The law on prospectuses and public offerings of shares was radically reformed in 2005. This followed from EU based initiatives in the areas of shares and securities. There is no comprehensive set of regulations and directives governing the market in securities.
The Prospectus Directive applies to the issue of securities to the public. In this context as in other context in respect of financial asset, securities embrace a wide range of transferrable securities including shares, bonds, debentures and other investment type interests in corporate entities and their equivalent.
Small and medium enterprises or undertakings, i.e., companies, firms or other businesses which according to their last annual or consolidated accounts satisfy two of the following three criteria:
- average employees less than 250,
- balance sheet total less than €43 million,
- annual net turnover not exceeding €50 000 000.
The Central Bank maintains a register of natural persons and small and medium sized enterprises who are qualified investors for the purpose of the Prospectus Regulation. Qualified investors include the following:
- entities which are authorised or regulated to operate in the financial markets, including investment firms, credit institutions, insurance companies, collective investment schemes and their management companies, pension funds and their management companies and commodity dealers;
- entities who are not so regulated whose corporate purpose is solely to invest in securities.
- National, regional governments, central banks, and certain other public bodies;
- legal entities which do not meet two of the three conditions specified in small to medium enterprise definition above and natural persons and small and medium size enterprises entered on the central bank register.
Natural persons and SME enterprises who apply for inclusion in the register of qualified investors and satisfy condition for inclusion below may be so entered. The conditions for inclusion are that they are registered in the state and meets at least two of the following:
- carried out transactions of a significant size on securities markets at a frequency of, at least, 10 per quarter over the four quarters immediately prior;
- value of securities portfolio exceeds €0.5 million;
- he or she has worked for at least one year in the financial sector in a professional position which requires knowledge of securities investment.
The condition for inclusion of SME enterprises is that their registered office is in the State. The Bank may require a natural person or SME which applies for inclusion to furnish appropriate documentation to demonstrate that they, he or she satisfies the appropriate conditions. It may require compliance with continuing conditions.
The prospectus regulation does not apply to the following securities:
- units issued by collective investment undertakings other than the closed-end types;
- non-equity securities issued by Member States, local or regional authorities or Central Banks;
- securities irrevocably guaranteed by a Member State or its regional or local authorities;
- securities issued by an association with legal status or non-profit-making bodies, recognised with a view to their obtaining the means necessary to achieve their non-profit-making objectives so recognised by a Member State;
- Non-equity securities issued in a continuous or repeated manner by credit institutions that are not subordinated, convertible or exchangeable; do not give a right to subscribe for other securities;
- repayable deposits covered under the deposit guarantee scheme.
Further categories are
- non-fungible shares of capital whose main purpose is to provide a right to occupy an apartment or other immovable property where the shares cannot be sold without this right being given up;
- securities included in an offer where the offer expressly limits the amount of the consideration to less than €2.5 million;
- non-equity securities issued in a continuous or repeated manner by credit institutions where the total consideration of the offer is less than €50 million, over 12 months, subject to certain conditions. In the case of the €2.5 million exemption, the total consideration for the offer when obligated with previous offers of the same type within the last 12 months must not exceed €2.5 million.
In many of the above cases, the person issuing shares may still draw up a prospectus in respect of the security and submit it to the Bank for approval. In the above case the two prospective regulations do not apply.
The following categories are not subject to the obligation to publish their prospectus:
- offer of securities addressed solely to qualified person;
- offer of securities addressed to fewer than 100 persons other than qualified investors;
- offer of securities to investors with a minimum consideration of at least €50,000 per investor for each separate offer;
- offer of securities whose denomination is at least €50,000;
- an offer of securities where the offer expressly limits the amount of the total consideration to less than €100,000.
The obligation to publish a prospectus does not apply to the placement of securities through financial intermediaries subject to compliance with certain conditions.
In the case of the requirement regarding issues of less than €100 000, this is aggregated with other offers made within a period of 12 months expiring on the date of the offer.
The obligation to publish a prospectus does not apply to offers of securities to the public in the State of the following types of securities:
- shares issued in substitution for shares of the existing class, if the issuing does not involve any increase in the issued share capital;
- shares issued in connection with a takeover by way of exchange provided that the document is available containing information which the Central Bank is satisfied is equivalent to prospectus;
- securities allotted or offered in connection with a merger, provided a document with equivalent information is available;
- shares offered, or offered free of charge to existing shareholders, and dividends paid out in the form of shares provided a document is available containing information on the nature and number of the shares and the reasons and details for the offer;
- securities allotted to former or existing directors or employees of the company or an affiliated undertaking, which in either case, the security is already admitted to trading on a regulated market provided a document is available containing information on the number and nature of the securities and the reasons and details of the offer;
- shares already admitted to trading on another regulated market, provided that securities of the same class, have been admitted to trading on that other regulated market for 18 months;
- securities first admitted, the admission to trading of which was associated with an approved prospectus made available to the public in conformity with EU prospectus law unless the second condition applies, listing particulars were approved; that the ongoing obligations for trading on that other regulated market have been fulfilled;
- that the person seeking admission to trading makes a summary available to the public in a manner specified under the regulations in the language accepted by a Bank; that the contents of the summary are to comply with certain condition and state that the most recent prospectus can be obtained, where it can be obtained;
- in circumstances where no reasonable prospectus has been published in relation to the securities, a warning notice in a particular format must be given and, in that case, reference to a prospectus shall be construed as reference to the most recent information disclosed to the regulated market under ongoing disclosure obligations.
Subject to the above exemptions, no offer of securities may be made to the public without publication of a prospectus in relation to that offer unless the home Member State has been approved by the Central Bank under Irish prospectus law or a host Member State in relation to the offering has been approved by the regulator of the home Member State pursuant to the applicable EU prospectus law.
EU prospectus law has been harmonised and accordingly prospectuses are approved in accordance with common criteria throughout the EU.
Securities are not to be admitted to trading on a regulated market (generally a stock exchange) without publication of a prospectus in relation to admission of those securities in accordance with the above criteria. Once again where a prospectus has been published in accordance with law of another EU State, this allows admission. An issuer who breaches this obligation constitutes an offense.
Responsibility for information given in a prospectus attaches to the following persons. In the case of equity securities other than convertible securities,
- the issuer,
- its directors and persons authorised to be named in the prospectus as director or having agreed to become director,
- each person who accepts and is stated as accepting responsibility in the prospectus as a responsible person.
In the case of other prospectuses, persons responsible include
- persons who accept and are stated as accepting responsibility,
- offeror of the securities,
- person seeking admission,
- guarantor in so far as it relates to the guarantor and the guarantee;
- persons not in the above categories who authorise the contents of the prospectus.
A person is not responsible as director if the prospectus is published without his knowledge or consent and on becoming aware of its publication he gives reasonable public notice that it was so published.
A person is not responsible for a prospectus if the issuer is responsible in accordance with the regulations, it was drawn up primarily by the issuer, or a person acting on his behalf and the offeror is making the offer in association with the issuer.
The following persons may accept responsibility for part of the prospectus. A person may state they did so only in relation to the specified parts or in certain specified parts or extents.
A prospectus shall contain all information which, according to the particular nature of the issuing entity and of the securities offered to the public and admitted to trading, which is necessary to enable investors to make an informed assessment of the
- assets and liabilities,
- financial position,
- profit and losses, and
- prospects of the issuer and of any guarantor and
- the rights attaching to the security.
The information presented must be consistent and presented in an easy, analysable and comprehensible form. It shall contain information concerning the issuer and the securities to be offered to the public or admitted to trading. Without limiting the above obligation, the prospectus must contain the minimum information required under the EU prospectus regulations.
A prospectus shall include a summary, in brief and non-technical language, conveying the essential characteristics and risks associated with the issuer and any guarantor, in the language in which the prospectus was originally drawn up.
The prospectus shall contain a warning that it should be read as an introduction to the prospectus and that any decision on the securities should be based on consideration of the prospectus as a whole. The summary shall also set out the civil liability of the persons responsible under law for the content.
A prospectus may be drawn up as a single document or separate document. A prospectus made up of separate documents is to divide the required information into a registration document containing the required information relating to the issuer, a securities note containing the information relating to the securities and a summary.
A base prospectus is one that contains certain specified information. It may be used for securities or non-equity securities, including warrants issued under an offering program. It may be used in the case where the securities or non-equity securities are issued in a continuous or repeated manner by a credit institution. The information given in the base prospectus must be supplemented with updated information as required. Certain further filing obligations may apply.
The final offer price or amount of the securities may be omitted if they cannot be included until the final offer in which case, provisions must be made for withdrawal or revocation within two working days of the statement of the final offer price and the amount of securities to be offered.
The Central Bank may authorise omission from the prospectus of information that is otherwise required if it considers
- that it would be contrary to the public interest;
- seriously detrimental to the issuer, provided the omission would not mislead the public with regard to facts and circumstances essential for an informed assessment or
- if the information is of minor importance only for a specific offer and is not such as will influence the assessment of the financial position and prospects of the issuer.
Information may be incorporated by reference in the prospectus where it refers to simultaneously published documents approved by the Bank and filed under EU prospectus regulation. The information incorporated shall be the latest available to the issuer.
The summary shall not incorporate information by reference. A cross-reference list must be provided to enable the investor easily to identify specific items of information.
There are provisions for approval and conditions attaching to prospectuses consisting of separate documents. Provided it is updated by the issue of supplements where required, a prospectus is generally valid for 12 months after publications. Similarly, a base prospectus has a 12 months life after filing.
The 2019 Act amends the Companies Act 2014 to update the definitions of ‘EU Prospectus Law’, ‘Irish Prospectus Law’, ‘Prospectus Regulation’ and ‘local offer’ to refer to the new Regulation (EU) 2017/1129, Irish domestic regulations as amended and the increase in the local offer threshold to €8 million.
These changes reflect the change in legislative basis from the previous Directive 2003/71/EC to the new Regulation (EU) 2017/1129.
This section also provides for a number of consequential amendments to other definitions arising from the updated definitions to ‘EU Prospectus Law’, ‘Irish Prospectus Law’ and ‘Prospectus Regulation’.
This section amends the definition of ‘expert’ to provide for a more concise definition.
Article 11 requires Member States to ensure that no civil liability shall attach to any person solely on the basis of the summary or the specific summary of an EU Growth prospectus including any translation thereof unless it is misleading or omits key information.
A category 3 offence applies to the offeror of a local offer if they are found to be in breach of the local offer requirements.
There are additional local offer requirements and for a category 3 offence to be applied in the event of a breach of these additional requirements. The additional requirements are based on recommendations made by the Central Bank of Ireland as the competent authority for the purposes of the prospectus regulations.Prospectus that are approved before 21 July 2019 will not become subject to Regulation (EU) 2017/1129 until the earlier of 21 July 2020 or the end of the validity of the prospectus itself.