Introduction

New Transparency Regulations, entitled the Transparency (Directive 2004/109/EC) (Amendment) (No. 2) Regulations 2015(the 2015 Regulations) came into force on 26 November 2015, and have been supplemented by revised Central Bank of Ireland(CBI) Transparency Rules dated November 2015. The new Regulations transpose Directive 2013/50/EU, which further amended the 2004 Transparency Directive.

The 2015 Regulations make further amendments to the principal Transparency Regulations of 2007, which were previously amended in 2010, in 2012, and also in February 2015.

This note, which is a summary for information purposes only, outlines some of the key changes which the 2015 Regulations have introduced to the existing transparency regime applicable to Irish PLCs whose debt or equity securities are traded on the Main Securities Market of the ISE, and also to closed-ended funds.

New notification requirements-holdings of instruments with a similar economic effect to shares 

The obligation to notify the acquisition or disposal of shares carrying voting rights now also applies to a person who holds financial instruments with a similar economic effect to holding shares or entitlements to acquire shares (that is, either cash-settled or physically-settled financial instruments). Under the 2015 Regulations, the following may be considered to be financial instruments:

  • Transferable securities.
  • Options and futures.
  • Swaps.
  • Forward rate agreements.
  • Contracts for differences.
  • Any other contracts or agreements with similar economic effects which may be settled physically or in cash.

There are detailed consequential new requirements which set out how voting rights are to be calculated, for disclosure purposes, where a person holds any of these instruments. This includes cases where the financial instrument provides exclusively for a cash settlement, in which event the number of voting rights is to be calculated on a “delta adjusted” basis[1].  

There are also new aggregation rules, which mean that a notification obligation may now arise, where the voting rights held directly or indirectly by a person, when aggregated with the number of voting rights relating to financial instruments held directly or indirectly by that person reaches, exceeds or falls below one of the thresholds for notification set out in the Regulations.

Home Member State- notification requirements

A new and more detailed definition of "home Member State" has been added. This says among other things that all issuers must communicate the choice of their home Member State to the competent authority of their home Member State, the competent authorities of all host member states and the competent authority of the member state where they have their registered office, where it is different from their home Member State.

Wider definition of "issuer"

The expression “issuer”, as defined by Regulation 2, has been indirectly amended, by expanding the expression "legal entity" as used therein to include not just entities with legal personality but also trusts, and what are described as "registered business associations without legal personality". The definition of "issuer" has also been directly amended, to include issuers of non-listed securities that are represented by depositary receipts admitted to trading on a regulated market.

Half-yearly financial reports

The deadline for publishing half-yearly financial reports has been extended from two to three months after the end of the reporting period.

Half- yearly, and Annual financial reports- public availability

The period during which an issuer's half-yearly and also annual financial reports must remain publicly available, has been increased from five to ten years.

Interim management statements no longer required to be published by issuers

The requirement to publish interim management statements has been abolished.

Additional periodic financial information, and more stringent rules for holders of shares etc. - new powers to CBI

The CBI has been given new powers:  (1) to require issuers to publish additional periodic financial information on a more frequent basis than annually and half- yearly in certain circumstances, including if the issuers are financial institutions or if the CBI thinks this would be appropriate, having regard to various factors; and (2) to make shareholders and others subject to more stringent disclosure rules than currently set out in the Regulations.

New stabilisation exemption

Helpfully, shares acquired (e.g. by underwriters in an IPO) for stabilisation purposes, where the voting rights are not exercised or otherwise used to intervene in the management of the issuer, are now exempt from the notification requirements.

New sanctions including suspension of voting rights

The CBI has now been given the power, under a revamped sanctions and measures regime, to impose very significant sanctions for contravention of the Transparency Regulations and Rules including, in the case of a company, a monetary penalty of up to the higher of €10m, 5% of turnover or twice the profits gained or losses avoided because of the contravention.

Furthermore, the CBI now has a new power to suspend voting rights attaching to shares, where there has been a failure to notify the acquisition or disposal of voting rights.

Publication of decisions

The CBI is required to publish all decisions on sanctions without undue delay. However, the publication of information can be delayed, or the information can be published on an anonymous basis, in limited circumstances, for example where the publication of a decision would seriously jeopardise the stability of the financial system. 

Changes to an Issuer's constitution/M&A

The obligation imposed by the 2007 Regulations on an issuer which was subject to the Transparency regime to send drafts of any proposed amendments to its constitution to the CBI, has been repealed. 

New standard notification forms 

New notification forms have been introduced for notifications of Home member States (available from the ESMA website) and for notifications of acquisitions or disposals of major holdings (available from the Central Bank's website). 

LINK TO THE NEW REGULATIONS

The 2015 Regulations (and also the earlier Transparency Regulations) can be accessed here:

http://www.centralbank.ie/REGULATION/SECURITIES-MARKETS/TRANSPARENCY/Pages/legislation.aspx

NEW CBI TRANSPARENCY RULES

The new CBI Transparency Rules can be accessed here:

http://www.centralbank.ie/regulation/securities-markets/transparency/Documents/Transparency%20Rules.pdf