Investor Compensation Act, 1998

Investor Compensation Act, 1998 Skip to content Disclaimer Feedback Helpdesk Gaeilge Léim go dtí an t-ábhar Séanadh Aiseolas Deasc chabhrach English Gaeilge English Produced by the Office of the Attorney General Táirgthe ag Oifig an Ard-Aighne Home Legislation Acts of the Oireachtas Statutory Instruments Pre-1922 Legislation Constitution External Resources Bills (Houses of the Oireachtas) Iris Oifigiúil / Official Gazette Revised Acts (LRC) Classified List of Legislation (LRC) Translations (acts.ie) Translations (Houses of the Oireachtas) Government Publications for Sale EU Law (EUR-Lex) FAQ Disclaimer Feedback Helpdesk Search Baile Reachtaíocht Achtanna an Oireachtais Ionstraimí Reachtúla Reachtaíocht Réamh-1922 Bunreacht Acmhainní Seachtracha Billí (Tithe an Oireachtais) Iris Oifigiúil Achtanna Athbhreithnithe (CAD) (An Coimisiún um Athchóiriú an Dlí) Liosta Rangaithe Reachtaíochta Aistriúcháin (achtanna.ie) Aistriúcháin (Tithe an Oireachtais) Foilseacháin Rialtais ar Díol Dlí AE (EUR-Lex) CCanna (Ceisteanna Coitianta) Séanadh Aiseolas Deasc chabhrach Cuardach TitleTeideal Year(s) or rangeBliain nó blianta nó raon TypeCineál All Legislation Acts Statutory Instruments Advanced SearchCuardach Casta HomeBaile ActsAchtanna 1998 Investor Compensation Act, 1998 Investor Compensation Act, 1998 Permanent Page URL View by SectionAmharc de réir Ailt View Full ActAmharc ar an Acht Iomlán Bill History Stair Bille Commencement, Amendments, SIs made under the Act Tosach Feidhme, Leasuithe, IRí arna ndéanamh faoin Acht Open PDFOscail PDF Print Full ActPriontáil an tAcht Iomlán Number 37 of 1998 INVESTOR COMPENSATION ACT, 1998 ARRANGEMENT OF SECTIONS PART I Preliminary and General Section 1. Short title and commencement. 2. Interpretation. 3. Service of notices. 4. Expenses. 5. Power to make regulations. 6. Laying of regulations before Houses of Oireachtas. 7. Repeals. 8. Appointment of supervisory authority and competent authority. 9. Authorised officers. PART II Administration of Investor Compensation 10. Formation of Company. 11. Alteration of memorandum of association and articles of association of Company. 12. Objects and powers of Company. 13. Powers of Company. 14. Accounts of Company and audits. 15. Performance of functions. 16. Non-application of section 182 (Removal of directors) of Act of 1963. 17. Members of Company. 18. Directors of Company. 19. Establishment of fund. 20. Administrative services for Company. 21. Contributions of investment firms. 22. Maintenance of funds. 23. Costs of administration. 24. Procedures to investigate complaints. 25. Approval of investor compensation schemes. 26. Revocation of approval of compensation scheme. 27. Failure by investment firms to comply with obligations. 28. Application to Court for confirmation of direction. 29. Product producers. PART III Payment of Compensation to Investors 30. Interpretation for Part. III. 31. Determination that an investment firm cannot meet its obligations. 32. Applications for compensation. 33. Appointment of an administrator. 34. Payment of compensation. 35. Further provisions relating to payment of compensation. 36. Provisions relating to restricted intermediaries. PART IV Miscellaneous 37. Joint accounts and trustees. 38. Information to investors and advertising. 39. Investment firms joining compensation schemes in other Member States. 40. Membership of compensation scheme by investment firm authorised in another Member State. 41. Compulsory insurance of authorised investment firms. 42. Exemption from liability for damages. 43. Offences and penalties. 44. Amendment of section 2(7) of Act of 1995. 45. Amendment of section 2 of Act of 1994. 46. Insertion of new section in Act of 1994. 47. Provisions relating to solicitors. PART V Miscellaneous Amendments 48. Amendment of section 16 of Central Bank Act, 1989. 49. Amendment of section 44 of Act of 1989. 50. Amendment of section 46 of Act of 1989. 51. Amendment of section 49 of Act of 1989. 52. Amendment of section 2 of Act of 1995. 53. Amendment of section 9 of Act of 1995. 54. Amendment of section 10 of Act of 1995. 55. Amendment of section 14 of Act of 1995. 56. Amendment of section 16 of Act of 1995. 57. Amendment of section 17 of Act of 1995. 58. Amendment of section 21 of Act of 1995. 59. Amendment of section 26 of Act of 1995. 60. Amendment of section 28 of Act of 1995. 61. Amendment of section 31 of Act of 1995. 62. Amendment of section 33 of Act of 1995. 63. Amendment of section 38 of Act of 1995. 64. Amendment of section 52 of Act of 1995. 65. Amendment of section 54 of Act of 1995. 66. Amendment of section 65 of Act of 1995. 67. Amendment of section 74 of Act of 1995. 68. Amendment of section 75 of Act of 1995. 69. Amendment of section 79 of Act of 1995. 70. Amendment of section 8 of Stock Exchange Act, 1995. 71. Amendment of section 14 of Stock Exchange Act, 1995. 72. Amendment of section 17 of Stock Exchange Act, 1995. 73. Amendment of section 18 of Stock Exchange Act, 1995. 74. Amendment of section 24 of Stock Exchange Act, 1995. 75. Amendment of section 29 of Stock Exchange Act, 1995. 76. Amendment of section 34 of Stock Exchange Act, 1995. 77. Amendment of section 39 of Stock Exchange Act, 1995. 78. Amendment of section 52 of Stock Exchange Act, 1995. 79. Amendment of section 54 of Stock Exchange Act, 1995. 80. Amendment of section 56 of Stock Exchange Act, 1995. 81. Amendment of section 65 of Stock Exchange Act, 1995. 82. Amendment of section 66 of Stock Exchange Act, 1995. 83. Amendment of section 70 of Stock Exchange Act, 1995. FIRST SCHEDULE Repeals SECOND SCHEDULE Supplementary provision in relation to a Direction by a Supervisory Authority under Section 27 THIRD SCHEDULE Directive 97/9/EC of the European Parliament and of the Council of 3 March 1997 on Investor-Compensation Schemes Acts Referred to Building Societies Act, 1989 1989, No. 17 Central Bank Act, 1971 1971, No. 24 Central Bank Act, 1989 1989, No. 16 Central Bank Act, 1997 1997, No. 8 Companies Act, 1963 1963, No. 33 Companies Act, 1990 1990, No. 33 Companies Acts, 1963 to 1990 Companies (Amendment) Act, 1986 1986, No. 25 Criminal Justice Act, 1994 1994, No. 15 Insurance Act, 1989 1989, No. 3 Investment Intermediaries Act, 1995 1995, No. 11 Local Government Act, 1941 1941, No. 23 Petty Sessions (Ireland) Act, 1851 14 & 15 Vict., c. 93 Solicitors Act, 1954 1954, No. 36 Solicitors Acts, 1954 to 1994 Solicitors (Amendment) Act, 1960 1960, No. 37 Solicitors (Amendment) Act, 1994 1994, No. 27 Stock Exchange Act, 1995 1995, No. 9 Succession Act, 1965 1965, No. 27 Taxes Consolidation Act, 1997 1997, No. 39 Trustee Act, 1893 c. 53 Trustee Savings Bank Act, 1989 1989, No. 21 Number 37 of 1998 INVESTOR COMPENSATION ACT, 1998 AN ACT TO ENABLE EFFECT TO BE GIVEN TO DIRECTIVE NO. 97/9/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL OF 3 MARCH 1997 ON INVESTOR COMPENSATION SCHEMES(1) , TO PROVIDE FOR INVESTOR COMPENSATION, TO AMEND THE CENTRAL BANK ACT, 1989 , THE INSURANCE ACT, 1989 , THE SOLICITORS (AMENDMENT) ACT, 1994 , THE STOCK EXCHANGE ACT, 1995 , AND THE INVESTMENT INTERMEDIARIES ACT, 1995 , AND TO PROVIDE FOR RELATED MATTERS. [13th July, 1998] BE IT ENACTED BY THE OIREACHTAS AS FOLLOWS: PART I Preliminary and General Short title and commencement. 1.—(1) This Act may be cited as the Investor Compensation Act, 1998. (2) This Act 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. Interpretation. 2.—(1) In this Act, unless the context otherwise requires— “Act of 1963” means the Companies Act, 1963 ; “Act of 1989” means the Insurance Act, 1989 ; “Act of 1994” means the Solicitors (Amendment) Act, 1994 ; “Act of 1995” means the Investment Intermediaries Act, 1995 ; “administrator” means, where a liquidator or official assignee has been appointed to an investment firm by the Court, that liquidator or official assignee, or where an administrator has been appointed to an investment firm by the supervisory authority, that administrator; “approved professional body” has the meaning assigned to it by the Act of 1995; “authorised investment business firm” has the meaning assigned to it by subsection (4); “authorised investment firm” means— (a) an authorised investment business firm, or (b) an authorised member firm, or (c) a credit institution the authorisation of which by the Bank under Directive No. 77/780/EEC of 12 December 1977(1) and Directive No. 89/646/EEC of 15 December 1989(2) extends to one or more of the investment services listed in section A of the Annex to the Investment Services Directive, or (d) an insurance intermediary; “authorised member firm” has the meaning assigned to it by the Stock Exchange Act, 1995 ; “authorised officer” means a person authorised for the purposes of section 9 ; “Bank” means the Central Bank of Ireland; “Board” means the Board of the Company; “branch”, in the case of an investment firm which is subject to the Investment Services Directive, means a place of business which is part of an investment firm, which has no separate legal personality and which provides investment services for which the investment firm has been authorised by the Bank or by a competent authority in another Member State, and all the places of business set up in the same Member State by an investment firm which has its head office in another Member State shall be regarded as a single branch; “certified person” has the meaning assigned to it by section 55 of the Act of 1995; “client” means a person who has entrusted money or investment instruments to an investment firm in connection with the provision of investment business services by the investment firm; “close relative” means a brother, sister, parent or spouse of a client or a child of the client or of the spouse of the client, where “spouse”, in relation to the client, shall not include a spouse who is living separately and apart from the client; “Company” means the Investor Compensation Company Limited; “compensatable loss” has the meaning assigned to it by section 30 (1); “competent authority” means a competent authority for the purposes of the Investor Compensation Directive; “Court” means the High Court; “credit institution” means a credit institution within the meaning of Article 1 of Council Directive No. 77/780/EEC of 12 December 1977(1) as amended by Council Directive No. 89/646/EEC of 15 December 1989(2) but does not include the institutions referred to in Article 2(2) of the first mentioned Directive; “director” includes any person occupying the position of director by whatever name called and any person who effectively directs or has a material influence over the business of an investment firm and includes a shadow director within the meaning of the Companies Act, 1990 ; “ECU” has the same meaning as in Council Regulations (EC) No. 3320/94 of 22 December 1994 on the consolidation of the existing Community legislation on the definition of the ECU following the entry into force of the Treaty on European Union(3) ; “eligible investor” means a person, not being an excluded investor, who is a client of an investment firm and has made an application for payment under section 34 ; “employee” has the same meaning as in the Act of 1995; “excluded investor” means a client of an investment firm which has been the subject of a determination by the supervisory authority under section 31 or a ruling and, in relation to that investment firm, is— (a) a professional or institutional client, including: (i) an investment firm; (ii) an investment firm for the purposes of the Investment Services Directive; (iii) a credit institution as defined in Article 1 of Council Directive No. 77/780/EEC; (iv) a financial institution as defined in Article 1(6) of Council Directive No. 89/646/EEC of 15 December 1989(2) ; (v) an insurance undertaking; (vi) an undertaking for collective investment; or (vii) a pension or retirement fund, or (b) a local authority, or (c) a director, manager or personally liable member of the investment firm, a holder of at least 5 per cent. of the capital of the investment firm, a person responsible for carrying out the statutory audit of the investment firm or a client with similar status in a group undertaking, or (d) a close relative or a third party acting on behalf of a client referred to in paragraph (c), or (e) another firm in a group undertaking, or (f) a client who has any responsibility for, or has taken advantage of, facts relating to the investment firm which gave rise to the firm's financial difficulties or contributed to the deterioration of its financial situation, or (g) a company which is of such a size that it is not permitted to draw up abridged balance sheets under Article 11 of the Fourth Council Directive No. 78/660/EEC of 25 July 1978(1) based on Article 54(3)(g) of the Treaty on the annual accounts of certain types of companies, or (h) a client specified by the supervisory authority as an excluded investor in accordance with section 35 (8); “functions” includes powers and duties and references to the performance of functions include, as respects powers and duties, references to the exercise of the powers and the carrying out of the duties; “group undertaking”, in relation to an investment firm, means a group undertaking within the meaning of the Companies (Amendment) Act, 1986 , of which the investment firm is a part; “insurance intermediary” has the meaning assigned to it by the Act of 1989 but excludes a solicitor in respect of whom a practising certificate (within the meaning of the Solicitors Acts, 1954 to 1994) is in force where the activities of the solicitor arise only incidentally to the provision of legal services; “insurance undertaking” has the meaning assigned to it by the European Communities (Non-Life Insurance) Framework Regulations, 1994 ( S.I. No. 359 of 1994 ), or under the European Communities (Life Assurance) Framework Regulations, 1994 ( S.I. No. 360 of 1994 ); “investment business firm” has the meaning assigned to it by the Act of 1995; “investment business services” has the meaning assigned to it by the Act of 1995 and includes the activities of an insurance intermediary; “investment firm” means— (a) an authorised investment business firm or a person (being a person who was an authorised investment business firm) whose authorisation has been revoked, (b) an authorised member firm or a person (being a person who was an authorised member firm) whose authorisation has been revoked, (c) a credit institution licensed in the State or a credit institution whose authorisation by the Bank under Council Directive 77/780/EEC of 12 December 1977 as amended by Council Directive 89/646/EEC of 15 December 1989 as amended and extended from time to time extends to one or more of the investment services listed in the Annex to the Investment Services Directive or a credit institution whose authorisation by the Bank under Council Directive 77/780/EEC of 12 December 1977 as amended by Council Directive 89/646/EEC of 15 December 1989 as amended and extended from time to time has been revoked or a credit institution whose authorisation by the Bank under Council Directive 77/780/EEC of 12 December 1977 as amended by Council Directive 89/646/EEC of 15 December 1989 as amended and extended from time to time no longer extends to one or more of the investment services listed in the Annex to the Investment Services Directive, or (d) an insurance intermediary or a person who was formerly an insurance intermediary; “investment instruments” has the meaning assigned to it by the Act of 1995; “investment product intermediary” has the meaning assigned to it by the Act of 1995; “Investment Services Directive” means Council Directive No. 93/22/EEC of 10 May 1993(1) ; “Investor Compensation Directive” means Directive No. 97/9/EC of the European Parliament and of the Council of 3 March 1997(2) ; “joint investment business” means investment business services provided for the account of two or more persons or over which two or more persons have rights that may be exercised by means of the signature of one or more of those persons; “local authority” means a local authority for the purposes of the Local Government Act, 1941 and where appropriate a provincial, regional, local and municipal authority; “member firm” has the meaning assigned to it by the Stock Exchange Act, 1995 ; “Member State” means a Member State of the European Communities; “Minister” means the Minister for Finance; “prescribed” means prescribed by regulations made by the Minister and cognate words shall be construed accordingly; “product producer” means a product producer for the purposes of the Act of 1995 or an insurance undertaking; “professional investor” means a client of an investment firm who the investment firm can show has sufficient and appropriate expertise in investment instruments to be categorised as a professional investor and who has acknowledged in writing to that investment firm that he or she has been made aware of the consequences of being categorised as a professional investor and is categorised by that investment firm as a professional investor; “restricted activity investment product intermediary” has the meaning assigned to it by the Act of 1995; “ruling” means a decision made by a court in relation to an investment firm for reasons which are directly related to the financial circumstances of the investment firm which has the effect that clients of the investment firm are precluded for the time being from pursuing claims against the investment firm for the return of money owed to or belonging to the client and held on behalf of the client by the investment firm in connection with the provision of investment business services and for the return of investment instruments belonging to the client and held, administered or managed by the investment firm on behalf of the client in connection with the provision of investment business services; “solicitor” has the meaning assigned to it in section 3 (as substituted by the Act of 1994) of the Solicitors Act, 1954 ; “supervisory authority” means the supervisory authority referred to in section 8 (1); “written appointment” means an appointment in writing for the purposes of section 27 of the Act of 1995 or an appointment in writing for the purposes of section 44 or 49 of the Act of 1989. (2) A word or expression that is used in this Act and is also used in the Investor Compensation Directive has, unless the contrary intention is indicated, the same meaning in this Act as it has in that Directive. (3) In this Act— (a) a reference to a section or a Schedule is to a section of or Schedule to this Act, unless it is indicated that reference to some other enactment is intended, (b) a reference to a subsection, paragraph or subparagraph is a reference to the subsection, paragraph or subparagraph of the provision in which the reference occurs, unless it is indicated that reference to some other provision is intended, and (c) a reference to any enactment shall be construed as a reference to that enactment as amended, adapted or extended by or under any subsequent enactment including this Act. (4) In this Act, “authorised investment business firm” has the meaning assigned to it by the Act of 1995 and, where the Minister has not made regulations under section 2(8)(a) of the Act of 1995, this definition excludes a restricted activity investment product intermediary who is a solicitor in respect of whom a practising certificate (within the meaning of the Solicitors Acts, 1954 to 1994) is in force unless that restricted activity investment product intermediary has informed the supervisory authority and the Company that he or she is a restricted activity investment product intermediary. (5) Notwithstanding subsection (1), an authorised investment business firm— (a) to which the Minister has given a certificate under section 446 (2) of the Taxes Consolidation Act, 1997 , (b) which is not an investment firm within the meaning of the Investor Compensation Directive, and (c) where any investment business services provided by the firm are part of the trading operations of the investment firm to which the certificate given to it by the Minister under section 446 (2) of the Taxes Consolidation Act, 1997 , refers, shall not be an authorised investment firm or an investment firm for the purposes of this Act. (6) References in this Act to books, records or other documents, or to any of them, shall be construed as including any document or information kept in a non-legible form (whether stored electronically or otherwise) which is capable of being reproduced in a legible form and all the electronic or other automatic means, if any, by which such document or information is so capable of being reproduced and to which the person, whose books, records or other documents (as so construed) are inspected for the purposes of this Act, has access. Service of notices. 3.—(1) Where a notice, direction or other document is authorised or required by or under this Act or regulations made thereunder to be served on a person, it shall, unless otherwise specified in this Act, be addressed to the person by name and shall be served on or given to the person in one of the following ways— (a) by delivering it to the person, or by leaving it at the address at which the person ordinarily resides or, in a case in which an address for service has been furnished, at that address, (b) by sending it by ordinary prepaid post addressed to the person at the address at which the person ordinarily resides or, in a case in which an address for service has been furnished, at that address, or (c) in the case of an officer or employee of an investment firm, by sending it to the person by ordinary pre-paid post addressed to the person at the address of the principal office of that investment firm. (2) A notice, direction or other document referred to in subsection (1) may— (a) in the case of an investment firm or any body corporate, be served on the secretary or other employee or officer of that investment firm or body corporate, (b) in the case of a partnership, be served on any partner, or (c) in the case of an unincorporated association other than a partnership, be served on any member of its governing body. Expenses. 4.—(1) The expenses incurred by the Minister in the administration of this Act shall, to such extent as may be sanctioned by the Minister, be paid out of monies provided by the Oireachtas. (2) The expenses incurred by the Bank in the administration of this Act shall be paid out of the general fund of the Bank except where otherwise provided in this Act or any other enactment. Power to make regulations. 5.—(1) The Minister may make regulations for enabling this Act to have effect. (2) Regulations under this Act may contain such incidental, supplementary and consequential provisions as appear to the Minister to be expedient for any purpose of this Act. (3) The Minister may make regulations for prescribing any matter referred to in this Act as prescribed. Laying of regulations before Houses of Oireachtas. 6.—Every regulation made under this Act shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the regulation is passed by either such House within the next 21 days on which that House has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder. Repeals. 7.—The Acts mentioned in column (2) of the First Schedule to this Act are hereby repealed to the extent mentioned in column (3) of that Schedule. Appointment of supervisory authority and competent authority. 8.—(1) The Bank shall be the supervisory authority for investor compensation under this Act. (2) The Bank shall be the competent authority in the State for the purposes of the Investor Compensation Directive. (3) Subject to subsection (4), the supervisory authority shall carry out its functions under this Act in accordance with this Act in order to promote— (a) the protection of the clients of investment firms, (b) the maintenance of an effective system of compensation for the clients of investment firms, and (c) the maintenance of the proper and orderly regulation and supervision of investment firms and financial markets. (4) The supervisory authority shall carry out its functions under this Act having regard to the Investor Compensation Directive, the text of which is set out for convenience of reference in the Third Schedule . Authorised officers. 9.—(1) Subsections (2) and (3) shall apply in relation to an investment firm in respect of insurance business carried on by that investment firm as an insurance intermediary. (2) Where the supervisory authority forms the view that an insurance intermediary may be unable to repay money belonging to a client of that insurance intermediary, the supervisory authority may authorise in writing a person to be an authorised officer to investigate whether the insurance intermediary is unable to repay money to or otherwise discharge its obligations towards clients of the insurance intermediary and to make a report to the supervisory authority in respect of that insurance intermediary. (3) Sections 64 and 65 of the Act of 1995 shall apply to an authorised officer appointed under subsection (2) as if the person appointed were appointed for the purposes of the Act of 1995 and the powers available to an authorised officer under those sections applied in relation to insurance intermediaries for the purposes of this Act. (4) The following shall be authorised officers for the purposes of this Act— (a) in relation to investment firms which are investment business firms— (i) an authorised officer appointed under section 64 of the Act of 1995, or (ii) an inspector appointed under section 66 or 73 of the Act of 1995; (b) in relation to investment firms which are stock exchange member firms— (i) an authorised officer appointed under section 55 of the Stock Exchange Act, 1995 , or (ii) an inspector appointed under section 57 or 64 of the Stock Exchange Act, 1995 ; (c) in relation to investment firms which are credit institutions— (i) an authorised person appointed under section 41 of the Building Societies Act, 1989 , or (ii) an inspector appointed under section 45 of the Building Societies Act, 1989 , or (iii) an authorised officer appointed under section 17 of the Central Bank Act, 1971 (as amended by section 36 of the Central Bank Act, 1989 , and by Regulation 39 of the European Communities (Licensing and Supervision of Credit Institutions) Regulations, 1992 ( S.I. No. 395 of 1992 )), or (iv) an authorised officer for the purposes of section 24 of the Trustee Savings Bank Act, 1989 , and the rights and powers of such authorised officers shall, with the necessary modifications, apply in relation to obtaining such information as the supervisory authority may require to enable it to exercise any of its functions under this Act. PART II Administration of Investor Compensation Formation of Company. 10.—(1) As soon as may be after the commencement of this section, the Minister shall take such steps as appear to him or her to be necessary or desirable to procure that a limited company to be known as “The Investor Compensation Company Limited” and in this Act referred to as “the Company” and satisfying the conditions laid down by this Act shall be formed and registered by the Bank under the Companies Acts, 1963 to 1990. (2) The following conditions shall be satisfied by the Company— (a) the Company shall be a company limited by guarantee, (b) the name of the Company shall be “The Investor Compensation Company Limited”, and (c) the memorandum of association and articles of association of the Company shall be in a form consistent with this Act. Alteration of memorandum of association and articles of association of Company. 11.—(1) Notwithstanding anything contained in the Companies Acts, 1963 to 1990, no alteration in the memorandum of association or articles of association of the Company which has been made shall be valid unless made with the prior approval of the supervisory authority. (2) The supervisory authority shall have power to require changes to be made to the memorandum of association and the articles of association of the Company. Objects and powers of Company. 12.—(1) The principal objects of the Company shall be stated in its memorandum of association to be— (a) to establish and maintain, having consulted the supervisory authority, arrangements for the making of payments to clients of investment firms in accordance with this Act, (b) to maintain a fund or funds out of which payments shall be made in accordance with this Act and, where appropriate, the Investor Compensation Directive, and to meet such other payments or expenses as may be paid out of the fund or funds in accordance with this Act, (c) to advise the supervisory authority on matters relating to compensation for clients of investment firms, and (d) to process claims for compensation by clients of investment firms as expeditiously as possible and to ensure that compensation is paid without undue delay. (2) Nothing in this section shall prevent or restrict the inclusion among the objects of the Company as stated in its memorandum of association of all such objects and powers as are reasonably necessary or proper for or incidental or ancillary to the attainment of the principal objects referred to in subsection (1) and are not inconsistent with this Act or with any conditions or requirements imposed on the Company by the supervisory authority. (3) The Company shall have power to do anything which appears to it to be requisite, advantageous or incidental to, or which appears to it to facilitate, either directly or indirectly, the performance by it of its functions as specified in this Act or in its memorandum of association. Powers of Company. 13.—(1) The Company shall have power to borrow or raise money, subject to the approval of the supervisory authority. (2) Subject to the approval of the supervisory authority, the Company may place monies paid into the fund or funds maintained by the Company in accordance with section 19 on deposit or may invest such monies in securities in which trustees are authorised by law to invest trust funds. Accounts of Company and audits. 14.—(1) The Company shall keep all proper and usual accounts of all monies paid into the fund or funds maintained by the Company in accordance with section 19 and of all disbursements from such fund or funds including an income and expenditure account and a balance sheet. (2) The supervisory authority shall have power to request an audit or audits of the accounts of the Company from time to time. Performance of functions. 15.—The Company may, if it reasonably considers it is appropriate to do so, having regard to its duties generally under this Act, perform any of its functions through or by any of its officers or employees or any other person duly authorised by the Company. Non-application of section 182 (Removal of directors) of Act of 1963. 16.—Section 182 (Removal of directors) of the Act of 1963 shall not apply to the Company. Members of Company. 17.—The Minister may, with the consent of the Minister for Enterprise, Trade and Employment, prescribe bodies or persons to be members of the Company, or, where a body is an unincorporated body of persons, to nominate an individual or body corporate to be a member of the Company. Directors of Company. 18.—(1) The articles of association of the Company shall provide that the appointment of directors shall be subject to this Act. (2) The number of directors of the Company, including the chairperson and deputy chairperson, shall be such number as shall be prescribed from time to time by the Minister, with the agreement of the Minister for Enterprise, Trade and Employment. (3) The Minister, with the agreement of the Minister for Enterprise, Trade and Employment, may from time to time prescribe bodies which appear to the Minister to represent the financial services industry and each such body may nominate a director to be appointed by the Company. (4) The Minister for Enterprise, Trade and Employment, with the agreement of the Minister, may from time to time prescribe bodies or individuals which appear to the Minister for Enterprise, Trade and Employment to represent the interests of the clients of investment firms and, (a) in the case of bodies so prescribed, each such body may nominate a director to be appointed by the Company, and (b) in the case of individuals so prescribed, the Company shall appoint each such individual to be a director of the Company. (5) The Governor of the Bank shall nominate and appoint the chairperson and deputy chairperson of the Board. (6) The Minister may, with the agreement of the Minister for Enterprise, Trade and Employment, prescribe that a body (or its successors) prescribed in accordance with subsection (3) or (4) may nominate and appoint more than one director where it appears to the Minister to be in the interests of ensuring the equal representation of the financial services industry and of investors, provided that the number of directors to be nominated by bodies representing the financial services industry shall be equal to the number representing the interests of investors. (7) The Governor of the Bank and each body or person referred to in subsection (3) may nominate and appoint one or more persons to be each an alternate director to the director or directors of the Company appointed by him or her. (8) The directors of the Company may act notwithstanding one or more vacancies in their number. Establishment of fund. 19.—(1) The Company shall establish and maintain a fund or funds out of which payments shall be made in accordance with this Act to clients of investment firms and may establish and maintain in respect of specified classes or categories of investment firms particular funds in accordance with this Act. (2) A fund shall not be established by the Company unless it has been approved of by the supervisory authority. (3) The supervisory authority shall not approve of the establishment of a fund unless it is satisfied that the approval is not liable to prejudice the operation of any other funds maintained by the Company or by an investor compensation scheme approved of under section 25 . (4) The supervisory authority may, following consultation with the Company, revoke the approval of the establishment of a fund or funds under subsection (2) where the supervisory authority considers that conditions have materially changed since the granting of the approval such that, if approval for the establishment of the fund were sought at that time, a different decision would be taken in relation to the approval. (5) The supervisory authority may, when approving of a fund under subsection (2) or subsequently, impose conditions or requirements on the Company. (6) Conditions or requirements imposed under subsection (5) may relate inter alia to the fund or funds maintained by the Company or to such other matters as the supervisory authority may consider appropriate. (7) Where funds are credited by the Company to a fund established in respect of a particular class or category of investment firm, those funds shall be used exclusively for making payments to clients in accordance with section 34 in respect of those investment firms and no other. (8) Notwithstanding subsection (7), where the Company, having consulted the supervisory authority, considers it appropriate to do so, the Company may make payments from a fund maintained to make payments in respect of a class or category of investment firm in order to meet its obligations under this Act in respect of other investment firms, subject to such payments being repaid from the assets of the fund or funds maintained by the Company to make payments under section 34 in respect of such other investment firms, together with payment of interest on the amount of such payments at a rate of interest to be determined by the Company. Administrative services for Company. 20.—(1) The Bank may provide administrative services to the Company or may establish a subsidiary in accordance with section 23 of the Central Bank Act, 1997 , which may, among other things, provide those services. (2) The expenses of the Bank or of a subsidiary of the Bank in providing administrative services to the Company, including the expenses of an administrator appointed in accordance with section 33 , shall be met from the resources of the company. Contributions of investment firms. 21.—(1) This section applies to investment firms but does not apply to certified persons in respect of whom an investor compensation scheme has been approved of under section 25 . (2) An authorised investment firm shall pay to the Company such contribution to the fund or funds maintained by the Company as the Company may specify from time to time. (3) (a) The Company may specify different rates or amounts of contributions or different bases for the calculation of contributions for different classes or categories of investment firm. (b) Notwithstanding the generality of paragraph (a), the Company, when specifying rates or amounts of contributions or bases for the calculation of contributions for investment firms which are investment firms for the purposes of the Investment Services Directive, may take account of any money or investment instruments entrusted to such a firm, before or after the commencement of this Act, where such money or investment instruments were entrusted by the client in connection with the provision of investment business services which are investment business for the purposes of the Investor Compensation Directive. (4) Where an investment firm does not comply with its obligations under this section, the investment firm shall, in addition to the payment of a sum to discharge its obligations under subsection (2), be liable to pay interest to the Company on all or any part of a contribution which has not been paid by the date or dates specified by the Company at a rate of 1.25 per cent. per month (or part of a month), on and from the date on which the contribution becomes due or such other amount of interest as may be prescribed by the Minister under this section. (5) Any sums due under this section shall be recoverable as a simple contract debt in any court of competent jurisdiction. (6) (a) The supervisory authority may impose conditions or requirements on authorised investment firms in relation to its functions under this Act. (b) Without prejudice to the generality of paragraph (a), the supervisory authority may impose conditions or requirements in relation to the provision of information which the supervisory authority requires to exercise its functions under this Act. (c) An authorised investment firm may appeal to the Court against the imposition of any condition or requirement imposed under paragraph (a) and, on hearing an appeal under this section, the Court may confirm, vary or rescind any condition or requirement imposed on an authorised investment firm under this section. Maintenance of funds. 22.—(1) Where the Company has specified that amounts standing to the credit of a fund maintained by the Company in accordance with section 19 shall be used to make payments in accordance with this Act solely to clients of a class or classes or category or categories of investment firm specified by the Company, the contributions paid by such investment firms under section 21 (2) shall stand to the credit of that fund. (2) Subject to subsection (3), the Company shall, having consulted the supervisory authority, decide— (a) the contributions to be paid by authorised investment firms to the fund or funds maintained by the Company in accordance with section 19 (1), and (b) the amount of the balance to be maintained by the Company in a fund or funds maintained by the Company under section 19 (1). (3) In making a decision under subsection (2), the Company— (a) shall endeavour to ensure that— (i) the Company is in a position to meet any reasonably foreseeable obligation under this Act, (ii) the Company maintains a sufficient balance in all funds maintained by it which will enable it to meet such obligations, and (b) shall have regard to— (i) the amount standing to the credit of the fund or funds maintained by the Company, (ii) the funding capacity of those authorised investment firms which are obliged to make contributions to those funds in accordance with this section, and (iii) any other matter which the Company, or the Company on the advice of the supervisory authority, considers relevant. Costs of administration. 23.—Notwithstanding section 19 , the costs of administration and management of the Board and of the Company shall be defrayed from the resources of the Company, including contributions paid by investment firms in accordance with section 21 (2) to the fund or funds maintained by the Company. Procedures to investigate complaints. 24.—The Board shall establish and maintain procedures to investigate complaints against it by investment firms and by investors. Approval of investor compensation schemes. 25.—(1) The supervisory authority may, following an application being made to it by an approved professional body and following consultation with the Company, approve of or refuse to approve of a proposal for the establishment of a compensation scheme to provide compensation in accordance with this Act for a specified category or categories of certified person. (2) An approved professional body which has applied under subsection (1) shall be informed— (a) whether or not the approval has been granted, within six months of the date of receipt of the application for approval, or (b) where additional information in relation to the application for approval has been sought by the supervisory authority, within a period of six months after the receipt by the supervisory authority of the additional information, or the period of twelve months after the receipt of the application for approval, whichever is the sooner. (3) The supervisory authority may impose conditions or requirements in relation to a compensation scheme for which approval has been sought under subsection (1) or which has been approved of under that subsection. (4) Conditions or requirements imposed under subsection (3) may relate among other things to— (a) the terms and conditions under which investment firms may participate in an investor compensation scheme, (b) the amount of the contributions to be made by members of the compensation scheme, and (c) procedures for the enforcement of compliance by members of the compensation scheme with the obligations to which they are subject by virtue of being members of the compensation scheme. (5) An application for approval under subsection (1) shall be in such form and contain such particulars as the supervisory authority shall specify from time to time. (6) A proposed investor compensation scheme shall not be approved of by the supervisory authority unless the approved professional body applying to establish the scheme satisfies the supervisory authority— (a) that it will enable compensation to be paid to clients of investment firms in accordance with this Act, (b) that the rules of the proposed scheme contain sufficient provisions so as to enable it to operate in accordance with this Act and in accordance with any conditions or requirements, or both, as the supervisory authority may impose, (c) as to the probity and competence of each of the directors and managers or other responsible persons of the proposed scheme, (d) that the funding arrangements to be put in place and the manner in which the proposed scheme is to be constituted are such that the scheme shall have reasonable provisions in place to provide for compensation for investors, and (e) that the operation of the scheme is not likely to prejudice the operation of any other investor compensation scheme approved by the supervisory authority or of the investor compensation arrangements established by the Company. (7) Whenever the supervisory authority refuses to approve of a compensation scheme in accordance with this section, it shall serve notice on the persons proposing the compensation scheme stating that it refuses to approve of the compensation scheme and setting out the reasons for that refusal in the notice and the persons proposing the compensation scheme may, within 21 days of receipt of such notice, appeal to the Court against the decision. (8) The supervisory authority may, at any time prior to the grant or refusal of approval, request further information from the approved professional body or may instruct an authorised officer to make such inquiries or carry out such investigation as may be necessary for the purpose of evaluating an application under this section. (9) Any proposed amendment of or addition to, as appropriate, the memorandum of association or articles of association or rules of a company operating an investor compensation scheme approved under this section or of the rules of such a compensation scheme shall not be made without the consent in writing of the supervisory authority, and the supervisory authority may approve of, or refuse to approve of, such amendment or addition as it thinks fit. (10) The supervisory authority may require changes to be made to the memorandum of association or articles of association of a company operating an investor compensation scheme under this section or to the rules under which such a compensation scheme operates. Revocation of approval of compensation scheme. 26.—The supervisory authority may, following consultation with the Company, apply to the Court in a summary manner for an order revoking the approval of a compensation scheme under section 25 where— (a) the supervisory authority considers that the compensation scheme has not complied with conditions or requirements imposed by the supervisory authority under section 25 , or (b) conditions have materially changed since the granting of the approval such that, if an application for approval were made at the time of the application to the Court, a different decision would be taken in relation to the application for approval. Failure by investment firms to comply with obligations. 27.—(1) The Company shall notify the supervisory authority where an investment firm which is not a member of a compensation scheme approved of by the supervisory authority under section 25 fails to comply with the obligations imposed on it by and under this Act. (2) An approved professional body which has established a compensation scheme approved of by the supervisory authority under section 25 shall notify the supervisory authority where it has failed to ensure compliance by an investment firm which is a member of the scheme with the obligations to which it is subject by virtue of its membership of that scheme. (3) Where the supervisory authority has been informed in accordance with subsection (1) or (2) that an investment firm has failed to comply with obligations or where an investment firm has failed to comply with conditions or requirements imposed under section 21 , the supervisory authority may give a direction in writing to the investment firm and to the directors and those responsible for the management of that investment firm requiring the investment firm to do either or both of the following: (a) to comply with such obligations, or with those conditions or requirements imposed under section 21 including the payment of any outstanding sums owed by it to the Company or to the compensation scheme approved of under section 25 by a date specified by the supervisory authority, or (b) to suspend for such period (not exceeding twelve months) as shall be specified in the direction any or all of the following: (i) the carrying on of the business of an investment firm; (ii) the making of payments to which paragraph (a) does not relate; (iii) the acquisition or disposal of any assets or liabilities; (iv) entering into transactions of any kind specified by the supervisory authority or entering into them except in specified circumstances or to a specified extent; (v) soliciting business from persons of a kind specified by the supervisory authority or otherwise than from such persons; (vi) carrying on business in a manner specified by the supervisory authority or otherwise than in such a manner. (4) A direction under subsection (3) shall have effect from the date specified by the supervisory authority. (5) The Second Schedule shall apply as respects a direction by the supervisory authority under this section. Application to Court for confirmation of direction. 28.—(1) Where the supervisory authority gives a direction under section 27 , and, following a reasonable period, is satisfied that the said direction is not being complied with, it may apply to the Court in a summary manner for an order confirming the direction. (2) The Court may, on an application being made under subsection (1), hear evidence from creditors and the Court may make such interim or interlocutory order, if any, as it considers fit, in any application under this section. (3) While a direction made under section 27 is in force, no winding-up proceedings in relation to the investment firm or, in the case of an investment firm which is constituted as an unincorporated body of persons, no proceedings for an order of dissolution, or, in the case of an investment firm which is constituted as a sole trader, no bankruptcy proceedings, may be commenced or resolution for winding-up passed in relation to the investment firm, and no receiver shall be appointed over the assets or over any part of the assets of the investment firm and such assets shall not be attached, sequestered or otherwise distrained except with the prior sanction of the Court. (4) The Court may hear proceedings or part of proceedings under this section otherwise than in public. (5) A creditor who is affected by a direction under section 27 (3) may apply to the Court to vary or set aside that direction where it affects the interests of the creditor to a material degree. (6) Subject to subsection (7), where an investment firm fails to comply with a direction given under section 27 , the supervisory authority shall— (a) in the case of an investment firm which is an authorised investment business firm for the purposes of the Act of 1995, apply to the Court for an order revoking the authorisation of the investment firm in accordance with section 16(2) of the Act of 1995 and, for these purposes, the failure of the investment firm to comply with its obligations under this Act shall constitute circumstances in which the supervisory authority may apply to the Court in summary manner for an order revoking the authorisation of the investment business firm in accordance with section 16(2) of the Act of 1995, (b) in the case of an investment firm which is an authorised member firm for the purposes of the Stock Exchange Act, 1995 , apply to the Court for an order revoking the authorisation of the investment firm in accordance with section 24 of that Act and, for these purposes, the failure of the investment firm to comply with its obligations under this Act shall constitute circumstances in which the Bank may apply to the Court in summary manner for an order revoking the authorisation of the authorised member firm in accordance with section 24 (2) of the Stock Exchange Act, 1995 ; (c) in the case of an investment firm which is a credit institution, the Bank shall amend the authorisation of the credit institution under Council Directive No. 77/780/EEC of 12 December 1977 and Council Directive No. 89/646/EEC of 15 December 1989 so that the authorisation of the credit institution no longer permits the provision of investment services listed in the Annex to the Investment Services Directive and shall so inform the credit institution immediately, or (d) in the case of an investment firm which is an insurance intermediary, inform the Company and the investment firm that the investment firm has failed to comply with its obligations under this Act. (7) In the case of an investment firm which is subject to the Investor Compensation Directive, the supervisory authority shall give not less than twelve months notice to the investment firm of its intention to take action against the investment firm in accordance with paragraph (a), (b) or (c) of subsection (6) as appropriate. Product producers. 29.—(1) Notwithstanding section 16 of the Central Bank Act, 1989 , where the supervisory authority has revoked the authorisation of an investment business firm or, in the case of an investment firm which is an insurance intermediary, informed the Company that the investment firm has failed to comply with its obligations under this Act, the supervisory authority shall inform those product producers from whom the investment firm held a valid written appointment at that time that the investment firm has failed to comply with its obligations under this Act. (2) Product producers who have been informed by the supervisory authority in accordance with subsection (1) that an investment firm has failed to comply with its obligations under this Act shall, on being so informed, cancel the written appointments of the investment firm. (3) It shall be an offence for a product producer who has been informed by the supervisory authority in accordance with subsection (1) that an investment firm has failed to comply with its obligations under this Act to accept any orders transmitted by the investment firm on behalf of a client or any moneys belonging to a client after it has been so informed except with the approval in writing of the supervisory authority. (4) A product producer shall not give a written appointment to an investment firm unless, to the best of its knowledge and belief, having caused reasonable inquiry to be made, the investment firm is not an investment business firm the authorisation of which has been revoked under section 16 of the Act of 1995 without being subsequently re-instated. (5) A product producer shall not give a written appointment to an investment firm which is an insurance intermediary, except with the approval in writing of the supervisory authority, unless, to the best of its knowledge and belief, having caused reasonable inquiry to be made, the investment firm is not an investment firm to which section 28 (6)(d) applies, and notwithstanding section 16 of the Central Bank Act, 1989 , the supervisory authority may give such approval in writing. PART III Payment of Compensation to Investors Interpretation for Part III . 30.—(1) In this Part— “compensatable loss” means 90 per cent. of the amount of an investor's net loss or 20,000 ECUs whichever is the lesser; “net loss”, in relation to every client of an investment firm, means the amount of the liability of the investment firm in respect of— (a) money owed to or belonging to the client and held on behalf of the client by the investment firm in connection with the provision of investment business services by the investment firm, and (b) investment instruments, the value of the investment instruments being determined, where possible, by reference to their market value, belonging to the client and held, administered or managed on behalf of the client by the investment firm in connection with the provision of investment business services by the investment firm, on the day of a determination made under section 31 (3) or a ruling, as appropriate, which the investment firm is unable to discharge in accordance with the legal and contractual conditions applicable but shall not include— (i) any amount to which subsection (2) relates, (ii) any monies or investment instruments held or maintained by an investment firm on behalf of an excluded investor, (iii) money or investment instruments arising out of transactions in respect of which an offence has been committed under Part IV or section 57 or 58 of the Criminal Justice Act, 1994 , or in respect of which there has been a criminal conviction for money laundering as defined in Article 1 of Council Directive No. 91/308/EEC of 10 June 1991(1) on prevention of the use of the financial system for the purpose of money laundering. (2) In calculating the amount of a client's net loss— (a) there shall be deducted from the total liability of the investment firm to the client of the investment firm the amount of any liability of any person to that investment firm in respect of which a right of set-off against that net loss existed immediately before the determination by the supervisory authority under section 31 (3) or ruling or in respect of which such a right would have existed had— (i) the money or investment instruments been repayable on demand, and (ii) such liability fallen due, immediately before such determination or ruling; (b) no account shall be taken of any debt of the investment firm unless it has been proved; (c) no account shall be taken of— (i) money owed to or belonging to a client and held on behalf of the client by an investment firm in connection with the provision of investment services by the investment firm to the client and (ii) investment instruments belonging to a client and held, administered or managed on behalf of the client by the investment firm in connection with the provision of investment services to the client, where the money or investment instruments were entrusted by the client to the investment firm at any time when the investment firm was not an authorised investment firm, unless the supervisory authority is satisfied that, at the time the money or investment instruments were so entrusted, the client did not know and could not reasonably be expected to have known that the investment firm was not an authorised investment firm; (d) account shall be taken, in the case of an insurance intermediary, of the amount of an insurance policy premium paid by the client to the insurance intermediary but not remitted to an insurance undertaking or, where a client of an insurance intermediary has suffered financial loss arising from the failure of the insurance intermediary to place on behalf of the client insurance of a class specified in Annex 1 to the European Communities (Life Assurance) Framework Regulations, 1994 or Annex 1 to the European Communities (Non-Life Insurance) Framework Regulations, 1994, the amount of that financial loss. (3) Without prejudice to subsection (2), (a) “net loss” includes money or investment instruments entrusted by a client to an investment firm, being an investment firm for the purposes of the Investor Compensation Directive, before or after the commencement of this Act, where such money or investment instruments were entrusted by the client in connection with the provision of investment business services which are investment business for the purposes of the Investor Compensation Directive; (b) “net loss” includes, in the case of an investment firm which is not an investment firm for the purposes of the Investor Compensation Directive, money or investment instruments entrusted by a client to the investment firm after the commencement of this Act. (4) Proof of debt for the purposes of subsection (2)(b) may be furnished by way of detailed statement of account, affidavit of debt or any prescribed means. Determination that an investment firm cannot meet i …