The Irish Stock Exchange Separation from The London Stock Exchange

The Irish Stock Exchange's ("ISE") formal separation from The London Stock Exchange ("LSE") took effect from midnight on 8th December, 1995 and trading on the new ISE commenced on Monday, 11th December. This event occurred following a number of years preparation and as a result of the requirements of the EC Investment Services Directive in relation to regulation of stock exchanges. As a result, the ISE and its Member Firms are now regulated by the Central Bank of Ireland pursuant to the provisions of The Stock Exchange Act, 1995.

Through agreement reached between the ISE and the LSE, Irish companies listed in Dublin and London on the date of separation have the unique opportunity to obtain a dual primary listing on both the Irish and London Exchanges after separation. If existing listed companies do not avail of this within the required three month period or if Irish companies subsequently obtain a listing on the ISE, such companies will be treated as overseas companies as regards any application for listing on the LSE. In practical terms, this means essentially that they would not be subject to regulation by the LSE, but only the ISE, and it may be that this is viewed less favourably by potential international (and, in particular, U.K.) investors in these Irish companies.

The new ISE will be managed by a Board of Directors established and operating in accordance with the relevant requirements of The Stock Exchange Act - one particular feature of which is the requirement that the Chairman must be independent of stockbroking firms.

The ISE will continue to use the LSE's Yellow Book as it's basic rules and regulations for listed companies, although there are some derogations - in some cases due to differences between Irish and British company law and others, in particular, arising in relation to differences of implementation of the Greenbury Report recommendations. The LSE requires in its Rules that U.K. listed companies set out in their annual report the remuneration packages of their Executive Directors, not by name but in order of remuneration. The ISE's corresponding rules require that listed companies give the aggregate of the Directors' remuneration, identifying separately Executive and non-Executive Directors' remuneration.

A further difference is that the ISE has introduced a requirement that not more than one-third of the directors can be co-opted, as opposed to elected by shareholders. If any event occurs which causes this one-third rule to be breached, an EGM of the Company must be held and, pending the EGM, no transactions of either a capital or revenue nature may be entered into by that company without informing the ISE and furnishing to the ISE a report of an independent adviser that the proposed transaction is fair and reasonable. A company in breach of this requirement will have its shares suspended.

Irish registered companies which have a dual listing on the ISE and the LSE will not have to implement the disclosure requirements made by the LSE in relation to the Greenbury recommendations, as the LSE has agreed that these should apply only to companies registered in the U.K.

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