Designated Investment Funds Act, 1985

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Trustees of designated investment funds required to enter into specified agreement prior to investing moneys of fund in private companies.

6.—(1) A trustee of a designated investment fund or a manager acting on his behalf shall not invest in shares of a private company and a private company shall not accept in payment for such shares moneys from the fund unless such trustee or manager on the one hand and the company on the other hand have previously entered into an agreement described in subsection (2) of this section and complying with the requirements of subsection (3) of this section.

(2) The agreement referred to in subsection (1) of this section is a written agreement whereby the private company which is a party to the agreement agrees as follows:

(a) that when—

(i) shares of the company have been issued, and

(ii) the company is satisfied that a person is a participant in the relevant designated investment fund and that that person is, under the terms and conditions subject to which subscriptions to the fund were accepted, entitled to require the trustee of the fund to have any such shares transferred into the name of the person,

the company will, on an application's being made to it in that behalf either by the trustee of such fund or by, or on behalf of, such person or his personal representative, register such shares in the name of such person, or, where appropriate, his personal representative,

(b) that, for the purpose of enabling such registrations to be effected, the company will take such steps as may be necessary under the Companies Acts, 1963 to 1982, or the Companies (Amendment) Act, 1983 , to make such alterations (if any) in its memorandum and articles of association as are required to enable it to effect such registrations in accordance with law.

(3) An agreement required to be entered into by subsection (1) of this section shall—

(a) specify the number of participants in the relevant designated investment fund,

(b) specify the nature of the alterations (if any) in the memorandum and articles of association of the private company which is a party to the agreement which are required to be made if the agreement is to be carried into effect, and

(c) have attached thereto a copy of the resolution, certified by the proper officer of such company, required by subsection (4) of this section to have been passed prior to the making of the agreement.

(4) (a) A private company may not enter into an agreement required to be entered into by subsection (1) of this section unless previously—

(i) there has been passed, at a general meeting of the company, a special resolution—

(I) referring to and approving of the terms of the agreement, and

(II) making any necessary alterations in the company's memorandum or articles of association or such other provisions, being a matter required to be the subject of or effected by such a resolution, required to enable registrations to be effected in accordance with the agreement, or

(ii) in case such a company is so authorised by its articles of association, a resolution so referring and making and giving such an approval and making such necessary alterations (if any) has been signed by all the members of the company (or in the case of members who are bodies corporate by their duly appointed representatives) for the time being entitled to attend and vote on such a resolution at such a general meeting.

(b) Notwithstanding anything contained in the Companies Acts, 1963 to 1985, or in the articles of association of any company, the following provisions shall apply as regards a resolution passed in compliance with the requirements of paragraph (a) of this subsection:

(i) the resolution shall not be capable of being amended or revoked,

(ii) a provision of the resolution which is an alteration or other provision referred to in clause (II) of subsection (4) (a) (i) or subparagraph (ii) of subsection (4) (a) of this section shall not come into operation until after the agreement approved of by the resolution has been entered into,

(iii) such a provision shall come into operation if, and only if, its coming into operation is required if registrations are to be effected in accordance with the aforesaid agreement, and

(iv) subject to subparagraphs (ii) and (iii) of this paragraph, such a provision shall come into operation on such day as the directors of the company concerned shall fix.

(5) The date of a resolution referred to in subsection (4) (a) (ii) of this section shall for the purposes of this section be the latest date on which it was signed by a member of the private company concerned and where such a resolution purports to have been signed on a particular date, then unless the contrary is shown it shall for the purposes of this section be treated as having been signed on that date by the person by whom it purports to have been signed.

(6) An agreement which is required to be entered into by subsection (1) of this section and in relation to which the other requirements of this section have been complied with shall be binding on the private company which is a party thereto, and without prejudice to any other right thereunder the agreement shall, in so far as it provides for the registration by such company of its shares in the name of a participant in the relevant designated investment fund, be enforceable against such company by that participant.

(7) Where it appears to the Minister to be necessary or expedient for the purpose of enabling this section to have full effect, the Minister may, in relation to any provision contained in the Companies Acts, 1963 to 1985, for that purpose by regulation provide for—

(a) its application, with such modification or adaptation as shall be specified in the regulation, to private companies of a class or description so specified, or

(b) its non-application to private companies of such a class or description, or

(c) its amendment otherwise.

(8) In this section “private company” means a private company as defined for the purposes of the Companies Act, 1963 , in section 33 of that Act.