Martin Brady (Dublin North East, Fianna Fail)

I commend the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Michael Ahern, on the introduction of the Bill. It represents a significant development in the international investments funds business in Ireland. There are multiple reasons that leading global financial institutions have been attracted to Ireland but the most notable are the attractiveness of the fiscal and regulatory environment and the availability of highly skilled and educated workers. It is a duty of Government to maintain such attractiveness as the reward is substantial. Ireland has a thriving financial services sector, which employs 51,000 people and contributes at least €700 million to the Exchequer annually. I commend IDA Ireland and the Government on seeking to boost Ireland's attractiveness as a leading location for financial services. I also recognise the major role played by former Taoiseach, Mr. Charles J. Haughey.

Maintaining a competitive edge requires continued review and reform because the global market continues to evolve and dwelling on past success is not an option. Based on my experience in business before I entered the Dáil, one must innovate almost on a daily basis. The Government must continue to be innovative to ensure continued progress and the legislation has been introduced with this in mind. Speaking in the Seanad the Minister of State, Deputy Ahern, outlined the importance of the funds industry and its growth over the past 15 years. He also detailed the legislative change that has occurred pertaining to funds vehicles.

As the Minister of State, Deputy Ahern, stated, the Bill seeks to provide the greatest flexibility to the funds industry while maintaining appropriate controls. The legislation will therefore make a number of important changes to existing law and it proposes a number of other changes to general company law, including some important and welcome provisions.

The Bill provides the general legal framework for the dedicated asset pooling structure, the common contractual fund, CCF, and for a new investment vehicle. It introduces segregated liability at sub-fund level for investment companies and it provides for the cross-investment between sub-funds and investment companies. I particularly note the new contractual fund, a highly tax-efficient scheme for the pooling of pension fund assets. Tax experts have predicted that the new pension fund will be attractive for a wide range of investors and hedge funds. The pooling of pension funds promotes cost savings through economies of scale, particularly for smaller pension funds which benefit from a reduction in administration costs as well as custodial and management fees.

Nowadays, one cannot pick up a newspaper without reading about the importance of creating a pension fund. This initiative will help individuals to start such funds. The Bill is further evidence of the continuing evolution of Ireland's legal and regulatory environment as it responds to and anticipates the needs and trends of the global funds industry. This legislation will reinforce Ireland's position at the forefront as a jurisdiction of choice for domiciling investment funds.

The Bill is also proof of the continuing benefit of the unique partnership arrangement in Ireland whereby the Government and the financial services regulator work together with industry without compromising their individual mandates to ensure that Ireland remains the location of choice for the international funds industry.

Given that the legal environment provides the tools with which the investment funds industry builds its products, this Bill will enhance the attractiveness both of the products and product range available from the jurisdiction. In addition, it will further enhance Ireland's attractiveness as a domicile for investment funds.

The objective of the investment funds provision is to give the greatest flexibility to the funds industry, while at the same time keeping appropriate controls in place. The previous speaker, Deputy Pat Breen, referred to this point but the Minister of State has ensured that such controls are in place, which is welcome. The industry is anxious to have a portfolio of fund vehicles available which is as broad as possible to improve further Ireland's attractiveness as an international location for the establishment of investment fund companies.

The Minister of State, Deputy Michael Ahern, has indicated that the Government will continue its support of the funds industry by responding appropriately to the new challenges which are presented by this ever-changing global marketplace. The funds industry is operating in a highly competitive environment and I urge the Government to continue to give all the necessary support so that the industry can prosper while at the same time offering its clients appropriate safeguards which are of the utmost importance.

The Bill seeks to ensure the continuation of conditions that have encouraged the industry's growth to date. These include openness, flexibility, competitiveness, co-operation and an internationally focused legal and regulatory framework. The legal framework represents the bricks and mortar with which the industry creates its products and services. However, with the pace of change, the evolution of product structures and the drive for efficiency, only an appropriate legal framework will satisfy today's demands. To anticipate and reflect tomorrow's considerations, the Government has decided to establish a dedicated section within the Department of Enterprise, Trade and Employment with responsibility for developing the investment funds legal framework.

The impact of this development has been immediate with the publication of this Bill. I am pleased that the Minister of State is proposing to increase penalties for persons convicted of corporate offences, including insider trading and making false statements on a prospectus. This is intended to provide greater protection to consumers and investors. This is of the utmost importance to the public which is, on the one hand, encouraged to invest but, on the other, is fearful of corporate mismanagement and corruption.

The Bill's key provisions include increased penalties for the misuse of price sensitive information. The Bill provides for penalties on conviction for serious market abuse offences of fines to a maximum of €10 million and-or ten years in prison. A person who breaches the insider trading laws will be liable to compensate parties involved in the transaction who did not have access to the information and suffered loss as a result. In addition, he or she will be required to account to the company for any profit made from the transaction.

Certain persons involved in the issue and promotion of the prospectus and the offer of the securities, including directors of the issuer, promoter of the issuer and those who guaranteed the issue of the securities or authorised the issue of the prospectus, will be liable to compensate investors who suffer loss as a result of any untrue statement in a prospectus.

The Bill also provides for an increase in the maximum penalties imposed under various Acts for breaches of consumer protection laws. Legislation such as this, combined with the expertise developed and experience gained over the last decade, will continue to attract inventive and visionary people. The legislation will also ensure a place for Ireland in the infrastructure of an increasingly competitive global funds industry.

The Government showed the legislative and regulatory foresight necessary to ensure that Dublin has become a premier financial player. This Bill shows a clear commitment to build on those sound foundations, thus ensuring that we will remain a key investment fund jurisdiction. If we succeed in this respect, the opportunities will be manifold.

Deputy Pat Breen said earlier that telecommunications is an important element in attracting foreign investors, and I agree with him. The former Taoiseach, Mr. Albert Reynolds, began work on modernising the telecommunications sector while holding the communications portfolio. He made great inroads into that business. Before being elected to this House, I worked with Telecom Éireann which was later renamed Eircom. I recall that when I worked in that sector, my colleagues and I spent most of our time explaining to people who had been waiting for telephone lines for seven or eight years why they could not get them. Thankfully, that situation has changed and I compliment Eircom on its work in that regard. The availability of modern telecommunications, including a modern telephone network, was a key factor in attracting foreign investment. Such modern facilities constitute a priority for investors who wish to transact their business on a global scale. I pay tribute to the former Taoiseach, Mr. Reynolds, for having brought that about.

I thank the Minister of State for having introduced this innovative Bill which I commend to the House.

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