Irish Stock Exchange Listing Rules: Sponsor Regime Irish Stock Exchange Daryl Byrne, Aisling McArdle & Orla O‟Gorman Mason Hayes & Curran Justin McKenna & Ciaran Healy 21 September 2016 FCA Listing Rules & ISE Listing Rules Recent Market Activity Key Entrants to Irish Equity Markets - Permanent TSB Group Holdings plc (2015 – MSM) - Irish Residential Properties plc (2014 – MSM) - Green REIT plc (2013 – MSM) - Hibernia REIT plc (2013 – MSM) - Applegreen plc (2015 – MSM) - Hostelworld Group plc (2015 – MSM) - Dalata Hotel Group plc (2014 – ESM, now MSM) - Malin Corporation plc (2015 – ESM) Notable Departures from Irish Equity Markets - Dragon Oil plc (2015 – MSM) - Aer Lingus Group plc (2015 – MSM) - Elan Corporation plc (2013 – MSM) - ICON plc (2013 – MSM) - Petroceltic International plc (2016 – ESM) Recent Market Activity Funds Raised on Irish Equity Markets (€m) 3500 3000 2500 2000 Funds Raised on Irish 1500 Equity Markets 1000 500 0 2012 2013 2014 2015 Irish PLCs The Irish PLCs that are relevant to UK firms for equity capital markets purposes are those listed on: i. London Official List and the Irish Main Securities Market ii. London Official List only iii. AIM and the Irish ESM iv. AIM only Irish Companies with Dual Listing on UK Official List and Irish MSM Market Capitalisation as of September 2016 UK Official List and Irish MSM Aminex plc Glanbia plc Kerry Group plc €80m €5.1bn €13.6bn Bank of Ireland Group Green REIT plc Kingspan Group plc €6.2bn €986m €4.5bn C&C Group plc Hibernia REIT plc Paddy Power Betfair plc €1.2bn €951m €9.1bn CRH plc IFG Group plc Permanent TSB Group €25.2bn €207m Holdings plc €941m Dalata Hotel Group plc Independent News & Media Ryanair Holdings plc €818m plc €187m €16.4bn Datalex plc Irish Continental Group plc Smurfit Kappa plc €259m €913m €5.5bn FBD Holdings plc Kenmare Resources plc €243m €346m Irish Companies with Single Listing on UK Official List and Irish MSM Market Capitalisation as of September 2016 UK Official List Only Irish MSM Only Cairn Homes plc Irish Residential Properties REIT plc £511.2m €492m DCC plc £6.1bn Grafton Group plc £1.2bn Greencore Group plc £1.5bn UDG Healthcare plc £1.6bn Irish Companies with Dual Quotations on UK AIM and Irish ESM Market Capitalisation as of September 2016 UK AIM and Irish ESM Abbey plc Fyffes plc Ormonde Mining plc €278m €478m €14m Allied Irish Banks plc Great Western Mining Ovoca Gold plc €16.3bn Corporation plc €2m €11m Amryt Pharma plc Karelian Diamond Resources Petroneft Resources plc €48m plc €4m €17m Applegreen plc Mainstay Medical International Providence Resources plc €385m plc €96m €72m Conroy Gold and Natural Merrion Pharmaceuticals plc Total Produce plc Resources plc €5m €4m €521m CPL Resources plc Mincon Group plc Zamano plc €170m €152m €13m Donegal Investment Group plc Origin Enterprises plc €55m €731m Irish Companies with Single Quotations on UK AIM and Irish ESM Market Capitalisation as of September 2016 UK AIM Only Irish ESM Only Circle Oil plc Norish plc Malin Corporation plc £3.5m £11.1m €549m Connemara Mining Company Petrel Resources plc plc £1.5m £6.1m Escher Group Holdings plc REACT Energy plc £31.2m £2.8m Kibo Mining plc San Leon Energy plc £22.9m £29.4m Minco plc £5.7m Divergences between FCA and ISE Sponsor Regimes Relevant FCA LISTING RULES ISE LISTING RULES Area Appointment • Prescriptive list – application for admission • Initial application and duration of listing of a Sponsor which requires the production of a prospectus, on each occasion it produces a Class 1 circular and other occasions such as reverse takeovers and related party transactions LR 8.2.1R and 8.2.3R LR 2.3.1 Role of a “come to a reasonable opinion, after having “satisfy itself, to the best of its knowledge and Sponsor made due and careful enquiry, that the applicant belief, having made due and careful enquiry of has satisfied all [requirements for listing]” the issuer and its advisers, that the issuer has satisfied all [requirements for listing] “ LR 8.4.2R LR 2.2.1 Principles for “act with due care and skill” and “at all times “act with due care and skill” and “ensure the Sponsors deal with the FCA in an open and co- issuer is properly guided and advised” operative way and deal promptly with any enquiries it makes” LR 8.3.3R and 8.3.5R LR 2.2.2 Duty to “the Sponsor must take reasonable steps to “Sponsor must be satisfied that the directors of Directors satisfy itself that the [directors] of the listed the issuer have had explained to them by the company understand their responsibilities and Sponsor or other appropriate professional adviser obligations” the nature of their responsibilities and obligations as directors” LR 8.3.4R LR 2.2.3 Divergences between FCA and ISE Sponsor Regimes Relevant FCA LISTING RULES ISE LISTING RULES Area Joint Sponsors • Duty to cooperate and share information • Duty to establish which Sponsor has primary responsibility and notify ISE LR 8.3.14R and 8.3.15R LR 2.3.3 and 2.3.4 Appointment of an Agent • Prohibited • May appoint an agent at its discretion if agent has sufficient experience and notified to ISE LR 8.7.16R LR 2.5.2 and 2.5.3 • Public censure Disciplinary • Private or public censure • Cancellation Action • Cancellation • Suspend/restrict Sponsor for 12 months • Unlimited financial penalties LR 8.7.20R / Financial Services LR 2.5.6 and 2.5.7 and Markets Act 2000 (s.88) Divergences between FCA and ISE Sponsor Regimes Relevant FCA LISTING RULES ISE LISTING RULES Area Financial “Sponsor has come to a reasonable “Sponsor must obtain written confirmation Position and opinion, after having made due and careful from the issuer that the directors have Prospects enquiry, that the directors of the [issuer] have established procedures which provide a established procedures which provide a reasonable basis for them to make proper reasonable basis for them to make proper judgements as to the financial position and judgments on an ongoing basis as to the prospects of the issuer and its group and be financial position and prospects of the satisfied that this confirmation has been applicant and its group” given after due and careful enquiry by the issuer” LR 8.4.2R(4) LR 2.2.8 Working “Sponsor has come to a reasonable “Sponsor must report to the ISE that it has Capital opinion, after having made due and careful obtained written confirmation from the issuer enquiry, that the directors of the [issuer] have that the working capital available to the a reasonable basis on which to make the group is sufficient for its present working capital statement i.e. that it and its requirements, that is for at least the next 12 subsidiaries (if any) have sufficient working months and it is satisfied that this capital available for the group's requirements confirmation has been given after due and for at least the next 12 months” careful enquiry by the issuer…” LR 8.4.2R(5) (LR 6.1.16R) LR 2.2.10 Sponsor Comfort Letters – Irish Market Practice Company Comfort Letter to Sponsor(s) Issue General Irish Market Practice Knowledge Yes. Generally based on a standard of “to the best of the Company‟s knowledge and qualification? belief” having made due and careful enquiry and sometimes “on the basis of advice provided to us by [our lawyers], yourselves and the Company‟s other advisers”. Director (i) has received a copy of the memorandum; understanding (ii) has had an opportunity to discuss any matters with the relevant law firm; and (iii) each director has confirmed through the responsibility statement that he has read and understood the memorandum. “No Significant Yes. Not required under the ISE LR but general market practice is confirmation of no Change” significant change in the financial or trading position of the Group since the last audited balance sheet (in accordance with statement in the Prospectus). “Proper Extraction” Yes. Not required under the ISE LR but general market practice is confirmation of financial information contained in the Prospectus which relates to the Group has been properly extracted from the Group‟s accounting records. Sponsor Comfort Letters – Irish Market Practice Lawyers Comfort Letter to Sponsor(s) Issue General Irish Market Practice Knowledge No (usually). qualification? (i) nothing has come to [our] attention which is not disclosed in the Prospectus and Confirmation which [we] consider is required to be drawn to your attention; (ii) [we] have supplied each director with a copy of the memo; and (iii) [we] have explained to the directors their responsibilities, obligations and potential liabilities and made ourselves available to discuss the memo and responded to any such queries. (i) have not made any specific enquiries of the Company, its directors, employees or General other representatives; qualifications (ii) scope of the letter is limited to matters which are customarily the responsibility of the Company‟s Irish legal advisers in that context; (iii) the letter contains no opinion as to the suitability for listing of the shares; and (iv) the letter is given in [our] capacity as Irish legal advisers only. Exclusion of Liability Yes. Inclusion of reference that the letter is given by way of comfort only and that [we] accept no liability in relation to the contents of the letter. Key Takeaways • Irish equity markets have been reinvigorated in recent years • Irish market practice guided by and to a large extent follows UK market practice but there are important differences • There are no technical guidance notes for Sponsors so a lot of knowledge resides with existing Sponsors and other advisers • Placing/Underwriting