Market overviewSize of market
What is the size of the market for initial public offerings (IPOs) in your jurisdiction?
At the date of writing this article, there are 21 companies listed on the Regulated Market of Euronext Dublin (formerly known as the Main Securities Market) and a total of 16 on the Euronext Growth market of Euronext Dublin (Euronext Growth).
There have not been any IPOs in 2023 thus far, with the last IPO in Ireland being that of Health Beacon plc in December 2021. A number of companies listed on the Irish market also have either de-listed or announced potential de-listings in 2023, with Engage XR Holdings plc having de-listed effective from 19 April 2023 and Diageo plc having also announced an intention to de-list in May. CRH plc is due to move its primary listing to the United States and has indicated its secondary listings are under review with a decision due on 26 April.
There were similarly no IPOs in 2022, but there were several delistings of companies following takeover processes. Following the acquisition of Yew Grove REIT plc by Slate Office Ireland Limited, Yew Grove’s shares were delisted on 9 February 2022. In addition, Hibernia REIT plc also delisted from both the Regulated Market and the London Stock Exchange (LSE) on 20 June 2022 following its takeover by a Brookfield entity. In addition, Tesco plc cancelled its secondary listing in Ireland in order to ‘simplify regulatory compliance obligations’ and T Stamp Inc similarly delisted on 14 October 2022.
While grappling with the aftermath of the covid-19 pandemic, the war in Ukraine and rising inflation rates, 2021 did see several IPOs and activity in the Irish capital markets landscape. HealthBeacon plc, an Irish digital therapeutics company specialising in the development of injectable medications for people at home, became the first alumnus of Euronext’s pre-IPO programme, IPOready, to list on Euronext. Its listing on 14 December 2021 raised a total of €25 million. Corre Energy BV, a Dutch incorporated hydrogen-based energy storage company, listed on Euronext Growth on 23 September 2021. With the offering totalling €12 million, Corre Energy BV’s listing was aimed at assisting it to achieve expansion across Northern Europe.
2021 also saw various moves between Euronext Growth and the Regulated Market, including the aforementioned Yew Grove’s ‘step up’ from Euronext Growth to the Regulated Market in May 2021. Similarly, Molten Ventures plc, formerly Draper Espirit plc, moved to the Regulated Market from Euronext Growth (along with a similar move to the main market of the LSE) in July 2021. Conversely, in July 2021, Datalex plc delisted its ordinary shares from the Regulated Market and was admitted to trading on Euronext Growth.Issuers
Who are the issuers in the IPO market? Do domestic companies tend to list at home or overseas? Do overseas companies list in your market?
Issuers are generally domestic Irish companies headquartered in Ireland. Many Irish companies undertaking an IPO seek a dual listing, typically with the second listing being on either the LSE’s main market or the Alternative Investment Market (AIM). This is primarily to obtain greater liquidity and is facilitated by broadly similar eligibility and ongoing general compliance requirements as among Euronext Dublin and the LSE markets. Where a dual listing is not favoured for any commercial or technical reasons, Irish companies typically tend to proceed with a sole listing on either Euronext Dublin or the LSE, as is most beneficial in the given circumstance. It remains to be seen if LSE listings of Irish companies will continue to be as popular in the post-Brexit landscape.
While in the minority, several overseas companies (primarily UK incorporated companies) are admitted to trading on Euronext Dublin’s markets, the most recent being Corre Energy BV which listed on Euronext Growth on 23 September 2021. Given Brexit, Euronext Dublin is now technically the main English-speaking exchange within the European Union subject to EU law regimes, such as the passporting regime. This could lead to an increase in IPOs (particularly secondary listings) from other jurisdictions, particularly issuers currently on the UK markets wanting to retain an EU base for various reasons including passporting and access to the market. Partially for this reason, some UK companies obtained a listing in Ireland (eg, Hammerson plc and SCISYS Group plc) and it is notable that the US entity Trust Stamp chose Euronext Growth as the location for its direct listing (albeit subsequently delisting). However, the number of listings has been limited and media commentary has noted that the number of new listings on Euronext Dublin post-Brexit has been less than hoped.Primary exchanges
What are the primary exchanges for IPOs? How do they differ?
Euronext Dublin is the only equity exchange for IPOs in Ireland and is a recognised stock exchange for the purposes of EU legislation. On 27 March 2018, Euronext completed its acquisition of the Irish Stock Exchange with Ireland, becoming one of the (now) seven core countries of Euronext. The Irish Stock Exchange has joined Euronext’s federal model and now operates under the trading name Euronext Dublin.
There are three equity capital markets on Euronext Dublin: the Regulated Market, Euronext Growth and the Atlantic Securities Market (ASM).
The Regulated Market is the primary equity securities market in Ireland and the only market in Ireland authorised by the Central Bank of Ireland under the European Union (Markets in Financial Instruments) Regulations 2017 as an EU-regulated market. The Regulated Market is typically selected by larger, more mature companies.
Euronext Growth is Euronext Dublin’s junior market and is largely based on AIM and has been designated as an SME Growth Market for the purposes of EU legislation. In a similar manner to AIM, companies trading on Euronext Growth are not subject to the same level of regulation as those trading on the Regulated Market. It remains to be seen whether a divergence between Euronext Growth and AIM will now develop in light of Brexit and the link with the Euronext system. There are different eligibility requirements for admission to trading on the Regulated Market and Euronext Growth.
The ASM is a relatively new market. This market is focused on companies listed on the New York Stock Exchange (NYSE) and Nasdaq exchanges, and it enables issuers to operate a dual US/EU listing (with trading in euro- and dollar-denominated securities). There have not yet been any companies admitted to ASM.
Which bodies are responsible for rulemaking and enforcing the rules on IPOs?
The principal rules for the admission of securities to the Regulated Market are contained in the Euronext Dublin Rule Book, Book II: Listing Rules, which is read in conjunction with the harmonised Euronext-wide Rule Book I (together, the Listing Rules).
For Euronext Growth companies, the principal rules are contained in the Euronext Growth Markets Rule Book (Euronext Growth Rules), with Part II of this containing rules specifically applicable to the Euronext Growth market operated by Euronext Dublin. A new version of Part II of the Euronext Growth Rules was issued relatively recently and became effective on 1 April 2022.
Other stock exchange rules include the ASM Rules for Companies and the relevant rules applicable to sponsors and advisers (for example, the Equity Sponsor Rules for the Regulated Market). Euronext and Euronext Dublin are the competent authorities in relation to these various rules.
Euronext and Euronext Dublin have broad powers to make and modify the rules and to oversee compliance with the rules by issuers, prospective issuers, sponsors, as well as Euronext Growth Listing Sponsors and ASM Advisors. Issuers, sponsors and advisers can be censured by Euronext and Euronext Dublin for breach of the applicable rules and, ultimately, where merited, issuer listings can be suspended or cancelled.
Aside from the market rules created by Euronext and Euronext Dublin, many other legislative regimes also apply with the legal framework in Ireland being primarily based on EU law. In this regard, the Central Bank of Ireland (CBI) is the overall competent authority for overseeing the legal framework for securities markets regulation in Ireland.
The Regulated Market is a regulated market for the purposes of Directive 2014/65/EU (Markets in Financial Instruments Directive II (MiFID II)) and therefore Regulation 2017/1129/EU (the Prospectus Regulation) applies to companies listing on the Regulated Market. The Prospectus Regulation will also apply to IPOs on Euronext Growth in cases where there is an offer of securities to the public and an exemption under the Prospectus Regulation is not available.
Where the publication of a prospectus is required, the CBI undertakes the required review and prospectus approval process. In certain instances where the issuer’s registered office is in a European Economic Area (EEA) member state other than Ireland, a separate EEA regulator may take carriage of this approval process. The CBI has issued various rules and guidance including Part 4 of the Central Bank (Investment Market Conduct) Rules 2019 and its ‘Guidance on Prospectus Regulatory Framework’, which set out further specific practical requirements and guidance around the CBI review and approval process, as well as on the required content and publication process for prospectuses.
In addition, there are various other statutes, rules and regulations of which IPO issuers will need to be aware. These include the Companies Act 2014 (which consolidated Irish company law into a single code), EU-derived and domestic market abuse regulations, transparency, financial instruments, corporate governance and reporting regulations and rules.Authorisation for listing
Must issuers seek authorisation for a listing? What information must issuers provide to the listing authority and how is it assessed?
Aside from the prospectus publication and Euronext Dublin application requirements, an issuer and its securities proposed for admission to trade on the Regulated Market need to meet certain eligibility requirements set out in the Listing Rules. Euronext Dublin holds discretion to dispense with or modify certain requirements where it deems appropriate. Some of these key requirements for listing equity shares are as follows:
- An applicant must have published or filed audited financial statements or pro forma accounts, consolidated with subsidiaries where applicable, for the preceding three financial years.
- This historical financial information must represent at least 75 per cent of the applicant’s business for that three-year period.
- The latest balance sheet date should not be more than six months before the date of the prospectus and not more than nine months before the date the shares are admitted to listing.
- An applicant must satisfy Euronext Dublin that it and any subsidiaries have sufficient working capital available to cover the group's requirements for at least the next 12 months from the date of publication of the prospectus.
- The expected aggregate market value of all securities (excluding treasury shares) to be admitted to listing must be at least €1 million.
- At the time of admission to trading on the Regulated Market, at least 25 per cent of the subscribed capital must be in public hands (free float).
- An applicant must be operating in conformity with its memorandum and articles of association (or other equivalent constitutional documents).
- There are also various incorporation and independence-related requirements (such as demonstrating that the applicant will be carrying on an independent business as its main activity, which can prove difficult where there is any shareholder over the 30 per cent ‘control’ threshold).
Additionally, the securities to which the application to list relates must comply with applicable laws and regulations governing those securities, the applicant's articles of association, other constitutional documents and any Irish-law requirements. The applicant must ensure the securities are capable of being traded in a fair, orderly and efficient manner; and in the case of transferable securities, are freely negotiable. Generally, shares must be fully paid and free from all liens or restrictions on the right to transfer.
An issuer on Euronext Dublin must appoint a sponsor for the duration of the listing, who must be registered with Euronext Dublin. The sponsor must respect various obligations and responsibilities included in the Listing Rules and the Rules for Equity Sponsors.
The eligibility requirements for applicants looking to list on Euronext Growth are less prescriptive, and again, Euronext Dublin holds some discretion to relax certain rules. In general, it is normal for a company looking to list on Euronext Growth to have a two-year trading record and a minimum market capitalisation of €5 million. Similar to the equity sponsor for the Regulated Market, an issuer on Euronext Growth is required to appoint a Euronext Dublin approved Euronext Growth Listing Sponsor (previously referred to as a Euronext Growth Advisor) who is subject to its own rules and requirements. Again, the Euronext Growth Listing Sponsor has various responsibilities, particularly assessing the applicant's suitability for admission and making certain confirmations to Euronext Dublin.
When a dual listing is being undertaken, eligibility requirements will need to be satisfied in both jurisdictions in which the applications to list have been made. Accordingly, in the case of a Euronext Dublin and London Stock Exchange (LSE) dual listing, correspondence will also need to be entered into with the Financial Conduct Authority of the UK. The eligibility requirements of the Regulated Market are broadly similar to the eligibility requirements of the premium listing segment on LSE’s main securities market, as are the eligibility requirements of Euronext Growth to the Alternative Investment Market (AIM).
However, it should be noted that the Financial Conduct Authority of the UK released a new Conduct of Business Sourcebook (COBS) in 2017 that affects, among other things, the quality of information that companies are required to make available to market participants during certain UK IPOs (this has been in effect since 1 July 2018). These rules provide that an approved registration document (which contains most of the substantive content of the prospectus) must be made available to investors earlier in the IPO process (and before any connected research is released), and that unconnected analysts must be given reasonable access to an issuer's management and the same information relating to the offering as connected analysts (with the intention of improving the quality of research reports). While the rules are not directly applicable to Ireland, it has impacted the timetable of Euronext Dublin IPOs as many issuers seek dual listings in Ireland and London, and many of the analysts are UK based.Prospectus
What information must be made available to prospective investors and how must it be presented?
Subject to limited exceptions, a company listing on the Regulated Market and, in certain cases as described below, a company listing on Euronext Growth must publish a regulator-approved prospectus. The Prospectus Regulation, together with the European Union (Prospectus) Regulations 2019 in Ireland (or equivalent regulations in other EEA countries if an EEA regulator has standing to approve the prospectus), set out the requirements for content inclusion in the prospectus and related matters. The role of the regulator in question is to ensure that the various content requirements set out in the prospectus legislation are met and to examine the prospectus for its completeness, comprehensibility and consistency.
The Prospectus Regulation (fully in force since 21 July 2019) has implemented significant changes to the prospectus regime to streamline and simplify prospectuses. Some of the key content requirements for prospectuses now include:
- a summary of the prospectus (which is limited to seven pages);
- the identities of directors, senior management, advisers and auditors – ie, the persons responsible for preparing the prospectus;
- the offer statistics and expected timetable;
- essential information, to include:
- selected financial data;
- capitalisation and indebtedness;
- reasons for the offer and use of proceeds; and
- risk factors associated with the issuer, its business area and the securities (but only material risk factors up to a maximum of 15);
- information on the issuer, to include:
- history and development;
- business overview;
- organisational structure; and
- property, plant and equipment;
- the operating and financial review and prospects;
- information on the directors, senior management and employees (including remuneration, board practices and share ownership);
- major shareholders and related-party transactions;
- financial information;
- details of the offer and the admission to trading details; and
- any additional information, primarily of a statutory nature, not covered elsewhere (eg, share capital, material contracts, constitutional documents).
More generally, the prospectus is required to contain all material information necessary to enable investors to make an informed assessment of the assets and liabilities, profits and losses, financial position, the prospects of the issuer and any guarantor, as well as the rights attaching to the securities, the reasons for the issuance and its impact on the issuer.
The summary of the prospectus is required to:
- be concise;
- be written using non-technical language;
- provide potential investors with the key information they need in order to understand the nature and the risks of the issuer, the guarantor and the securities that are being offered; and
- be read together with the other parts of the prospectus.
Part 4 of the Central Bank (Investment Market Conduct) Rules 2019 and the CBI's Guidance on Prospectus Regulatory Framework should also be factored into the preparation of any prospectus in Ireland. There are also several relevant European Commission delegated regulations in respect of the content of prospectuses.
In certain cases, on regulator consent, certain information may be omitted from the prospectus and certain issuers (for example, small and medium-sized enterprises (SMEs) or issuers with an existing listing on an SME Growth Market) may prepare forms of prospectuses (for example, the EU Growth prospectus) with reduced disclosure requirements (albeit such prospectuses still need enough information to enable investors to make an informed investment decision). Simplified prospectuses may also be permitted in the case of secondary issuances. Regular issuers may also prepare a universal registration document that facilitates less detailed prospectuses when undertaking a new issuance or admission and an accelerated approval process. The EU also recently introduced an EU Recovery Prospectus in response to the pandemic to assist companies in raising capital in a more streamlined manner with an associated short-form prospectus.
There is no primary obligation to publish a prospectus for issuers seeking a listing and admission to trading on the Euronext Growth market. However, a requirement to do so may arise under the Prospectus Regulation if there is a public offering of securities that does not fall within one or more of the exemptions detailed in the Prospectus Regulation. If a prospectus is required in connection with an admission to Euronext Growth, this is likely to be the EU Growth prospectus considering Euronext Growth's designation as an SME Growth Market.
In the absence of a requirement to publish a prospectus, an information document (more commonly referred to as an admission document) must be prepared for a Euronext Growth listing (as well as a separate pre-admission announcement). The content requirements for an admission document are set out in the Euronext Growth Rules. These content requirements are similar, but lighter, than the content requirements for a prospectus. The admission document does not have to be approved by the CBI but does need to be filed with Euronext Dublin. Euronext Dublin will review the admission document for completeness, consistency and comprehensibility. A fast-track process may apply for certain companies already traded on an eligible market.Publicity and marketing
What restrictions on publicity and marketing apply during the IPO process?
It is a key facet of the IPO process that care is taken in terms of marketing and publicity, as well as in terms of document content prepared for investor meetings or circulation. Many of the requirements derive from the Prospectus Regulation, Market Abuse Regulation and from other statutes and common law.
Fundamentally, all information contained in a prospectus, admission document or other IPO-related materials (in particular ‘early look’ or roadshow investor meetings materials) are vetted and verified such that the statements contained in them are evidenced by third party or other corroboration, or otherwise are validly held management or director belief statements. A failure to undertake this level of discipline could ultimately leave the issuer, officers or management of the issuer open to potential legislative or regulatory breaches or to charges of misrepresentation.
The COBS provisions have impacted some of the traditional marketing in practice, which would have traditionally included a presentation to connected research analysts in advance of the intention to float announcement. In practice, many listings in Ireland may now be required to follow the COBS provisions (particularly for dual listings), and this dictates when briefings with analysts can take place and the publication date of analysts' reports.
Advertisements relating to a public offer or admission to trading should comply with certain principles contained in the Prospectus Regulation. Any such advertisement should state that a prospectus has been or will be published, and where a copy of it can be obtained. The advertisement should not be inaccurate or misleading and the information contained in the advertisement should be consistent with that contained in the prospectus. Considering this, it is typical that an IPO applicant would have publicity guidelines drawn up and put in place towards the start of an IPO process.Enforcement
What sanctions can public enforcers impose for breach of IPO rules? On whom?
Under the Listing Rules and the Euronext Growth Rules, matters may be referred to the Disciplinary Committee of Euronext Dublin for adjudication where Euronext Dublin considers there to have been a contravention of the Listing Rules. If the Disciplinary Committee finds there has been a contravention, it may censure the issuer and publish such censure, and suspend or cancel the listing of the issuer’s securities. Moreover, if the Disciplinary Committee finds that the contravention was as a result of the failure of all or any of an issuer’s directors to discharge their responsibilities, the relevant director or directors can also be censured and that censure published.
Prospectuses must contain certain information. The issuer, directors of the issuer, and in certain circumstances other persons to include those who have authorised the contents of the prospectus, are deemed responsible for the content of the prospectus. Such responsible persons are required to include declarations in the prospectus that, to the best of their knowledge, the information therein contained is in accordance with the facts and that there are no omissions from the prospectus likely to affect its import.
In Ireland it is a criminal offence under the Companies Act 2014 to issue a prospectus that includes any untrue statement or omits any information required by EU prospectus law. Any person responsible who authorised the issue of the prospectus will be guilty of an offence unless they can prove:
- that an untrue statement was immaterial or they honestly believed it to be true up to the time of issue;
- in the case of an omission, that it was immaterial or that they did not know about it; or
- in either case, that making the statement or omission ought reasonably to be excused.
A person guilty of such an offence may be liable on conviction on indictment to a fine not exceeding €50,000 or imprisonment of a term of up to five years, or both.
Offering or admitting securities without a prospectus where one is required is also an offence and a person guilty of such an offence may be liable on conviction on indictment to a fine of up to €1 million or imprisonment of a term of up to five years, or both.
Pursuant to the 2019 Regulations, the CBI is the competent authority in Ireland in respect of the Prospectus Regulation, to oversee compliance with the Prospectus Regulation and to investigate potential breaches of prospectus law in Ireland. In addition to the criminal sanctions above, the CBI has various powers of assessment and investigation and may impose administrative sanctions under the 2019 Regulations in respect of contraventions of certain provisions of the Prospectus Regulation or the 2019 Regulations. Sanctions include censures, directions, various monetary penalties and disqualifying the assessee from being concerned in the management, or having a qualifying holding in, any regulated financial service provider.
Separately, the Corporate Enforcement Authority (which has replaced the Office of the Director of Corporate Enforcement as an independent statutory body with wider powers) also has an investigative and enforcement function (generally in respect of compliance with corporate laws and regulations in Ireland) and has the power to prosecute persons for breaches of the Companies Act.
Timetable and costsTimetable
Describe the timetable of a typical IPO and stock exchange listing in your jurisdiction.
There is no set time frame for an IPO; however, typically an IPO on the Regulated Market using a long-form prospectus will require four to six months to complete.Although a dual listing in the UK may generally have knock-on effects on the timetable, this is particularly true in light of the new Conduct of Business Sourcebook (COBS) provisions in the UK (which requires earlier approval of the registration document). A Euronext Growth IPO should enjoy a shorter time frame (particularly given this will not usually require a prospectus approval process) and, in particular circumstances, may be achievable within a three-month period.
Factors that may affect timing include:
- the nature and complexity of the issuer’s assets;
- history and sector;
- the level of any required pre-IPO preparation carried out by the issuer;
- any particular legal complexities or additional workstreams relevant to the transaction (for example, regulatory workstreams);
- market conditions; and
- sufficient issuer and adviser resources being in place.
The timetable of a traditional Regulated Market IPO in Ireland might look as follows (which will vary depending on the factors involved including whether it is a dual IPO with the UK and the applicability of COBS, etc):
Four to six months prior to IPO
Engagement with the sponsor bank is made and early look investor meetings are held to gauge likely investor appetite and to help refine the investment strategy and issuer approach.
Selection and engagement of the IPO adviser team commences. The team appointed will include the lead bank sponsor or Euronext Growth Listing Sponsor, the nominated adviser, the issuer’s legal and accounting advisers and the bank’s legal advisers. For dual listing IPOs, legal advisers to both the issuer and the sponsor will also need to be engaged in the second jurisdiction.
The issuer ensures it has the appropriate resources in terms of personnel and systems.
System controls and processes are put in place in light of the impending legal and financial due diligence processes and all IPO corporate, accounting and tax structural considerations to be addressed.
Publicity guidelines are prepared and circulated.
An all-party kick-off meeting is held to determine appropriate timelines, workstreams and project management items.
Legal and financial due diligence processes commence.
Prospectus drafting commences.
Preparation of a long-form financial report and working capital report commences.
One to four months prior to IPO
Legal and financial diligence processes are brought through to completion.
Prospectus drafts are submitted to the CBI and replies are made to consequent CBI queries. The prospectus is brought through to CBI approval form.
The prospectus is verified.
The long-form financial report and working capital report is completed.
The issuer board of directors is convened at appropriate milestones to approve relevant matters and to be advised of their duties as directors in the context of a prospectus and as directors of a (soon to be) public listed company.
All associated documentation to include board documentation, policy documents, comfort letters and the constitution to be adopted by the issuer on or before IPO completion, is drafted.
Two to four weeks prior to IPO
The placing or underwriting agreement is negotiated.
Any cornerstone subscription agreements are finalised.
All other processes are finalised.
A board meeting is held to review and approve the pathfinder prospectus or registration document.
The pathfinder prospectus or registration document is finalised and published.
Final two weeks prior to IPO
Depending on applicability and approach to COBS, there is a seven-day briefing of unconnected analysts, following which any research reports are published.
The intention to float announcement is made.
Marketing roadshows or investor education and book-building commences.
The final share pricing and allocation is determined.
The transaction documentation is signed.
The prospectus and formal application to Euronext Dublin is submitted.
The price is announced, and conditional dealings commence.
Impact day + three
Admission of the shares of the issuer to trading and unconditional dealings commence.
What are the usual costs and fees for conducting an IPO?
We see aggregate IPO transaction costs, depending on the level of funds raised, ranging between 1 per cent and 5 per cent of the total funds raised in an IPO. Generally, the underwriters or fundraisers are retained on a primarily success-fee-only basis, paid with commission earned on funds raised. Other key transaction fees will involve lawyer and accountant fees, and it is worth noting that advisers may have to be engaged across several jurisdictions, depending on the nature of the transaction. As many companies dual list in Ireland and the UK, there will be Irish and UK legal advisory fees. If an issuer is raising any of its funds from the US or from non-EEA jurisdictions, this will bring an extra layer of advisory costs.
In respect of both the Regulated Market and Euronext Growth, there are two primary categories of fee payable: (1) the admission fee, which is a one-time fee payable at the time of the initial listing and (2) the annual fees, which are payable annually in order to retain a listing. Fees are calculated on the market capitalisation of the securities of the issuer or securities being admitted.
The initial admission fees on the Regulated Market range from €100,000 (for market capitalisations of up to €250 million) to €250,000 (for market capitalisations over €1 billion). The annual fee for a company on the Regulated Market ranges between €7,000 and €25,000 depending on market capitalisation.
The initial admission fees on Euronext Growth range from €10,000 (for market capitalisations of up to €100 million) to €60,000 (for market capitalisations greater than €250 million). Annual fees payable thereafter range from €5,000 to €8,000 depending on market capitalisation.
Atlantic Securities Market admission fees range from €2,000 (for market capitalisations of less than US$10 million) to €70,000 (for market capitalisations between US$1 and US$2 billion). Annual fees payable thereafter range from €15,000 to €30,000 depending on market capitalisation.
Corporate governanceTypical requirements
What corporate governance requirements are typical or required of issuers conducting an IPO and obtaining a stock exchange listing in your jurisdiction?
The Listing Rules require that all Irish companies listed on the Regulated Market include in their annual report a description as to the extent of the company’s application of the principles of the UK Corporate Governance Code (the UK Code) and the Irish Corporate Governance Annex (the Irish Annex) issued by Euronext Dublin. There is a ‘comply or explain’ requirement such that, if there are provisions of the UK Code or the Irish Annex that have not been complied with, the company is required to state the reasons for the non-compliance and provide a clear outline of the rationale for this divergence in its annual report. Where a company does not comply with a provision of the UK Code or the Irish Annex but actively intends to comply with it in the future, it should include an explanation of how it intends to comply. Non-Irish companies are required to outline compliance with their local corporate governance regimes and the ways this differs from the UK Code and Irish Annex.
Under the UK Code and the Irish Annex, some of the key items that are addressed include:
- board composition and effectiveness;
- board appointments and re-election;
- independence of directors;
- board committees and remuneration;
- relations with shareholders; and
- board evaluation and accountability.
The European Union (Shareholders' Rights) Regulations 2020 recently came into force to give effect to EU Directive 2017/828. This applies to companies traded on a regulated market, such as the Regulated Market (but not Euronext Growth). In addition to existing shareholders' rights provisions, key changes include those in respect of:
- remuneration policy and votes (requirements on a more specific and detailed remuneration policy, preparation of a remuneration report and votes on pay);
- shareholder information (intermediaries to provide information on ultimate shareholders);
- related party transactions (announcement of material related party transactions before their conclusion and related procedures); and
- transparency (transparency obligations of institutional investors and asset managers).
There is a degree of overlap between some of these provisions and existing provisions of the Listing Rules, the UK Code and the Irish Annex, but some of these provisions are more prescriptive and go into further detail (for example, around the requirements of the remuneration policy and report).
Issuers on Euronext Growth have slightly lesser obligations in terms of corporate governance, but such an issuer must state in its admission document and (on an ongoing basis) on its website about which corporate governance code it does or will apply, how it complies with such code and, where relevant, explain the reasons for departing from its chosen code. In addition, if it does not apply a corporate governance code, this should be stated with its current corporate governance arrangements. However, best practice would be to apply the provisions of the UK Code and Irish Annex where possible.
Other relevant regimes to be conscious of include the general provisions of the Irish Companies Act 2014, the EU Transparency Directive (2004/109/EC) regime (generally only applicable to those on a regulated market) and the EU market abuse regime.New issuers
Are there special allowances for certain types of new issuers?
While Euronext Dublin maintains a general discretion in relation to applications to list on any of its markets, there is provision in the Listing Rules that a derogation of certain eligibility criteria can apply to mineral companies and scientific research-based companies (as each is defined in the Listing Rules). These derogations are subject to certain minimum capitalisation and other conditions that may be imposed.
No particular allowances are made for any other type of issuer, for example, smaller or growth companies; however, Euronext Growth’s less stringent eligibility criteria and regulatory regime may be better suited to, and more manageable, for smaller companies. There are, however, no prescriptive factors dictating the choice of market of the issuer other than the eligibility requirements.
Where a prospectus is required, certain categories of issuer (for example, small and medium-sized enterprises (SMEs) or those on SME Growth Markets) may benefit from a shorter-form prospectus or more streamlined procedures.Anti-takeover devices
What types of anti-takeover devices are typically implemented by IPO issuers in your jurisdiction? Are there generally applicable rules relevant to takeovers that are relevant?
Ireland’s takeover compliance regime comprises the Irish Takeover Panel Act 1997 (as amended), the European Communities (Takeover Bids) Regulations 2006 (as amended), the (Irish) Takeover Rules and the Substantial Acquisition Rules. A new set of Takeover Rules became effective on 22 July 2022, the first significant update for a number of years.
The regime can apply in respect of takeovers or takeover bids of companies incorporated in Ireland, as well as whose shares are traded on a regulated market in Ireland or another EU or European Economic Area state, or whose shares are, or have in the previous five years been, traded on Euronext Dublin (including Euronext Growth), the London Stock Exchange (including the Alternative Investment Market), New York Stock Exchange or Nasdaq. It can also apply in certain circumstances to takeovers or takeover bids of non-Irish companies whose shares are traded on Euronext Dublin. Shared jurisdiction with other states’ takeover rules can apply in certain circumstances. The Irish Takeover Panel is the statutory body responsible for monitoring compliance with the Takeover Rules and associated legislation. Notably, given Brexit, the Irish Takeover Panel now has full (rather than shared) jurisdiction in respect of takeover bids of Irish companies listed only on a regulated market in the UK.
The Takeover Rules primarily exist to ensure takeovers and takeover bids comply with certain general principles and are conducted within an orderly framework to include that a mandatory offer is required in respect of the acquisition of 30 per cent of the voting rights in a relevant company. The Substantial Acquisition Rules additionally restrict how quickly a party may increase their holdings of voting securities in a relevant company between 15 per cent and 30 per cent of the voting rights.
Anti-takeover devices are not typically implemented by IPO issuers in Ireland and anti-takeover defences are normally conducted through defence documents, shareholder communications or other actions such as dividend declarations and share buyback opportunities after a hostile bid has been made. The Takeover Rules carry a general prohibition against frustrating actions, and a concern may also be that the insertion or implementation of anti-takeover devices pre-emptively may conflict with the general duty of directors to act in the interests of the company and shareholders as a whole. However, in a hostile circumstance a target may attempt to establish there has been concerted action between shareholders, as shareholders acting in concert may be viewed as a single shareholder or offeror for the purposes of the Takeover Rules (perhaps requiring an early-stage mandatory offer). The Companies Act also provides that a company can raise queries with registered shareholders as to the identity of beneficial holders of the shares held by them, which may assist in establishing whether some of the shareholder bases are connected.
Foreign issuersSpecial requirements
What are the main considerations for foreign issuers looking to list in your jurisdiction? Are there special requirements for foreign issuer IPOs?
A Euronext Dublin listing provides access to a euro-quoted, European Union, English-speaking exchange and its associated market investors. As part of the Euronext federal model, Euronext Dublin now has access to a deeper pool of liquidity and is able to leverage Euronext corporate services for small and medium-sized enterprises and technology companies to support scaling companies in Ireland.
In considering which market to select, the Regulated Market may provide a better platform in terms of liquidity and accentuating a foreign issuer’s profile in Ireland or Europe (as applicable). Alternatively, the less stringent eligibility criteria and regulatory regime of Euronext Growth may suit certain foreign issuers better, particularly in instances where they may not have a substantive presence in Ireland.
US companies listed on the New York Stock Exchange (NYSE) or Nasdaq may be attracted to the possibility of creating a dual listing in Ireland on the Atlantic Securities Market (ASM). The ASM’s regulatory regime and entry requirements are relatively compatible with the Security and Exchange Commission (SEC) requirements and registration documentation (with limited additional disclosures required). In addition, companies on the ASM can use US Generally Accepted Accounting Principles for financial reporting and, in most cases, trading is stamp-duty free.
There are no particular requirements for foreign issuer IPOs; however, an applicant must be acting in accordance with its constitution and be duly incorporated or validly established under, and its securities must conform with, the law of its place of incorporation. It is also required that certain pre-emption rights are conferred on shareholders.
As per the Listing Rules, Euronext Dublin will not admit shares of a company incorporated in a non-European Economic Area (EEA) state that are not listed either in its country of incorporation or in the country in which a majority of its shares are held, unless Euronext Dublin is satisfied that the absence of the listing is not because of the need to protect investors.
Issuers from within the EEA looking to list and admit their shares for trading on the Regulated Market will generally not have to publish a new prospectus where they already have a prospectus approved in their home member state. In such circumstances, a passporting application can be made whereupon the relevant approving regulator shall supply the CBI with a copy of the approved prospectus, a certificate of its approval and, if applicable, an English translation of the summary section of the prospectus.
Companies that have their securities traded on an eligible market (outlined at Appendix I of the Euronext Growth Rules, including any regulated market, any multilateral trading facility within the meaning of Directive 2014/65/EU (MiFID II), any of the markets operated or organised by the Swiss Exchange, the Toronto Exchange or the Johannesburg Stock Exchange, any US market registered with the SEC as a national securities exchange and the Australian Securities Exchange) for at least 18 months before seeking admission to Euronext Growth can be fast-tracked, meaning an admission document would not have to be published but rather a detailed pre-admission announcement submitted (unless a prospectus is required).Selling foreign issues to domestic investors
Where a foreign issuer is conducting an IPO outside your jurisdiction but not conducting a public offering within your jurisdiction, are there exemptions available to permit sales to investors within your jurisdiction?
There are certain prescribed circumstances when a prospectus does not have to be published in respect of offers of securities to the public. Some of the most relied upon exemptions under the Prospectus Regulation (there are numerous) are as follows:
- an offer of securities addressed solely to qualified investors (as defined within the Prospectus Regulation);
- an offer of securities addressed to fewer than 150 natural or legal persons per member state other than qualified investors;
- an offer of securities whose denomination per unit amounts to at least €100,000;
- an offer of securities addressed to investors who acquire securities for a total consideration of at least €100,000 per investor, for each separate offer; or
- an offer of securities to the public with a total consideration in the EU of less than €1 million (calculated over a period of 12 months), with member states having the option to increase this amount to €8 million. Under the European Union (Prospectus) Regulations 2019 as amended by the European Union (Prospectus) (Amendment) Regulations 2019, Ireland has availed of this discretion and exempted offers of securities to the public in Ireland where the total consideration for the offer does not exceed €8 million (however, other jurisdictions into which an offer is being made would need to be considered).
Consideration should also be given to the local offer regime in Ireland that applies to offers of securities to the public in Ireland where a prospectus is not published, and the offer expressly limits the total consideration for the offer to more than €100,000 and less than €8 million. If an offering document is prepared in respect of such a local offer, this must contain certain prescribed information and be filed with the Irish Companies Registration Office. The offering document is defined as a document prepared for a local offer that, if prepared in connection with an offer to which the Prospectus Regulation applies, would be a prospectus. Many of the same exemptions applicable to the Prospectus Regulation also apply to local offers.
Care would also need to be taken in respect of any marketing from a general regulatory perspective (including the MiFID II and Market Abuse Regulation regimes).
Are there any unique tax issues that are relevant to IPOs in your jurisdiction?
The issue of new shares through an IPO should not attract stamp duty. However, the transfer of such shares thereafter (on the Regulated Market only) will generally be subject to stamp duty where the company holds its share register in Ireland. A stamp duty exemption for trading shares on Euronext Growth was introduced in 2017.
Shares bought back by a listed company from existing shareholders should be subject to capital gains tax in the hands of the shareholder rather than being subject to income tax, which carries a higher rate. The current rate of capital gains tax in Ireland is 33 per cent. Certain exceptions and reliefs from capital gains tax can apply depending on the circumstances.
Companies should also consider whether any existing employee share option schemes require the exercise of the option prior to any IPO.
A company contemplating a listing should consider whether the change in the ownership structure of the company would cause any clawbacks of any tax relief previously claimed by the group, and consider any taxation aspects that may arise as a result of any pre-IPO corporate restructuring that may take place.
In which fora can IPO investors seek redress? Is non-judicial resolution of complaints a possibility?
In Ireland, an investor who has suffered a financial loss may seek redress through the courts.
Where the quantum of the claim is over €1 million, the dispute may be entered into the Irish Commercial Court. The benefit of the Commercial Court is a case-managed approach by the judiciary, which leads to matters being heard more promptly.
Disputes may also be resolved by way of alternative dispute resolution (ADR) where the parties have entered into an agreement with a binding ADR clause or agreed to enter into a binding ADR process. In recent years, the Irish judiciary has encouraged parties to engage in mediation at the outset of a dispute, and the Mediation Act 2017 requires a solicitor to advise his or her client of the benefits of mediation. A party who refuses a request to mediate a dispute may potentially be penalised by an adverse costs award against it.Class actions
Are class actions possible in IPO-related claims?
Although there are no Irish provisions specifically relating to a class action procedure, in certain circumstances the courts have allowed a test case (or test cases) to proceed where the test case is representative of a number of cases that arise out of an identical or similar set of circumstances or facts.
Where a test case process is allowed by the court, each claimant must have initiated their own separate set of court proceedings, agree to their proceedings being part of the representative group and agree to be bound by the outcome of the test case.
Alternatively, a number of investors may file a single set of court proceedings and progress these proceedings as co-plaintiffs; although this can be impractical where the number of potential claimants is high.
While not previously common, there have been a number of substantial representative group claims progressed in the Irish courts in recent years in the area of financial services litigation, and the courts are open to this method of progressing claims because of its time and cost efficiency.Claims, defendants and remedies
What are the causes of action? Whom can investors sue? And what remedies may investors seek?
Outside of potential criminal sanctions for breaches of Irish or EU prospectus law, Irish legislation provides that a variety of persons may be liable to pay compensation to persons who acquire any securities based on a prospectus. Generally, the claimant must have suffered loss by reason of any untrue statement in a prospectus or by reason of the omission of information required to be contained in the prospectus. A statement included in a prospectus shall be deemed to be untrue if it is misleading in the form and context in which it is included.
The issuer, directors of the issuer and certain other persons, including guarantors and experts whose statements are consensually included in the prospectus, may be held liable. An expert may also be held liable for an untrue statement in a prospectus. The legislation (primarily the Companies Act 2014) contains certain exceptions and exemptions to this liability, including where a person did not know of or consent to the issuance of a prospectus or had reasonable grounds to believe that an untrue statement was true. Additionally, a person will not be held liable solely based on a prospectus summary unless it is misleading, inaccurate or inconsistent when read together with other parts of the prospectus.
Where a claim relating to the information contained in a prospectus is brought before a court, the plaintiff investor might have to bear the costs, if applicable, of translating the prospectus before the legal proceedings are initiated.
In addition, depending on the facts of each case, there may be several other remedies open to an investor. The most common, as in the UK, is a claim of damages in tort based on negligent misstatement, deceit or fraud (including conspiracy to defraud). The basic principle is that the investor must be able to demonstrate loss. An investor could also potentially bring a claim for rescission in contract for misrepresentation.
Update and trendsKey developments
Are there any other current developments or emerging trends that should be noted?Trends
There has been a lot of consolidation in the wider global capital markets, which has potentially been influenced by various factors, including the aftermath of the covid-19 pandemic, the conflict in Ukraine and the consequential rise in fuel and food prices, which has led to a general sense of global uncertainty in the marketplace. This has been reflected in Ireland with a relatively high number of takeover processes and de-listings, which have either been completed or put in train on Irish-listed markets throughout 2021 and into 2023. In this regard, Yew Grove and Hibernia both delisted from the Regulated Market in 2022 following takeovers, and Applegreen plc, CPL Resources plc and Abbey plc all cancelled their Euronext Growth listings following recommended takeover processes throughout 2021. Furthermore, Total Produce plc cancelled its Euronext Growth (and UK) listing as part of its merger with Dole Food Company with the enlarged entity listing on the US market. In addition, Tesco plc, Amryt Pharma plc (both UK registered), Aryzta AG (Swiss registered) and most recently Engage XR Holdings plc independently took the decision to cancel their respective secondary Irish listings, for various factors including cost, group and compliance simplification and the overall size of the entity's market capitalisation.
More broadly, there has been a low number of IPOs in Ireland over the last number of years with only two IPOs from the start of 2021 to the current date in 2023. While the global factors previously mentioned may have contributed to this, there has been media commentary noting the low IPO activity in Ireland relative to other countries, the lack of domestic fund managers to drive activity and the perceived failure to seize the potential ‘Brexit dividend’. While the numbers are objectively noticeably low, recent media reports noted that Euronext Dublin's director of listings remains “optimistic” of further IPOs in the second half of 2023.
Separately, between 2013 and 2018, there had been a consistently growing trend towards IPOs of Irish property real estate investment trusts and property-related IPOs, highlighted by the fact that when Yew Grove listed on the Euronext Growth and AIM markets in 2018, this was the sixth property-related IPO to float on Euronext Dublin in five years. The UK entity Hammerson plc also obtained a secondary listing on the Regulated Market in 2020. However, in recent years, this trend has slowed and may be reversing with Yew Grove and Hibernia both having delisted in 2022 with Yew Grove having faced difficulties in raising capital of the scale and timeline necessary to meet its 2018 IPO’s targeted intention to have a €300 million to €500 million portfolio within three years.UpdatesEuronext Growth Rules
An updated Part I of the Euronext Growth Rules replaced its predecessor effective from 1 April 2022, following a consultation process undertaken by Euronext Dublin. Some of the core changes include:
- The admission process – there have been amendments to the content requirements in the admission document required on first admission to trading. These requirements are now contained in Appendix III of Part I (similar to the position for the Euronext Growth markets in other jurisdictions). In addition, Euronext Dublin now will take a more direct role in reviewing the admission document for completeness, consistency and comprehensibility. Previously, the Euronext Growth Listing Sponsor provided a confirmation in respect of compliance with relevant requirements of the Euronext Growth Rules.
- Announcements – the required announcements both at admission and on an ongoing basis have been streamlined with announcements no longer required for certain actions (eg, resignation, dismissal and the appointment of directors).
- Disclosure of corporate transactions – some of the previous rules governing the conditions to be complied with by issuers prior to entering into substantial transactions (a transaction exceeding 10 per cent under any of the class tests), related party transactions (a transaction with a related party exceeding 5 per cent of any of the class tests) and transactions resulting in a fundamental change of business (a disposal or disposals exceeding 75 per cent under any of the class tests) have now been removed.
- Brokers – the need for a broker is no longer mandatory at all times.
- Cash shell companies – the period during which an issuer can be a cash shell company has been extended from six to 12 months.
- Half-year report – There has been an extension of the period for publication of these reports from within three months of the end of the second quarter of the financial year to within four months.
- Euronext Growth Listing Sponsors – what were formerly Euronext Growth Advisors are now called Euronext Growth Listing Sponsors, with the rules applicable to such sponsors now contained directly within the Euronext Growth Rules (Appendix IV of Part I) and made consistent with the rules applicable to these sponsors on the other Euronext Growth markets.
An updated version of the Irish Takeover Rules was released by the Irish Takeover Panel and became effective on 22 July 2022. This was the first significant update of the Irish Takeover Rules since 2014 and changes include bringing the Irish regime closer to the equivalent UK regime, to include the introduction of a mandatory ‘put up or shut up’ regime (in which the bidder must clarify its intentions within a set period), updates to the opening position disclosure regime as well as general updates to reflect changes to the legal landscape since the time of the prior rules.Balance for Better Business
A review group, Balance for Better Business, which is an independent business-led review group established by the Irish government, published its fifth report in November 2022. It confirmed that the 20 biggest publicly quoted Irish companies (ISEQ 20) were reported as having an average of 36 per cent per cent female representation at board level (up from 31 per cent last year) and ahead of target, with other listed companies having an average of 26 per cent (up from 20 per cent last year). However, there is only one female chair in ISEQ 20.
The report also sets targets for women on leadership teams as well as publishing the results from previous years. Listed companies and those considering IPOs should consider the composition of their board members going forward, given the benefits of a diverse board in terms of corporate governance, diversity, publicity, proxy voting policies (for example, ISS and Glass Lewis) and potential legislative regimes to apply (for example, possible gender pay gap reporting).
Euronext Tech Leaders Index and IPO Ready
Flutter Entertainment plc, listed on the Regulated Market, is the only Irish listed company to be included in Euronext’s new Tech Leaders Index. This index brings together more than 100 high-growth and technology led companies from across Euronext’s seven listing venues.
In January 2023, Euronext Dublin also launched its fifth IPOready training programme, with 14 companies joining it. The objective of the programme is to equip participating companies with an in-depth understanding of all sources of finance available to them (including IPOs) and determine which is most suited to their needs.
The Prospectus Regime
The EU Commission has adopted certain new proposals for a regulation that will make various changes to the EU Prospectus Regulation regime. These will take effect in 2024 and will need to considered by the European Parliament and Council.Coronavirus
What emergency legislation, relief programmes and other initiatives specific to your practice area has your state implemented to address the pandemic? Have any existing government programmes, laws or regulations been amended to address these concerns? What best practices are advisable for clients?
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