ISE CONTINUING OBLIGATIONS REQUIREMENTS–MSM
Introduction
The ISE listing requirements and various EU Directives impose a number of ongoing reporting obligations on funds listed on the Main Securities Market (the "MSM"). The obligations are imposed in order to maintain an orderly and transparent market in the shares* of listed funds, to ensure the ongoing suitability of the funds for listing, to protect shareholders' interests and to ensure that all relevant information is disseminated without delay.
Any material changes to the general character or nature of the operation of a listed fund will require an announcement, and in some cases, may also require prior ISE or shareholder approval.
* units in the case of Unit Trusts.
Prior ISE Approval
ISE approval is required in advance of any of the following proposed changes being implemented:
- a variation in class rights;
- a material change in the general character or nature of the operation of the fund;
- a material change in the investment objective, policies or strategy of the fund;
- a proposal to terminate, renew or extend the life of the fund (where shareholder approval is not being sought);
- a material change in the minimum subscription;
- a change in the Investment Manager, Depositary, Administrator or Prime Broker;*
- a related party transaction;
- a reverse take-over or other substantial transaction;
- a material amendment to the constitutive documents;
- a change from open or closed status (except where provided for in the listing particulars); or
- a decision to cancel the listing of a fund, sub-fund or class;
- a transfer of listing from MSM to GEM.
*does not apply to listed funds authorised by the Central Bank of Ireland.
Prior Shareholder Approval
Prior shareholder approval is required for any matter relating to:
- a reverse transaction;
- a related party transaction;
- a change from open to closed ended status (except where provided for in the listing particulars).
- a change which is relevant to the continuation of the listing, or may materially affect the interests of shareholders;
- a proposal which may lead to a substantial change in the nature and substance of the listed fund, including in some circumstances, where the delisting of a fund is proposed;
- a proposal to issue shares at less than net asset value (except where such offer is first made on a pro-rata basis to shareholders); or
- a proposal to change the status of the fund to a super sophisticated fund (which proposal should offer dissenting shareholders the opportunity to redeem prior to the change taking place).
In order to obtain the approval of shareholders required per the above, a listed fund must prepare a Circular. A Circular to shareholders must contain full details in respect of the proposal as will enable shareholders to appraise its merits. The Circular must not be circulated or made available publicly until it has received the formal approval of the ISE. Circulars must be circulated to shareholders at least 10 working days in advance of the voting date, or such shorter period as may be permitted under the funds' constitutive documents. Any Circular requiring shareholders to vote on a matter must also be released to the CAO at the same time it is circulated to shareholders.
Announcement of Changes without Prior Approval
The following announcements may be made by a fund without prior approval:
- a change in Directors or material change in Directors' function;
- the net asset value per share upon calculation and any change in the frequency of its calculation;
- changes in capital structure (excluding issues and redemptions);
- details of any shareholding by the Directors, their connected persons or any person with managerial responsibility;
- details of any change of any shareholding of the Investment Manager;
- the identity of any controlling shareholder (30% or more of the voting rights or otherwise in a position to control the board);*
- a change or proposed change in investment, borrowing or leverage restrictions;
- any material change in the tax status of the fund;
- any suspension of redemptions, transfers or valuations;
- any change in Registrar, Transfer Agent, Auditor or Sponsor;
- any material change in dividend, redemption or valuation policy;
- any dividend paid, including details of the record date, the period covered, the payment date and the amount of the dividend;
- notice of any AGM or EGM;
- any change in the financial year end;
- the effect, if any, of any issue of further securities on the terms of exercise of rights under options or warrants and convertible securities;
- any material change to the fees paid by the fund or material change to its material contracts;
- any change in the name of the listed fund, sub-fund, class or series;
- any decision to cancel the listing of a series;
- any change in the rights attaching to any class of listed shares or to any shares into which the listed shares are convertible.
*does not apply to listed funds authorised by the Central Bank of Ireland.
Market Abuse
The Market Abuse Regulation (EU 596/2014) ("MAR") and the Market Abuse Directive on criminal sanctions for market abuse (Directive 2014/57/EU) ("CS MAD") impose a range of requirements on listed issuers. These requirements are reviewed in detail in our separate memorandum "Market Abuse – A New Regime for Investment Funds". This new regime became effective on 3rd July 2016.
Dillon Eustace can assist in providing further advices and drafting Market Abuse policies for Issuers.
General
- A listed fund must ensure equality of treatment for all shareholders in the same position.
- Copies of any Directors' service contracts must be made available to any shareholder or prospective shareholder from the date of an AGM notice until the time of the meeting.
ISE REQUIREMENTS FOR ANNUAL REPORTS
The ISE requires that listed funds publish an audited annual report within six months of each financial year end. A report must be filed with the ISE and may be published by either (i) circulating the report to shareholders; or (ii) inserting the report, as a paid advertisement, in at least one international newspaper.
In extenuating circumstances the ISE may grant an extension of the publication and filing deadline. In any circumstances that it is felt an extension may be required please contact Dillon Eustace as soon as possible in order that we can make the application for an extension in advance of the deadline.
Where a fund is a feeder fund, the annual report for the master fund must also be filed with the ISE within the same timeframe.
Omission of Information
The ISE may authorise the omission from the annual report of information which:
- is of minor importance only and which is not such as will influence the assessment of the assets and liabilities, financial position, profits and losses and prospects of the listed fund; or
- disclosure of such information would be contrary to the public interest or seriously detrimental to the listed fund, provided that, in the latter case, such omission would
not be likely to mislead investors with regard to the facts and circumstances, knowledge of which is essential for the assessment of the shares in question.
The ISE should be consulted in advance in respect of any application for omission of information.
Annual Report
The annual report must:
Be prepared in accordance with the listed funds national law, and, in all material respects, with IAS, US or Canadian (or equivalent) accounting standards;
Have been independently audited and reported on, in accordance with International, Irish, UK, US or Canadian (or equivalent) auditing standards;
If the fund has subsidiary undertakings, include any such subsidiaries, at the discretion of the fund, either in single or consolidated form, or both, where one form contains significant additional information not set out in the other;
If the listed fund is a sub-fund of an umbrella, comprise the accounts for the umbrella fund as a whole, including all sub-funds, save where a sub-fund benefits from a legal segregation of its assets from the liabilities of other sub-funds within the umbrella.
Content of Annual Report
The annual report and accounts must include the following items (where relevant)
- A report by the Directors or the Investment Manager on the results for the period under review;*
- A balance sheet, income statement and explanatory notes;
- The identity of the directors, specifying which act as independent;*
- Details of the interests in the shares held by the directors, their connected persons or any investment manager of which the fund is aware, distinguishing between beneficial and non-beneficial interests;
- Portfolio analysis* –
either
- Disclosing each investment – issuer, market value, percentage of net/gross assets, type of security
- Analysing the portfolio – by sector, security type, listed/unlisted, currency, geographical area, etc. and providing the market value and percentage of net/gross assets for each category.
- Complying with US GAAP disclosure provisions, where the auditors confirm that the statement is so compliant.
* does not apply to listed funds authorised by the Central Bank of Ireland.
Irish Regulated Funds
An Irish fund regulated by the Central Bank and which is in compliance with Central Bank notice NU 11.8 (Appendices A & B) or the UCITS notices shall be deemed to have complied with (b),(c) and (e) as specified above.
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.
