Credit Guarantee (Amendment) Act 2016

PART 1 Preliminary and General

1.. Short title, commencement and collective citation

1. (1) This Act may be cited as the Credit Guarantee (Amendment) Act 2016.

(2) This Act (other than Part 4) shall come into operation on such day or days as the Minister may appoint by order or orders either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or different provisions.

(3) Parts 1 to 3 and the Credit Guarantee Act 2012 may be cited together as the Credit Guarantee Acts 2012 and 2016.

2.. Definitions

2. In this Act—

“Minister” means the Minister for Jobs, Enterprise and Innovation;

“Principal Act” means the Credit Guarantee Act 2012.

PART 2 Amendment of Principal Act

3.. Amendment of section 1 of Principal Act

3. Section 1 of the Principal Act is amended—

(a) by the insertion of the following definitions:

“ ‘asset credit facility agreement’ means an agreement (other than a loan agreement or a credit facility agreement) under which a participating finance provider agrees to provide to a qualifying enterprise credit in the form of tangible movable property upon—

(a) such date or dates as may be specified in the agreement, or

(b) the happening of such event as may be so specified,

in consideration of that qualifying enterprise agreeing to make payments to the participating finance provider on such date or dates, or the happening of such event as may be so specified, and ‘asset credit facility’ shall be construed accordingly;

‘cash price’ means, in relation to property provided pursuant to a qualifying finance agreement that is an asset credit facility agreement, the price that the participating enterprise would have been required to pay for the property if, at the time of the making of the agreement, that enterprise had elected to—

(a) purchase the property, and

(b) pay for the property in cash;

‘credit amount’ means—

(a) in the case of a qualifying finance agreement that is a loan agreement, the principal of moneys borrowed from the participating finance provider by a participating enterprise pursuant to the agreement,

(b) in the case of a qualifying finance agreement that is a credit facility agreement, the maximum amount (whether or not drawn down) of moneys agreed to be given or advanced by the participating finance provider to a participating enterprise, or to a third party nominated in that behalf by a participating enterprise, pursuant to the agreement,

(c) in the case of a qualifying finance agreement that is an asset credit facility agreement, the cash price (specified in the agreement) of the property provided by the participating finance provider to a participating enterprise pursuant to the agreement, and

(d) in the case of a qualifying finance agreement that is an invoice finance facility agreement, the maximum amount of moneys agreed to be given or advanced by the participating finance provider to a participating enterprise pursuant to the agreement, irrespective of whether that amount is given or advanced;

‘credit facility agreement’ means an agreement (other than a loan agreement) under which a participating finance provider agrees to give or advance to a qualifying enterprise, or to a third party nominated in that behalf by a qualifying enterprise, a sum or sums of money upon—

(a) such date or dates as may be specified in the agreement, or

(b) the happening of such event as may be so specified,

in consideration of that qualifying enterprise agreeing to repay to the participating finance provider the said sum or sums of money so given or advanced, and interest or charges (if any) thereon, on such date or dates as may be so specified, and ‘credit facility’ shall be construed accordingly;

‘finance agreement’ means—

(a) a loan agreement,

(b) a credit facility agreement,

(c) an asset credit facility agreement, or

(d) an invoice finance facility agreement;

‘finance provider’ means a person who, in the ordinary course of business—

(a) provides financial products to qualifying enterprises,

(b) arranges for the provision by other persons of financial products to qualifying enterprises, or

(c) provides facilities for the provision on credit of goods or services by the person to qualifying enterprises,

but does not include a person who is prohibited under the law of the State or any other state from engaging in any of the activities specified in the foregoing paragraphs, and references to the provision of a financial product shall be construed accordingly;

‘financial product’ means—

(a) a loan,

(b) a credit facility,

(c) an asset credit facility, or

(d) an invoice finance facility,

provided to a qualifying enterprise under a finance agreement;

‘invoice finance facility agreement’ means an agreement under which a participating finance provider agrees to give or advance to a qualifying enterprise a sum or sums of money in consideration of that qualifying enterprise assigning to the participating finance provider the right to recover debts owed to that qualifying enterprise, and ‘invoice finance facility’ shall be construed accordingly;

‘participating enterprise’ means a qualifying enterprise—

(a) belonging to a class to which a credit guarantee scheme applies, and

(b) who has entered into a qualifying finance agreement with a participating finance provider;

‘participating finance provider’ shall be construed in accordance with section 2;

‘qualifying finance agreement’ means a finance agreement—

(a) in respect of which there has been compliance with the conditions specified in a credit guarantee scheme under subsection (4) of section 5,

(b) belonging to a class of finance agreement to which a credit guarantee scheme applies,

(c) that is made for a purpose that does not contravene a provision of a credit guarantee scheme to which paragraph (c) of that subsection applies, and

(d) that does not permit a finance provider to exercise his or her powers under the finance agreement in such manner as would result in—

(i) the value of the financial product provided under the agreement exceeding the maximum value specified under that subsection,

(ii) the aggregate of the value of the financial products provided under a particular class of finance agreements with the qualifying enterprise concerned exceeding the maximum value so specified, or

(iii) the aggregate of the value of the financial products provided under all qualifying finance agreements with the qualifying enterprise concerned exceeding the maximum value specified under that subsection;”,

(b) in the definition of “loan agreement” —

(i) by the substitution of “participating finance provider” for “participating lender” in each place where it occurs, and

(ii) by the insertion of “, credit card facility or credit line facility” after “overdraft facility”,

and

(c) by the deletion of the definitions of—

(i) “lender”,

(ii) “EEA Agreement”,

(iii) “EEA state”,

(iv) “participating borrower”,

(v) “participating lender”, and

(vi) “qualifying loan agreement”.

4.. Participating finance provider

4. The Principal Act is amended by the substitution of the following section for section 2:

“2. (1) For the purposes of this Act, a finance provider is a participating finance provider if—

(a) the finance provider is a person in respect of whom a certificate under subsection (2) has effect, and

(b) the finance provider stands approved for the time being by the Minister in accordance with this section.

(2) For the purposes of this section, the Minister may, on the provision by the person referred to in paragraph (a) or (b), as may be appropriate, of such information or documentation as the Minister considers necessary, certify in writing that he or she is satisfied—

(a) that a person is a finance provider, or

(b) that a person intends to carry on the business of—

(i) providing financial products to qualifying enterprises,

(ii) arranging for the provision by other persons of financial products to qualifying enterprises, or

(iii) providing facilities for the provision on credit of goods or services by the person first-mentioned in this paragraph to qualifying enterprises.

(3) The Minister may approve a finance provider under this section if—

(a) the finance provider declares, in writing, that he or she agrees to comply with and be bound by the terms of a credit guarantee scheme, and

(b) the Minister is satisfied that the finance provider has complied with the applicable conditions.

(4) The Minister may withdraw an approval under this section if a finance provider ceases to comply with the applicable conditions or contravenes any other provisions of a credit guarantee scheme.”.

5.. Power of Minister to give guarantees

5. The Principal Act is amended by the substitution of the following section for section 4:

“4. (1) Subject to this section and section 12 of the Credit Guarantee (Amendment) Act 2016, the Minister may, in accordance with a credit guarantee scheme, enter into an agreement with a participating finance provider guaranteeing the due repayment or payment, as the case may be, to that participating finance provider of such part of the credit amount under a qualifying finance agreement as is specified in the first-mentioned agreement.

(2) Subject to subsection (3) and section 12 of the Credit Guarantee (Amendment) Act 2016, the Minister shall not, pursuant to a guarantee under this section, be liable, in relation to any particular qualifying finance agreement, to pay an amount exceeding 80 per cent of the credit amount that—

(a) the participating enterprise concerned stands liable, for the time being, to pay to the participating finance provider concerned, and

(b) stands unpaid.

(3) The Minister shall not exercise the powers conferred on him or her by this section in such manner as would result in his or her being liable, in respect of qualifying finance agreements entered into by the same participating finance provider, to pay to that participating finance provider amounts the aggregate of which would exceed 13 per cent of the aggregate of the credit amounts under those qualifying finance agreements.

(4) The Minister shall not exercise the powers conferred on him or her by this section in such manner as would result in the yearly credit amount to which guarantees under this section apply exceeding €150 million.

(5) The Minister shall, in relation to a credit guarantee scheme, after consultation with the participating finance provider concerned, and by notice in writing given to the provider, specify the maximum value of financial products that may be provided by that provider pursuant to qualifying finance agreements—

(a) entered into in any year, and

(b) to which guarantees under this section apply.

(6) The Minister may notify a participating finance provider in writing that an agreement entered into by the Minister with the participating finance provider under this section shall not apply in relation to one or more classes of qualifying finance agreements (in this section referred to as “new finance agreements”) entered into by the participating finance provider after such date as may be specified in the notice.

(7) An agreement under this section shall not apply to new finance agreements.

(8) In this section ‘yearly credit amount’ means, in relation to any particular year, the aggregate of all credit amounts in respect of all qualifying finance agreements made in that year.”.

6.. Amendment of section 5 of Principal Act

6. Section 5 of the Principal Act is amended—

(a) in subsection (2) —

(i) by the substitution of the following paragraph for paragraph (a):

“(a) the giving of such information to the Minister, as he or she may reasonably require for the purposes of the granting of approval under section 2 or the making of an agreement under section 4;”,

(ii) by the substitution, in paragraph (b), of “participating finance provider” for “participating lender” in each place where it occurs,

(iii) by the substitution, in paragraph (c), of “participating finance provider” for “participating lender”,

(iv) by the substitution of the following paragraph for paragraph (d):

“(d) without prejudice to the generality of section 8(4), the method of payment of the premium under section 8 and the time or times at which the premium shall be paid;”,

(v) by the substitution, in paragraph (e), of “participating finance providers” for “participating lenders”,

(vi) by the substitution, in paragraph (f), of “finance providers” for “lenders”, and

(vii) by the substitution, in paragraph (h), of “finance agreement” for “loan agreement”,

(b) by the substitution of the following subsection for subsection (3):

“(3) A scheme under this section shall specify conditions (in this Act referred to as ‘applicable conditions’), with which a finance provider shall, for the purposes of the granting of approval under section 2, comply, relating to—

(a) the policies and practices of the finance provider as respects—

(i) the provision of financial products generally,

(ii) the provision of financial products to qualifying enterprises,

(iii) the assessment of the credit risk or financial stability of qualifying enterprises,

(iv) the recovery of sums owing to the finance provider by a qualifying enterprise or property provided to a qualifying enterprise by the finance provider under a qualifying finance agreement, and

(v) the provision by qualifying enterprises of security for financial products provided to qualifying enterprises under qualifying finance agreements,

(b) the sources from which the finance provider obtains his or her finance or funding,

(c) the credit history of the finance provider and, in the case of certain classes of finance provider as may be specified in the scheme, a person who has, subject to subsection (6), a controlling interest in the finance provider,

(d) the accounts and financial performance of the finance provider,

(e) in the case of a finance provider referred to in paragraph (b) of the definition of ‘finance provider’, the payment by the finance provider of any moneys that may be received by that provider from the Minister pursuant to a guarantee under section 4 in respect of a qualifying finance agreement, to the person who provided the financial product to which that agreement relates,

(f) the administration and management of the finance provider,

(g) the financial product or financial products to which the scheme applies, including—

(i) the information and documentation to be provided by the finance provider to the Minister in relation to the provision of such financial products,

(ii) the information and documentation to be provided by the finance provider to qualifying enterprises in relation to the provision of such financial products, and

(iii) the interest, charges and other costs (if any) that may be applied in relation to the provision of such financial products to qualifying enterprises,

(h) the procedures in relation to the supervision of finance agreements entered into on the finance provider’s behalf by members of staff of the finance provider, and

(i) where applicable, the capital reserves of the finance provider,

declared in a credit guarantee scheme to be conditions with which a finance provider shall comply before an approval in respect of that finance provider may be given under section 2.”,

(c) by the substitution of the following subsection for subsection (4):

“(4) A scheme under this section shall specify—

(a) the class or classes of—

(i) qualifying enterprise,

(ii) finance provider,

(iii) financial product, and

(iv) finance agreement,

to which the scheme shall apply,

(b) the conditions that shall be complied with in relation to the entering into of a finance agreement by a participating finance provider with a qualifying enterprise,

(c) the purposes for which moneys or other property received by qualifying enterprises pursuant to a finance agreement may be applied,

(d) the maximum value or values of one or more financial products that may be provided to a qualifying enterprise under one or more finance agreements to which the scheme applies, and

(e) the methodology referred to in section 8(1).”,

and

(d) by the insertion of the following subsections after subsection (4):

“(5) (a) The Minister may require that any information referred to in subsection (2)(a) given to him or her by a person in compliance with a scheme under this section be attested as to the truth of the information by a statutory declaration made by that person.

(b) The Minister may require that any document, information or report referred to in subsection (2)(f) given to him or her by a finance provider in compliance with a scheme under this section be attested as to the truth of the contents of the document or report or, as the case may be, as to the truth of the information, by a statutory declaration made by that finance provider.

(6) For the purposes of this section, controlling interest shall be construed in accordance with subsection (14) of section 494 of the Taxes Consolidation Act 1997 and, accordingly, that subsection shall apply in relation to a finance provider subject to any necessary modifications.”.

7.. Payment of premium to Minister by participating enterprise

7. The Principal Act is amended by the substitution of the following section for section 8:

“8. (1) Subject to this section, a participating enterprise shall, in accordance with a credit guarantee scheme that applies to the enterprise and a qualifying finance agreement entered into by the enterprise with a participating finance provider, pay to the Minister an amount (in this section referred to as the ‘premium’) determined by the Minister in accordance with the methodology specified in the scheme for the purposes of making that determination.

(2) The Minister shall, in specifying, in a credit guarantee scheme, the methodology referred to in subsection (1), have regard to—

(a) the expenses referred to in section 11 incurred or likely to be incurred, or both, in relation to the scheme, and

(b) the objectives of the scheme.

(3) The Minister shall, in specifying, in a credit guarantee scheme, the methodology referred to in subsection (1) in so far as the expenses referred to in section 11 are concerned, have regard to—

(a) the size and quality of the participating enterprises to which the scheme applies,

(b) the risks associated with those participating enterprises,

(c) the typical risks associated with the business sector or sectors to which those participating enterprises belong,

(d) the duration of guarantees given under the scheme,

(e) the Minister’s liability under section 4(2) in relation to a qualifying finance agreement to which the scheme applies, and