The Irish Stock Exchange (the "ISE") has issued a revised Code of Listing Requirements and Procedures (the "Code") to coincide with the implementation of the Alternative Investment Fund Managers Directive (the "AIFMD") on 22 July 2013. The Code will be effective from this date. This is a welcome development and a number of the rule changes have modernised the Code.

Key Developments

  • It is no longer a requirement to prepare and file interim accounts with the ISE. If a fund continues to  prepare interim accounts, such as for UCITS, the interims can be filed with the ISE but they will not be reviewed.
  • The transfer restrictions and compulsory redemption rule has been amended from:

"shares may not be subject to any transfer restrictions or compulsory redemption except; (i) where the holding of such shares may result in regulatory, pecuniary, legal, taxation or material administrative disadvantage for the fund or its shareholders as a whole; or (ii) to maintain a minimum holding per shareholder, as specified in the listing particulars" to:

"shares may only be subject to any transfer restrictions or compulsory redemption where such any transfer restrictions or compulsory redemption is in the best interest of the fund or its shareholders as a whole".

  • Depositaries that are approved to act as a depositary under the AIFMD are automatically suitable for the safekeeping and custody of the assets of the fund. Where a depositary is a financial institution regulated in a member state or is subject to equivalent regulation and supervision by a third country regulatory authority, the ISE will by and large accept prima facie compliance of the depositary. Description of the depositaries custodial experience must be disclosed in the listing particulars.
  • It is no longer a requirement that any dividend payment by a fund be made out of the funds accumulated net income plus the net of accumulated realised and unrealised capital gains and accumulated realised and unrealised capital losses. Dividend payments must now be in line with the fund's accounting standards.
  • Investment managers approved under the AIFMD are automatically suitable to act as an investment manager for listed funds. Description of the Investment manager's experience must be disclosed in the listing particulars.
  • The ISE have eliminated the requirement that a prime broker or counterparty have a specified credit rating.
  • It is no longer a requirement for Irish regulated funds to seek ISE prior approval for a change of service provider. Any change must still be announced to the ISE.

Property Funds

Property funds that are authorised and regulated as a Qualifying Investor Alternative Investment Fund ("QIAIF") are automatically suitable for listing and do not have to comply with the additional property investment restrictions or the rules related to the experience of the investment manager or independent valuer. The following highlights some of the fundamental changes to the investment restrictions:

  • The ISE have increased the amount of gross assets invested in any one property from 20% to 30%.
  • The ISE have deleted the following rules:
  • The requirement that a new fund have net assets of at least US$10 million raised at the time of listing.
  • No more than 10%, in aggregate, of the fund's gross assets may be invested in property which has a leasehold period of less than 60 years remaining at the time of listing or, if later, at the time of acquisition.
  • No more than 25%, in aggregate, of the funds gross assets may be invested in property which is let on a short term (i.e. less than 12 month) basis.
  • No more than 25%, in aggregate, of the funds gross assets may be invested in property which does not produce rental income or which is in the course of, or requires, substantial redevelopment.
  • Borrowing or leverage by the fund must be confined to 65% of the funds gross assets.

Additional property rule:

  • No more than 25% of the funds gross assets may be invested in property which is the subject of a mortgage.  The amount of any outstanding mortgage on any one property must not represent more than 50% of the value of that property.

Other Notable Changes

  • Where audited financial statements are included in the listing particulars, the directors must confirm that there has been no significant change in the financial or trading position of the fund since the end of the period for which the audited financial statements included in the listing particulars have been prepared.
  • The net asset value of the shares must be calculated at least annually; previously it was at least every calendar quarter. It is still a requirement that the net asset value of a fund be notified to the ISE immediately upon calculation.
  • The 48 hour notice period prior to listing has been removed. A further positive welcome is that all documents can be sent in softcopy format, including Directors Responsibility Letters and Power of Attorney.

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.