Disclosure Requirements - Ireland
Disclosure Category 1
In the case of holdings in Irish equities, CBL is under an obligation, under Section 1062 of the Companies Act 20141, to disclose the identity and holdings of customers holding applicable positions.
In order to comply with the legislation as mentioned below, customers entering into transactions in the Irish domestic market consent and are hereby deemed to consent to disclosure and to the appointment of the issuer, regulator or other requesting party as their attorney-in-fact, under power of attorney to collect from CBL such information as is required to be disclosed.
Customers are advised that local laws and regulations (including the Irish Companies Act and the Irish Takeover rules) may require CBL to disclose securities trading and holding information and the identity of the ultimate beneficial owners of certain securities.
Additionally, the Central Bank of Ireland (the “Central Bank”) under Section 1383 of the Companies Act 2014 has issued additional Rules and these shall be known as the “Transparency Rules”.
In accordance with the provisions of Section 1383(7) of the Companies Act 2014, where appropriate the Central Bank has also included guidance in these Transparency Rules on the steps that may be taken to comply with Transparency (regulated markets) law.
Background and legal basis
Section 1062 of the Companies Act 2014 gives a public company wide-ranging power to investigate ownership of its shares.
A written notice is sent by the company to any person or company that holds or has held any of its share capital during the three years immediately preceding the date of issue of the 81 Notice, irrespective of the size of the holding. The notice is addressed to the person or company whose name appears in the shares register. If this is a nominee, the notice will be passed on to the person or company represented by the nominee. The company can request that the ultimate beneficial owner be revealed.
The Irish market recognises the nominee concept and all Irish shares held by CBL customers are registered in the name of Citibank Nominees Ireland Ltd. It is not typical that disclosure is required. However, the Companies Act 2014 does give the company the right to require disclosure down to the level of the final beneficial owner.
Although extremely rare, the Irish Financial Services Authority (IFSA) can apply to the Irish courts to have a court order granted to allow the IFSA to request disclosure. An order would only be issued in serious cases such as fraud or national security where there appears to be indicative evidence of a crime.
Directive (EU) 2017/828 of 17 May 2017 amending Directive 2007/36/EC with regard to the encouragement of long-term shareholder engagement (the second shareholder’s rights directive “SRD II”) was transposed into the Companies Act 2014 on 30 March 2020 (“SDR II Law”).
Obligation to report threshold crossings
In accordance with the Irish Companies Act 1990 under sections 68 to 78 and the Transparency Rules subject to the exemptions in Regulation 14(5) and Regulation 17(6) an investor ((other than where the issuer is a collective investment undertaking of the closed-end type) who acquires or ceases to be interested in shares has an obligation to make notification to the company of the interests which they have, if either as shareholder or through his direct or indirect holding of Regulation 17 financial instruments or a combination of such holdings:
- reaches, exceeds or falls below 3%, 4%, 5%, 6%, 7%, 8%, 9%, 10% and each 1% threshold thereafter up to 100% or in the case of a non-Irish issuer on the basis of thresholds at 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75% as a result of an acquisition or disposal of shares or Regulation 17 financial instruments;
- reaches, exceeds or falls below an applicable threshold in (1) as a result of events changing the breakdown of voting rights and on the basis of information disclosed by the issuer in accordance with Regulation 20; and in the case of an issuer which is not incorporated in an EEA state a notification under (2) shall be made on the basis of equivalent events and disclosed information.
The company may impose sanctions if the shareholder fails to comply. The beneficial owner is legally responsible for reporting. In accordance with the Irish Companies Act 1990, an investor acquiring three percent of a company’s voting rights must inform the issuer within two trading days. Any subsequent increases of one percent must also be reported within the same time frame.
The investor is responsible for making the necessary disclosure and failure to do so may lead to investors losing voting rights or the withdrawal of dividend payments. Under Section 81 of the Companies Act (1990), companies have the authority to request the nominee holder to disclose the name of the underlying beneficial owners and their interest in the company.
The acquisition of 30 per cent of a company’s voting rights and each subsequent increase of one percent in a 12-month period must be accompanied by a formal takeover bid.
For holdings between 30 percent and 50 percent of a company’s voting rights, each subsequent increase of one percent must be accompanied by a formal takeover bid.
Additional rules and guidance on how to comply with the Notification of the Acquisition or Disposal of Major Shareholdings and Voting Rights Transparency Directive can be found under www.centralbank.ie
Non-compliance with the 1062 Notice may result in the withdrawal of voting rights, the withholding of capital and income payments and the invalidation of any transfer of shares.
Non-compliance with a court order can have serious judicial consequences up to and including imprisonment.
In accordance with the provisions of Section 1383(6) of the Companies Act 2014, the imposition of administrative sanctions shall apply in relation to a contravention of the Transparency Rules.
The Irish Statute Book Instrument Nr. 542/2003 and the Stamp Duty Consolidation Act 1999 organise stamp duty, which is charged to the beneficial owner via the custodian and CBL.
Shareholders who do not disclose the identity and residence of the final beneficial owner cannot benefit from a tax reduction for which they may be eligible.
Documentary evidence of details of all transactions and, where applicable, proof of relief from stamp duty must be retained for three years from the settlement date of each transaction and must be forwarded upon request from CBL or the revenue commissioners.
By holding Irish equities in an account with CBL, customers will be deemed to have authorised the disclosure to the revenue commissioners, upon request, of all details of transactions relating to Irish equities.
Shareholder identification as set out in the SRD II Law
The SRD II Law provides for the right of issuers to identify their shareholders.
Issuers can request intermediaries at each level of a custody chain to promptly provide relevant information to facilitate such identification.
In accordance with the SDR II Law as amended, an intermediary (in this case, Clearstream Banking) shall, upon receipt of the shareholder identification disclosure request, transmit similar request to the next intermediaries in the custody chain (that is, Clearstream Banking customers with holdings in the requested securities). A response to the shareholder identification disclosure request shall be sent by every intermediary in the custody chain directly to the recipient's address defined in the request and without delay. Clearstream Banking will generate the response as required, with information regarding shareholder's identity, limited to Clearstream Banking books only.
1. Formerly Section 81 of the Companies Act 1990.