Noel Ahern (Dublin North West, Fianna Fail)

I thank the Members for their views and comments, particularly Deputy O'Dowd who supported the principle of the Bill. It is a while since the question of the Bill was first raised and it has been discussed on and off for a number of years, but that does not mean it was drawn up in a day. There was a long process involving the Attorney General, Departments and the Financial Regulator, but it was difficult to come up with a formula that would take account of different circumstances for the different bodies involved.

As I said in my opening comments, the Bill amends the 1989 Act. The recommendations arose from a review group whose members were representatives of building societies, Departments, the Central Bank etc. They recommended greater discretion to building societies that wanted to opt out of the five-year rule. Listening to some Members I am not sure they fully grasped that but since 1989 it has been possible for building societies to demutualise. Some of them have taken that option but they were unable to sell on the company. They turned it into a public limited company but were unable to sell on for five years. I hear what Deputies have said they would like to see in the Bill. However, the Bill is not meant to cover everything. It is a framework Bill. The details of what happens afterwards or how building societies demutualise is covered in the individual conversion scheme and is subject to the rules of the building societies. Deputy Gilmore said that nothing could now stop the directors of the Irish Nationwide Building Society making a killing and they could take 15%. Somebody can stop them. The members of the building society can stop them. By passing the Bill we are not sanctioning any activity. We are giving options.

Up to now building societies had two options based on the 1989 Act. They could remain mutual or demutualise with the five-year rule. We have now extended the scope. Building societies can still remain mutual or can demutualise under the existing protective provisions, or they can now opt out of these provisions and be taken over immediately or opt out and be sold at a later stage. All we are doing is giving options. Any building society that decides to demutualise must undergo a long and almost tortuous process. It is not just a case of the directors coming in and everybody rubber-stamping it.

The conversion process involves the preparation of a statutory conversion scheme by the society, on which the Central Bank must be consulted; the issuing of a statement to members outlining the proposals; the right to inspect the scheme; and approval of the scheme by members of the society. Members are required to give approval and if they are not happy they simply refuse. While they may not be able to bring forward the schemes themselves, they have the important right to refuse. The process also involves application to the Central Bank for confirmation of the scheme and the issuing of public notice of this, the right of any person to make objections or representations to the Central Bank, confirmation of the scheme by the Central Bank following consideration of any objections or representations, the right of members of the society to petition the High Court for cancellation of a conversion scheme and finally the registration under the Companies Act. Many procedural stages must be followed. While the process may be initiated by the directors, the members are very important. While some may be in a great hurry to take their money and run, I am sure they are good at looking after their own interests and if they do not feel they are getting a fair share, they can simply reject the scheme, which would deny the directors, staff and anyone else from getting more than they want them to.

Some Deputies spoke about credit unions. The Department of the Environment, Heritage and Local Government has no role regarding credit unions. In the future the Department may no longer deal with legislation such as this, which is a bit of a throwback to the days when mortgages were linked to housing or whatever. However, there is now much financial and banking legislation, which is more appropriate to the Department of Finance and its agencies.

Demutualisation has been allowed since 1989. Some Deputies spoke as if we were introducing that provision tonight. The Bill does not push any building society towards demutualisation: it gives them the option. It is then up to the members.

I have tried to amend one aspect over which some concern was expressed. Deputy Gilmore may have been correct in referring to different sections being for different groups. I have tried to be fair in that regard. While the proposal for demutualisation comes from the directors, some motions that reached the floor of a society's AGM have been blocked. I have tried to loosen the provisions somewhat to allow it to be discussed. We all know from public meetings we attend in different walks of life that in discussion it is possible to get across the thinking of the floor to those in control without the need to pass a motion. I am making that change which gives it the flexibility it required. I would not like to be associated with trying to deny free speech — none of us could do that in our occupation.

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