Ireland: Changes To Transparency Regime

Last Updated: 16 December 2015
Article by Maura McLaughlin, Eoin O'Connor, Maedhbh Clancy, Helen Berrill and Robert Cain

The Irish transparency regime changed on 26 November 2015 when amending European legislation was transposed into Irish law. The most notable change is the widening of the existing disclosure obligation to capture a broader range of financial instruments including cash-settled derivatives. This Briefing summarises the key changes and their practical impact.

BACKGROUND

The deadline for Member States to transpose the changes made to the existing Transparency Directive (Directive 2004/109/EC) (the Existing TD) by the amending Transparency Directive (Directive 2013/50/EU) (the Amending TD) was 26 November 2015 and the Irish Transposing Regulations (SI 541/2015) (the Irish Regulations) took effect from that date. The Central Bank of Ireland also published its updated Transparency Rules on 30 November 2015. A Commission Delegated Regulation provides further detail on calculations and exemptions.

QUESTIONS & ANSWERS

Q1: WHY HAS THE REGIME CHANGED?

The Existing TD imposed:

  • reporting obligations: issuers of securities admitted to trading on regulated markets across the EU had annual, half-yearly and quarterly reporting obligations; and
  • disclosure/notification obligations: shareholders in those issuers were obliged to notify acquisitions and disposals of voting shares which could lead to a holding reaching, exceeding or falling below certain thresholds.

Concerns arose that:

  • the reporting obligations caused a disproportionate administrative burden for small and medium-sized issuers; and
  • persons could build up economic interests in issuers using financial instruments other than voting shares, without being required to disclose those interests.

Q2: WHAT KEY CHANGES HAS THE AMENDING TD INTRODUCED?

  • Disclosure: the disclosure obligation has been widened to cover holdings of all financial instruments that could be used to acquire economic interests in a listed company (in particular cash-settled derivatives).
  • Aggregation: holdings of the financial instruments mentioned above must now be aggregated with shareholdings in the same issuer to calculate whether thresholds have been reached.
  • Reporting:
    • the obligation on issuers to provide quarterly financial information has been removed (however, see Q11 below, and companies may still report voluntarily);
    • half-year financial reports must be published within 3 (not 2) months of the end of the reporting period; and
    • half-yearly and annual reports must remain publicly available for 10 (not 5) years.
  • "Home" Member State: issuers who do not choose a home Member State within 3 months of securities first being admitted to trading on a regulated market will be the subject of 'deemed Member State' provisions.

Q3: WHAT OTHER CHANGES SHOULD BE NOTED?

  • "Issuer": the definition of "issuer" has been broadened to cover natural persons and issuers of non-listed securities represented by depositary receipts admitted to trading on regulated markets.
  • New exclusion when calculating thresholds: shares acquired for stabilisation purposes can now be excluded from the calculation.
  • Notifications: these must now be made "promptly" rather than "as soon as possible" but the four trading days limit still applies.
  • Sanctions: competent authorities must publish all decisions on sanctions and measures imposed for breaches of the transparency regime without undue delay (subject to rights to delay publication or publish decisions on an anonymous basis).
  • Instruments of incorporation: the obligation on an issuer to notify its competent authority and relevant regulated market of changes to its instruments of incorporation has been removed.
  • New loan issues: the obligation on issuers to publicise new loan issues and related guarantees and security has been removed.

Q4: WERE ANY CHANGES NOT TRANSPOSED INTO IRISH LAW?

The Amending TD requires listed and large non-listed extractive and logging companies to report all material payments to governments – this requirement has not yet been transposed into Irish law (but may instead be transposed when the Accounting Directive (Directive 2013/34/EU) is transposed in early 2016).

Q5: DID THE NOTIFICATION THRESHOLDS CHANGE?

No. The thresholds are still 5%, 10%, 15%, 20%, 30%, 50% and 70%, and Member States continue to be allowed to set lower thresholds. The thresholds in the Transparency Rules remain unchanged at 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10% and each 1% threshold thereafter up to 100% or, in the case of a non-Irish issuer, 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%.

Q6: WHAT OTHER PROVISIONS OF THE AMENDING TD SHOULD WE BE AWARE OF?

  • Electronic reporting: annual reports must be prepared in single electronic reporting format from 2020. ESMA is consulting on this, and the consultation period closes on 24 December 2015.
  • Access: a European Electronic Access Point is being introduced to facilitate access to information across Member States. ESMA published its final draft Regulatory Technical Standards on the EEAP in September 2015 for approval by the European Commission.

Q7: WHAT FINANCIAL INSTRUMENTS ARE NEWLY IN SCOPE?

  • Category 1: instruments in respect of which there is a binding agreement that, on maturity, the holder will have an unconditional right to acquire (or the discretion to acquire) voting shares that are already in issue.
  • Category 2: financial instruments not covered by Category 1 above, but which are referenced to shares referred to in Category 1 above, and have a similar economic effect (whether or not they confer a right to cash settlement).

Q8: ARE THERE EXAMPLES OF THOSE FINANCIAL INSTRUMENTS?

Yes, as follows:

  • Examples in Amending TD: transferable securities, options, futures, swaps, forward rate agreements, contracts for differences and any other contracts or agreements with similar economic effects which may be settled physically or in cash are in scope. ESMA has confirmed that the reference to "options" includes a reference to puts, calls or any combination thereof.
  • ESMA indicative list: the following are in scope if they come within either category at Q7 above and reference voting shares:
    • irrevocable convertible and exchangeable bonds referring to already issued shares;
    • financial instruments referenced to a basket of shares or an index where either:
      • the voting rights in a specific issuer held through financial instruments referenced to the basket or index represent >1% of the voting rights attached to shares of that issuer;
      • the shares in the basket or index represent >20% of the value of the securities in the basket or index; and
      • warrants, repurchase agreements, rights to recall lent shares, contractual buying pre-emption rights, other conditional contracts or agreements than options and futures, hybrid financial instruments, combinations of financial instruments and shareholders' agreements having financial instruments in one of the two categories referred to in Q7 above as an underlying.

Q9: WILL NOTIFICATIONS AND CALCULATIONS CHANGE?

Yes. Notifications must now distinguish between:

  • holdings of shares and holdings of financial instruments;
  • the two different categories of financial instruments referred to in Q7 above; and
  • financial instruments with a right to physical settlement and those with a right to cash settlement.

Regarding calculations:

  • voting rights in respect of a financial instrument must be calculated by reference to the full notional amount of underlying shares unless the instrument provides for cash settlement only, in which case a 'delta-adjusted' basis must be used;
  • the holder must aggregate and notify all financial instruments relating to the same underlying issuer; and
  • only long positions can be taken into account, and long positions cannot be netted with short positions relating to the same underlying issuer.

The Central Bank has updated its Form TR-1 to take account of the Irish Regulations.

Q10: DO THE SAME EXEMPTIONS APPLY TO HOLDINGS OF FINANCIAL INSTRUMENTS?

The existing exemptions relating to clearing and settlement, custodians, shares held by market makers, voting rights held in the trading book, notifications by parent undertakings, management companies and investment firms apply to holdings of newly inscope financial instruments.

Q11: DID IRELAND EXERCISE MEMBER STATE DISCRETION?

Yes, as follows:

  • Quarterly reporting: the Central Bank can require that issuers who are financial institutions and (subject to the fulfilment of certain conditions) other issuers provide additional periodic financial information.
  • Stricter requirements: the Central Bank can apply stricter requirements to shareholders and holders of other relevant financial instruments when setting notification thresholds, applying stricter notification and disclosure procedures, and applying laws relating to mergers, takeovers and other transactions affecting ownership or control of companies.
  • Sanctions: the Central Bank has the right to impose a higher monetary figure for a breach by an individual of the Irish Regulations (€2,500,000 instead of €2,000,000).

Q12: ARE THE TAKEOVER RULES OR PART 17 OF THE COMPANIES ACT 2014 AFFECTED?

No, those regimes are unaffected.

Q13: OTHER NOTABLE POINTS?

  • Market maker exemption: the Irish Regulations provide that a market maker looking to rely on this exemption must notify the competent authority of the issuer's home Member State, rather than the competent authority that regulates the market maker in respect of its market making activities.
  • Sanctions: the Irish Regulations now also give the Central Bank (where there has been a failure to comply with notification obligations) the ability to suspend voting rights.

CONCLUSION

The Amending TD has been in the pipeline for some time and represents the first in a series of significant amendments to European and Irish securities laws. If firms have not already updated their systems to enable reporting on the new in-scope instruments and compliance with the other new requirements they should do so soon.

On 3 July 2016, the new Market Abuse Regulation will become directly effective in Ireland and will have a major impact on the ongoing reporting obligations of issuers of securities. The EU has also published proposed amendments to the prospectus regime by way of a draft prospectus regulation on 30 November 2015 which will have a significant impact on the content of prospectuses. We will shortly be issuing a further briefing on both of these developments.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.