Recently the Irish High Court has delivered two judgments which should be of interest to all company directors. (Each case concerned Phoenix Shannon plc. ) The first case concerned a claim for reinstatement by the operations director and a Vice President of a Company, who had been dismissed. The second concerned a claim that by reason of the failure to convene an annual general meeting in accordance with the time scales prescribed by the Companies Acts that directors who had been co-opted onto the board should be deemed to have vacated office on the date that the AGM should have been held. This ruling also has implications for directors who are required to resign by rotation.
John Coman and Sheena Doggett, Partners in A & L Goodbody's Company and Commercial Department, take a look at these judgments.
Brian Boland -v- Phoenix Shannon plc
The Facts
Mr. Brian Boland had been employed with Phoenix Shannon plc. as Operations Director and Vice President. In 1996 the Company was in financial difficulty and on the 6th of November 1996 Mr. Boland and the managing director were suspended on full pay.
Mr. Boland's service contract was in reasonably standard form. It had a termination clause providing for immediate termination of employment where the employee had committed acts of gross misconduct, or was guilty of any conduct, which in the reasonable opinion of the board, brought the Company into disrepute, or was convicted of any criminal offence or repeated acts of dishonesty or became bankrupt. In order to investigate any complaint of misconduct the Company was entitled to suspend the employee on full pay.
After the meeting of the 6th November, 1996 the Company commissioned a firm of chartered accountants to review certain transactions and interview particular members of management. However, it was agreed that they would not at that time contact or interview Mr. Brian Boland. At the end of November 1996, the Company, without notice, stopped Mr. Boland's salary.
The Claim
Mr. Boland issued proceedings seeking a declaration that the suspension was unlawful and constituted a repudiatory breach of his contract of service and was in breach of the principles of natural justice.
The defendants' solicitors then wrote to the plaintiff on two occasions requesting Mr Boland to attend for interview before the board. Although Mr. Boland was invited to have a legal adviser present at such meeting at no stage were any charges or allegations put to Mr. Boland. Acting on legal advice, Mr. Boland did not attend the meeting and ultimately was dismissed on 15th January 1997.
Judgment
In the High Court Barron J. said the court had to determine whether there was a fair issue to be tried as to the status of Mr. Boland within the company and where the balance of the convenience lay in relation to the granting or withholding of interlocutory relief. In this context there were three issues to determine: what were the grounds for dismissal; whether the executive committee was entitled to dismiss assuming grounds existed; and whether the procedures concerning the dismissal were fair.
Barron J. said there was a fair issue to be tried in relation to each of these issues and he felt that the balance of convenience lay in favour of granting the relief sought by Mr. Boland.
He said although a plaintiff has to come to court with clean hands this did not mean that the defendant does not also have to have clean hands. He accepted that the allegations against the Mr. Boland were serious, and if substantiated justified his dismissal summarily. Nevertheless it seemed that the balance of hardship lay in favour of Mr. Boland. The judge was particularly troubled by the fact that accountants who were retained to investigate allegations of fraud and other irregularities against a senior company officer would conduct such an investigation on the basis that the officer was not to be consulted.
He said damages would not be adequate. The plaintiff should be reinstated and receive a salary and other benefits to which he was entitled under his contract of employment.
Comment
Regardless of the terms of the particular service or employment contract, the Irish courts will insist that companies contemplating dismissal must observe principles of natural justice and fairness of procedures. In particular the reasons for the decisions to dismiss must be disclosed so that the affected party may have an opportunity to not only present his case but to do so in an informed and meaningful manner.
Phoenix Shannon plc and Others -v- Harold Purkey, Keith Hartley, Philip Platek, Nico Pronk, Benjamin Swirsky and George Wolfe, High Court 7th
May 1997.
The Facts
During 1996 the six defendants had been co-opted onto the board of directors at the initiative of the company's merchant bankers. At the time of the second co-option which was in October 1996 all but three of the existing directors resigned, except for Mr. Ola Johansson, Mr Brian Boland and Mr Keith Westrich. These three were the plaintiffs in the proceedings, the company having been joined as first plaintiff.
The last AGM of the company had been held on the 30th November, 1995. The Companies Act, 1963 requires a company to hold its AGM at intervals of no more than 15 months.
The Claim
The plaintiffs argued that the AGM for 1996 should, at the latest, have been held on the 28th February, 1997 and that the failure to hold the AGM on this date meant that the six defendants who had been co-opted onto the board had automatically vacated office on that day.
The basis for this argument was quite technical. Section 131 of the Companies Act 1963 provides that every company shall in each year hold an AGM and not more than 15 months shall elapse between the date of an AGM and the next. This is repeated in Article 52. Article 92 provides the directors may from time to time appoint any person to be a director either to fill a casual vacancy or as an additional director provided that the total number of directors shall not exceed the maximum number fixed by the articles. It further states, " a director so appointed shall hold office only until the commencement of the AGM following next after his appointment when he shall retire......"
The plaintiffs argued that the clear meaning of article 92 is that the directors co-opted under this article (as all the defendants were) are required to retire pursuant to the provisions, that this is mandatory insofar as it provides that a director so appointed shall hold office only until the commencement of the AGM following next after his appointment and by providing that such directors "shall retire."
Judgment
Costello J. rejected the plaintiffs' argument. He accepted that it is clear that the company is required to hold an AGM every year and that not more than 15 months may elapse between the date of one AGM and that of the next. He agreed that the AGM next following the date of co-option referred to in article 92 must refer to the AGM which should be held under article 52 and Section 131.
However, the article is silent as to what is to happen if the directors fail to convene the meeting and in effect the plaintiffs were asking the court to imply a provision into article 92 that should the directors fail to convene an AGM as required the co-opted directors will automatically vacate office on the last day on which the meeting should lawfully have been held.
Costello J. said there were two reasons why this should not be done. First, Section 131(3) makes express provision as to what is to happen should the directors default in convening an AGM. This allows the Minister on the application of any member of the company to call an AGM. Section 131(4) provides that a general meeting so convened shall be deemed to be an AGM of the company but where a meeting so held is not held in the year in which the default occurred, then it shall not be so treated unless the company so resolves.
He said these provisions not only provide a practical remedy should the directors fail to convene an AGM but also a means by which the default can be legally rectified.
Secondly, the articles themselves suggest that no such provision should be implied. Article 93 sets out the circumstances in which the office of a director shall be vacated - for example, if he becomes insolvent or of unsound mind or is subject to a restriction order. The Judge accepted the arguments of the defendants that had it been intended that the failure to hold an AGM as contemplated by Article 92 would result in the automatic vacation of office by co-opted directors that such a provision would have been included in article 93. He said the same arguments apply to the provisions of article 97 relating to the resignation of directors by rotation. At each AGM one third are required to retire from office. He did not think that the court should imply a provision in that article to the effect that should the company fail to hold an AGM the directors whose turn it is to retire shall be deemed automatically to have vacated office.
Comment
In practice many private companies amend their standard articles of association to provide that directors will not retire by rotation or require to be re-elected in general meeting following appointment by directors. For companies who do not make such amendments this ruling means that where a company fails to hold an AGM then directors co-opted on to the board of directors who are required to retire by rotation will not be deemed to have vacated office on the date that the AGM should have been held. In some cases this might mean that persons who had assumed that they had long since ceased being directors were in fact directors all along and thus subject to all the responsibilities and liabilities of that office.
New Safety Obligations for Producers of Goods
Four years ago the EU Council of Ministers adopted the Product Safety Directive. This was intended to fill any gaps in the safety laws of Member States by imposing a general safety obligation on all producers and distributors of goods not already regulated by specific safety laws.
Although it should have been implemented in Member States by 1994, the legislation was not introduced in Ireland until the 2nd June, 1997 when the (European Communities (General Product) Safety Regulations, 1997) (the "Regulations") were published. However, the Regulations were in fact stated to operate from the 25th April 1997.
Carol Plunkett, a Senior Associate in our Litigation Department examines the new provisions.
To Whom do the Regulations Apply?
The Regulations have a broad scope. They apply to "producers and distributors of products intended for or likely to be used by consumers". "Product" is defined as any product intended for consumers or likely to be used by consumers, supplied for consideration or not, in the course of a commercial activity and whether new, used or reconditioned. However, the Preamble to the Product Safety Directive provides that production equipment, capital goods and other products used exclusively in the context of a trade or business are excluded. "Consumer" is not defined in either the Regulations or the Directive.
Who are Producers and Distributors?
"Producer" is widely defined and includes:
The Regulations set out a number of factors to be taken into account in determining the safety of a product. These factors suggest that the activities of a retailer or supplier could affect product safety requirements and so they may also be "producers". "Distributor" means any professional in the supply chain whose activity does not affect the safety properties of a product.
Exceptions
Second hand products supplied as antiques or products to be repaired or reconditioned prior to being used are excluded. However, the Regulations provide that the supplier must clearly inform the person to whom he supplies the product that it is supplied as an antique or requires repair or reconditioning prior to being used. Products which are already subject to specific safety rules are also excluded.
When is a Product Safe?
The Regulations set out a number of factors which should be taken into account in determining the safety of a product. These include:
A product shall be deemed to be safe if it conforms with any specific rules of the law of the State drawn up in accordance with the EU Treaty.
Duties on Producers
Producers should disclose any information concerning hidden risks. Consumers must be placed in a position to enable them to assess the risks inherent in a product throughout the normal or reasonably foreseeable period of its use, where such risks are not immediately obvious without adequate warnings and to take precautions against the risks. In appropriate cases, producers should mark products or product batches in such a way that they can be identified and also carry out sample testings of products.
Duties of Distributors
Distributors are also subject to an obligation not to supply an unsafe product. In addition, they are subject to ongoing obligations to monitor products with regard to safety and to inform producers and consumers about any defects or risks.
Enforcement: Director of Consumer Affairs
The Director of Consumer Affairs has responsibility for overseeing compliance with the regulations and has considerable statutory enforcement powers. In particular he may issue directions to producers or distributors. These may take many forms. For example, they may prohibit or impose restrictions on a product or product batch being placed in the market or order the withdrawal or destruction of a production. Such directions may be made for a definite or indefinite period.
The Director may require producers and distributors to affix to a product or any packaging such warnings as he may think appropriate, or to publish warnings about any risks in a product. There are also safeguards to ensure procedural fairness. The Director's requirements must be in writing and they must state the reasons on which they are based. Also where feasible the Director shall give any person to whom he is considering making a direction, an opportunity to submit his views on the proposed measure before its adoption. There is also a provision for an appeals procedure against a direction, to the Circuit Court and to the High Court, on appeal from the Circuit Court, on a point of law.
To assist with enforcement, the Director may appoint authorised officers to ensure compliance with the Regulations. These officers are given considerable powers including powers to enter and inspect premises, to seize products, inspect and take copies of extracts from any records and, cause any products or articles or substances used in the manufacture of a product to be dismantled or to be subjected to any process or test.
Where a producer or distributor fails to comply with a direction the Director may initiate proceedings in the High Court for an order requiring compliance with the terms of his direction.
Comment
These new Regulations impose yet more obligations on producers and in particular on distributors who have until now not been burdened with what is in effect an obligation to ensure that products are safe.
It is now all the more important to ensure that clear instructions and directions are given to consumers in relation to the use of any product with warnings of any dangers which may be involved.
Producers and now distributors as well must be careful to ensure that products conform with EU Safety Standards.
The penalties for not doing so are substantial - a fine of up to œ1,500.00 even when the matter is dealt with in the District Court with a daily fine of o250.00 on top of this. Producers and distributors alike would be wise to carry out a review of all of their products, labelling, instruction booklets and packaging to ensure that they are not exposed to prosecution by the Director of Consumer Affairs and his officers.
Environmental Update
Alison Fanagan, a Senior Associate in the Litigation Department and a member of the firm's Environmental Unit, gives a brief overview of recent developments in environmental law.
IPC Licensing Extended Further
IPC licences are environmental operating licences, issued by the Environmental Protection Agency (EPA), and required only for specified activities. Deadline dates by which particular activities must apply for their IPC licence are being set from time to time so as to phase them in gradually.
Recently, the range of activities needing to apply for an IPC licence has been extended. Activities such as poultry and pig-rearing, dairy product manufacture, handling or storage of crude petroleum and commercial brewing and distilling, amongst others, have now been given dates by which they must apply for their IPC licence from the EPA. Those dates range from 14th October 1997 to 9th June 1998.
Activities needing an IPC licence should allow plenty of time to get their application in. If you miss the deadline the EPA can require you to stop operating.
A full list of the activities covered by IPC is contained in the First Schedule of the Environmental Protection Agency Act 1992. Please contact a member of our Environmental Law Unit if you are concerned that your company's activity may require an IPC Licence.
Packaging and Packaging Waste Regulations
The EU Packaging and Packaging Waste directive should have been implemented in Ireland in 1995. Regulations to implement it, and to authorise the Industry/IBEC developed accredited scheme for compliance, "REPAK", were vetted by the EU with the result that the Regulations came into operation on 1st July, 1997. The obligations on manufacturers, producers and retailers under the Packaging and Packaging Waste Regulations are extremely onerous and need to be carefully examined by any producer of packaging or packaging waste eg. supermarkets, factories etc.
Litter Pollution Act 1997 and Regulations
All of the provisions of this Act are effective from 1st July 1997. The Act makes it an offence, punishable by a fine of up to IRœ1,500, for any person (including companies) to litter a public place. This includes dog litter, and "on the spot" fines of œ25 can be imposed by the gardai dog wardens, or litter wardens after 1st July 1997.
The Act also provides for the imposition of litter control conditions on the occupiers of land and premises, operators of mobile food vans, and the organisers of major events, as well as on the distributors of flyers. Election material is, however, specifically excluded from the legislation.
Local authorities are required to produce litter management and waste management plans under the Waste Management Act 1996. Both of these Acts are part of a focused drive to reduce waste. It will be interesting to see how the legislation is enforced.
Our Environmental Law unit produces specialist bulletins on a regular basis on these and other topics. If you would like to be put on our mailing list please let us know. If you would like more information please contact Peter Polden, Deborah Spence, Alison Fanagan, or the solicitor who usually deals with your affairs.
The European Association of Securities Dealers Automated Quotations, known as EASDAQ, was established in September, 1996.
Mark Ward, an Associate in the Commercial Department and a member of the firm's Securities Unit, looks at how EASDAQ operates.
EASDAQ is based in Brussels and is a screen-based market which uses electronic trading systems similar to those used by NASDAQ in the United States. NASDAQ is a U.S. Stock Exchange which is an alternative source of equity for small to medium sized high-growth companies. In recent years, there have been a number of stock flotations by Irish companies on NASDAQ. The electronic trading system allows market participants to deal with each other electronically rather than face to face.
There are currently ten companies listed on EASDAQ. EASDAQ predicts a further forty listings from many diverse sectors by the end of this year. As EASDAQ is still in its infancy, there are no Irish companies currently listed on it.
Opportunities for Irish companies
It is significant that NASDAQ is a shareholder of EASDAQ and EASDAQ promotes itself as an alternative, or possibly complementary, fund-raising route for NASDAQ - minded companies.
A dual listing on both NASDAQ and EASDAQ could double the hours of daily trading in a company's stock, as investors across Europe could trade whilst those in the US slept and visa versa.
Issues to be addressed upon listing
The EASDAQ rules are based upon the NASDAQ rules and the rules of the US Securities and Exchange Commission. A flotation would require the advice of lawyers, accountants and sponsoring brokers and would require consideration of many issues including the following:
Comment
Given the involvement of NASDAQ as a shareholder and the potential for dual listings on EASDAQ and NASDAQ, EASDAQ has good prospects, and it is probably only a matter of time before an Irish company seeks an EASDAQ listing.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
John Coman and Sheena Doggett, Partners in A & L Goodbody's Company and Commercial Department, take a look at these judgments.
Brian Boland -v- Phoenix Shannon plc
The Facts
Mr. Brian Boland had been employed with Phoenix Shannon plc. as Operations Director and Vice President. In 1996 the Company was in financial difficulty and on the 6th of November 1996 Mr. Boland and the managing director were suspended on full pay.
Mr. Boland's service contract was in reasonably standard form. It had a termination clause providing for immediate termination of employment where the employee had committed acts of gross misconduct, or was guilty of any conduct, which in the reasonable opinion of the board, brought the Company into disrepute, or was convicted of any criminal offence or repeated acts of dishonesty or became bankrupt. In order to investigate any complaint of misconduct the Company was entitled to suspend the employee on full pay.
After the meeting of the 6th November, 1996 the Company commissioned a firm of chartered accountants to review certain transactions and interview particular members of management. However, it was agreed that they would not at that time contact or interview Mr. Brian Boland. At the end of November 1996, the Company, without notice, stopped Mr. Boland's salary.
The Claim
Mr. Boland issued proceedings seeking a declaration that the suspension was unlawful and constituted a repudiatory breach of his contract of service and was in breach of the principles of natural justice.
The defendants' solicitors then wrote to the plaintiff on two occasions requesting Mr Boland to attend for interview before the board. Although Mr. Boland was invited to have a legal adviser present at such meeting at no stage were any charges or allegations put to Mr. Boland. Acting on legal advice, Mr. Boland did not attend the meeting and ultimately was dismissed on 15th January 1997.
Judgment
In the High Court Barron J. said the court had to determine whether there was a fair issue to be tried as to the status of Mr. Boland within the company and where the balance of the convenience lay in relation to the granting or withholding of interlocutory relief. In this context there were three issues to determine: what were the grounds for dismissal; whether the executive committee was entitled to dismiss assuming grounds existed; and whether the procedures concerning the dismissal were fair.
Barron J. said there was a fair issue to be tried in relation to each of these issues and he felt that the balance of convenience lay in favour of granting the relief sought by Mr. Boland.
He said although a plaintiff has to come to court with clean hands this did not mean that the defendant does not also have to have clean hands. He accepted that the allegations against the Mr. Boland were serious, and if substantiated justified his dismissal summarily. Nevertheless it seemed that the balance of hardship lay in favour of Mr. Boland. The judge was particularly troubled by the fact that accountants who were retained to investigate allegations of fraud and other irregularities against a senior company officer would conduct such an investigation on the basis that the officer was not to be consulted.
He said damages would not be adequate. The plaintiff should be reinstated and receive a salary and other benefits to which he was entitled under his contract of employment.
Comment
Regardless of the terms of the particular service or employment contract, the Irish courts will insist that companies contemplating dismissal must observe principles of natural justice and fairness of procedures. In particular the reasons for the decisions to dismiss must be disclosed so that the affected party may have an opportunity to not only present his case but to do so in an informed and meaningful manner.
Phoenix Shannon plc and Others -v- Harold Purkey, Keith Hartley, Philip Platek, Nico Pronk, Benjamin Swirsky and George Wolfe, High Court 7th
May 1997.
The Facts
During 1996 the six defendants had been co-opted onto the board of directors at the initiative of the company's merchant bankers. At the time of the second co-option which was in October 1996 all but three of the existing directors resigned, except for Mr. Ola Johansson, Mr Brian Boland and Mr Keith Westrich. These three were the plaintiffs in the proceedings, the company having been joined as first plaintiff.
The last AGM of the company had been held on the 30th November, 1995. The Companies Act, 1963 requires a company to hold its AGM at intervals of no more than 15 months.
The Claim
The plaintiffs argued that the AGM for 1996 should, at the latest, have been held on the 28th February, 1997 and that the failure to hold the AGM on this date meant that the six defendants who had been co-opted onto the board had automatically vacated office on that day.
The basis for this argument was quite technical. Section 131 of the Companies Act 1963 provides that every company shall in each year hold an AGM and not more than 15 months shall elapse between the date of an AGM and the next. This is repeated in Article 52. Article 92 provides the directors may from time to time appoint any person to be a director either to fill a casual vacancy or as an additional director provided that the total number of directors shall not exceed the maximum number fixed by the articles. It further states, " a director so appointed shall hold office only until the commencement of the AGM following next after his appointment when he shall retire......"
The plaintiffs argued that the clear meaning of article 92 is that the directors co-opted under this article (as all the defendants were) are required to retire pursuant to the provisions, that this is mandatory insofar as it provides that a director so appointed shall hold office only until the commencement of the AGM following next after his appointment and by providing that such directors "shall retire."
Judgment
Costello J. rejected the plaintiffs' argument. He accepted that it is clear that the company is required to hold an AGM every year and that not more than 15 months may elapse between the date of one AGM and that of the next. He agreed that the AGM next following the date of co-option referred to in article 92 must refer to the AGM which should be held under article 52 and Section 131.
However, the article is silent as to what is to happen if the directors fail to convene the meeting and in effect the plaintiffs were asking the court to imply a provision into article 92 that should the directors fail to convene an AGM as required the co-opted directors will automatically vacate office on the last day on which the meeting should lawfully have been held.
Costello J. said there were two reasons why this should not be done. First, Section 131(3) makes express provision as to what is to happen should the directors default in convening an AGM. This allows the Minister on the application of any member of the company to call an AGM. Section 131(4) provides that a general meeting so convened shall be deemed to be an AGM of the company but where a meeting so held is not held in the year in which the default occurred, then it shall not be so treated unless the company so resolves.
He said these provisions not only provide a practical remedy should the directors fail to convene an AGM but also a means by which the default can be legally rectified.
Secondly, the articles themselves suggest that no such provision should be implied. Article 93 sets out the circumstances in which the office of a director shall be vacated - for example, if he becomes insolvent or of unsound mind or is subject to a restriction order. The Judge accepted the arguments of the defendants that had it been intended that the failure to hold an AGM as contemplated by Article 92 would result in the automatic vacation of office by co-opted directors that such a provision would have been included in article 93. He said the same arguments apply to the provisions of article 97 relating to the resignation of directors by rotation. At each AGM one third are required to retire from office. He did not think that the court should imply a provision in that article to the effect that should the company fail to hold an AGM the directors whose turn it is to retire shall be deemed automatically to have vacated office.
Comment
In practice many private companies amend their standard articles of association to provide that directors will not retire by rotation or require to be re-elected in general meeting following appointment by directors. For companies who do not make such amendments this ruling means that where a company fails to hold an AGM then directors co-opted on to the board of directors who are required to retire by rotation will not be deemed to have vacated office on the date that the AGM should have been held. In some cases this might mean that persons who had assumed that they had long since ceased being directors were in fact directors all along and thus subject to all the responsibilities and liabilities of that office.
New Safety Obligations for Producers of Goods
Four years ago the EU Council of Ministers adopted the Product Safety Directive. This was intended to fill any gaps in the safety laws of Member States by imposing a general safety obligation on all producers and distributors of goods not already regulated by specific safety laws.
Although it should have been implemented in Member States by 1994, the legislation was not introduced in Ireland until the 2nd June, 1997 when the (European Communities (General Product) Safety Regulations, 1997) (the "Regulations") were published. However, the Regulations were in fact stated to operate from the 25th April 1997.
Carol Plunkett, a Senior Associate in our Litigation Department examines the new provisions.
To Whom do the Regulations Apply?
The Regulations have a broad scope. They apply to "producers and distributors of products intended for or likely to be used by consumers". "Product" is defined as any product intended for consumers or likely to be used by consumers, supplied for consideration or not, in the course of a commercial activity and whether new, used or reconditioned. However, the Preamble to the Product Safety Directive provides that production equipment, capital goods and other products used exclusively in the context of a trade or business are excluded. "Consumer" is not defined in either the Regulations or the Directive.
Who are Producers and Distributors?
"Producer" is widely defined and includes:
- the manufacturer of the product when the manufacturer is established in the community;
- any other person presenting themself as the manufacturer by affixing to the product his name, trademark or other distinctive mark.
- a person who reconditions the product;
- the manufacturer's representative if the manufacturer is not established in the community;
- the importer of the product if there is no representative established in the Community;
- any other professionals in the supply chain insofar as their activities may affect the safety properties of a product placed on the market.
The Regulations set out a number of factors to be taken into account in determining the safety of a product. These factors suggest that the activities of a retailer or supplier could affect product safety requirements and so they may also be "producers". "Distributor" means any professional in the supply chain whose activity does not affect the safety properties of a product.
Exceptions
Second hand products supplied as antiques or products to be repaired or reconditioned prior to being used are excluded. However, the Regulations provide that the supplier must clearly inform the person to whom he supplies the product that it is supplied as an antique or requires repair or reconditioning prior to being used. Products which are already subject to specific safety rules are also excluded.
When is a Product Safe?
The Regulations set out a number of factors which should be taken into account in determining the safety of a product. These include:
- the characteristics of the product, including its composition, packaging and instructions for assembly;
- the effect on other products, where it reasonably foreseeable that it will be used with other products;
- the presentation and labelling of the products
- the categories of consumers at serious risk when using the product, in particular, children.
A product shall be deemed to be safe if it conforms with any specific rules of the law of the State drawn up in accordance with the EU Treaty.
Duties on Producers
Producers should disclose any information concerning hidden risks. Consumers must be placed in a position to enable them to assess the risks inherent in a product throughout the normal or reasonably foreseeable period of its use, where such risks are not immediately obvious without adequate warnings and to take precautions against the risks. In appropriate cases, producers should mark products or product batches in such a way that they can be identified and also carry out sample testings of products.
Duties of Distributors
Distributors are also subject to an obligation not to supply an unsafe product. In addition, they are subject to ongoing obligations to monitor products with regard to safety and to inform producers and consumers about any defects or risks.
Enforcement: Director of Consumer Affairs
The Director of Consumer Affairs has responsibility for overseeing compliance with the regulations and has considerable statutory enforcement powers. In particular he may issue directions to producers or distributors. These may take many forms. For example, they may prohibit or impose restrictions on a product or product batch being placed in the market or order the withdrawal or destruction of a production. Such directions may be made for a definite or indefinite period.
The Director may require producers and distributors to affix to a product or any packaging such warnings as he may think appropriate, or to publish warnings about any risks in a product. There are also safeguards to ensure procedural fairness. The Director's requirements must be in writing and they must state the reasons on which they are based. Also where feasible the Director shall give any person to whom he is considering making a direction, an opportunity to submit his views on the proposed measure before its adoption. There is also a provision for an appeals procedure against a direction, to the Circuit Court and to the High Court, on appeal from the Circuit Court, on a point of law.
To assist with enforcement, the Director may appoint authorised officers to ensure compliance with the Regulations. These officers are given considerable powers including powers to enter and inspect premises, to seize products, inspect and take copies of extracts from any records and, cause any products or articles or substances used in the manufacture of a product to be dismantled or to be subjected to any process or test.
Where a producer or distributor fails to comply with a direction the Director may initiate proceedings in the High Court for an order requiring compliance with the terms of his direction.
Comment
These new Regulations impose yet more obligations on producers and in particular on distributors who have until now not been burdened with what is in effect an obligation to ensure that products are safe.
It is now all the more important to ensure that clear instructions and directions are given to consumers in relation to the use of any product with warnings of any dangers which may be involved.
Producers and now distributors as well must be careful to ensure that products conform with EU Safety Standards.
The penalties for not doing so are substantial - a fine of up to œ1,500.00 even when the matter is dealt with in the District Court with a daily fine of o250.00 on top of this. Producers and distributors alike would be wise to carry out a review of all of their products, labelling, instruction booklets and packaging to ensure that they are not exposed to prosecution by the Director of Consumer Affairs and his officers.
Environmental Update
Alison Fanagan, a Senior Associate in the Litigation Department and a member of the firm's Environmental Unit, gives a brief overview of recent developments in environmental law.
IPC Licensing Extended Further
IPC licences are environmental operating licences, issued by the Environmental Protection Agency (EPA), and required only for specified activities. Deadline dates by which particular activities must apply for their IPC licence are being set from time to time so as to phase them in gradually.
Recently, the range of activities needing to apply for an IPC licence has been extended. Activities such as poultry and pig-rearing, dairy product manufacture, handling or storage of crude petroleum and commercial brewing and distilling, amongst others, have now been given dates by which they must apply for their IPC licence from the EPA. Those dates range from 14th October 1997 to 9th June 1998.
Activities needing an IPC licence should allow plenty of time to get their application in. If you miss the deadline the EPA can require you to stop operating.
A full list of the activities covered by IPC is contained in the First Schedule of the Environmental Protection Agency Act 1992. Please contact a member of our Environmental Law Unit if you are concerned that your company's activity may require an IPC Licence.
Packaging and Packaging Waste Regulations
The EU Packaging and Packaging Waste directive should have been implemented in Ireland in 1995. Regulations to implement it, and to authorise the Industry/IBEC developed accredited scheme for compliance, "REPAK", were vetted by the EU with the result that the Regulations came into operation on 1st July, 1997. The obligations on manufacturers, producers and retailers under the Packaging and Packaging Waste Regulations are extremely onerous and need to be carefully examined by any producer of packaging or packaging waste eg. supermarkets, factories etc.
Litter Pollution Act 1997 and Regulations
All of the provisions of this Act are effective from 1st July 1997. The Act makes it an offence, punishable by a fine of up to IRœ1,500, for any person (including companies) to litter a public place. This includes dog litter, and "on the spot" fines of œ25 can be imposed by the gardai dog wardens, or litter wardens after 1st July 1997.
The Act also provides for the imposition of litter control conditions on the occupiers of land and premises, operators of mobile food vans, and the organisers of major events, as well as on the distributors of flyers. Election material is, however, specifically excluded from the legislation.
Local authorities are required to produce litter management and waste management plans under the Waste Management Act 1996. Both of these Acts are part of a focused drive to reduce waste. It will be interesting to see how the legislation is enforced.
Our Environmental Law unit produces specialist bulletins on a regular basis on these and other topics. If you would like to be put on our mailing list please let us know. If you would like more information please contact Peter Polden, Deborah Spence, Alison Fanagan, or the solicitor who usually deals with your affairs.
The European Association of Securities Dealers Automated Quotations, known as EASDAQ, was established in September, 1996.
Mark Ward, an Associate in the Commercial Department and a member of the firm's Securities Unit, looks at how EASDAQ operates.
EASDAQ is based in Brussels and is a screen-based market which uses electronic trading systems similar to those used by NASDAQ in the United States. NASDAQ is a U.S. Stock Exchange which is an alternative source of equity for small to medium sized high-growth companies. In recent years, there have been a number of stock flotations by Irish companies on NASDAQ. The electronic trading system allows market participants to deal with each other electronically rather than face to face.
There are currently ten companies listed on EASDAQ. EASDAQ predicts a further forty listings from many diverse sectors by the end of this year. As EASDAQ is still in its infancy, there are no Irish companies currently listed on it.
Opportunities for Irish companies
It is significant that NASDAQ is a shareholder of EASDAQ and EASDAQ promotes itself as an alternative, or possibly complementary, fund-raising route for NASDAQ - minded companies.
A dual listing on both NASDAQ and EASDAQ could double the hours of daily trading in a company's stock, as investors across Europe could trade whilst those in the US slept and visa versa.
Issues to be addressed upon listing
The EASDAQ rules are based upon the NASDAQ rules and the rules of the US Securities and Exchange Commission. A flotation would require the advice of lawyers, accountants and sponsoring brokers and would require consideration of many issues including the following:
- The company must be a public limited company (or must be converted to a public limited company).
- A company seeking a listing must prepare and file a prospectus with the Registrar of Companies in Ireland and with EASDAQ.
- The minimum total assets of a company seeking a listing on EASDAQ must be ECU2.5 million (approximately IRœ1.9 million) and the minimum capital and reserves must be ECU2 million (approximately IRœ1.5 million).
- The securities floated must be freely transferable and a minimum of 20% of the securities must be in the public's hands.
- Following a listing, EASDAQ requires a minimum market capitalisation of approximately US$30,000,000 but this minimum amount is not set out in EASDAQ's rules and is open to discussion with EASDAQ.
- As is the case with NASDAQ, there are ongoing compliance obligations for companies and their directors. For example, there are continuing obligations relating to disclosure of information and publishing quarterly reports and financial information.
Comment
Given the involvement of NASDAQ as a shareholder and the potential for dual listings on EASDAQ and NASDAQ, EASDAQ has good prospects, and it is probably only a matter of time before an Irish company seeks an EASDAQ listing.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
