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9 1995

STOCK EXCHANGE ACT, 1995

PART III

Membership of Stock Exchanges

Competent authority.

16. —(1) The Bank shall be the competent authority in the State for member firms for the purpose of Council Directive 93/22/EEC of 10 May, 1993(1).

(2) The Bank shall be the competent authority for authorised member firms for the purpose of Council Directive 93/6/EEC of 15 March, 1993(1) .

Prohibition of unlawful member firm.

17. —(1) Any person who—

(a) claims to be a member firm, or

(b) holds himself out as a member firm,

shall be guilty of an offence under this Act unless that person is such a member firm.

(2) It shall be an offence for a person to be a member firm of an approved stock exchange unless he has been authorised—

(a) by the Bank under section 18 of this Act, or

(b) by a competent authority in another Member State, for the purpose of Council Directive 93/22/EEC of 10 May, 1993(1) as amended or extended from time to time, whose authorisation includes any or all of the services referred to in section A, 1 (b) or 2 of the Annex to that Directive, or

(c) as a European Communities credit institution in a Member State, whose authorisation under Council Directive 77/780/EEC of 12 December, 1977(2) as amended by Council Directive 89/646/EEC of 15 December, 1989(3) as amended or extended from time to time, includes one or more investment services equivalent to those set out in section A, 1 (b) or 2 of the Annex to Council Directive 93/22/EEC of 10 May, 1993(1).

Grant of authorisation.

18. —(1) Subject to the provisions of this Act, the Bank may grant or refuse to grant to any person applying to it under this section an authorisation to operate as an authorised member firm.

(2) The grant of an authorisation under subsection (1) of this section may be given unconditionally or it may be given subject to such conditions or requirements or both as the Bank considers fit.

(3) Whenever the Bank refuses to grant authorisation to a proposed member firm under this section, it shall serve notice on the proposed member firm of its intention to refuse to authorise it and stating the reasons therefor and the proposed member firm may within 21 days of receipt of such notice appeal to the Court against the decision.

(4) An application for authorisation under subsection (1) of this section shall be in such form and contain such particulars as the Bank shall specify from time to time and, without prejudice to the generality of the aforesaid, shall include a copy of the memorandum of association and articles of association of the proposed member firm and such particulars as the Bank may request in relation to—

(a) the type of business to be carried on or likely to be carried on by the proposed member firm, and

(b) any person or persons having control or ownership of the proposed member firm including any natural or legal person whose shareholding or other commercial relationship with the proposed member firm might influence the conduct of the proposed member firm to a material degree.

(5) A proposed member firm shall not be authorised by the Bank unless—

(a) it is a company incorporated by statute or under the Companies Acts, or a company made under Royal Charter or it draws up a partnership agreement, where it is constituted as an unincorporated body of persons, if such an agreement does not already exist,

(b) it satisfies the Bank that the memorandum of association and articles of association of the proposed member firm 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 Bank may impose,

(c) it has the minimum level of capital which shall be specified by the Bank under this section,

(d) it satisfies the Bank as to the probity and competence of each of its directors and managers,

(e) it satisfies the Bank as to the suitability of each of its qualifying shareholders,

(f) it satisfies the Bank as to the organisation and management skills of the proposed member firm and that adequate levels of staff and expertise will be employed to carry out its proposed activities,

(g) it satisfies the Bank that it has and will follow established procedures to enable the Bank to be supplied with all information necessary for its supervisory functions and to enable the public to be supplied with any information which the Bank may specify,

(h) it satisfies the Bank that the organisation of its business structure is such that it and any of its associated or related undertakings, where appropriate and practicable, are capable of being supervised adequately by the Bank,

(i) its registered office and its head office are in the State, and

(j) it satisfies the Bank as to its conduct of business, its financial resources and any other matters as the Bank considers necessary in the interests of the proper and orderly regulation and supervision of approved stock exchanges or of member firms or both or in the interests of the protection of investors.

(6) The Bank may set out conditions and requirements, either through the rules of an approved stock exchange or otherwise, in order to monitor the solvency of an authorised member firm which is constituted as an unincorporated body of persons and the solvency of its proprietors.

(7) The Bank shall impose conditions or requirements, from time to time, in respect of the level of capital to be maintained by an authorised member firm.

(8) Any appointment to the Board of Directors of an authorised member firm or proposed member firm or to the post of manager, chief executive or post equivalent thereto, on or after the granting of an authorisation under this section, shall be subject to the prior approval in writing of the Bank, which said approval shall not be given unless the authorised member firm satisfies the Bank as to the probity and competence of the proposed appointee.

(9) The Bank may direct an authorised member firm to alter its memorandum of association and articles of association in the interest of the proper and orderly regulation of approved stock exchanges and their member firms or the protection of investors or both.

(10) A proposed amendment to the memorandum of association or articles of association of an authorised member firm shall not be made without the prior consent in writing of the Bank.

(11) An authorisation granted under subsection (1) of this section by the Bank shall specify the classes of investment services which may be provided by the authorised member firm concerned and the authorisation may specify additional services which an authorised member firm may provide, including those set out in Annex C to Council Directive 93/22/EEC of 10 May, 1993(1) as amended or extended from time to time and the Bank may amend or vary the classes of investment services or other services which may be so provided and such authorisation shall be taken as authorisation of the said firm for the purposes of the said directive.

(12) The Bank may at any time prior to the grant or refusal of an authorisation request further information from the proposed member firm or may instruct an authorised officer to make such inquiries or carry out such investigations as may be necessary for the purpose of evaluating properly an application under this section, and such inquiries or investigations shall be carried out in accordance with this Act.

(13) (a) In the case of a member firm, the Bank shall apply this Act, having regard to the division of responsibilities between the home and host member states of the member firm concerned which are set out in Council Directive 93/22/EEC of 10 May, 1993(1) and Council Directive 93/6/EEC of 15 March, 1993(1) and the relevant sections of this Act shall be construed accordingly.

(b) Subject to the provisions of this section, member firms shall be subject to such conditions or requirements or both as may be imposed on them by the Bank in the interests of any or all of the following, namely—

(i) the proper and orderly regulation of stock exchanges and their member firms;

(ii) the protection of investors or clients or both.

(14) The Bank may impose requirements on a proposed member firm or an authorised member firm to organise its business or corporate structure, or control of any associated undertaking or related undertaking not supervised by the Bank, such that that member firm when authorised under this Act and, where appropriate and practicable, the business of any associated undertaking or related undertaking, either collectively or individually, is capable of being supervised to the satisfaction of the Bank under this Act.

(15) A proposed member firm shall be informed whether or not authorisation has been granted—

(a) within six months of the date of receipt of the application, or within six months of the coming into operation of this section, whichever is the later; or

(b) where additional information in relation to the application has been sought by the Bank, within a period of six months after the receipt by the Bank of the additional information or the period of twelve months after the receipt of the application, whichever is the sooner.

(16) It shall be an offence for a proposed member firm to apply for authorisation under this section knowingly or recklessly using false or misleading information or knowingly or recklessly making false or misleading statements.

Requests from Commission.

19. —Notwithstanding other provisions of this Act, the Bank shall comply with requests from the Commission to limit or suspend decisions where—

(a) a proposed member firm which is the direct or indirect subsidiary of a parent governed by the law of a State which is not a Member State of the European Community seeks authorisation from the Bank, or

(b) an undertaking which is governed by the law of a State which is not a Member State acquires a holding in any authorised member firm such that the latter would become its subsidiary.

Authorised Member Firms doing business outside the State.

20. —(1) When an authorised member firm wishes to establish a branch in another Member State it shall notify the Bank in writing setting out the address of the proposed branch from which documents may be obtained, the names of the proposed managers and a programme of operations setting out inter alia the types of business envisaged and the proposed organisational structure of the branch.

(2) Subject to subsection (3) of this section, the Bank shall communicate information referred to in subsection (1) of this section to the relevant authority in that other Member State in accordance with the provisions of Council Directive 93/22/EEC of 10 May, 1993(1) , within three months of receiving all information requested of the authorised member firm, and shall inform the authorised member firm accordingly.

(3) Where the Bank does not communicate the information in the manner referred to in subsection (2) of this section, the Bank shall give reasons for the refusal to the authorised member firm and the authorised member firm shall be entitled to appeal to the Court against that decision.

(4) Where an authorised member firm wishes to change any particulars supplied under subsection (1) of this section it shall notify the Bank in writing of any such changes and allow at least one month from the date of the notification before carrying out the changes so as to allow the Bank to exercise its functions under this Act.

(5) When an authorised member firm wishes to provide investment services within the territory of another Member State for the first time but does not propose to establish a branch in that other Member State, it shall notify the Bank in writing setting out the Member State in which it proposes to provide those services and a programme of operations stating in particular the investment service or services it intends to provide.

(6) The Bank shall communicate the information referred to in subsection (5) of this section to the relevant authority in that other Member State in accordance with the provisions of Council Directive 93/22/EEC of 10 May, 1993(1), within one month of receiving all that information.

(7) Where an authorised member firm wishes to change any particulars concerning a programme of operations supplied under subsection (5) of this section it shall notify in writing the Bank and the competent authority in the other Member State in which it proposes to provide or provides investment services of any such changes before carrying out the changes so as to allow the competent authority in the other Member State to carry out its obligations under the provisions of Council Directive 93/22/EEC of 10 May, 1993(1) .

Existing member firms.

21. —(1) Notwithstanding section 17 of this Act, a person whom the Bank deems to have been a member firm of the Irish Stock Exchange on the day immediately prior to the coming into operation of this section, having regard to the member firms listed in the daily official list of the Irish Stock Exchange, shall stand authorised, on the coming into operation of this section, as an authorised member firm until the Bank has granted or refused authorisation to it:

Provided that, no later than three months after the coming into operation of this Part of this Act, it—

(a) draws up a formal partnership agreement, where it is constituted as an unincorporated body of persons, if such agreement does not already exist, and

(b) applies to the Bank under section 18 of this Act for authorisation, and, in that section, references to proposed member firm shall be construed accordingly.

(2) Pending a decision by the Bank to authorise a member firm to whom subsection (1) of this section refers or during the three months referred to in subsection (1) of this section or during both such times, the Bank may do either or both of the following, namely—

(a) impose such conditions or requirements or both as it thinks fit relating to the proper and orderly regulation and supervision of approved stock exchanges and their member firms or in relation to the protection of investors including conditions or requirements or both which relate to matters in an associated undertaking, a related undertaking or in both;

(b) issue directions under this Act.

(3) A person to whom subsection (1) of this section refers may appeal to the Court against the conditions or requirements imposed under this section.

(4) On hearing an application under subsection (3) of this section, the Court may confirm, vary or rescind any condition or requirement imposed under this section.

(5) Notwithstanding section 17 of this Act, a person who falls within subsection (6) of this section may be a member firm of an approved stock exchange until either the 31st day of December, 1995 or it has been authorised by a competent authority in its home Member State, whichever is the earlier.

(6) Subsection (5) of this section applies to persons or branches of persons which—

(a) have their head office and registered office in another Member State,

(b) are subject to prudential regulation in that Member State which is considered by the Bank to be equivalent to the regulation applying to authorised member firms under this Act, and

(c) are recognised as primary dealers by the National Treasury Management Agency.

(7) A member firm falling within subsection (6) of this section shall be subject to such conditions or requirements or both as may be imposed on it by the Bank in the interests of either or both of the following, namely, the proper and orderly regulation and supervision of stock exchanges and their member firms and the protection of investors or clients, and such conditions or requirements or both may be imposed on it by the Bank in respect of associated undertakings or related undertakings.

(8) Section 18 (13) of this Act shall not apply to firms falling within subsection (6) of this section.

Imposition of conditions or requirements on authorised member firms.

22. —(1) Without prejudice to section 18 of this Act, where the Bank grants an authorisation under that section, it may do all or any of the following, namely—

(a) make its authorisation subject to such conditions or requirements or both as it considers fit, relating to the proper and orderly regulation and supervision of an authorised member firm;

(b) impose conditions or requirements or both which relate to matters in an associated undertaking or a related undertaking;

(c) at any time after its approval, impose conditions or requirements or both on an authorised member firm and either amend or revoke any condition or requirement imposed under this paragraph or under paragraph (a) or (b) of this subsection:

Provided that the said conditions or requirements do not contravene any guidelines in that behalf which may be issued to the Bank, from time to time, by the Minister with the consent of the Minister for Enterprise and Employment in the interests of the proper and orderly regulation and supervision of stock exchanges and their member firms and the protection of investors, and published in the Iris Oifigiúil.

(2) Any condition or requirement referred to in subsection (1) of this section may be imposed in relation to any or all of the following, namely—

(a) an authorised member firm;

(b) all authorised member firms;

(c) a class of authorised member firms;

(d) a specified period of time or times;

(e) an associated undertaking or related undertaking;

(f) any matter, as the Bank may consider appropriate, in the interests of the proper and orderly regulation and supervision of approved stock exchanges and their authorised member firms.

(3) An authorised member firm may appeal to the Court against the imposition of any condition or requirement imposed under subsection (1) of this section and, on hearing an appeal under this section, the Court may confirm, vary or rescind any condition or requirement imposed under this section.

Refusal to consent to amendment of memorandum of association or articles of association of an authorised member firm.

23. —(1) Subject to subsection (2) of this section, the Bank may refuse to consent to an amendment of, or addition to, the memorandum of association or articles of association, or both, of an authorised member firm in any or all of the following circumstances, namely, where it is expedient to do so in the interest of the proper and orderly regulation of approved stock exchanges and their authorised member firms or in order to protect investors.

(2) Whenever the Bank refuses to consent to an amendment of or addition to the memorandum of association or articles of association or both of an authorised member firm, it shall serve notice on the authorised member firm concerned stating that it refuses to consent to the amendment or addition and setting out the reasons for the refusal in the notice and the authorised member firm may, within 21 days of receipt of such notice, appeal to the Court against the decision.

Revocation of authorisation.

24. —(1) The Bank may revoke the authorisation of an authorised member firm in all or any of the following circumstances, namely, where—

(a) a request is made to it in that behalf by the authorised member firm;

(b) an authorised member firm—

(i) has failed to operate as a member firm within 12 months of the date on which it was authorised under this Act; or

(ii) has failed to operate as a member firm for a period of more than six months; or

(iii) is being wound up.

(2) Without prejudice to the power of the Bank to revoke an authorisation under subsection (1) of this section, the Bank may apply to the Court in a summary manner for an order revoking the authorisation of an authorised member firm in any or all of the following circumstances, namely, where—

(a) it is expedient to do so in the interest of the proper and orderly regulation of approved stock exchanges or their member firms or in order to protect investors or in any or all of these circumstances;

(b) an authorised member firm has been convicted on indictment of any offence under this Act or any Act under which the Bank exercises statutory functions or any offence involving fraud, dishonesty or breach of trust;

(c) circumstances have materially changed since the granting of the authorisation such that, if an application for authorisation were made at the time of the application to the Court, a different decision would be taken in relation to the application for authorisation;

(d) the authorisation was obtained by knowingly or recklessly making false or misleading statements or by knowingly or recklessly using false or misleading information;

(e) an authorised member firm has failed to comply to a material degree with a condition or requirement of this Act;

(f) an authorised member firm no longer fulfils any or all of the conditions or requirements which were imposed when the authorisation was granted or which were subsequently imposed;

(g) an authorised member firm—

(i) no longer complies with capital or any other financial requirements specified by the Bank, from time to time, or

(ii) is not maintaining or is unlikely to be able to maintain adequate capital resources or other financial resources having regard to the nature and volume of its business;

(h) an authorised member firm becomes unable or, in the opinion of the Bank, is likely to become unable to meet its obligations to its creditors or suspends payments lawfully due;

(i) an authorised member firm has infringed to a material degree a code of conduct or rules of conduct, specified in or set out under section 38 of this Act;

(j) a director, manager or qualifying shareholder of an authorised member firm is no longer deemed by the Bank to fulfil the conditions of competence and probity required by section 18 of this Act to be a director or manager or qualifying shareholder of an authorised member firm;

(k) an authorised member firm has failed to comply with a condition or requirement or both imposed under this Act, and the circumstances are such that the Bank is of the opinion that the stability and soundness of the authorised member firm is or has been materially affected by such a failure;

(l) an authorised member firm has so organised its business or corporate structure such that the authorised member firm and, where appropriate, any related undertaking or associated undertaking, either collectively or individually, is no longer capable of being supervised to the satisfaction of the Bank under this Act.

(3) When the Bank proposes to revoke the authorisation of an authorised member firm or proposes to apply to the Court for an order to revoke the authorisation of a member firm, the following procedure shall apply, namely, the Bank shall serve notice on the authorised member firm of its intention and shall state its reasons in the said notice.

(4) Where an application is made to the Court under this section, the Court may make such interim or interlocutory orders as the circumstances may require.

(5) Persons (being persons who were authorised member firms) whose authorisation has been revoked (in this section referred to as “former authorised member firms”) shall continue to be responsible for arranging the discharge of all contracts entered into before announcement of the revocation of the authorisation, unless the Bank states otherwise.

(6) Where the authorisation of an authorised member firm is revoked and the former authorised member firm, if a company, is not being wound up, or, if constituted as an unincorporated body of persons, is not the subject of a dissolution order, then—

(a) the former authorised member firm shall continue to be subject to the duties and obligations imposed by this Act and any codes of conduct or rules of conduct or client money requirements or any other conditions or requirements imposed by the Bank under any section of this Act and by the rules of the approved stock exchange of which it is or was a member firm until all the liabilities, duties and obligations of the said member firm have been discharged to the satisfaction of the Bank,

(b) the former authorised member firm shall, as soon as possible after the revocation of the authorisation, notify the Bank and such other persons, if any, as the Bank indicates are to be notified of the measures being taken to discharge without undue delay the liabilities, duties and obligations of the said member firm, and

(c) in the case where—

(i) the former authorised member firm has notified the Bank in accordance with paragraph (b) of this subsection, and the Bank is of the opinion that the measures being taken or proposed to be taken for the purposes of this section are not satisfactory, or

(ii) the former authorised member firm has not so notified the Bank and the Bank is of the opinion that the former authorised member firm has failed to so notify as soon as possible after the authorisation is revoked, or

(iii) the Bank is of the opinion that the former authorised member firm has failed to take all reasonable stepsto notify persons which the Bank has indicated, under paragraph (b) of this subsection, are to be notified,

then, subject to subsection (10) of this section, the Bank may give a direction in writing to the former authorised member firm for such period, not exceeding six months, prohibiting the former authorised member firm so directed from any or all of the following, namely—

(I) creating any liabilities;

(II) dealing with or disposing of any assets or specified assets of the former authorised member firm in any manner;

(III) engaging in any transaction or class of transaction or specified transaction;

(IV) making payments;

without the prior authorisation of the Bank, and the Bank may further direct that former authorised member firm within two months of the initial direction to prepare and submit to it for its approval a scheme for the orderly discharge in full of the liabilities, duties and obligations concerned.

(7) Where the authorisation of a member firm is revoked and the former authorised member firm, if a company, is being wound up, or, if constituted as an unincorporated body of persons, is the subject of a dissolution order, then—

(a) the liquidator or receiver of the former authorised member firm shall, in addition to his duties and obligations in respect of the winding-up, be subject to the duties and obligations to which the former authorised member firm would be subject if it were an authorised member firm to which subsection (6) of this section relates and that subsection shall for the purposes of this section be construed accordingly,

(b) the liquidator or receiver of the former authorised member firm shall also be subject to all rules and regulations of the relevant stock exchange and any conditions or requirements imposed under this Act as if the liquidator or receiver were an authorised member firm, and

(c) notwithstanding paragraph (a) of this subsection, the Bank may, where authorisation is revoked and where the Bank considers it appropriate in the circumstances, remove, on giving notice in writing to the liquidator or receiver of the former authorised member firm, the duties and obligations imposed on the liquidator or receiver concerned to comply with paragraph (b) of subsection (6) of this section and may impose, in writing, on that liquidator or receiver such further duty or obligation as corresponds to that set out in paragraph (b) of that subsection.

(8) The Bank shall publish notice of revocation of an authorisation of an authorised member firm in the Iris Oifigiúil within 28 days of such revocation.

(9) A former authorised member firm shall cease to operate as a member firm and it shall be an offence for a former authorised member firm to operate as an authorised member firm.

(10) Where the Bank gives a direction under subsection (6) of this section, it may apply to the Court on being satisfied that the direction has not been complied with and the Court may confirm, vary or set aside the direction on such terms and for such period as the Court thinks fit.

(11) The Bank shall not exercise its powers under subsection (2) (j) of this section unless it has given an authorised member firm an opportunity to remove the director, manager or qualifying shareholder or otherwise deal with the concerns of the Bank in relation to the probity or competence of the person concerned within such period of time as the Bank may specify.

(12) An application under this section may be heard otherwise than in public.

Register of member firms.

25. —(1) The Bank shall require that a register or registers of member firms of an approved stock exchange or approved stock exchanges (to be known and in this Act to be referred to as a “Register of member firms”) be kept by the approved stock exchange or stock exchanges in question at such premises as the Bank may direct.

(2) A Register of member firms shall be open for inspection by any member of the public at all reasonable times on the payment of such fee as the Bank may specify or approve.

(3) A copy of the said Register shall be published annually in such manner as the Bank directs showing the changes that have taken place during the preceding year.

(4) A Register of member firms shall include the names and addresses of member firms and such other particulars as the Bank may direct from time to time.

Asset and liability ratios and structures of authorised member firms.

26. —(1) The Bank may impose a requirement on an authorised member firm to keep at all times a proportion of its assets in liquid form (in this section referred to as “liquid assets”) so as to enable the authorised member firm to meet its liabilities as they arise.

(2) An authorised member firm may keep liquid assets in addition to those required for the purpose of complying with subsection (1) of this section.

(3) For the purposes of complying with the requirements of the Bank under subsection (1) of this section, an authorised member firm shall have regard to the range and scale of its business and that of any relevant associated undertaking or related undertaking and the composition and character of its assets and liabilities and those of any such undertaking.

(4) The Bank may, from time to time, impose a requirement on an authorised member firm to maintain—

(a) a specified ratio, or

(b) a ratio which does not exceed a specified ratio, or

(c) a ratio which is not less than a specified ratio,

between its assets and its liabilities and the specified ratio may be expressed as a percentage of the assets or liabilities concerned.

(5) A requirement of the Bank under this section may be expressed to apply to all or any of the following, namely—

(a) all authorised member firms,

(b) authorised member firms of a specified category or specified categories,

(c) the total assets or total liabilities of the authorised member firm or authorised member firms concerned,

(d) specified assets or assets of a specified kind,

(e) specified liabilities or liabilities of a specified kind,

and shall have effect in accordance with the specified terms of the requirement.

(6) A requirement under this section which is in force may be revoked by the Bank or may be amended by a subsequent requirement under the relevant subsection.

(7) The Bank may, from time to time, specify, as respects an authorised member firm, requirements as to the composition of its assets and requirements as to the composition of its liabilities.

(8) In determining, for the purposes of this section, the assets and liabilities of an authorised member firm with which another undertaking is associated or related, there shall be attributed to the authorised member firm, in a manner acceptable to or as may be specified by the Bank, the whole or part of the assets and liabilities of whatever description of the associated undertaking or related undertaking.

(9) Any requirements imposed by the Bank under this section may include requirements imposed for the purposes of applying Council Directive 93/6/EEC of 15 March, 1993(1) or other relevant European Community Directives to the authorised member firm.

(10) In this section—

(a) “specified” means specified by the Bank under this section;

(b) “liabilities” include such contingent liabilities as may be specified by the Bank from time to time for the purposes of this section;

(c) “liquid assets” means assets specified as such for the purposes of this section by the Bank.

Maintenance of books and records by member firms.

27. —(1) (a) A member firm shall keep at an office or offices within the State such books and records (including books of accounts) as may be specified from time to time by the Bank and shall notify the Bank of the address of every office at which any such books or records are kept.

(b) A person who contravenes paragraph (a) of this subsection shall be guilty of an offence.

(2) The Bank may specify different books and records for the purposes of this section and in relation to different member firms or different classes of member firms.

(3) Books and records to be kept pursuant to this section shall be—

(a) in addition to any books or other records to be kept by or under any other enactment, and

(b) retained for at least such period as the Bank may specify.

(1)O.J. No. L 141 11/6/93.

(1) O.J. No. L 141 11/6/93.

(2)O.J. No. L 322 17/12/77.

(3)O.J. No. L 386 30/12/89.

(1) O.J. No. L 141 11/6/93.

(1) OJ. No. L141 11/6/93.

(1) O.J. No. L 141 11/6/93.

(1) O.J. No. L 141 11/6/93.

(1) O.J. No. L 141 11/6/93.