Introduction The purpose of this article is to explain the obligations imposed on directors and other persons to disclose certain interests or rights in shares and debentures of companies incorporated in Ireland, whether to the company itself, the Takeover Panel or the Irish Stock Exchange. The disclosure obligations will vary, depending on whether the company is:
a private company incorporated in Ireland; or a public company incorporated in Ireland which is not listed; or a public company incorporated in Ireland which is listed either on the Irish Stock Exchange or one or more specified Exchanges. Disclosure Obligations of Directors, Secretaries and their Families Chapter 1 of Part IV of the Companies Act, 1990 (the "1990 Act") requires directors and secretaries of companies to disclose certain interests to public and private companies incorporated in Ireland. 1. What constitutes an "interest"? Section 54(4) of the 1990 Act provides that a person should be taken to have an interest in shares or debentures, if:
he enters into a contract for their purchase by him (whether for cash or other consideration); or not being the registered holder, he is entitled to exercise any right conferred by the holder of those shares or debentures or is entitled to control the exercise of any such right. Accordingly, the obligation to notify covers not only legal but equitable interests. Certain interests are excluded however:-
where property is held upon trust, an interest in reversion or remainder, or of a bare trustee or any discretionary interest; interests subsisting under unit trusts or UCITS; interests in schemes under section 46 of the Charities Act, 1961; life interests under irrevocable settlements where the settler has no interest in the income or the property; an interest held by a stockbroker as security for a transaction entered into any ordinary course of business; and any other interests exempted by the Minister. 2. Who is obliged to notify? The obligation to notify is placed on directors or secretaries of a company in relation to interests in the shares or debentures of that company or its subsidiary or holding company. It is extended to the interests held by a spouse or minor child of the director or secretary of the company (where such a person is not himself or herself a director or secretary thereof). An understanding of the following key terms is vital to understanding of section 53:
"director"; "company"; "subsidiary"; and "holding company". 2.1 "Director" A "director" is defined as including any person occupying the position of director by whatever name they are called. Accordingly, directors who are called by another name, for example, a governor in the case of a charity will still be directors for the purpose of the Companies Acts. The term "director" includes a de facto director, who is someone who acts as a director of a company although he has not been formerly appointed as such. The term "director" also includes a shadow director, who is a person who has not been formally appointed a director of the company, but in accordance with whose directions or instructions the directors of that company are accustomed to act. There is a limited exception for a person giving professional advice. It is worthwhile noting that only individuals can be directors of an Irish company unlike other jurisdictions in which it is possible to have corporate directors. There is a debate as to whether an Irish company can be a shadow director of a company incorporated in Ireland. However, it is important to note that section 54(5) of the 1990 Act provides that where a body corporate is interested in shares, a person shall be taken to be interested in them where:
that body corporate or its directors are accustomed to act in accordance with his directions or instructions; or he is entitled to exercise or control the exercise of one-third or more of the voting power at general meetings of that body corporate. Accordingly, when a natural person is a shadow director of a body corporate which is interested in shares in another body corporate, the person must make a notification. 2.2 "Company" A company is...