Interests in Shares
There are extensive obligations on shareholders and certain parties connected to them, to disclose their interest in shares. The obligations apply to shareholdings above a particular percentage and to transactions which result in movements above or below the relevant percentage. Shares held by spouses, family members and controlled companies are attributed to the shareholder concerned.
If there is a failure to comply with the duty of disclosure, the rights and interests in the shares are not exercisable. An application may be made to the court for relief, where the default is due to inadvertence, is accidental, or for some other good cause and where it is just and equitable to grant relief. A court may not grant relief where it appears that the default has arisen by reason of a deliberate act or omission on the part of the applicant.
PLCs are to keep an individual and group register for the above purposes. When it receives information pursuant to a duty of disclosure, it is to enter the information on the register. The PLC is not by virtue of anything done for the purpose of this obligation, to be deemed to be put on enquiry as to the rights of the persons in relation to the shares.
The register is to be kept open and available for inspection. The general provisions regarding the inspection of registers apply. The registers are to remain open and accessible to persons attending the PLC’s annual general meeting at least one-quarter hour before the commencement of the meeting and during its continuance.
Obligation to Disclose
The principal disclosure obligations apply to share capital, which carries voting rights at general meetings. Where there are different classes of share, the relevant percentages apply generally to the classes concerned.
Where a person to his knowledge acquires an interest in the share capital of a PLC or ceases to be so interested, or becomes so aware, then he has a duty of disclosure, which requires him to make a notification to the PLC of the interests in the shares, where this is a notifiable interest. The duty is to make the notification within five days.
The notifiable percentage is generally 3% of the nominal value of the capital of the company or the particular class of capital. When the aggregate interest exceeds the relevant percentage, there is a notifiable interest and the duty of disclosure arises. The Minister may make regulations varying the relevant percentages or may apply different percentages to different classes of PLC.
The notification must be made in writing to the PLC. It must specify the number of shares which the person knows he has an interest in, immediately after the time the duty arose or that he no longer has such interest if this is the case. The notification should include details of the persons who are registered owners of the shares and the number of shares held by each, in as far as known. A person with an interest in a PLC’s shares that becomes notifiable must notify the PLC in writing of the particulars and changes in the particulars, as soon as he first becomes aware of the same.
Shares are attributed to persons if they are held by his spouse, civil partner or child or a body corporate/ company which he controls or is deemed to control. Where a person is entitled to exercise at least one-third of the voting rights of the company in general meeting and that company is entitled to control another company, then the other company is attributed to the shareholder.
Parties to certain agreements are deemed interested in one another’s shareholdings in the company, even where the entire interest of the other is not acquired. The provisions apply to agreements by which one or more parties acquire shares in a PLC, which impose duties and restrictions on at least one of them, in relation to his use, retention and disposal of his shares in the PLC.
Parties to such agreements are deemed interested in the shares which the other party to the agreement holds in the PLC. Parties to such a share acquisition agreement have a duty to keep each other informed for this purpose. They are to notify the other party of their relevant interest in the shares. The notification to the company must refer to the agreement concerned and give certain details in relation to it.
Certain interests in shares are not notifiable. The general principles applicable to the disclosure of shares in private companies apply. The exemptions in respect thereof are also applicable. These include the following exemptions:
- nominee interests;
- interest under unit trusts and other collective investment schemes;
- future interests and certain life interests;
- interests held by stockbrokers, market operators;
- interests as an attorney, proxy or agent;
- interests arising automatically on takeovers where the requisite number have accepted.
A PLC may by a notice in writing to a person whom it knows or has reasonable cause to believe has or had an interest in shares in the previous three years, require the person to confirm or indicate whether this is the case. Further information may be required in relation to the particulars of the person’s past and present interest in shares during the last three-year period.
The person may be required to disclose the identity of another person who has an interest in the shares and whether that person is interested in or is or was party to a share acquisition agreement. The information is required to be given within a reasonable time, which is to be specified in the notice.
Where a notice is served by the PLC requiring information about an interest in shares, and the addressee fails to give the requisite information, the PLC may apply to the court for an order directing that the information be given. Failure to comply with an information notice is a category 3 offence. It is a defence if the requirement was frivolous or vexatious. There is provision for removal of entries from the register, after certain periods.
Where a requirement is made, and the PLC receives information in response, it is to enter the name, the fact that the requirement was imposed and information received in pursuance of it.
A PLC may be required to exercise its above powers to require disclosure under a requisition made by not less than 10% of the paid-up share capital holders, having voting rights in general meetings. The requisition is to give reasonable grounds for the requirement and specify the manner in which the powers are to be exercised.
Where the requisition is made, the PLC is to require the requisite information. If it fails to do so, it may be required to do so by the court.
On conclusion of an investigation by the PLC, it shall cause a report of the information given on foot of the requisition, to be prepared. An interim report is required if the report not completed within three months. When the report is finished, the requisitionists are to be notified. Default on the part of PLC constitutes an offence by it and by officers in default.
References and Sources
Companies Act 2014 (Irish Statute Book)
Companies Act 2014: An Annotation (2015) Conroy
Law of Companies 4th Ed. (2016) Courtney
Keane on Company Law 5th Ed. (2016) Hutchinson
Other Irish Sources
Tables of Origins & Destinations Companies Act 2014 (2016) Bloomsbury
Introduction to Irish Company Law 4th Ed. (2015) Callanan
Bloomsbury’s Guide to the Companies Act 2015 Courtney & Ors
Company Law in Ireland 2nd Ed. (2015) Thuillier
Pre-2014 Legislation Editions
Modern Irish Company Law 2nd Ed. (2001) Ellis
Cases & Materials Company Law 2nd Ed. (1998) Forde
Company Law 4th Ed. (2008) Forde & Kennedy
Corporations & Partnerships in Ireland (2010) Lynch-Fannon & Cuddihy
Companies Acts 1963-2012 (2012) MacCann & Courtney
Constitutional Rights of Companies (2007) O’Neill
Court Applications Under the Companies Act (2013) Samad
Company Law – Nutshell 3rd Ed. (2013) McConville
Questions & Answers on Company Law (2008) McGrath, N & Murphy
Make That Grade Irish Company Law 5th Ed. (2015) Murphy
Company Law BELR Series (2015) O’Mahony
Companies Act 2006 (UK) (Legilsation.gov.uk)
Statute books Blackstone’s statutes on company law (OUP)
Gower Principles of Modern Company Law 10th Ed. (2016) P. and S. Worthington
Company Law in Context 2nd Ed. (2012) D Kershaw
Company Law (9th Ed.) OUP (2016) J Lowry and A Dignam
Cases and Materials in Company law 11th Ed (2016) Sealy and Worthington
UK Practitioners Services
Tolley’s Company Law Handbook
Gore-Browne on Companies
Palmer’s Company Law