Central Bank and Financial Services Authority of Ireland Act 2004

PART 1 Preliminary

1 Short title and commencement.

1.—(1) This Act may be cited as the Central Bank and Financial Services Authority of Ireland Act 2004.

(2) This Act comes into operation on such day or days as may be fixed by an order or orders made by the Minister for Finance, either generally or with reference to any particular purpose or provision. Different days may be fixed for different purposes and different provisions.

PART 2 Amendment of Central Bank Act 1942

2 Amendment of section 2 of Central Bank Act 1942 (Interpretation).

2.—Section 2 of the Central Bank Act 1942 (as substituted by section 3 of the Central Bank and Financial Services Authority of Ireland Act 2003) is amended—

(a) by inserting the following definition after the definition of “Appeals Tribunal” in subsection (1):

“ ‘associated entity’ in relation to a financial service provider, means—

(a) a holding company of the financial service provider, or

(b) a subsidiary company of the financial service provider, or

(c) a company that is a subsidiary of a body corporate, if the financial service provider is also a subsidiary of the body, but neither company is a subsidiary of the other, or

(d) if a financial service provider is a company, any other body corporate that is not a subsidiary of the company but in respect of which the company is beneficially entitled to more than 20 per cent of the nominal value of either—

(i) the allotted share capital, or

(ii) the shares carrying voting rights (other than voting rights which arise only in specified circumstances) in that other body corporate,

or

(e) a partnership or joint venture in which the financial service provider has a financial interest;”;

(b) by inserting the following definition after the definition of “Currency Act 1927” in subsection (1):

“ ‘Deputy Financial Services Ombudsman’ means the person holding office under section 57BL;”;

(c) by inserting the following definition after the definition of “Director”:

“ ‘EEA country’ means a country that is a member of the European Economic Area;”;

(d) by inserting the following definitions after the definition of “financial services” in subsection (1):

“ ‘Financial Services Ombudsman’ means the person holding office under section 57BJ or acting as Financial Services Ombudsman under section 57BM;

‘financial service provider’ means a person who carries on a business of providing one or more financial services;”;

(e) by inserting the following definition after the definition of “Governor” in subsection (1):

“ ‘holding company’ means a company that has one or more subsidiary companies;”;

(f) by inserting the following after the definition of “power” in subsection (1):

“ ‘publication’, in relation to a report or other document, includes publishing the report or document in an accessible form on an Internet website;”;

(g) by inserting the following definition after the definition of “record” in subsection (1):

“ ‘regulated financial service provider’ means—

(a) a financial service provider whose business is subject to regulation by the Bank or the Regulatory Authority under this Act or under a designated enactment or a designated statutory instrument, or

(b) a financial service provider whose business is subject to regulation by an authority that performs functions in an EEA country that are comparable to the functions performed by the Bank or the Regulatory Authority under this Act or under a designated enactment or designated statutory instrument, or

(c) in relation to Part VIIB only, any other financial service provider of a class specified in the regulations for the purposes of this paragraph;”;

(h) in the definition of “Rome Treaty” in subsection (1), by substituting “1992;” for “1992.”;

(i) by inserting the following definitions after the definition of “Rome Treaty” in subsection (1):

“ ‘subsidiary company’ has the meaning given by section 2A;

‘voting rights’ means—

(a) in relation to a company that has a share capital, the rights conferred on shareholders by virtue of their shares, or

(b) in relation to a company that does not have a share capital, the rights conferred on members,

to vote at general meetings of the company on all, or substantially all, matters.”;

(j) by inserting the following subsections after subsection (3):

“(4) For the purposes of this Act, a person is concerned in the management of a body corporate, or a firm, that is a regulated financial service provider if the person is in any way involved in directing, managing or administering the affairs of the body or firm.

(5) In this Act, a reference to the directors of a company, in relation to a company that does not have a board of directors, is a reference to the persons responsible for directing the operations of the company.”.

3 Insertion of new section 2A into Central Bank Act 1942.

3.—The Central Bank Act 1942 is amended by inserting the following section after section 2:

“Definition of ‘subsidiary company’.

2A.—(1) For the purposes of this Act, a company is a subsidiary of another company if (but only if)— (a) that other company— (i) holds a majority of the shareholders' or members' voting rights in the first-mentioned company, or (ii) is a shareholder or member of that company and controls the composition of its board of directors, or (iii) is a shareholder or member of that company and controls alone, in accordance with an agreement with other shareholders or members, a majority of the shareholders' or members' voting rights, or (b) that other company has the right to exercise a dominant influence over the first-mentioned company— (i) because of provisions contained in its memorandum or articles, or (ii) because of a control contract, or (c) that other company has a participating interest in the first-mentioned company and— (i) that other company actually exercises a dominant influence over the first-mentioned company, or (ii) that other company and the first-mentioned company are managed on a unified basis, or (d) the undertaking is a subsidiary of a company that is that other's subsidiary company. (2) In determining whether one company controls the composition of the board of directors of another company for the purposes of subsection (1)(a)(ii), section 155(2) of the Companies Act 1963 applies to companies that are subject to this Act in the same way as it applies to companies that are subject to that section. (3) The following provisions apply for the purposes of paragraph (a) of subsection (1)(a): (a) any shares held, or power exercisable— (i) by a person as a nominee of that other company referred to in that paragraph, or (ii) by, or by a nominee for, a subsidiary company of that other company (not being the subsidiary company whose shares or board of directors are involved), are to be treated as held or exercisable by that other company; (b) despite paragraph (a)— (i) any shares held or power exercisable by that other company, or a subsidiary company of that other company, on behalf of a person or company that is neither that other company nor a subsidiary company of that other company is to be treated as not held or exercisable by that other company, (ii) any shares held, or power exercisable, by that other company or by its nominee or subsidiary company are to be treated as not held or exercisable by that other company if they are held as security, but only if the power is, or the rights attaching to the shares are, exercised in accordance with instructions received from the person providing the security; (c) any shares held or power exercisable by that other company or its nominee or subsidiary company are to be treated as not held or exercisable by that other company if the ordinary business of that other company or its subsidiary company includes lending money and those shares are held as security, but only if the power is, or the rights attaching to the shares are, exercised in the interest of the person who is providing the security. (4) For the purposes of subsection (1)(a)(i) and (iii), the total of the voting rights of the shareholders or members in the subsidiary undertaking are to be reduced by the following: (a) the voting rights attached to shares held by the subsidiary company in itself; and (b) the voting rights attached to shares held in the subsidiary company by any of its subsidiary companies; and (c) the voting rights attached to shares held by a person acting in his own name but on behalf of the subsidiary company or one of its subsidiary companies. (5) For the purposes of subsection (1)(b), a company is not to be treated as having the right to exercise a dominant influence over another company unless it has a right to give directions with respect to the operating and financial policies of that other company and the directors of that other company are obliged to comply with those directions. (6) In subsection (1)(b), ‘control contract’ means a contract in writing conferring a right that— (a) is of a kind authorised by the memorandum or articles of the company in relation to which the right is exercisable, and (b) is permitted by the law under which that company is established. (7) Subsection (5) does not limit the construction of the expression ‘actually exercises a dominant influence’ in subsection (1)(c).”.

4 Substitution of section 6B of Central Bank Act 1942.

4.—The Central Bank Act 1942 is amended by substituting the following section for section 6B (as inserted by section 7 of the Central Bank and Financial Services Authority of Ireland Act 2003):

“Offices of the Bank.

6B.—(1) For the purpose of enabling the Bank to perform its functions, the Board— (a) may acquire and hold land, and (b) may build, establish, equip and maintain offices and other premises, in such places, whether in the State or elsewhere, as it considers appropriate. (2) The Board may sell, lease or otherwise dispose of land held by the Bank whenever the Board considers that the land is no longer required for the purpose of enabling the Bank to perform its functions. (3) In this section, ‘acquire’ includes acquire by purchase, lease or exchange.”.

5 Amendment of section 20 of Central Bank Act 1942 (Prohibition of the Governor holding shares in a bank).

5.—Section 20 of the Central Bank Act 1942 is amended—

(a) by substituting “financial institution” for “bank” wherever it occurs,

(b) by inserting the following subsection after subsection (4):

“(4A) This section does not prohibit the Governor from—

(a) entering into a policy of insurance, or

(b) purchasing units of, or participating in, a collective investment scheme whose funds are invested in bonds or equities generally (including the bonds or shares of a financial institution), or

(c) establishing and maintaining an ordinary savings account with a building society or a friendly society.”;

(c) by substituting the following subsection for subsection (5):

“(5) In this section—

‘bank’ includes a bank incorporated outside the State as well as a bank incorporated in the State;

‘financial institution’ includes a credit institution and an insurance undertaking;

‘shares’, in relation to a bank, include stock, shares, debentures, debenture stock, bonds and other securities of the bank.”.

6 New section 33SA inserted into Central Bank Act 1942.

6.—The Central Bank Act 1942 is amended by inserting the following section after section 33S (as inserted by section 26 of the Central Bank and Financial Services Authority of Ireland Act 2003):

“Supplementary powers of Consumer Director with respect to carrying out the responsibilities imposed under section 33S.

33SA.—(1) To enable the Consumer Director to carry out the responsibilities imposed by section 33S, that Director may— (a) undertake studies, analyses and surveys with respect to the provision of relevant financial services to consumers, and (b) collect and compile information for that purpose, and (c) publish the results of any such studies, analyses or surveys. (2) In undertaking such a study, analysis or survey, the Consumer Director— (a) may, by notice in writing, require any person who, in the opinion of that Director has information, or has control of a record or other thing, that is relevant to the study, analysis or survey to provide the information, record or thing to the Consumer Director, and (b) may, by the same or another notice in writing, require the person to attend before that Director for that purpose. (3) A person commits an offence if the person— (a) intentionally prevents the Consumer Director from exercising a power conferred by subsection (1), or intentionally obstructs or hinders that Director in the exercise of such a power, or (b) without reasonable excuse, fails to comply with a requirement made to the person in accordance with subsection (2), or (c) in purporting to comply with a requirement made under subsection (2) to provide information, provides the Consumer Director with information that the person knows, or ought reasonably to know, is false or misleading in a material respect. (4) The Consumer Director may, in writing, authorise an officer or a member of the Bank's staff to investigate the business, or any aspect of the business, of a financial service provider who has been required under this section to provide information, or a record or other thing. Such an officer or member of the Bank's staff may take whatever steps are necessary for or in connection with carrying out such an investigation. (5) A financial service provider who— (a) without reasonable excuse, fails to co-operate with an investigation carried out under subsection (4), or (b) intentionally prevents such an investigation from being carried out, or intentionally obstructs or hinders the investigation, commits an offence. (6) A person who is convicted of an offence under this section is liable— (a) on conviction on indictment, to a fine not exceeding €30,000 or to imprisonment for a term not exceeding five years, or to both, or (b) on summary conviction, to a fine not exceeding €3,000 or to imprisonment for a term not exceeding 12 months, or to both. (7) Summary proceedings for an offence under this section may be brought and prosecuted by the Chief Executive, but not to the exclusion of any other person who is authorised to bring and prosecute summary offences. (8) Despite section 10(4) of the Petty Sessions (Ireland) Act 1851, summary proceeding for an offence under this section may be brought within 2 years after the date on which the offence was first discovered.”.

7 Amendment of section 33AC of Central Bank Act 1942 (Registrar to prepare annual report).

7.—Section 33AC of the Central Bank Act 1942 (as inserted by section 26 of the Central Bank and Financial Services Authority of Ireland Act 2003) is amended in subsection (1) by substituting “within 9 months after the end of each financial year” for “not later than the end of September in each year”.

8 Amendment of section 33C of Central Bank Act 1942 (Functions and powers of Regulatory Authority).

8.—Section 33C of the Central Bank Act 1942 (as inserted by section 26 of the Central Bank and Financial Services Authority of Ireland Act 2003) is amended by substituting the following subsections for subsection (9):

“(9) If a matter relating to the financial stability of the State's financial system arises in connection with the performance or exercise by the Regulatory Authority of its functions or powers, that Authority shall consult the Governor on the matter.

(9A) The Regulatory Authority may, if it considers it prudent to do so, give a written report to the Minister on any matter of the kind referred to in subsection (9), but may act on such a matter only with the agreement of the Governor.

(9B) For the purposes of subsections (9) and (9A), ‘matter’ includes (but is not limited to) the issue, revocation and suspension of a licence or other authority.”.

9 Amendment of section 33AK of Central Bank Act 1942 (Disclosure of information).

9.—Section 33AK of the Central Bank Act 1942 (as inserted by section 26 of the Central Bank and Financial Services Authority of Ireland Act 2003) is amended—

(a) in subsection (5)(aj), by substituting “functions, or” for “functions.”, and

(b) by inserting after subsection (5)(aj)—

“(ak) to the Financial Services Ombudsman that is required for the performance of that Ombudsman's functions.”.

10 New Part IIIC inserted into Central Bank Act 1942.

10.—(1) The Central Bank Act 1942 is amended by inserting the following Part after Part IIIB (as inserted by section 26 of the Central Bank and Financial Services Authority of Ireland Act 2003):

“PART IIIC

CHAPTER 1

Interpretation