Listing Rules

Table of Contents

Overview

Stock Exchanges maintain listing rules with a view to preserving the integrity of the market in the shares, bonds and other securities traded on them. The Irish stock exchange rules are based on European Union Rules. The following relates to the listing rules of the principal exchange.

Compliance with listing rules is a precondition for continued listing of shares. The rules impose obligations all issuing companies as well as their directors. Obligations are also imposed on sponsors. The issuer must pay fees to the stock exchange in accordance with a set schedule.

Dispensations or modifications of the rules may be allowed. An application may be made to the stock exchange for dispensation or modification. A dispensation may be allowed, for example, if a company is in severe financial difficulty.

Admission

In order to be admitted to the stock exchange, the issuer must give

full information reasonably required for considering the application
information that the exchange considers appropriate to protect investors and ensure the smooth operation of the market and
such other information as may be reasonably required to verify that the listing rules are complied with.

The stock exchange may require the issuer to publish such information as it considers appropriate to protect investors and ensure the smooth operation of the market.

An issuer must take reasonable care to ensure information notified or made available to the stock exchanges not misleading, false, or deceptive and does not omit anything rightly to affect the import of the information.

Application for Admission

Special provisions apply to a new applicant for admission. Where a prospectus must be published, the sponsor must complete a declaration confirming that it has performed all the relevant services with due care and skill and is satisfied having made due enquiry as to the matters and documents required to be complied with and provided have been done. The sponsors must be satisfied with the financial reporting procedure.

Issuers have other specific responsibilities, particularly in the context of transactions that require fulfillment of certain conditions and procedures. The sponsor has a duty to report in writing to the exchange in relation to the completeness and accuracy of information.

The following principles apply generally to applicants for admission. Applicants may be refused admission if their situation is such that it would be detrimental to the interests of investors. It may be refused if the securities are already listed in another EU state or if the applicant has not complied with the listing rules or any special conditions imposed.

The stock exchange may make the admission subject to special conditions which it considers appropriate to protect investors. An applicant for admission on a stock exchange must be validly incorporated in the company’s operation and conformity with its constitution. In order to be listed, securities must conform to the company law rules of the place where they are incorporated.

Sponsor

A company whose shares are listed requires a sponsor in certain circumstances. The sponsor has responsibilities. Public sector issuers or issuers of debt securities and derivative securities need not have a sponsor but must in some cases appoint a listing agent.

A company issuing shares or securities including bonds must have a sponsor when it makes the application for listing and for the duration of its listing. More than one sponsor, with split responsibilities, may be provided for. The stock exchange maintains a list of approved sponsors.

Sponsors must satisfy the stock exchange in relation to their eligibility. There are published eligibility criteria and an application process. Sponsors are obliged to comply with the listing rules applicable to them. A sponsor may appoint an agent to discharge and provide certain functions. The stock exchange may impose sanctions on sponsors for failures of compliance.

A sponsor must satisfy itself that the company issuing shares has complied with the listing rules. The sponsor must confirm its independence to the exchange. It must provide the exchange information known to as the exchange may require for the purpose of verifying whether the listing rules have been complied with.

It must take reasonable steps to ensure that a confirmation or declaration required to be provided to the exchange is correct and complete. It must notify the exchange without delay of its resignation or dismissal.

Sponsors must act with due care and skill. They must ensure the issuers are properly guided and advised in relation to the application of the listing rules. The sponsors must satisfy themselves that the directors of the company have been advised of their responsibilities under the rules. The sponsor must be independent of the company issuing the shares.

Securities Requirements

Securities must be freely transferable fully paid up and free from any liens. There are provisions whereby partly paid up securities may be listed provided their transferability is not restricted and investors have been provided with the appropriate information.

The expected aggregate market capitalization for all securities to be listed must be at least €1,000,000 for shares and €200,000 for debt securities. There are certain exceptions. The rule does not apply if securities of the same class are already listed.

The securities may be listed with a lower value if the exchange is satisfied that there would be an adequate market for them. If no securities of the type concerned are listed, the application must relate to all securities of the class concerned.

In order to be listed, a prospectus must be drawn up under Irish Law or the law of EEA State which is the home state of the issuer. Where another state is involved, the prospectus must be shown to be approved. There are common EU rules of prospectuses.

Special Rules

There are special rules for particular type of shares and securities such as convertible securities. They may only be listed if the securities into which they are convertible are themselves listed.

Similarly, warrants or options for shares may be themselves listed only if the shares into which they may be converted are listed. The securities must be eligible for electronic settlement in an un-certificated securities system.

There are special requirements for applicants where the shares are convertible into other classes of their own share. There are special requirements for mineral company and scientific research based companies.

Thy must satisfy additional requirements with respect to minimum capital, , track record ability to attract funds from sophisticated investors. The rules may be modified.

There are specific requirements in relation to mineral companies and scientific based company. Mineral companies must either have a controlling interest in the majority by value of the properties, fields, and mines in which it is involved or must have reasonable spread of interests and minimum resources and has rights to participate actively in their extraction. Scientific research companies must have minimum track records and capitalization.

Accounts

Applicants for admission of equity shares must generally have published and filed audited account for at least three years, with latest account not less than six months before the date of the prospectus. The accounts must have been audited in accordance with auditing standards applicable in the EU. The auditor must not have modified the accounts.

The auditor must be independent. The company must obtain confirmation from auditors that they can comply with guidelines on independence issued by their national county body.

A new applicant for share listing must show that at least 75% of the business is reported by a historic revenue earning record which covers the period of accounts above, that it controls its assets and has done so and that will be independent.

The purpose is to enable prospective investors to make a reasonable assessment about the future prospects of the applicant business might be.. Investors should be able to consider the historic revenue earning record in light of the particular competitive advantages, the outlook for the sector and general macroeconomic climate.

Business Requirements

Business which have existed for three years, but which may have one or more of the following characteristics may not satisfy the rule.

strategy which emphasises the development or marketing of products which have not formed a significant part of historic earning record
the value of the business on admission would be determined to a significant degree by future development rather than past performance
the relationship between the value of the business and its revenue or profit-earning record is significantly different to similar companies in the sector
no record of consistent revenue, cash flow or profit growth through the historic, revenue earning period
applicant has undergone a significant change in the scale of operations during the period of the historic earning record
it has a significant level of research and development expenditure.

An applicant for listing must satisfy the exchange that it and its subsidiaries have sufficient working capital for its requirement for at least the next 12 months from the date of the prospectus. This requirement may be dispensed if alternative evidence of adequate working capital is available.

If an application is made for the admission of a class for shares, a sufficient number must be distributed to the public in the EEA. At least 25% of the shares must be in public hands.

Shares are not in public hands if they are held by persons in any way connected to the company. Exceptionally, a lower percentage may be sufficient.

The above requirement regarding historic revenues may be varied if the applicant’s business is supported by historic revenue earning record covering the period of accounts, it controls the majority of assets and it would be carrying out an independent business as its main activity.

Directors and senior management of the company must collectively have appropriate expertise and experience in the management of the group’s business. Directors must be free from conflicts of interest, and arrangements must be in place to avoid any detriment to the company’s interests.

A company that has a controlling shareholder must be capable at all times of carrying on its business independently of it and any associates. Transactions between the company and controlling shareholder and associates must be at arm length. The controlling shareholder is one entitled to exercise control directly or indirectly of 30% or more of the voting right or able to control the appointment of directors.

Application Documents

An applicant seeking approval of an prospectus must comply with the relevant legislation and prospectus rules. Certain prescribed documents must be filed with the stock exchange in the listing application. Documents include

completed application
copy of the prospectors
public circular supplementary prospectuses,
details of securities,
copies of company documentation
completed shareholder statement,
completed pricing statement
confirmation of the total number of shares issued
certain declarations

Certain documents must be retained by the company for at least six years, including

agreements to acquire businesses or assets in consideration or/for or in relation to the company’s securities
letters report valuations and contracts referred to in a prospectus or circular
annual reports and accounts and that of any guarantor
interim accounts
title document,
employee share scheme document,
copies of board resolutions.

Listing Principles

Listed companies must comply with the listing principles. The purpose is to ensure they pay due regard to the fundamental role they play in maintaining market confidence and ensuring a fair and orderly market. The listing principles are designed to assist listed companies and identifying their obligations and responsibilities under the listing rules. The listing principles are as follows; a listed company

must take reasonable steps to enable its directors to understand their responsibilities and obligations as such
must take reasonable steps to establish and maintain adequate procedure systems and control to enable it to comply with its obligations
must act with integrity towards holders and potential holders of its securities
must communicate information to holders potential holders in such a way as to avoid the creation or continuation of a false market
must ensure it treats all holders of the same class in the same position equally in respect of rights attaching to the shares
must deal with the stock exchange in an open and cooperative manner.

Listing Rule Compliance

If an issuer contravenes the listing rules, the exchange may impose sanctions. It may censure the company concerned. It may suspend or cancel the listing.

If the listing committee finds the contravention is due to failure of the directors to discharge responsibilities under the rules, it may censure the directors. In the case of welfare or persistent beaches, the listing may be suspended or discontinued unless the director(s) ceases to hold office.

A listing may be suspended from time-to-time if this necessary for the smooth operation of the market. A listing may be suspended if the company

fails to apply with obligations
fails to publish financial information in accordance with the rules
is unable to assess accurately its financial position and inform the market
there is insufficient market information about a proposed transaction
its securities have been suspended elsewhere
it is in insolvency or winding up