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Irish Collective Asset-management Vehicles Bill 2014: From the Seanad (Continued)

Thursday, 19 February 2015

Dáil Éireann Debate
Vol. 868 No. 3

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Deputy Anthony Lawlor: Information on Anthony Lawlor Zoom on Anthony Lawlor I have a general question.

An Ceann Comhairle: Information on Seán Barrett Zoom on Seán Barrett Deputies may not ask general questions on amendments from the Seanad. If I were to allow the Deputy to ask a general question, it would reopen the debate. He must appreciate that this is purely a technical issue to be dealt with in a technical manner. I assume the amendment is agreed to.

  Seanad amendment agreed to.

  Seanad amendment No. 2:

Section 11: In page 17, to delete lines 1 to 3 and substitute the following:
“(a) in relation to a person named as a director of the ICAV—
(i) all particulars which are, in relation to a director, required pursuant to subsection (2) of section 65 to be contained in the register kept under that section, and

(ii) if the person is disqualified under the law of a country or territory other than the State (whether pursuant to an order of a judge or a tribunal or otherwise) from being appointed or acting as a director or secretary of a body corporate or an undertaking, the particulars which are required by section 66(1) to be stated in a notification under section 65(6),
and”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris I understand amendments Nos. 2 and 10 will be discussed together. Amendment No. 2 provides that a director must disclose in his or her statement, required under section 10 for registration of an ICAV, if he or she is disqualified under the law of another country from acting as a director or secretary of an entity. The amendment effectively provides for the insertion of section 23 of the Companies Act 2014 in the ICAV Bill.

Amendment No. 10 is a technical amendment consequential on amendment No. 2. It modifies the text on company law disqualification of directors' rules to take account of the relevant statutory reference in relation to ICAVs, namely, the fact that directors are being disqualified under the law of another state.

  Seanad amendment agreed to.

  Seanad amendment No. 3:

Section 18: In page 19, to delete lines 12 and 13 and substitute the following:
“(ii) if the ICAV is not authorised under the AIFM Regulations, the full name and address of the proposed external AIFM within the meaning of the AIFM Regulations, and”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris The purpose of amendment No. 3 is to ensure the Central Bank is notified of the details of an external fund manager in the case of an alternative investment fund ICAV. In relation to an ICAV that is an alternative investment fund, it will have either internal management within the ICAV or appointed external management. The Central Bank, through the authorisation process of the internal management, will be aware of the manager if he or she is internal to the ICAV since it will be one and the same person. However, in the case of external fund management, the bank will not automatically know who the manager is. The amendment clarifies that all external managers will have to provide their full name and address for the Central Bank of Ireland on application to the Central Bank for authorisation as an ICAV. All managers of non-UCIT funds will be authorised separately under the rules implementing the alternative investment fund managers directive.

Deputy Anthony Lawlor: Information on Anthony Lawlor Zoom on Anthony Lawlor Will there be a charge on the fund by the Central Bank of Ireland for providing this service?

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris Will the Deputy please repeat the question?

Deputy Anthony Lawlor: Information on Anthony Lawlor Zoom on Anthony Lawlor In the light of the additional burden this will place on the Central Bank, will the Central Bank impose a charge on funds?

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris As is already the case with regard to bodies regulated by the Central Bank, fees are payable to it for supervision.

  Seanad amendment agreed to.

Acting Chairman (Deputy Liam Twomey): Information on Liam Twomey Zoom on Liam Twomey Amendments Nos. 4 and 5 form a composite proposal and may be discussed together.

  Seanad amendment No. 4:

Section 23: In page 22, line 8, after “satisfied” to insert “that”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris Amendments Nos. 4 and 5 are minor drafting corrections. Amendment No. 4 proposes the insertion of the word "that" after the word "satisfied" on line 8 of page 22, while amendment No. 5 proposes to delete the word "that" on line 9 of page 22.

  Seanad amendment agreed to.

  Seanad amendment No. 5:

Section 23: In page 22, line 9, to delete “that”.

  Seanad amendment agreed to.

  Seanad amendment No. 6:

Section 27: In page 24, to delete lines 21 to 25 and substitute the following:
“(f) borrowing policies of an ICAV, or

(g) the timing and contents of reports issued by an ICAV,

and such other supervisory and reporting conditions relating to the business of an ICAV as the Bank considers appropriate and prudent to impose on the ICAV, depositary or management company.”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris Amendment No. 6 is a minor drafting correction which deletes the original paragraph (h) and replaces it with the same text but not within a paragraph.

  Seanad amendment agreed to.

  Seanad amendment No. 7:

Section 32: In page 26, to delete lines 9 to 35 and substitute the following:

“Execution of documents

32. (1) Contracts on behalf of an ICAV may be made as follows:
(a) a contract which, if made between natural persons, would be by law required to be in writing and to be under seal, may be made on behalf of the ICAV in writing under the common seal of the ICAV in accordance with this section;

(b) a contract which, if made between natural persons, would be by law required to be in writing, signed by the parties, may be made on behalf of the ICAV in writing, signed by any person acting under its authority, express or implied;

(c) a contract which, if made between natural persons, would by law be valid although made by parol only, and not reduced into writing, may be made by parol on behalf of the ICAV by any person acting under its authority, express or implied.
(2) A contract made according to this section shall bind the ICAV and its successors and all other parties to it.

(3) A contract made according to this section may be varied or discharged in the same manner in which it is authorised by this section to be made.

(4) The following provisions of this section shall apply whether it is the case that—
(a) as permitted by section 33, the ICAV does not have a common seal, or

(b) the ICAV does have such a seal.
(5) A document has the same effect as if executed under the common seal of the ICAV if it is expressed (in whatever form of words) to be executed by the ICAV and it is signed on behalf of the ICAV—
(a) by 2 authorised signatories, or
(b) by a director of the ICAV in the presence of a witness who attests the signature.
(6) Each of the following is an authorised signatory for the purposes of subsection (5):
(a) a director of the ICAV;

(b) the secretary (or any joint secretary) of the ICAV; or

(c) any person authorised by the directors of the ICAV in accordance with the ICAV's instrument of incorporation.
(7) Where a document is to be signed by a person on behalf of more than one ICAV, it is not duly signed by that person for the purposes of this section unless he or she signs it separately in each capacity.

(8) References in this section to a document being (or purporting to be) signed by a secretary are to be read, in a case where that office is held by a firm, as references to its being (or purporting to be) signed by an individual authorised by the firm to sign on its behalf.”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris Amendment No. 7 seeks to make the rules on the execution of documents consistent with the position under the Companies Act 2014 in respect of public limited companies. ICAVs may wish to authorise other individuals such as the investment manager to execute standard trading documents on behalf of the ICAVs. The original text which limited signatories to the directors and company secretary is out of line with how investment funds operate.

  Seanad amendment agreed to.

Acting Chairman (Deputy Liam Twomey): Information on Liam Twomey Zoom on Liam Twomey Amendments Nos. 8 and 9 are related and may be discussed together.

  Seanad amendment No. 8:

Section 84: In page 56, between lines 18 and 19, to insert the following:
“Breaches of certain duties: liability to account and indemnify

84. (1) Subject to section 85, where a director of an ICAV acts in breach of his or her duty under section 79(1)(a), (c), (d), (e), (f) or (g), he or she shall be liable to do either or both (as the corresponding common law rule or equitable principle relating to bodies corporate with respect to the matter would have required) of the following things:
(a) account to the ICAV for any gain which he or she makes directly or indirectly from the breach of duty;

(b) indemnify the ICAV for any loss or damage resulting from that breach.
(2) Subsection (1) is without prejudice to—
(a) the ICAV’s right at common law to claim damages for breach of duty, or

(b) the ICAV’s right to make an application seeking the grant of equitable relief,

but subsection (1) and this subsection shall not be read as having the combined effect of enabling the ICAV to be afforded more compensation for any damage or injury, or more protection of any proprietary right, than is just and equitable in all the circumstances.”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris Amendment No. 8 inserts a new provision in the ICAV Bill that stems from the introduction of section 78, being the provision governing fiduciary duties owned by a director. The section mirrors section 232 of the Companies Act 2014. The amendment obliges the director who acts in breach of his or her fiduciary duties to account to the ICAV for any gain he or she has made arising from the breach of duty or indemnify the ICAV for any loss arising from the breach.

Amendment No. 9 inserts a new provision that follows on from amendment No. 8 and mirrors section 233 of the Companies Act 2014. The amendment provides that an officer of an ICAV may have a defence to a claim of negligence or breach of duty on his or her part where he or she has acted honestly and reasonably.

  Seanad amendment agreed to.

  Seanad amendment No. 9:

Section 85: In page 56, between lines 18 and 19, to insert the following:
“Power of court to grant relief to officers of ICAV
85. (1) This section applies to any action for negligence, default, breach of duty or breach of trust against an officer of an ICAV.

(2) In proceedings to which this section applies the court hearing the proceedings has the power of granting relief provided under subsection (3) if it appears to the court that the officer is or may be liable in respect of the negligence, default, breach of duty or breach of trust (the “wrong concerned”) but that he or she has acted honestly and reasonably and that, having regard to all the circumstances of the case (including those connected with his or her appointment), he or she ought fairly to be excused for the wrong concerned.

(3) The power referred to in subsection (2) is to relieve the officer, either wholly or partly, from his or her liability in respect of the wrong concerned, on such terms as the court may think fit.”.

  Seanad amendment agreed to.

  Seanad amendment No. 10:

Section 85: In page 57, between lines 32 and 33, to insert the following:
“(i) the references to section 23 included section 11(3)(a)(ii) of this Act,”.

  Seanad amendment agreed to.

  Seanad amendment No. 11:

Section 85: In page 58, to delete lines 10 and 11 and substitute the following:
“(l) in section 863(2), in the case of an offence in relation to an ICAV—
(i) the reference to the Registrar were a reference to the Bank, and

(ii) the reference to prescribed particulars being given at such time and in such form and manner as may be prescribed were to particulars specified by the Bank being given at such time and in such form and manner as may be so specified,

and”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris This amendment amends section 85(2)(l)of the ICAV Bill which refers to section 863(2) of the Companies Act 2014. Section 863 of the Companies Act 2014 provides that details of a disqualification order or conviction or other such relevant occurrences must be supplied to the Company Registrations Office, CRO. The amendment makes it clear that where such an offence occurs in respect of an ICAV, this information must be sent to the Central Bank, rather than the CRO, and should be sent to the bank in a form and manner that it will specify.

  Seanad amendment agreed to.

  Seanad amendment No. 12:

Section 87: In page 58, line 34, to delete “Part” and substitute “Act”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris Amendment No. 12 is a drafting amendment to use the point to "Act" rather than "Part", which would be incorrect.

  Seanad amendment agreed to.

Seanad amendment No. 13:

Section 94: In page 64, between lines 25 and 26, to insert the following:
“(9) The registration of a body corporate as an ICAV by continuation under Part 9 does not affect the priority of charges created by the body corporate before its registration as an ICAV.”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris Amendment No. 13 provides for the protection of the priority of charges held by a migrating company seeking to register as an ICAV. The purpose of the amendment is to safeguard the priority to which any person may be entitled on foot of legal, equitable or such other principles as govern charges in the jurisdiction in which they were issued.

  Seanad amendment agreed to.

  Seanad amendment No. 14:

Section 144: In page 92, line 14, to delete “authorisation” and substitute “approval”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris Amendment No. 14 is a drafting amendment to replace the word "authorisation" with the more correct term "approval".

  Seanad amendment agreed to.

  Seanad amendment No. 15:

Section 152: In page 100, line 23, to delete “section 609 is” and substitute “sections 600 and 609 are”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris Amendment No. 15 is a drafting amendment to correct the specific modifications to cater for the winding up of the ICAV. The amendment does not change the policy set out in the Bill.

  Seanad amendment agreed to.

Acting Chairman (Deputy Liam Twomey): Information on Liam Twomey Zoom on Liam Twomey Amendments Nos. 16 and 17 are related technical amendments and may be discussed together.

  Seanad amendment No. 16:

Section 171: In page 110, line 3, to delete “agreement” and substitute “ “agreement” ”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris Amendment No. 16 is a drafting amendment to correct a syntax error arising from the use of inverted commas. Amendment No. 17 is also a drafting amendment to correct an error in section 171. Inspectors, not directors, furnish reports.

  Seanad amendment agreed to.

  Seanad amendment No. 17:

Section 171: In page 110, line 6, to delete “a directors’ ” and substitute “an inspector’s”.

  Seanad amendment agreed to.

  Seanad amendment No. 18:

Section 178: In page 113, to delete lines 29 to 32 and substitute the following:

“General Offences

178. (1) Section 876(1) and (3), 877 and 878 of the Companies Act 2014, and other provisions of that Act relating to those provisions, have effect as if—
(a) the references to a company included an ICAV, and

(b) the references to that Act included this Act.
(2) In its application in relation to the provisions mentioned in subsection (1) as they have effect in accordance with that subsection, section 865 of the Companies Act 2014 has effect as if the reference to the Director of Corporate Enforcement included the Bank.”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris Amendment No. 18 modifies the enforcement provision in respect of sections 876, 877 and 878 of the Companies Act 2014 in order that the Central Bank, as well as the Office of the Director of Corporate Enforcement, will be able to take summary proceedings should these offences occur. Section 876 of the Companies Act concerns the offence of providing false information. Section 877 concerns the offence of destroying documents, while section 878 concerns the fraudulent parting with documents. These sections are cross-applied from the Companies Act 2014 to the Irish Collective Asset-management Vehicles Bill by virtue of this section. The amendment reflects the reality that, by virtue of the Central Bank's role as the registration authority for ICAVs, it may be best placed to prosecute for such offences.

  Seanad amendment agreed to.

  Seanad amendment No. 19:

  Section 180: In page 114, between lines 3 and 4, to insert the following:
“Registration and inspection of documents

180. (1) Every document relating to an ICAV that is required to be deposited with, or sent or furnished or otherwise provided to, the Bank under this Act or the Companies Act 2014 as it applies in relation to the ICAV—
(a) shall be recorded on a register relating to the ICAV maintained by the Bank, and

(b) shall be open to inspection free of charge on a web-site maintained or used by the Bank.
(2) The register maintained in compliance with subsection (1) is in addition to the registers maintained under section 14 or 96 or by virtue of section 84 or 85.

(3) Documents provided—
(a) under Chapter 2 of Part 2 (or pursuant to a condition imposed under section 27),

(b) under section 145(2)(d),

(c) by virtue of section 171(2)(d),

(d) by virtue of section 180, or

(e) by virtue of section 185,
shall not be recorded on the register maintained in compliance with subsection (1) or be open to inspection under that subsection.”.

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris Amendment No. 19 inserts a new section which sets out the mechanism for the registration of documents concerning an ICAV and how such documents may be inspected.

  Seanad amendment agreed to.

  Seanad amendment No. 20:

Section 184: In page 115, to delete lines 12 to 17 and substitute the following:

“Amendments of UCITS Regulations
184. The UCITS Regulations are amended—
(a) in Regulation 3(1)—
(i) by inserting the following definitions:
“ ‘Act of 2015’ means the Irish Collective Asset-management Vehicles Act 2015;”, and

 “ ‘ICAV’ means an ICAV within the meaning of the Act of 2015;”,
(ii) in the definition of “articles”, by inserting “and, in relation to an ICAV, means its instrument of incorporation within the meaning of the Act of 2015” at the end,

(iii) in the definition of “directors”, by inserting “and includes directors and shadow directors of an ICAV” at the end, and

(iv) by substituting for the definition of “investment company” the following:
“ ‘investment company’ means—

(a) an investment company with fixed capital,

(b) an investment company with variable capital, or

(c) except in Regulations 45, 89(4)(a) and 107, an ICAV;”,
and
(b) in Regulation 4(6) by—
(i) deleting “or” after subparagraph (c), and

(ii) substituting the following for subparagraph (d):
“(d) common contractual funds, or

(e) Irish collective asset-management vehicles.”.”

Deputy Simon Harris: Information on Simon Harris Zoom on Simon Harris Amendment No. 20 specifically modifies a number of the USITS regulations in order that they are given effect in the context of the ICAV. This is to ensure they can apply to an ICAV.

  Seanad amendment agreed to.


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