The main laws and regulations governing business combinations and acquisitions of publicly listed companies include the following.
Irish Takeover Panel Act, the Takeover Regulations and the Takeover Rules
M&A transactions in Ireland involving public companies are primarily regulated by the Irish Takeover Panel Act 1997, as amended (the Takeover Act), the European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006, as amended (the Takeover Regulations), and the Irish Takeover Panel Act 1997, Takeover Rules 2013 made thereunder (the Takeover Rules).
The Takeover Act, the Takeover Regulations and the Takeover Rules primarily apply to change-of-control and certain other M&A transactions involving an Irish registered target with voting shares admitted to trading (or whose voting shares had, in the previous five years, been admitted to trading) on: (i) a market regulated by The Irish Stock Exchange Plc trading as Euronext Dublin (the ISE) (ie, including junior markets such as the Enterprise Securities Market or the Atlantic Securities Market); or (ii) the London Stock Exchange (including AIM), the NYSE or NASDAQ.
The Takeover Regulations and the Takeover Rules also apply to change-of-control transactions involving: (i) an Irish registered target with voting shares admitted to trading on one or more ‘regulated markets’ (within the meaning of article 4(1)(21) of Directive 2014/65/EC of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments) in the EEA (other than Ireland); and (ii) a non-Irish registered target with voting shares admitted to trading on one or more regulated markets in the EEA including Ireland (but not in its country of incorporation). Change-of-control transactions involve the acquisition of shares carrying 30 per cent or more of voting rights of a target company.
The Takeover Rules, which are based on seven general principles set out in the Takeover Act (the General Principles), contain detailed provisions applicable to the conduct of takeovers. The spirit, as well as the strict reading, of the Takeover Rules and the General Principles must be adhered to. Among other matters, the General Principles provide that target shareholders be afforded equivalent treatment and sufficient time and information to reach a properly informed decision on an offer. The Takeover Rules are not concerned with the financial or commercial advantages or disadvantages of a takeover or other relevant transactions and they include mandatory bid rules, share-dealing restrictions, confidentiality and disclosure obligations, and restrictions on frustrating actions.
The Takeover Rules establish timelines within which offers must be conducted and declared unconditional in all respects. There is greater flexibility around the timeline applied to takeovers carried out by way of scheme of arrangement than by way of offer as the Irish High Court’s timetable must also be taken into consideration.
The Takeover Rules are administered and enforced by the Irish Takeover Panel (the Takeover Panel), which is the supervisory body for takeovers in Ireland and the designated competent authority under Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids.
The Takeover Panel has statutory power to make rulings and to give directions to ensure the General Principles and the Takeover Rules are complied with. The Takeover Panel operates principally to ensure fair and equal treatment of all target company shareholders in relation to takeovers (whether structured by way of an offer or a scheme of arrangement) and certain other relevant transactions. The Takeover Panel operates on a day-to-day basis through its executive, the members of which are available for consultation and guidance on the operation of the Takeover Rules. The Takeover Panel is designated as the competent authority for the purposes of article 4(1) of the Takeover Regulations.
The Companies Act
The Companies Act 2014, as amended, (the Companies Act) contains, among other matters, the applicable legislative basis for a scheme of arrangement and a domestic merger. The Companies Act is also the core statute which regulates the governance and internal affairs of an Irish company, including the principal fiduciary duties of directors.
The Substantial Acquisition Rules
The Irish Takeover Panel Act 1997, Substantial Acquisition Rules, 2007 (the SARs) are a separate set of rules issued and administered by the Takeover Panel. The SARs restrict the speed at which a person may increase a holding of voting shares (or rights over voting shares) in a target to an aggregate of between 15 per cent and 30 per cent thereby providing the means by which acquisitions of shares in public limited companies may be made.
The main aim of the SARs is to give target companies adequate warning of stake building. Subject to limited exceptions, a person may not, in any period of seven days, acquire shares (or rights over shares) in a target company, which carry 10 per cent or more of its voting rights, if, following such acquisition, that person would hold shares (or rights over shares) carrying 15 per cent or more, but less than 30 per cent, of the voting rights in the target company.
The Competition Acts
The Competition Acts 2002 to 2017, as amended, (the Competition Acts) govern the regulation of competition law in Ireland. The Competition Acts established the Competition and Consumer Protection Commission (the CCPC), which is primarily responsible for the enforcement of the Irish merger control regime. Depending on the size of the transaction and scale of the parties and their operations in Ireland, a takeover may be required to be notified to and approved by the CCPC under the Competition Acts. Larger transactions, involving multiple jurisdictions, may require notification to and approval by the European Commission under Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation).
The CCPC shares responsibility for media mergers with the Minister for Communications, Climate Action and Environment (the Minister). The Irish courts have jurisdiction to adjudicate on any allegation of breach of the Competition Acts and on any appeal against a merger decision by the CCPC.
The Market Abuse Regulation
Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2004 on market abuse (MAR) and the European Union (Market Abuse) Regulations 2016 (MAR Regulations) regulate insider dealing and market manipulation by imposing significant obligations on issuers.
The Cross-Border Mergers Regulations
The Cross-Border Mergers Regulations apply where the transaction involves a merger of an Irish incorporated entity with at least one other EEA company.
The Irish Prospectus Regulations, the Prospectus Directive and the New Prospectus Regulation
The EU prospectus regime harmonises requirements for the drafting, approval and distribution of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market situate or operating within a member state. It is designed to reinforce investor protection by ensuring that all prospectuses, wherever issued in the EU, provide clear and comprehensive information while at the same time making it easier for companies to raise capital throughout the EU on the basis of approval from a single competent authority.
Currently in Ireland, the Prospectus (Directive 2003/71/EC) Regulations 2005, as amended, (the Irish Prospectus Regulations) regulate public offers of securities. The Irish Prospectus Regulations derive from Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading (the Prospectus Directive).
The Prospectus Directive is soon to be repealed by Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (the New Prospectus Regulation). The New Prospectus Regulation was published in the Official Journal on 30 June 2017 and it has been designed to repeal and replace the existing body of prospectus law. It will apply on a rolling basis, with full application from 21 July 2019 and will be directly effective in EU member states, meaning that it does not strictly need any national transposing measures to take effect.
The Transparency Regulations and the Transparency Rules
The Transparency (Directive 2004/109/EC) Regulations 2007, as amended, (the Transparency Regulations) seek to enhance the transparency of information provided by issuers on a regulated market by containing certain disclosure requirements for public companies. Further guidance and procedural and administrative requirements were issued by the Central Bank of Ireland (the Central Bank) when it, pursuant to the Companies Act, issued the Irish transparency rules in November 2016 (the Transparency Rules).
The listing rules of the relevant stock exchange or market
Companies whose shares are listed on the Main Securities Market (the MSM) of the ISE must comply with the Euronext Dublin listing rules (the Listing Rules). The ISE website (www.ise.ie) contains market and regulatory information applicable to listed companies. It also provides access to the Listing Rules and the Irish Corporate Governance Annex published by the ISE (the Irish Annex). The UK Corporate Governance Code (the Code), as supplemented by the Irish Annex, is also applicable to these companies.
There are a number of Irish publicly listed companies listed on markets outside Ireland, such as the NASDAQ, the NYSE and the London Stock Exchange (main and AIM markets), and these companies are subject to additional rules applicable to those markets.
Some sectors have special rules and additional regulators may be required to get involved. In particular, regulated financial services businesses are subject to rules which require change-of-control consent from the Central Bank; media mergers are subject to the approval of the CCPC and the Minister; and Irish airlines are subject to foreign control restrictions.
Memorandum and articles of association
An Irish incorporated company is also subject to its memorandum and articles of association (forming a contract between the company and its shareholders). The memorandum of association sets out the principal objects of the company, while the articles of association set out the internal regulations of the company regarding matters such as shareholder meetings, voting rights, powers and duties of directors, the composition of the board of directors and communications between the company and its shareholders.
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