The first group of amendments consists of amendments Nos. 2 and 10 to 27, inclusive. This group relates to Parts 4 and 5 of the Bill, which refer to the transposition of the EU directives on market abuse and prospectuses.
Senator McDowell raised a number of points regarding these provisions on Committee Stage and, following further examination by the Office of the Parliamentary Counsel and the Office of the Attorney General, these provisions were further amended in the Dáil. Furthermore, the drafting of the regulations to transpose both directives has been progressed alongside the progression of the Bill through the legislative process and this has resulted in some mismatches which have now been removed.
Amendment No. 2 amended section 2 regarding the commencement of the new section 31, which repeals the existing provisions on market abuse law. At present, the Irish Stock Exchange operates the official list, the regulated market and the recently launched the Irish enterprise exchange, lEX, which in EU terms is not a regulated market for the purposes of EU directives. It was always the intention to apply the market abuse regime to the lEX using the powers in section 37. However, it will be necessary to examine the proposed transposing regulations to be made under section 30 to see what modifications may be necessary in the application of the full market abuse regulations to the lEX. This will take some time. In the meantime, it is considered undesirable to have no statutory prohibition on insider dealing applying to the lEX market. Section 2, as amended, will allow for a deferment of the repeal of Part V of the 1990 Act in its application to the lEX market until the section 37 order can be made.
Amendments Nos. 11 and 23 amended sections 29 and 43, now sections 30 and 46, regarding the regulations transposing the market abuse and prospectus directives. The previous draft gave the Minister the power to make regulations under section 30 for the purpose of giving effect to the EU market abuse directive, market abuse regulation and supplemental directives. However, the market abuse regulation is directly applicable in all member states. Therefore, it was incorrect to refer to "giving effect" to the regulation and section 29 has been amended to reflect this. Likewise, it was incorrect to refer to "giving effect" to the prospectus regulation in section 43, which has also been amended.
It has also been clarified that regulations made under sections 30 and 46 may only provide for penalties on a summary conviction. Subsection (3) of section 30, as amended, provides that such regulations may include provisions regarding disclosure of interests in relevant share capital currently in section 3 of the Companies (Amendment) Act 1999, which is being repealed in the new section 31. Regulations may also impose the requirements imposed by Article 6(9) of the EU market abuse directive that any person professionally arranging transactions in financial instruments who reasonably suspects that a transaction might constitute insider dealing or market manipulation shall notify the competent authority.
Amendment No. 12 added a new section 31 repealing Part V of Act of 1990 and the Companies (Amendment) Act 1999 which contains the existing law on market abuse and insider dealing. I would like to point out that the repeal of the market abuse legislation in section 31 and the repeal of the prospectus legislation in section 40 represent a significant streamlining of the law in these two areas. The EU directives will simplify administration and reduce the number of different rules and standards across the European Union. This is not adding new legislation on top of the existing law. It is bringing our legislation into line with Europe and making us more competitive globally.
Amendment No. 14 amends section 34 by giving IFSRA the power to make rules in order to determine whether a financial interest is significant, as required by the market abuse directive. Amendment No. 15 adds a new section 35, amending section 33AJ of the Central Bank Act 1942. This will ensure that the Irish Stock Exchange, in acting as an agent of the bank for the purposes of the market abuse directive, is covered by the immunity clause contained in Section 33AJ of the Central Bank Act.
Amendments Nos. 10, 16 and 18 to 20, inclusive, amend the definitions of "Irish market abuse law", "EU prospectus law", "Irish prospectus law", "local offers" and "offers of securities to the public" to ensure the text is consistent with that in the transposing regulations.
Amendment No. 22 amends section 43, previously section 40, by removing the reference to a threshold as it is not considered necessary to have such a threshold. The market practice is that for non-equity securities, the offerer, the person who sought admission of the securities or the guarantor alone should be liable. It will mean that Ireland will not lose competitive advantage to countries where liability for prospectuses for all debt issues attaches effectively to the issuers only. Amendment No. 25 amends section 48, previously section 45, to provide that the competent authority may prosecute for any summary offences under section 48, which refers to untrue statements or omissions.
Amendment No. 27 amends section 51, section 48 in the Seanad text, and gives IFSRA — the competent authority designate — the power to define "significant" for the purposes of the register of SMEs and natural persons. Article 2(2)(a) of the prospectus directive lays down criteria for those investors who wish to be considered as qualified investors, one of which is that the investor has carried out transactions of a significant size on security markets at an average frequency of at least ten per quarter over the previous four quarters. The amendment was felt to be necessary because, for example, applying for inclusion on the register of SMEs and natural persons is not an obligation imposed by Irish prospectus law but one that only arises if a person decides to avail of that particular registration regime. Amendments Nos. 13, 17, 21, 24 and 26 are related to or consequential on the amendments I have just described.
