if large companies make very large contributions to political parties they also have — they may be ideologically closer to these political parties — a large influence on the policies and the appointments, which is more serious, made by those political parties. What I suggest is implicit in the amendment in the names of Senator Norris and myself is that, if the names of those companies and of those individuals involved in those companies were open to disclosure, any such appointments or any such change in policy or movements that happened would be open to inspection by the public. I am worried that people may have undue influence and the suspicion is that decisions are made at the behest of a large fund raiser, say for Fianna Fáil or for Fine Gael.
An Cathaoirleach: I do not want to cut across you Senator, but are you repeating yourself or are you making a Second Stage speech?
Mr. Ross: That is up to you to decide, a Chathaoirligh.
An Cathaoirleach: We do not often agree.
Mr. Ross: But you have thrown my  train of thought, so I am going to have to start again.
An Cathaoirleach: That was the idea.
Mr. Ross: This is a matter of public perception. There is no hard evidence of an appointment. I am not suggesting that X is appointed to X board because he gave X amount of money to a single party. I am suggesting that it is a matter for public perception and that the Minister's defence of this is not very convincing. To come out and say: “Look, I do not particularly want to discuss this because I am on a Companies Bill” is wrong. The matter is now before the Minister. We must see good reason given as to why such a disclosure should not be made. To say that it is too broad an issue is failing to face the fact.
We ought to accept that this amendment — in the names of Senator Norris and myself — is the beginning of full disclosure of all contributions to political parties so that companies can give the lead, companies can defend it — companies who give money to all three political parties can look a bit silly — and individuals who give money to political parties should disclose it. There is no shame. Sometimes in this House the Government and Ministers get very defensive when amendments are put down. From my point of view there is nothing wrong — indeed it is very noble — with giving money to political parties if it is given with the right motives but if it is given with the right motives there is absolutely no reason why those who give it should be worried about it being disclosed.
Mr. Mulroy: The big question is why do individuals or companies support one political party as against another? Is it to gain certain advantages, as Senator Ross has put forward? I believe that companies support a specific political party because they feel that that party is better able to run the economy in the most efficient way, and that the party is better fit to create an environment for investment whereby the company will gain  from it. I believe that certain companies change from party to party at different times depending on the performance of the particular party. Local opinion polls indicate that many people who supported certain political parties before the last election have now changed to support other parties. If they do not want to disclose which party they are supporting at any particular time they should not be forced to do so.
I would be concerned if contributions to political parties had an adverse effect on the running of companies, but there is no evidence that this is the case. I believe that companies and individuals should be allowed to make contributions without going public on it.
Mr. O'Shea: I would like to respond to Senator Ross first. I support the principle of universal disclosure of political party contributions. The point I made regarding trade union members is that they can voluntarily opt out of subscribing to the political fund of a trade union, so that it is a conscious decision of the trade union member whether he or she subscribes to a political fund from which a particular political party benefit, but in the case of a company contributions can be made to political parties without the knowledge or consent of shareholders. This is where I see the problem. Generally speaking, companies do not make it known that they are making contributions to a political party or parties, as the case may be.
The Minister said that this subject is not totally appropriate to the Companies Bill. I contend that if the funds of companies are being used in a specific way in the political arena then that information should not only be made known to the shareholders of a company but also to the public at large.
An Cathaoirleach: Senator Norris, may I just warn you? I appreciate your name is down to this amendment, but we have had a fairly lengthy debate already on this amendment and I would appreciate it if we did not have repetition. Senator  Ross did an excellent job for you before you came in.
Mr. Norris: Thank you. I am extremely grateful.
An Cathaoirleach: You left it in very good hands. Perhaps you could just say your piece and resume your seat?
Mr. Norris: I think perhaps, a Chathaoirligh, to your other many sterling qualities you have also added now the gift of prophecy. I am very grateful to my colleague, Senator Ross, for having entered this amendment in my name. I do take it very seriously and I am very glad of the opportunity to speak. I did in fact have to leave a lunch with the Spanish Ambassador and I hope I was not discourteous to him in so doing, but I felt my principal obligation was to this House. I feel strongly about this motion.
Mr. Manning: In one word, the self-sacrifice of the Independent Senators in this House knows no bounds.
Mr. Norris: Absolutely none and I am glad that this is recognised. I think there are a number of points that perhaps have not been made. Unfortunately, I do not have the Cathaoirleach's capacity to see into the future or the past so I am not quite sure when I will be repeating myself but I am sure this will be drawn to my attention if it becomes tedious.
First of all, I should say that there are some distinctions between the amendment I placed down with the assistance of Senator Ross and the amendment in the name of the Labour Party Senators. The principal difference is their amendment deals simply with the disclosure of contributions to a political party and the amendment we put down deals not just with contributions which could be construed narrowly as being financial contributions but deals with full details of all contributions, either in benefit or in kind. In other words if, for example, a taxi company decided — and this could be quite crucial and important at election  time — to make available a fleet of taxis to ferry people from their homes to a polling booth, this would be a decision that would require some kind of disclosure. I will not test the patience of the House by giving a series of other examples but they do exist. In other words, the amplification that is contained, the greater detail in our amendment, is one which I am satisfied is important and indeed crucial.
The other crucial difference with our amendment is that it also includes not just political parties but also other interest groups. There has been the very unfortunate experience in this country over the past number of years of small and possibly unrepresentative pressure groups getting themselves into a position of political leverage and precipitating amendments which many people feel were unnecessary.
I am not going to reopen this discussion but I would like to say that during the course of some of those discussions it was alleged that people like myself were the representatives of an international conspiracy to corrupt morals which was being financed by money from abroad, particularly from the United States of America. I am sorry to say this was not true. If it was true I would have been happy to disclose that fact. I do believe, however, that some of these groups do receive funding from companies and I would like to know what those companies are because I would like to have the option to purchase or not to purchase the products of those companies. As a citizen I believe it is my right to know where the profits of publicly quoted companies are being applied because if they are applied in ways that I would find politically offensive as a citizen, I have every right to decide not to purchase those products.
It is very important indeed that the voter knows where money is coming from for political campaigns. I think it is even more important — and this point was ably made by the Labour Senator who spoke immediately before me, Senator O'Shea — that the investors and shareholders know where their money is going. Surely they have a right to know. There  is nothing in the Companies Bill at the moment that will give them the right to know where certain moneys belonging to the company, in which presumably they have a clear interest, are being applied.
In the legislation it is important to unearth a principle and the principle the Minister quite correctly seeks to implement throughout the legislation is that interest should be declared, should be made public, that the public have a right to know the interest that people have. Disclosure is compelled in certain instances with regard to the stockholdings and shareholdings of directors of companies. If this is a principle that is appropriate, fit and worthy to be implemented with regard to the private shareholdings of investors, which have a far less significant impact on the political life of the country, surely the investors and the voters have a right to know what is being done? I say this because although it is not quite at the same state in this country yet, in America and in some other countries where there is such reliance on, for example, electronic media the capacity to buy air time on television or advertising time on radio and so on or in the newspapers becomes crucial in determining who is going to win an election.
We need to be able to know where money is coming from. Senator Mulroy said, perfectly properly, that business has a right to support the party that it believes is in the best economic interests of the country. I support that right absolutely but do we not have the right to know? Is that right to be protected from scrutiny? I cannot really believe that——
An Cathaoirleach: Senator Norris, you are going on too long.
Mr. Norris: Am I?
An Cathaoirleach: You are repeating what Senator Ross said. Your case has been well made.
Mr. Norris: Considering the fact that the Cathaoirleach, her gracious self, has said that my case is well made, I am sure the Minister will feel precisely the same  and consider positively our amendments. I want to make one further point and that is that there will be suspicion in the public mind as long as these disclosures are not made. There will be suspicion that moneys are made available to political parties in the belief by those companies that they will secure major contracts funded from public moneys. This may or may not be the case but it is certainly incontrovertibly true that the general public of Ireland believe this to be the case and I consider it an important part of the function of this Bill to meet these genuine concerns of the people of Ireland.
Mr. Manning: On this important issue, the Independent Senators have done a certain amount of public service in raising it, although I believe it is not, strictly speaking, appropriate to this Bill. If we were to address this question a new Parties Act, to regulate the way in which political parties operate, such as exists in Germany, might be more appropriate. I have listened to the two Senators at the back going on at great length on this subject and I have begun to wonder if they are in the same world as I am in.
Mr. Norris: We are not — we are not members of a party.
Mr. Manning: That is not necessarily a virtue. It perhaps explains why the Senator knows so little about the reality of what happens in party financing. The reality is — and I think it is no different to any party — that the number of companies which contribute in any significant way to political parties is very small indeed. Most of the companies which do are privately owned. In large companies where there are shareholders funds involved the boards of directors invariably believe that they do not have the freedom to make major donations, or even small donations, to political parties. Frequently where there is a donation it is given personally by the directors out of their own money.
Companies are extremely careful and from the point of view of somebody who  is involved in trying to raise funds for a political party the reality is very different to that described by the two Senators. There are many cases where I wish it were otherwise. In the same way, the amount the trade unions contribute to political parties here is minute and certainly not in proportion to the influence they claim to exercise as a result of their contribution.
There is a fear we will get into a situation here where we see fat cats rushing up to Mount Street, both sides, or over to Gardiner Place with large dollops of money to give to the political parties. The reality is totally different. Most members of political parties spend their time fund-raising, arranging draws, raffles, door-to-door collections, church gate collections, etc. By and large, that is how political parties are funded. They are funded out of contributions made each month by Members of the Oireachtas. Being an Independent Senator means one does not have to make a monthly levy to one's political party but that again is the reality of how parties are funded.
If we were to be sensible about this we would say there is a great need in this country for adequate public funding of political parties and we could take the model in Germany where parties get a proportion of public money relative to the number of votes they got in the previous election. In that way there would be full accountability of what goes to the parties and the parties would be allowed to do things they cannot do at present like having proper research facilities, proper back-up, proper educational facilities and so forth. The reality is that political parties in this country, whatever they are, are run on a shoestring and are run largely on the efforts of the individual voluntary members who go around raising money in that way. To suggest otherwise is to do a disservice.
I would have no objection whatsoever to the principle that public companies should be obliged to disclose how much  of their shareholders funding has been given to a particular political party but it would be a mistake to become too self-righteous about this or to believe that this is a central problem facing the Irish political process at present because it is not. If this question were to be addressed — and I should like to see it addressed — it should be done within the context of a wider Bill dealing with the role of political parties, the internal running of political parties, the way in which political parties are funded and so forth. There are a range of questions which could be addressed in that way. For that reason I think it is interesting but not very relevant to the Bill we are discussing today.
An Cathaoirleach: Is amendment No. 265 withdrawn?
Mr. O'Shea: No.
Question: “That the new section be there inserted” put and declared lost.
Amendment declared lost.
Amendment No. 266 not moved.
Mr. Ross: On a point of order I should like to ask a question on procedure. If amendments Nos. 265 and 266 are taken together — although I think they mean different things — can we have a division on amendment No. 266 and not on amendment No. 265?
An Cathaoirleach: No. Amendment No. 265 has been decided on and amendment No. 266 has gone with it. We are still on section 184.
Government amendment No. 267:
In page 141, lines 42 to 46, and in page 142, lines 1 to 4, to delete subsection (6).
Mr. S. Brennan: This is a technical  amendment and it has to do with offences. This section deals with the standard penalties where there is no specific penalty. It is purely a technical amendment.
Amendment agreed to.
Section 184, as amended, agreed to.
Sections 185 to 188, inclusive, agreed to.
Government amendment No. 268:
In page 143, line 20, after “company”, to insert “that is not being wound up”.
Mr. S. Brennan: I am bringing forward amendments Nos. 268 and 269 to try to make the intention behind section 189 clearer. The section was designed to fill a gap which has often been the subject of complaint in the past, that is, where a company runs down its assets to the point where it is simply not worth the creditors while to have it wound up and the proprietors simply shut the doors and walk away. In such situations the various remedies available in Part VI of the 1963 Act and Part VI of the Bill are not available to aggrieved parties because the company concerned is not actually being wound up. However, there could be valid reasons why, for example, a judgment was returned unsatisfied in the terms of subsection (1), and we feel it would be worth while making it clear that we intend the section to apply particularly to the cases mentioned at the outset, in other words, where the assets of the company had reached a level where creditors would not find it worth their while to petition for a winding up.
It was to prevent this kind of deliberate running down of the assets that the section was designed in the first place, so creditors in such a situation would nevertheless have recourse to some of  the winding up remedies. These two amendments will, therefore, make it clear that the situation in which the section is to apply is, first, where the company is insolvent but is not actually being wound up and, secondly, the reason it is not being wound up is simply that there are little or no assets left. In such cases the various remedies listed in subsection (2) and in the table at the end of the section will be available to creditors of the company concerned.
Amendment agreed to.
Government amendment No. 269:
In page 143, line 26, to delete “company.”, and substitute the following:
it appears to the court that the reason or the principal reason for its not being wound up is the insufficiency of its assets.”.
Amendment agreed to.
Government amendment 270:
In page 143, line 30, to delete “117, 119 to 123,”.
Mr. S. Brennan: This is a fairly technical aspect. Let me explain it. On looking again at section 189 I felt we were somewhat too ambitious as regards its scope. Amendment No. 270 would restrict its application to situations where the application of the section would, on reflection, be workable and, indeed, equitable in some cases. The area I have in mind here involves section 117 and sections 119 to 123 in Part VII of the Bill which, as Senators will recall, restrict the directors of an insolvent company from being involved in another company unless the new company is, among other things, adequately capitalised.
However, these sections, particularly in the basic section 117, are structured at present in a way which makes it very  difficult indeed to see how they would or could apply where the company concerned was not actually being wound up. For example, there would be no one to enforce it. It is the liquidator who effectively sets in motion the enforcement in section 117. Thus, subsections (6) to (8), (10) and (11) in section 117 would be virtually meaningless and totally inoperable where the company was not being wound up. Overall, therefore, it is probably better not to apply section 117 and sections 119 to 123 to situations where there is not a liquidation. That is precisely what amendment No. 270 seeks to do.
Amendment agreed to.
Government amendment No. 271:
In page 143, line 44, after “245A”, to insert “, 297A.
Mr. S. Brennan: This is our last amendment and it is a highly technical one. What subsection (4) is saying is that where, under section 108 and so on, an individual is held to be personally liable for something, the court may apply the rules set out in section 297A (5) (b) of the 1963 Act, inserted by section 107 of this Bill, to determine the persons to whom the compensation, restitution or whatever should be made.
However, we omitted to mention section 297A itself in the list set out in page 143, line 44, and this amendment will rectify that omission. The result will be that, where the court declares a person to have personal liability as a consequence of fraudulent trading under that section, the rules in section 297A (5) (b) will apply for determining who the fraudulent trader is to pay the money to.
Amendment agreed to.
Section 189, as amended, agreed to.
Title agreed to.
An Leas-Chathaoirleach: When is it proposed to take Report Stage?
Mr. W. Ryan: It is proposed to take Report Stage on Wednesday week, 5 October.
An Leas-Chathaoirleach: Is that agreed?
Mr. Ross: No — sorry, maybe somebody wants to get in first.
Mr. Hogan: As somebody who has been here most of the time dealing with this Bill, I think I am entitled to my opinion on the matter.
An Leas-Chathaoirleach: The procedure has not gone through. The question is that the Bill be reported with amendments.
Bill reported with amendments.
An Leas-Chathaoirleach: Next Stage?
Mr. W. Ryan: The leader of the Fine Gael Party in this House is anxious to have two weeks to prepare a number of amendments but the Minister is doubtful about whether he can be here on that date. I am in your hands, Sir. I do not want to vote one way or another.
Mr. Ross: I am sorry, I could not hear what the Senator said.
An Leas-Chathaoirleach: The Acting Leader of the House said that the Fine Gael Opposition spokesperson requires two weeks for amendments for Report Stage and that the Minister finds difficulty in being here on that day. The question is one for the House.
Mr. Ross: We could set it for next Wednesday.
Mr. Hogan: I think Senator Ross has misinterpreted the situation. Fine Gael are seeking to have two weeks to study  Committee Stage and to put down necessary amendments for Report Stage. If we are to do that we need time, and putting forward Report Stage for next Wednesday or Thursday is not going to give me sufficient time to do that. That is why I am seeking the indulgence of the House. If we want to have the Bill in its correct form going out of this House, if we are serious about giving the necessary time to study the implications of what we were saying here throughout Committee Stage, and as there are 189 sections in the Bill, I think that I am not unreasonable in asking for two weeks.
Mr. Ross: When will the Minister be able to be here? Is that not the relevant point?
An Leas-Chathaoirleach: The Chair would suggest that the House should order this business for the next sitting day and it is a matter for the Whips to arrange the business in the normal fashion. It could be tentatively arranged for Wednesday, 28 September. In the meantime I would expect the Whips to make a suitable arrangement.
Mr. W. Ryan: I could not altogether agree with that because if by any chance we were not taking Report Stage next week the House would not be sitting at all. The Minister suggested Thursday rather than Wednesday. Could we agree on Tuesday of the following week, 4 October?
Mr. S. Brennan: I could try to make that.
An Leas-Chathaoirleach: Is that agreed?
Mr. Norris: I am slightly confused. What are we being asked to agree to?
An Leas-Chathaoirleach: We are being asked to agree to taking Report Stage of  the Companies (No. 2) Bill, 1987, on Tuesday, 4 October.
Mr. Ross: No. I will tell you why. It is totally up to the House but some of the Independents who have contributed to this Bill — this may be behaving in a very selfish fashion — will have serious difficulties that week. I know Senator Hogan does not want it next week. That week has very serious difficulties for some of the Independents who have been concerned with the Bill ever since it started. The House can say it does not matter. At least two or three will not be able to be here that week for reasons which the House may or may not understand but they are parliamentary reasons. It may be that the only agreeable date is three weeks' time. Is that too late for the Minister?
Mr. S. Brennan: It is not really for me to intervene in this matter.
An Leas-Chathaoirleach: It is a matter for the Leader of the House to propose a date.
Mr. W. Ryan: I propose Tuesday, 4 October at 2.30 p.m.
An Leas-Chathaoirleach: Is that agreed?
Mr. W. Ryan: Some of the Independents have suggested they are available every day.
Mr. Norris: Could I clarify my position? I had anticipated that we would be meeting next week on Wednesday and Thursday, and possibly on Tuesday as well. There is a lot of business to be conducted, of various kinds, and we have indicated that we are quite prepared to have our own motions, reports and so on discussed if there is nothing else from the Government side. I am not quite sure what is the difficulty with Wednesday, 28 September, nor am I sure why it seems  to be proposed not to meet at all next week but perhaps I have misinterpreted what has been said.
Mr. Hogan: I will try to explain to Senator Norris the difficulty with next Wednesday. I have my viewpoint in relation to next Wednesday and the Senator has a problem in relation to the following week.
An Leas-Chathaoirleach: Senator Hogan should address the Chair. The matter as I see it is entirely for the Leader of the House to propose a date and he has done so. The question is that Report Stage of this Bill be ordered for Tuesday, 4 October.
Mr. Norris: Can I ask one further question? I take it that, for example, if the next Stage of the Companies Bill is not taken, that does not preclude the House sitting to discuss other matters on Wednesday?
An Leas-Chathaoirleach: That question does not arise. The Chair is merely fixing a date before which this business cannot be enacted.
Mr. Norris: With the greatest respect, might I suggest that there is really no conflict because if you set next Wednesday it is only a date before which it cannot be taken and we are then——
An Leas-Chathaoirleach: I have already mentioned that twice.
Mr. Norris: In that case we can resolve the dispute by proposing that date which leaves the Government then free.
An Leas-Chathaorileach: Is the question agreed?
Mr. Ross: No, and I will tell you why. I am not trying to be argumentative. I am  making a very serious point about this. If we discuss the Companies Bill on Tuesday, 4 October, certainly Senator O'Toole and I who have been through this Bill from start to finish will not be here. Maybe that does not matter but it is up to the House and to the Government. Maybe the Government would prefer it if we are not here. I would ask them to consider that. Senator Hogan who has also gone through the Bill will be here. I would ask them to consider the fact that at least Senator O'Toole and I of the Independent Members will not be here.
We have some very serious and very constructive amendments to put down on Report Stage and we have announced our intention to do so. If we cannot do this they will have to lapse and I do not think that is in the interests of the legislative process.
An Leas-Chathaoirleach: The Chair must put the question as proposed by the Leader of the House: “That Report Stage be ordered for Tuesday, 4 October.”
Mr. Ross: Vótáil.
An Cathaoirleach: The question is: “That Report Stage be ordered for Tuesday, 4 October 1988.” On that question a division has been challenged. Will those Senators calling for a division please rise in their places?
Senators Norris, O'Shea and Ross stood.
An Cathaoirleach: As fewer than five Senators stood in their places I declare the question carried. The names of the Senators who stood will be recorded in the Journal of the Proceedings of the Seanad.
Question declared carried.
Report Stage ordered for Tuesday, 4 October 1988.
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