Insider Trading Law In Ireland (Part 1)

Author:Mr Keith Smyth
Profession:Dillon Eustace
 
FREE EXCERPT

Legal Ground and Applicability

1.1 Please identify the legal source of the insider trading

rules applicable to investors in Ireland.

The following provisions of Irish law apply to shareholders as

well as officers of a company:

Part V of the Companies Act, 19901. This applies to

companies listed on the Alternative Securities Market and the Irish

Enterprise Exchange of the Irish Stock Exchange, so should not be

of wide application;

Market Abuse (Directive 2003/6/EC) Regulations 2005 SI No. 342

of 2005, ("the Regulations");

Part 4 of the Investment Funds, Companies and Miscellaneous

Provisions Act, 2005, ("the Act");

Market Abuse Rules issued by the Financial Regulator ("the

Rules");

Caselaw

Where an entity is considering making an offer for a company which

is listed on a relevant market, it will need to comply with the

following pieces of legislation in addition to those listed at

points I to IV above.

The Irish Takeover Panel Act, 1997 ("Takeover

Act"),

The Irish Takeover Panel Act 1997, Takeover Rules, 2007

("Takeover Rules");

The European Communities (Takeover Bids (Directive 2004/25/EC)

Regulations 2006, ("Takeover Regulations"), and

Point IX applies to listed companies and requires them to comply

with the obligations of the Regulations as if it were an issuer for

the purposes of the Regulations.

Listings Rules (these apply to Companies listed on the main

market of the Irish Stock Exchange).

Point X applies to persons discharging managerial responsibilities

and would include directors of a company

Model Code in the Irish Stock Exchange Listing Rules (Appendix

1 to Chapter 6) (the "Model Code");

Point XI applies to directors of companies and those who act at the

instigation of a director.

Section 30 of the Companies Act 1990;

1.2 What is decisive for insider trading rules in Ireland to

apply (e.g. seat of issues?, place of listing of relevant

instruments?)?

Regulation 4 of the Regulations applies to any financial

instrument2 which is (a) admitted to trading on a

regulated market in at least one Member State, or (b) for which a

request for admission to trading on a regulated market in at least

one Member State has been made whether or not any transaction in or

relating to the financial instrument takes place on that market.

Regulation 4 is extended by Regulation 5 to a financial instrument

which does not come within the definition contained in Regulation 4

but the value of which depends on a financial instrument which does

fall within Regulation 4.

The Regulations therefore apply to actions carried out in the

State or abroad concerning financial instruments that are admitted

to trading on a regulated market situated in or operating in the

State, or for which a request for admission to trading on a

regulated market situated in or operating in the State has been

made and to actions carried out in the State concerning financial

instruments that are admitted to trading on a regulated market in a

Member State, or for which a request for admission to trading on a

regulated market in a Member State has been made.

The Listings Rules and the Model Code apply to companies which

are listed on the Official List of the Irish Stock Exchange.

The Companies Act, 1990 applies to quoted Irish companies

admitted to one of the Irish Stock Exchange markets, other than

companies with securities admitted to trading on the Official List

(regulated market).

The Takeover Rules and the Takeover Act apply to companies with

their registered office in Ireland whose transferable securities

are admitted on a regulated market in Ireland or on a regulated

market in another Member State. The place of listing is therefore

generally the determining factor in whether the Irish law on

insider dealing applies.

  1. Which instruments are covered by insider trading

    regulations?

    2.1 Please name examples of financial instruments covered by

    insider trading regulations, especially with regard to debt

    securities:

    Regulation 2 of the Regulations applies to:

    units in collective investment undertakings,

    transferable securities as defined by Directive 2004/39

    EC,

    money market instruments,

    financial futures contracts, including cash-settled

    instruments,

    forward rate interest agreements,

    interest-rate, currency and equity swaps,

    derivatives on commodities,

    any other instrument admitted to trading on a regulated market

    in a Member State or for which a request for admission to trading

    in such a market has been made, and

    options to acquire or dispose of any instrument referred to

    above in (i) to (vii), including equivalent cash settled

    instruments in particular options on currency and on interest

    rates.

    Transferable securities are defined for the purpose of the

    Regulations as those classes of securities which are negotiable on

    the capital market and include the following:

    shares in companies and other securities equivalent to shares

    in companies, partnerships or other entities, and depository

    receipts in respect of shares,

    bonds or other forms of securitised debt, including depository

    receipts in respect of such securities, and

    any other securities giving the right to acquire or sell any

    such transferable securities.

    Where Part V of the Companies Act, 1990 applies, securities are

    defined as:

    shares, debentures or other debt securities issued or proposed

    to be issued, whether in Ireland or otherwise, for which dealing

    facilities are, or are to be, provided by a recognised stock

    exchange (which for these purposes is the Irish Stock

    Exchange),

    any right, option or obligation in respect of such shares,

    debentures or other debt securities referred to in paragraph

    (i),

    any right, option or obligation in respect of any index

    relating to any such shares, debentures or other debt securities

    referred to in paragraph (i); and

    such interests as may be prescribed.

    The Listing Rules and the Model Code apply to Securities (being

    shares, certificates representing shares, units in a collective

    investment scheme, options to subscribe for or purchase securities,

    treasury shares, debt securities, warrants, certificates

    representing debt securities, and other instruments specified in

    Section C of Annex 1 of MiFID) admitted or seeking admission to one

    of the Irish Stock Exchange markets. The Irish Stock Exchange has

    three markets; the Main Market, the Alternative Securities Market

    and the Irish Enterprise Exchange.

    The Takeover Rules apply to transferable securities which are

    admitted (depending on the registered office of the company) on a

    regulated market in either Ireland or another Member State.

    2.2 Where do insider securities have to be admitted to

    trading (e.g. organized market, regulated market, regulated

    unofficial market, etc.)? In which jurisdictions do insider

    securities have to be admitted to trading? Is the mere (i)

    application or (ii) announcement of such application sufficient?

    Are OTC/private deals included?

    Under the Regulations, the financial instruments have to (a) be

    admitted to trading on a regulated market in at least one Member

    State, or (b) requested admission to trading on a regulated market

    in at least one Member State whether or not any transaction in or

    relating to the financial instrument takes place on that market. As

    the Regulations apply whether or not a transaction takes place on

    the market, they would appear to cover private/OTC deals.

    Part V of the Companies Act, 1990 applies in respect of dealings

    in companies securities which are listed on unregulated markets

    operated by the Irish Stock Exchange.

    The Listings Rules (as they pertain to prohibiting the use of

    inside information) and the Model Code apply to dealings in the

    securities of listed companies (which are defined as Companies that

    have any class of their securities admitted to the official list of

    the Irish Stock Exchange). "Dealing in" includes:

    any acquisition or disposal of, or agreement to acquire or

    dispose of any of the securities of the company,

    entering into a contract (including a contract for differences)

    the purpose of which is to secure a profit or avoid a loss where

    reference to fluctuation in the price of any of the securities of

    the company,

    to grant, acceptance, acquisition, disposal, exercise or

    discharge of any option to acquire or dispose of any of the

    securities of the company,

    entering into, or terminating, assigning or novating any stock

    lending agreement in respect of the securities of the company,

    using a security, or otherwise granting a charge, lien or other

    encumbrance over the securities of the company,

    any transaction, including a transfer for nil consideration, or

    the exercise of any power or discretion effecting a change of

    ownership of a beneficial interest in the securities of the

    company, or

    any other right or obligation, present or future, conditional

    or unconditional, to acquire or dispose of any securities of the

    company.

    The Takeover Act and the Takeover Rules apply to takeovers (not

    being takeover bids) and other relevant transactions in respect of

    Directive Companies (companies with their registered office in

    Ireland whose transferable securities are admitted to a regulated

    market in Ireland or a regulated market in one or more Member

    States (other than Ireland) or companies with their registered

    office in another Member State whose transferable securities are

    admitted to a regulated market in Ireland or companies with their

    registered office in another Member State whose transferable

    securities are admitted to a regulated market in Ireland or a

    regulated market in one or more Member States (excluding that

    Member State) but including Ireland) which are also relevant

    companies under the Takeover Act (Directive Relevant Companies) and

    to companies which fall within the definition of "relevant

    company" in...

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