The Irish Auditing and Accounting Supervisory Authority (IAASA) has issued a reminder to directors of listed companies in relation to the content requirements set out under Irish takeover law in respect of their annual directors’ report.
These disclosure obligations apply to any company required to prepare a directors’ report under Section 158 of the Companies Act 1963 whose securities are admitted to trading on the Main Securities Market of the Irish Stock Exchange or on any other EU or EEA regulated market.
During the course of its financial reporting review activity, IAASA found that, in a number of cases, listed companies had not complied with these disclosure obligations. IAASA states that the purpose of issuing the reminder (published by way of an Information Note dated 16 May 2012) is to raise awareness of the existence of these requirements in order to assist companies in becoming fully compliant.
The disclosure obligations, which are set out in Regulation 21(2) of Part 4 of the European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006, require the disclosure in the annual directors’ report, by reference to the end of the financial year concerned, certain information on:
- the structure of the company’s capital, including the rights attaching to shares;
- any restrictions on the transfer of shares;
- to the extent not already required to be disclosed by law, any significant direct or indirect holdings of shares in the company and the relevant holders;
- any securities carrying special rights with regard to control of the company;
- how certain rights are exercisable regarding employees’ share schemes;
- any restrictions on voting rights;
- any agreements between shareholders which are known to the company and which may result in restrictions on the transfer of securities or on voting rights;
- any rules which the company has in force concerning appointment and replacement of directors or amendment of the articles of association;
- the powers of the company's directors;
- any significant agreements that take effect, alter or terminate upon a change of control of the company following a bid, and the effects of any such agreements; and
- any agreements between the company and its directors or employees providing for compensation for loss of office or employment that occurs because of a bid.
These disclosure obligations are in addition to those required to be included in the directors’ report under other applicable law.
It is perhaps not surprising that some companies may not have been aware of these obligations, as they are contained within regulations dealing with the somewhat unrelated area of the takeover of regulated market public limited companies. This is perhaps an example of the often complex and fragmented nature of the company law landscape in Ireland which is spread out across a large number of acts and statutory instruments.
For a link to IAASA’s Information Note, which also sets out the full text of Regulation 21(2), please click here.