Alice-Mary Higgins (Independent) | Oireachtas source

Section 7 gives rise to one of my most fundamental concerns in respect of the Bill. I will be pressing this amendment to a vote in opposing the section but I am also proposing a number of other amendments to extract some of the more egregious elements of the section.

On Committee Stage, no strong rationale was put forward for the section besides the question of what is a change and a shift in the current understanding of what constitutes a limited partnership versus a beneficial partnership. Effectively, this section inserts a new set of actions in which a limited partner can engage, including very significant actions, such as the following: serving on the board or committee of an investment limited partnership, including an advisory committee; appointing, electing or participating in choosing the representatives who will serve on the board of a committee; acting as a member of a board or a committee directly or through another representative; giving advice on, consenting or refusing to consent to any action that the general partner in an investment limited partnership might take; and exercising all of the powers, authorities or obligations that a member of a board will have.

This is a substantial decision-making role that is being accorded to limited partners under the protective cover of stating that they will not be subject to liabilities in respect of those actions. That is significant. Given, as we have discussed, the extraordinary scale of the investment limited partnerships, the substantial amounts of money at play, and the very substantial decisions at play, we are now in a position where we are effectively excluding these very active decision makers from liability. In the Minister's response, he simply said that people may have an opinion and that everyone is entitled to that. There were provisions in the 1994 Act to ensure there are certain actions which it is appropriate for a limited partner to engage in that do not necessarily carry liability. However, I suggest that serving on a board, determining who serves on a board and making decisions on that board are not actions that are appropriate for exclusion from liability. It is a particular concern if we widen the exclusion from liability to include these actions when we are effectively bringing in giant investment limited partnerships. We have a much bigger instrument, potentially, and we are giving people more control at the wheel of that instrument, yet we are lessening their liability. That is a serious concern.

I am opposed the entire section. However, I want to oppose a few specific aspects of it as well. I oppose the specific aspect in regard to serving on a board in the introduction of this section. I would also like to specifically oppose a very extraordinary set of lines which state that not only are these acts excluded from the question of liability if something were to happen on one occasion, for example, but that this applies “irrespective of the frequency with which that holding out, or that purported doing of the act or acts concerned, occurs”. A person could be in there every day, could be at a board meeting every week and could be making decisions constantly. This is not a one-off, inadvertent question of whether a limited partner expressed an opinion and whether that has had an influence. This is literally a situation where the Bill states that it applies regardless of the frequency.Even if those lines are deleted, this section would still be a problem. However, it would state that being on a board, selecting a member of the board or participating in a decision on a board should not in and of itself be a breach of the liability protections. There are some protections for each action in itself, but if they are done frequently we allow a pattern of control, influence and steering of a company to occur. I will oppose this section and the Minister of State should delete it, but if he cannot, he should consider removing the proviso that allows people to do such things all the time. In that way, one action in itself would not be considered a problem. That protection would still be there but we would not have this idea of as many actions as one likes. There is a concern that a pattern will emerge of people who are only 10% or 20% shareholders effectively steering the policy and actions of a limited partnership without any liability.