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Irish Stock Exchange Listing Rules: Sponsor Regime
Irish Stock Exchange
Daryl Byrne, Aisling McArdle & Orla O‟Gorman
Mason Hayes & Curran
Justin McKenna & Ciaran Healy
21 September 2016
FCA Listing Rules & ISE Listing Rules
Recent Market Activity
Key Entrants to Irish Equity Markets
- Permanent TSB Group Holdings plc (2015 – MSM)
- Irish Residential Properties plc (2014 – MSM)
- Green REIT plc (2013 – MSM)
- Hibernia REIT plc (2013 – MSM)
- Applegreen plc (2015 – MSM)
- Hostelworld Group plc (2015 – MSM)
- Dalata Hotel Group plc (2014 – ESM, now MSM)
- Malin Corporation plc (2015 – ESM)
Notable Departures from Irish Equity Markets
- Dragon Oil plc (2015 – MSM)
- Aer Lingus Group plc (2015 – MSM)
- Elan Corporation plc (2013 – MSM)
- ICON plc (2013 – MSM)
- Petroceltic International plc (2016 – ESM)
Recent Market Activity
0
500
1000
1500
2000
2500
3000
3500
2012 2013 2014 2015
Funds Raised on Irish Equity Markets (€m)
Funds Raised on IrishEquity Markets
Irish PLCs
The Irish PLCs that are relevant to UK firms for equity capital markets purposes
are those listed on:
i. London Official List and the Irish Main Securities Market
ii. London Official List only
iii. AIM and the Irish ESM
iv. AIM only
Irish Companies with Dual Listing on UK Official List and Irish MSM
Market Capitalisation as of September 2016
UK Official List and Irish MSM
Aminex plc
€80m
Glanbia plc
€5.1bn
Kerry Group plc
€13.6bn
Bank of Ireland Group
€6.2bn
Green REIT plc
€986m
Kingspan Group plc
€4.5bn
C&C Group plc
€1.2bn
Hibernia REIT plc
€951m
Paddy Power Betfair plc
€9.1bn
CRH plc
€25.2bn
IFG Group plc
€207m
Permanent TSB Group
Holdings plc
€941m
Dalata Hotel Group plc
€818m
Independent News & Media
plc €187m
Ryanair Holdings plc
€16.4bn
Datalex plc
€259m
Irish Continental Group plc
€913m
Smurfit Kappa plc
€5.5bn
FBD Holdings plc
€243m
Kenmare Resources plc
€346m
Irish Companies with Single Listing on UK Official List and Irish MSM
Market Capitalisation as of September 2016
UK Official List Only Irish MSM Only
Cairn Homes plc
£511.2m
Irish Residential Properties REIT plc
€492m
DCC plc
£6.1bn
Grafton Group plc
£1.2bn
Greencore Group plc
£1.5bn
UDG Healthcare plc
£1.6bn
Irish Companies with Dual Quotations on UK AIM and Irish ESM
Market Capitalisation as of September 2016
UK AIM and Irish ESM
Abbey plc
€278m
Fyffes plc €478m
Ormonde Mining plc
€14m
Allied Irish Banks plc
€16.3bn
Great Western Mining
Corporation plc €2m
Ovoca Gold plc
€11m
Amryt Pharma plc
€48m
Karelian Diamond Resources
plc €4m
Petroneft Resources plc
€17m
Applegreen plc
€385m
Mainstay Medical International
plc €96m
Providence Resources plc
€72m
Conroy Gold and Natural
Resources plc €5m
Merrion Pharmaceuticals plc
€4m
Total Produce plc
€521m
CPL Resources plc
€170m
Mincon Group plc
€152m
Zamano plc
€13m
Donegal Investment Group plc
€55m
Origin Enterprises plc
€731m
Irish Companies with Single Quotations on UK AIM and Irish ESM
Market Capitalisation as of September 2016
UK AIM Only Irish ESM Only
Circle Oil plc
£3.5m
Norish plc
£11.1m
Malin Corporation plc
€549m
Connemara Mining Company
plc £1.5m
Petrel Resources plc
£6.1m
Escher Group Holdings plc
£31.2m
REACT Energy plc
£2.8m
Kibo Mining plc
£22.9m
San Leon Energy plc
£29.4m
Minco plc
£5.7m
Divergences between FCA and ISE Sponsor
Regimes
Relevant
Area FCA LISTING RULES ISE LISTING RULES
Appointment
of a Sponsor
• Prescriptive list – application for admission
which requires the production of a prospectus,
on each occasion it produces a Class 1
circular and other occasions such as reverse
takeovers and related party transactions
LR 8.2.1R and 8.2.3R
• Initial application and duration of listing
LR 2.3.1
Role of a
Sponsor “come to a reasonable opinion, after having
made due and careful enquiry, that the applicant
has satisfied all [requirements for listing]”
LR 8.4.2R
“satisfy itself, to the best of its knowledge and
belief, having made due and careful enquiry of
the issuer and its advisers, that the issuer has
satisfied all [requirements for listing] “
LR 2.2.1
Principles for
Sponsors
“act with due care and skill” and “at all times
deal with the FCA in an open and co-
operative way and deal promptly with any
enquiries it makes”
LR 8.3.3R and 8.3.5R
“act with due care and skill” and “ensure the
issuer is properly guided and advised”
LR 2.2.2
Duty to
Directors
“the Sponsor must take reasonable steps to
satisfy itself that the [directors] of the listed
company understand their responsibilities and
obligations”
LR 8.3.4R
“Sponsor must be satisfied that the directors of
the issuer have had explained to them by the
Sponsor or other appropriate professional adviser
the nature of their responsibilities and obligations
as directors”
LR 2.2.3
Divergences between FCA and ISE Sponsor
Regimes
Relevant
Area FCA LISTING RULES ISE LISTING RULES
Joint
Sponsors
• Duty to cooperate and share information
LR 8.3.14R and 8.3.15R
• Duty to establish which Sponsor has primary
responsibility and notify ISE
LR 2.3.3 and 2.3.4
Appointment
of an Agent
• Prohibited
LR 8.7.16R
• May appoint an agent at its discretion if
agent has sufficient experience and notified
to ISE
LR 2.5.2 and 2.5.3
Disciplinary
Action
• Public censure
• Cancellation
• Suspend/restrict Sponsor for 12 months
• Unlimited financial penalties
LR 8.7.20R / Financial Services
and Markets Act 2000 (s.88)
• Private or public censure
• Cancellation
LR 2.5.6 and 2.5.7
Divergences between FCA and ISE Sponsor
Regimes
Relevant
Area FCA LISTING RULES ISE LISTING RULES
Financial
Position and
Prospects
“Sponsor has come to a reasonable
opinion, after having made due and careful
enquiry, that the directors of the [issuer] have
established procedures which provide a
reasonable basis for them to make proper
judgments on an ongoing basis as to the
financial position and prospects of the
applicant and its group”
LR 8.4.2R(4)
“Sponsor must obtain written confirmation
from the issuer that the directors have
established procedures which provide a
reasonable basis for them to make proper
judgements as to the financial position and
prospects of the issuer and its group and be
satisfied that this confirmation has been
given after due and careful enquiry by the
issuer”
LR 2.2.8
Working
Capital “Sponsor has come to a reasonable
opinion, after having made due and careful
enquiry, that the directors of the [issuer] have
a reasonable basis on which to make the
working capital statement i.e. that it and its
subsidiaries (if any) have sufficient working
capital available for the group's requirements
for at least the next 12 months”
LR 8.4.2R(5) (LR 6.1.16R)
“Sponsor must report to the ISE that it has
obtained written confirmation from the issuer
that the working capital available to the
group is sufficient for its present
requirements, that is for at least the next 12
months and it is satisfied that this
confirmation has been given after due and
careful enquiry by the issuer…”
LR 2.2.10
Sponsor Comfort Letters – Irish Market Practice
Company Comfort Letter to Sponsor(s)
Issue General Irish Market Practice
Knowledge
qualification?
Yes. Generally based on a standard of “to the best of the Company‟s knowledge and
belief” having made due and careful enquiry and sometimes “on the basis of advice
provided to us by [our lawyers], yourselves and the Company‟s other advisers”.
Director
understanding
(i) has received a copy of the memorandum;
(ii) has had an opportunity to discuss any matters with the relevant law firm; and
(iii) each director has confirmed through the responsibility statement that he has
read and understood the memorandum.
“No Significant
Change”
Yes. Not required under the ISE LR but general market practice is confirmation of no
significant change in the financial or trading position of the Group since the last
audited balance sheet (in accordance with statement in the Prospectus).
“Proper Extraction”
Yes. Not required under the ISE LR but general market practice is confirmation of
financial information contained in the Prospectus which relates to the Group has been
properly extracted from the Group‟s accounting records.
Sponsor Comfort Letters – Irish Market Practice
Lawyers Comfort Letter to Sponsor(s)
Issue General Irish Market Practice
Knowledge
qualification?
No (usually).
Confirmation (i) nothing has come to [our] attention which is not disclosed in the Prospectus and
which [we] consider is required to be drawn to your attention;
(ii) [we] have supplied each director with a copy of the memo; and
(iii) [we] have explained to the directors their responsibilities, obligations and potential
liabilities and made ourselves available to discuss the memo and responded to
any such queries.
General
qualifications
(i) have not made any specific enquiries of the Company, its directors, employees or
other representatives;
(ii) scope of the letter is limited to matters which are customarily the responsibility of
the Company‟s Irish legal advisers in that context;
(iii) the letter contains no opinion as to the suitability for listing of the shares; and
(iv) the letter is given in [our] capacity as Irish legal advisers only.
Exclusion of Liability Yes. Inclusion of reference that the letter is given by way of comfort only and that [we]
accept no liability in relation to the contents of the letter.
Key Takeaways
• Irish equity markets have been reinvigorated in recent years
• Irish market practice guided by and to a large extent follows UK
market practice but there are important differences
• There are no technical guidance notes for Sponsors so a lot of
knowledge resides with existing Sponsors and other advisers
• Placing/Underwriting Agreements are generally governed by English
law
Mason Hayes & Curran Contacts Justin McKenna Partner d +353 1 614 5253 e [email protected] Ciaran Healy Partner d +353 1 614 2394 e [email protected]
Sponsoring Transactions on the ISE
21 September 2016
ISE Overview
ISE: Markets
MAIN SECURITIES
MARKET
“MSM”
ENTERPRISE
SECURITIES
MARKET
“ESM”
GLOBAL EXCHANGE
MARKET
“GEM”
ATLANTIC SECURITIES
MARKET
“ASM”
ISE: Equity Issuers – International Profiles
67% INTERNATIONAL
SHAREHOLDER BASE
89% DUAL LISTED
81% INTERNATIONAL
EMPLOYMENT
86% INTERNATIONAL
REVENUE
ISE Sponsor Regime
Securities Regulation in Ireland
Irish Stock Exchange
Competent Authority for Listing
Listing Rules
Sponsor regime
Central Bank of Ireland
Prospectus
Transparency
Market abuse
1. Conditions for listing
2. Document submission
3. On-going advice
4. Liaise with ISE
Role of an ISE Registered Sponsor
ISE & FCA Sponsor Regimes
Sponsor requirements
Irish Stock Exchange
Financial Conduct Authority
Scope Listing Rules Listing Rules
Which issuers? All Premium listed only
When required? Throughout listing Specified occasions
Eligibility requirements
Transaction experience
Competence & systems and controls
On-going requirements
Eligibility and disclosure
Eligibility and disclosure
Supervision ISE monitoring Monitoring / supervisory visits
Becoming a Sponsor - Criteria
Firm Executive Eligibility
Application ISE reviews ISE
approval Admission
Becoming a Sponsor - Process
On-going Requirements
Eligibility Disclosure Annual Confirmation
Sponsoring Transactions on
the ISE
1. Ensure independence
2. Advise on the application of the LRs
3. Liaise between the ISE and the company
4. Confirm eligibility of the company
5. Report on working capital
6. Ensure the applicant has appropriate financial reporting procedures
7. Provide confirmation that the LR have been complied with
Sponsor Responsibilities – IPO
1. Ensure independence from the transaction
2. Advise the company on the application of the LRs
3. Liaise between the ISE and the company
4. Report on working capital
Sponsor Responsibilities – Transactions
Future Developments
Update of ISE sponsor regime
Consideration of fast-track route for „FCA approved‟ sponsors
Consultation on proposals (Q4, 2016 / Q1, 2017)
Future Developments
ISE Delivering Issuer Choice
Streamlined
documentation
/ Listing Rules
Reporting and
governance
Euro quotation
(or sterling if
preferred )
Fungible and
efficient trading
Internationally
connected
• Access to European fund managers with mandates to invest in companies quoted on a European exchange
• Increased sales, research and trading support from European sell-side
• Increased market visibility, branding and profile
A seamless, complementary ISE/European quotation with the following benefits for issuers:
Dual Listing – Ireland / UK
BREXIT – WHAT WILL THE IMPACT BE?
Awaiting clarity…
Questions over EU securities legislation and ability to passport securities in Europe
How can issuers insure / mitigate against this risk?
“We have a dual listing on the Irish and
London Stock Exchanges. This together
with our focused operating model helps to
provide a degree of balance to the risks
associated with the UK’s decision to leave
the EU.”
C&C Trading Statement 7th July 2016
BREXIT – OUR ISSUERS VIEW…
Orla O’Gorman
Head of Equity
+353 1 6175130
QUESTIONS NOW OR IN THE FUTURE…
Daryl Byrne
Head of Regulation
+353 1 6174239
Aisling Mc Ardle
Regulation Manager
+353 1 6174216