New Notification Requirements

As part of the new set of obligations imposed by the Regulations, major shareholders acquiring or disposing of (or indeed having the right to acquire, dispose or exercise) voting rights in shares of issuers, must notify the issuer of the acquisition or disposal of these rights if the percentages held, both directly and indirectly, exceed or fall below three per cent or 10 per cent (and any full percentile increment in movement above 10 per cent). Shareholders investing or disposing of shares in an Irish company which is listed on the ISE are now required to notify the company of a change in shareholding that crosses these thresholds.

Joe Beashel

An important element to the new obligations (as laid out under section 22 of the Regulations) is where a person makes a notification to an issuer, in accordance with the acquisition or disposal of shares which are trading on a regulated market, the person is also required to send a copy of the notification to the Financial Regulator or to their home state competent authority.

New Company Requirements

Along with the reporting requirements imposed on major shareholders, the Regulations also introduce new obligations with which listed issuers must come to terms. Section 20(1) of the Regulations requires all issuers, who have seen movement up or down on their voting shares or share capital (in respect of each share class) to file a statement at the end of each calendar month detailing these changes. Directors should note that responsibility for all information drawn up and made public lies with the issuer and that shareholders may rely on this information once it is made public.

Another new requirement is to produce an interim management statement ("IMS"). Under section 9(2) an issuer must publish an IMS during each half-yearly financial period. The IMS must be made between 10 weeks of the start of the half-yearly financial period and six weeks before the end of the half-yearly financial period. The IMS should cover the relevant six-month period up to the date of its publication. The IMS must seek to provide an explanation of material events and transactions which have taken place during the period which may impact the financial position of the issuer as well as a general description of the financial position and performance of the issuer and its controlled undertakings.

A separate obligation arises from section 27(1) of the Regulations which requires issuers to provide information to shareholders on the place, time and agenda of meetings, the total number of shares in issue and the rights of shareholders to participate (and vote) in meetings. Notably, closed-ended funds are included in this obligation which also requires that the issuer publish notices or distributes circulars concerning the allocation and payment of dividends and the issue of new shares, including information on allotments, subscriptions, cancellations or conversion. Interestingly, as part of the ongoing obligations and access to information, the Regulations also permit the use of e-voting machines.

In circumstances where the issuer requires amendments to its memorandum and articles of association, the Regulations require that the issuer first submit the proposed revisions to the Financial Regulator as well as the relevant "regulated market". Issuers listed on the ISE were previously obliged to notify proposed amendments to their constitutive documents to the ISE, but not to the Financial Regulator.

The consequence of making misleading statements and false publications

The Regulations provide a right of compensation for the publication of false or misleading statements. Liability will only be attached where the person who was discharging their managerial responsibility in relation to the publication of the information knew a statement to be untrue or misleading, or was reckless as to whether it was untrue or misleading, or knew an omission to be dishonest or a concealment of a material fact. A breach of these requirements may result in the company being liable to pay compensation to a person who has acquired securities issued by it and / or suffered loss in respect of such securities. The stern penalties applicable under the Regulations mean that issuers should be extra vigilant to ensure the accuracy and completeness of each document published.

1.Language of documents

At present, each member state where an issuer is listed may require that information disclosed to the public is in its official language(s). Responses to a consultation process demonstrated that issuers whose securities are traded in several member states find having to produce information in many different languages costly and burdensome. Under the Regulations, when disclosing information to a host member state market, issuers are now permitted, in addition to the language of their own home member state, to use a language customary in the international sphere of finance.

Summary

A large section of the Regulations have been given over to the introduction of new enforcement powers for the CBFSA, as the competent authority responsible for compliance with the Regulations. Of course, this follows the recent trend whereby the CBFSA has been granted powers under Directives such as the Market Abuse Directive and Prospectus Directive and of course the, soon to be implemented, Capital Requirements and Markets in Financial Instruments Directive.

With these new powers, the CBFSA has the ability to enforce the new regime, including the power to obtain documents and information from issuers and their advisers, to publish the details of issuers or shareholders who have failed in their obligations and to suspend trading of securities or to impose sanctions for breaches of the Regulations.