Billy Kelleher (Cork North Central, Fianna Fail)

I move amendment No. 3:

In page 16, lines 12 to 15, to delete all words from and including "apply," in line 12 down to and including "Court" in line 15 and substitute the following:

"apply to the High Court, on notice to the applicant, the Central Bank, the registrar and all creditors of the applicant".

Amendments Nos. 3 to 5, inclusive, are related. They make minor adjustments to the new mechanism agreed on Committee Stage last week that will allow certain collective investment fund companies migrate their registered offices into or out of this country without having to first wind up the company in their current jurisdiction.

These Report Stage amendments will amend subsections 6 and 7 of the new section 256G that will be inserted into the Companies Act 1990 by section 3 of this Bill. All three amendments deal with the court actions that shareholders or creditors can initiate if they wish to halt a planned migration of a fund from Ireland.

Before turning to the precise nature of the adjustments contained in the three amendments, I will explain why these proposals are deemed to be of such urgency that they are being addressed by way of Dáil Committee and Report Stage amendments to a Bill that has already been passed in the Seanad. I have always made the case that amendments should be published in good time to allow them to be examined so that people may decide whether to support them or otherwise.

The proposals arise in response to a recent approach by the Irish collective investment funds industry who reported that it believes there is currently a short-term window of opportunity for Ireland to attract investment funds business from third countries if our laws were amended to allow funds that are constituted as bodies corporate to migrate here without first having to wind up in their current jurisdiction. The funds entities in question are seeking to relocate to well regulated jurisdictions, another critically important point, and Ireland has a well regulated system in place regarding funds. This would respond to investor concerns arising from the recent financial turmoil.

As the Government is committed to doing all in its power to facilitate economic growth, and all the more so in the current challenging environment, it resolved to examine and respond to this request as speedily as possible.

Following detailed consultations with the funds industry and with the Financial Regulator and the Companies Registration Office a mechanism has been devised that will facilitate inward and outward migration of funds entities. This arrangement has appropriate safeguards in place to protect Ireland's reputation as a well regulated fund management centre, and the new mechanism is being restricted to funds whose activities will be or are regulated by the Financial Regulator. In addition to meeting the short-term window of opportunity identified by the funds industry I should add that this mechanism will also have long-term application and will add to the overall funds regulatory regime available in the State.

In this regard amendments Nos. 3 to 5, inclusive, deal with the High Court action that creditors or shareholders may initiate if they wish to halt the deregistration of an outward migrating fund. Amendment No. 3 will alter lines 12 to 15 of page 16 of the Bill as passed by the select committee last week. This amendment will add the migrating company and the Central Bank to the list of parties on whom notice must be served when a creditor or a shareholder applies to court to halt the deregistration in this State.

At present the Bill provides that notice must be served on the CRO and fund creditors, but there is merit in the migrating company being served with notice, given that its proposed migration will be the subject of a court case. I believe there is also merit in putting the Central Bank or Financial Regulator on notice as it is they who will have supervised the fund up to this point and it is they who will make a decision in the first instance on whether to allow an outward migration. This may put them in possession of facts that would be valuable to a court in arriving at its decision.

Amendment Number 4 - to be inserted between lines 39 and 40 of the same page of the Bill - also gives the migrating company and the Central Bank the right to participate fully in the court hearing. This should ensure that the court has access to all relevant facts before it makes a decision on whether to make an order in the case.

Amendment No. 5 seeks to give guidance to the court about the issues it should take into account in making its decision. The amendment provides that in order to halt proceedings, the court will have to be satisfied that the deregistration would not only be detrimental to the petitioning creditors or shareholders, but that it would also be materially prejudicial to the creditors of the fund taken as a whole, or to the shareholders of the funds taken as a whole, or to both the creditors and shareholders taken as a whole.

See this speech in context