Market overview

Size of market

What is the size of the market for initial public offerings (IPOs) in your jurisdiction?

Given the current covid-19 circumstances, it is perhaps unsurprising that there have not been any IPOs to date in 2020. However, Open Orphan plc did, by way of a recommended all-equity offer process, complete a merger with hVIVO plc (a technical reverse takeover) along with associated fundraises with the enlarged entity listing on both the Euronext Growth market (Euronext Growth) of Euronext Dublin and the AIM market (AIM) of the London Stock Exchange (LSE). 

2019 proved a difficult year for IPOs across Europe but Ireland had a relatively consistent 2019 with the medical supplies distribution business, Uniphar plc, raising circa €139 million in gross proceeds listing on both Euronext Growth and AIM. In addition, a reverse takeover (with a related placing of £4.5 million worth of shares) took place of Venn Life Sciences Holdings plc (which had an existing admission on Euronext Growth and AIM) by Open Orphan with the new enlarged entity, Open Orphan plc, now trading on Euronext Growth and AIM. As previously mentioned, Open Orphan plc subsequently merged with hVIVO plc.

There were two IPOs in 2018. First, Yew Grove REIT plc, a new Irish real estate investment trust (REIT) raised €75 million listing on both Euronext Growth and AIM. Second, VR Education Holdings plc, a virtual reality, software and technology company, raised €6.75 million following its IPO on Euronext Growth and AIM. In addition, SCISYS Group plc entered into a group restructure whereby the company set up an Irish plc and then delisted from AIM with the new entity ultimately being listed on both AIM and Euronext Growth on the same day.

In 2017, in what was described by Euronext Dublin as a ‘stellar year’, there were three IPOs in Ireland. This included the largest IPO in Europe in 2017, where the Irish government listed its approximately 25 per cent stake in Allied Irish Banks plc (AIB). The AIB listing on the main 'Euronext Dublin' Market of Euronext Dublin (the Main Market) (in conjunction with a listing on the LSE) raised €3.4 billion. The other Irish IPOs in 2017 were Glenveagh Properties plc’s IPO on the Main Market and the LSE main market (raising €550 million) and Greencoat Renewables plc’s IPO on both Euronext Growth and AIM (raising €270 million). In addition, in 2017, Cairn Homes plc obtained a primary listing on the Main Market in addition to its existing standard listing on the main market of the LSE (availing of the dual listing facility).

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 AIM. This is primarily to obtain greater liquidity and is facilitated by broadly similar eligibility and on-going general compliance requirements as and between 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 specific circumstances. It remains to be seen if these practices will be affected by Brexit.  

While in the minority, a number of overseas companies (primarily UK incorporated companies) are admitted to trading on Euronext Dublin’s markets. Given Brexit, Euronext Dublin is now technically the main English-speaking exchange within the European Union subject to the EU law regimes such as the passporting regime (and this may be of more relevance at the end of the Brexit transition period). It is possible this may 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. SCISYS Group plc is an example of a company which obtained an Irish listing as a form of 'Brexit planning'.

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 it 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 Main Market, Euronext Growth and the Atlantic Securities Market (ASM). The Main Market is the only market in Ireland authorised by the Central Bank of Ireland (CBI) under the European Union (Markets in Financial Instruments) Regulations 2017 as an EU-regulated market and is typically selected by larger, more mature companies.

Euronext Growth is Euronext Dublin’s junior market and is largely based on AIM. 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 Main Market.

There are different eligibility requirements for admission to trading on the Main 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 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. Aside from any specific mentions of ASM, this chapter focuses solely on IPOs on the Main Market and Euronext Growth.

Regulation

Regulators

Which bodies are responsible for rulemaking and enforcing the rules on IPOs?

The principal rules for the admission of securities to the Main Market are contained in the Euronext Dublin Rule Book - Book II: Listing Rules which is read in conjunction with the Euronext-wide harmonised Euronext Rule Book - Book I (together, the Listing Rules). For Euronext Growth companies, the principal rules are contained in the Euronext Growth Markets Rule Book (with Chapter 5 specifically applicable to the Euronext Growth Market operated by Euronext Dublin) (the Euronext Growth Rules). Other stock exchange rules include the Atlantic Securities Market (ASM) Rules for Companies, the Rules for Equity Sponsors, the Rules for Euronext Growth Advisors and the Rules for ASM Advisors. Euronext or Euronext Dublin is the competent authority in relation to these various rules.

Euronext / Euronext Dublin has broad powers to make and modify the various rules and to oversee compliance with the rules by issuers, prospective issuers, sponsors as well as Euronext Growth and ASM advisors. Issuers, sponsors and the advisors can be censured by Euronext or Euronext Dublin for breach of applicable rules and ultimately, where merited, issuer listings can be suspended or cancelled.

Many other legislative regimes also apply. The Main 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 Main 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, which is the overall competent authority for overseeing the legal framework for securities markets regulation in Ireland, 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, to include Part 4 of the Central Bank (Investment Market Conduct) Rules 2019 and its 'Guidance on Prospectus Regulatory Framework' which set out certain more practical requirements and guidance around the CBI review and approval process and on the required content and publication process for prospectuses.

Aside from the Prospectus Regulation and the various listing rules, there are various other statutes, rules and regulations of which IPO issuers will need to be aware. These include the Irish Companies Act 2014 (which has consolidated Irish company law into a single code) and EU-derived and domestic market abuse, transparency, 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 to be admitted to trading on the Main Market need to meet certain eligibility requirements set out in the Listing Rules. Euronext Dublin has discretion to dispense with or modify certain of these 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 Main 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); and
  • there are also various incorporation and independence related requirements (such as demonstrating 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 and 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 has various obligations and responsibilities to include in respect of 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 has a certain level of 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 sponsor for the Main Market, an issuer on Euronext Growth is required to appoint a Euronext Dublin approved Euronext Growth Advisor (who is subject to the Rules for Euronext Growth Advisors). Again, the Euronext Growth Advisor has various responsibilities, particularly assessing the applicant's suitability for admission and making appropriate 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/London Stock Exchange (LSE) dual listing, correspondence will also need to be entered into with the Financial Conduct Authority of the UK (FCA). The eligibility requirements of the Main Market are broadly similar to the eligibility requirements of the premium listing segment on the LSE’s main securities market, and the eligibility requirements of the Euronext Growth are broadly similar to those of AIM.

However, it should be noted that the FCA released a new Conduct of Business Sourcebook (COBS) in 2017 which affect, amongst other things, the quality of information which companies are required to make available to market participants during certain UK IPOs (this took effect from 1 July 2018). The new 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 listing primary listings in Ireland and London and many of the analysts will be UK based.

Prospectus

What information must be made available to prospective investors and how must it be presented?

A company listing on the Main Market, and, in certain cases as described below, a company listing on Euronext Growth, has to publish a regulator-approved prospectus. The Prospectus Regulation together with the European Union (Prospectus) Regulations 2019 (2019 Regulations) in Ireland (or equivalent regulations in other EEA countries if an EEA regulator has standing to approve the prospectus) sets out the requirements for content inclusion in the prospectus and related matters. The role of the regulator in question is to ensure 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 in an effort 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);
  • identity of directors, senior management, advisers and auditors - i.e. the persons responsible for preparing the prospectus;
  • 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;
  • operating and financial review and prospects;
  • 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
  • additional information, primarily of a statutory nature, not covered elsewhere (eg, share capital, material contracts, constitutional documents).

 

The prospectus is required, more generally, to contain all material information necessary to enable investors to make an informed assessment of the assets and liabilities, profits and losses, financial position, and prospects of the issuer and any guarantor as well as the rights attaching to the securities and the reasons for the issuance and its impact on the issuer.

The summary of the prospectus is required to be concise and written in non-technical language and 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 should 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 a number of 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 (eg, SME's or issuers on an SME Growth Market) may prepare an EU Growth prospectus which contains reduced disclosure requirements (albeit it still needs 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 which will facilitate less detailed prospectuses when undertaking a new issuance or admission and an accelerated approval process.

There is no primary obligation to publish a prospectus for issuers seeking a listing and admission to trading on the Euronext Growth market. A requirement to do so may arise, however, 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 in light of 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') will be required to 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 along with a declaration of compliance by the Euronext Growth Advisor. A fast-track process can 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 an IPO process that care is taken in terms of marketing and publicity and in terms of document content prepared for investor meetings or circulation. Many of the particular requirements derive from the Prospectus 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 and 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, the COBS provisions may now be required to be followed for many listings in Ireland (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.

In light of the above considerations, 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 and 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 to be contained in it. Any person responsible who authorised the issue of the prospectus will be guilty of an offence unless they can prove either:

  • that an untrue statement was immaterial or they honestly believed it to be true up to the time of issue; or
  • 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 and is 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 Office of the Director of Corporate Enforcement 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.

Law stated date

Correct on

Please state the date on which the law stated here is accurate.

1 May 2020