Last Updated June 10, 2019

Law and Practice

Contributed By Walkers

Authors



Walkers is a global firm with ten substantive offices around the world. Its transactions often involve Cayman Islands, British Virgin Islands, Bermuda, Jersey and/or Guernsey legal matters, and it provides an integrated service to clients across its offices, legal systems and time zones. The finance and capital markets group in Ireland comprises a team of 23, including two listing agents. The group also includes four tax-advisers (including two tax partners) who support a number of practice areas and 16 dedicated capital markets fee-earners who spend the vast majority of their time advising on debt capital markets activity. In addition, the team works with asset finance, corporate, real estate and investment funds teams on multi-disciplinary, cross-border mandates. It is one of the largest dedicated debt capital markets teams in Ireland. The firm was a founding member of the Irish Debt Securities Association (IDSA) and sits on the Executive Council and Legal, Tax, CSP and Listing Sub-committees.

Euronext

The continuing obligations applicable to issuers of debt securities listed on Euronext are set out in:

  • the Euronext Rules;
  • the Transparency (Directive 2004/090/EC) Regulations, 2007 (as amended);
  • Commission Directive 2007/14/EC of 8 March 2007;
  • Commission Delegated Regulation (EU) 2015/761 of 17 December 2014;
  • the Transparency Rules; and
  • the Irish and EU market abuse legislation referred to at Section 2.1 Key Legislative or Regulatory Instruments above.

Although it is outside the scope of this Q&A, Regulation (EU) 2017/2402 (the "Securitisation Regulation") also imposes certain transparency and reporting requirements on issuers of debt securities (listed or unlisted). The application of the Securitisation Regulation would need to be analysed on a case by case basis.

Continuing obligations for issuers of debt securities on Euronext include:

Financial Reporting

Issuers of Euronext listed debt securities are, subject to certain exemptions, required, in accordance with the Euronext Rules, to publish annual reports and accounts as soon as possible after they have been approved and, in any event, by no later than the timeframe permitted under national legislation.

The Euronext Rules require annual reports and accounts to be: (i) prepared in accordance with an issuer's national law and, in all material respects, with national accounting standard or IAS, and (ii) independently audited and reported on.

Under the transparency regime, issuers of securities admitted to trading on a regulated market are, subject to certain exemptions, required to:

  • make their annual financial reports public at the latest four months after the end of each financial year, and to ensure that the annual financial report remains publicly available for at least ten years thereafter. The annual financial report is required to include:

i)       the audited financial statements of the issuer;

ii)       a management report; and

iii)       a responsibility statement.

  • make its half-yearly financial report covering the first six months of the financial year public as soon as possible and, in any event, no later than three months after the end of the period to which the report relates. The half-yearly financial reports must remain available to the public for at least ten years following their publication. Half-yearly financial reports must include:

i)       a condensed set of financial statements;

ii)       an interim management report; and

iii)       responsibility statements.

The provisions regarding periodic financial reporting set out in the transparency regime do not apply to issuers that exclusively issue wholesale debt securities (ie, debt securities the denomination per unit of which is:

  • at least EUR100,000 (or an equivalent amount); or
  • at least EUR50,000 (or an equivalent amount), where such debt securities have already been admitted to trading on a regulated market in the State or in a Member State other than the State before 31 December 2010, for as long as such debt securities are outstanding).

Equality of Treatment

Issuers of debt securities listed on Euronext must, in accordance with the requirements of the transparency regime, ensure that all holders of debt securities ranking pari passu are treated equally in respect of all the rights attaching to those debt securities.

Exercise of Rights and Meetings

In accordance with the requirements of the transparency regime, issuers of Euronext listed debt securities:

  • must ensure that all facilities and information necessary to enable securities holders to exercise their rights are publicly available and that the integrity of the date is preserved;
  • subject to the law of the country in which the issuer of Euronext listed debt securities is incorporated, must not prevent the holders of debt securities listed on Euronext from exercising their rights by proxy;
  • must publish notices or distribute circulars concerning:

a)       the place, time and agenda of meetings of holders of the securities;

b)       the payment of interest;

c)       the exercise of any conversion, exchange, subscription or cancellation rights and repayment; and

d)       the rights of holders of the securities to exercise their rights in relation to the matters mentioned at (a)-(c) above.

  • must designate, as an agent, a financial institution through which securities holders may exercise their financial rights.

Disclosure of Regulated Information

Under the transparency regime, issuers must disclose regulated information to a Regulatory Information Service ("RIS").

Where an Issuer of Euronext listed debt securities discloses regulated information to a RIS, it must simultaneously notify the CBI.

Disclosure of Information

Under the transparency regime, an issuer must notify the public without delay of any change in the rights of holders of the securities (including changes in the terms and conditions of the securities which could indirectly affect those rights, resulting in particular from a change in loan terms or in interest rates.

Corporate governance requirements

In order to have securities listed on Euronext Dublin and admitted to trading on Euronext, the issuer must be duly incorporated and otherwise validly established according to the relevant laws of its place of incorporation and establishment, and be operating in conformity with its constitutional documents. The directors of an issuer are required, under the Euronext Rules, collectively, to have appropriate expertise and experience for the management of the issuer's business.

Specific rules apply to transactions (for example, related party transactions or significant transactions or transactions by directors) post-listing.

Issuers of Euronext listed debt securities will also be subject to the market abuse regime. The market abuse regime prohibits insider dealing, unlawful disclosure of inside information and market manipulation. Chapter 3 of MAR sets out the obligations of issuers in respect of public disclosure of inside information, compiling and maintaining insider lists and reporting of transactions by managers. Under the market abuse regime, Issuers of Euronext listed debt securities are required to, inter alia:

  • disclose to the public inside information which directly concerns the issuer as soon as possible. Inside information that an issuer is required to disclose publicly should be posted and maintained on the issuer’s website for a period of at least five years;
  • maintain a list of those who have access to inside information and who work for the issuer, whether as employees or otherwise performing tasks through which they have access to inside information. The CBI, as competent authority in Ireland, may request that an issuer provide its insider list. Insider lists must be maintained for at least five years after they were prepared or last updated;
  • take all reasonable steps to ensure that persons appearing on an insider list acknowledge in writing their legal and regulatory duties in respect of insider information and confirm that they are aware of the sanctions applicable to insider dealing and unlawful disclosure of inside information;
  • ensure that the information notified to the CBI and the Issuer by persons discharging managerial responsibilities ("PDMR") in respect of the issuer relating to transactions conducted by the PDMR on their own account relating to the debt securities issued by the issuer is publicly disclosed within three days of the transaction and in a manner which enables fast access on a non-discriminatory basis; and
  • notify PDMRs in writing of their obligations under MAR and draw up and maintain a list of PDMRs and persons closely associated with them.

In addition, as noted at 8.3 Rules Regarding Stabilisation and Market Manipulation above, the delegated and implementing acts relating to MAR issued by the European Commission impose detailed regulatory technical standards and requirements in respect of specific issues, such as rules around buy-back programmes/stabilisation measures.

GEM

Issuers of debt securities to be listed on the GEM will be subject to the detailed continuing obligation provisions contained in the GEM Listing Rules and will also need to comply with MAR and the Irish and European market abuse regimes.

There are certain differences in the continuing requirements for retail and wholesale offers of debt securities for example, as outlined in 13.1 Continuing Obligations Applicable to Listed Debt Securities, certain provisions of the transparency regime only apply to retail offers.

These obligations apply to foreign incorporated issuers, except that there are equivalency provisions.

If Euronext Dublin considers that an issuer has contravened the Euronext Rules and considers it appropriate to do so, it may impose sanctions on the issuer including censuring of the issuer and/or suspending or canceling the listing of the issuer's securities. To the extent that the Disciplinary Committee determines that the failure to comply with the Euronext Rules is due to a failure by the directors of the issuer to discharge their duties, Euronext Dublin may, amongst other things, censure the relevant director(s) and, in addition, publish such censure.

Issuers of securities listed on Euronext are also subject to the prospectus, market abuse and transparency regimes. There are wide ranging penalties for a breach of any of the above regimes including criminal liability, criminal and administrative sanctions and civil liability. The transparency and market abuse regimes are most relevant in the context of continuing obligations. 

As noted above, a wide range of potential penalties for breaches of the market abuse regime may apply, including civil and criminal penalties (including terms of imprisonment) and administrative sanctions, with potential prescribed fines of up to EUR15,000,000 or 15% of turnover for the most serious breaches.  Similarly, penalties for breaches of the transparency regime include civil and criminal penalties (including terms of imprisonment) and administrative sanctions and potential prescribed fines of up to EUR1,000,000 or as may be determined under the CBI's administrative sanctions regime.

Issuers of debt securities listed on the GEM are also subject to the market abuse regime and, accordingly, are subject to the same penalties under the market abuse regime outlined above. Issuers of debt securities listed on the GEM are also subject to the various penalties contained in the GEM Listing Rules.

Walkers Global

The Exchange,
George's Dock, IFSC,
Dublin 1,
Ireland

+353 1 470 6600

+353 1 470 6601

info@walkersglobal.com www.walkersglobal.com
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Authors



Walkers is a global firm with ten substantive offices around the world. Its transactions often involve Cayman Islands, British Virgin Islands, Bermuda, Jersey and/or Guernsey legal matters, and it provides an integrated service to clients across its offices, legal systems and time zones. The finance and capital markets group in Ireland comprises a team of 23, including two listing agents. The group also includes four tax-advisers (including two tax partners) who support a number of practice areas and 16 dedicated capital markets fee-earners who spend the vast majority of their time advising on debt capital markets activity. In addition, the team works with asset finance, corporate, real estate and investment funds teams on multi-disciplinary, cross-border mandates. It is one of the largest dedicated debt capital markets teams in Ireland. The firm was a founding member of the Irish Debt Securities Association (IDSA) and sits on the Executive Council and Legal, Tax, CSP and Listing Sub-committees.

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