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Section 26 is concerned exclusively with certain
loopholes which were discovered in the Finance
(No. 2) Act, 1947, and which resulted in evasion
of the 25% duty.
The transactions which are
now declared to attract the 25% duty are, very
briefly, as follows :—
(1) A conveyance to an Irish body corporate
(i.e. a company formed after 15 th October,
1947, at least 51% o f the share capital being
in Irish hands) where the purchase money
was provided by an unqualified person
(i.e. a person other than an Irish citizen
or other exempted person) holding shares
or a right o f control in the company, where
a mortgage, charge or debenture is after
wards given to the unqualified person by
the company for the amount of the purchase
money so provided. ("Section 26 (2)
(a)
and
(*))■
(2) A transaction similar to that mentioned in
(1) where the security for the money advanced
is an equitable deposit o f the title deeds.
(Section 26 (2) (r) and (
d
)).
(3) A conveyance to an Irish body corporate
where an unqualified person is entitled to
a beneficial interest in the whole or part
o f the property, unless the principal or only
instrument under which such a person becomes
so entitled is an instrument chargeable with
the full duty. This covers the case where
property is purchased by an Irish body
corporate with money provided by an un
qualified person and the property is sub
sequently conveyed by the company to such
person. It is intended that duty at the rate
o f 25% should be payable even if the
unqualified person becomes an Irish citizen
before the date o f the conveyance to him
by the company. (Section 26 (3)).
(4) A transfer to an Irish body corporate, if,
at any date after 3rd May, 1949, the company
ceases to be an Irish body corporate, because
of the shares held by Irish citizens ceasing
to exceed 51 % o f the share capital in nominal
value. (Section 26 (4)).
The effect o f section 26 is, that if a transaction
falls within one o f the above-mentioned categories
(1), (2), or (3), the mortgage, charge, or equitable
deposit in case (1) or (2), or the conveyance
from the company to the beneficial owner in case
(3) will attract the 25% duty unless such mortgage,
charge or equitable deposit in cases (1) or (2),
or the conveyance in case (3) was completed before
4th May, 1949. In the latter event, the section
does not apply.
Case (4) above means that where property was
purchased on any date after 1st December, 1947,
by a company formed after 15 th October, 1947,
5 1% o f whose capital was in Irish hands, and the
share capital is altered on any date after 4th May,
1949, so that less than 51 per cent, thereof continues
to be so held, the conveyance to the company
must be re-stamped with the full 25 per cent,
duty
even though the deed may have already been adjudged
duly stamped.
This provision, that a deed which
has been duly stamped in accordance with the law
and the facts existing at the date of its execution
may attract additional duty on the happening of
an uncertain future event, is both novel and
undesirable, and is a departure from the principles
of the Stamp Act, 1891.
Counsel or solicitor,
investigating a title in, say, 1953, on which a con
veyance to such a company appears, in order to
satisfy himself that the conveyance was duly stamped,
may have to require the vendor’s solicitors (who
may not be the solicitors for the company) to furnish
evidence that on no single day subsequent to the
3rd May, 1949, was less than 51 per cent, o f the
share capital of the company held by Irish citizens.
Inspection o f the share register o f the company
will not necessarily afford evidence that the persons
whose names appear therein are Irish citizens ; and
it is difficult to visualize the nature o f the evidence
that will have to be required. The adjudication
stamp on the deed, instead o f being a protection
to the purchaser, may be a pitfall. A good deal
o f property may be held by private companies",
formed, since 15 th October, 1947, for the purpose
o f building and estate development. A solicitor for
a subsequent purchaser dealing with a conveyance
to such a company about which he may know
nothing, will have to assume that the section applies
until the contrary is proved. The profession will
have to consider how best the practical difficulties
created by this sub-section can be solved, with
due regard to their obligation to ensure that their
clients will obtain good titles to property purchased.
The attention o f the Minister was drawn to the
practical difficulties arising out o f the sub-section.
In reply, he stated that while it is true that the
sub-section may cause some difficulty where the
property is sold by a company many years after
its formation, as the sub-section applies' only to a
company incorporated in the State after 15 th
October, 1947, the matter o f ascertaining the
beneficial ownership o f the shares in the company
at all dates since the date of its formation will
not present any great difficulty for some years to