Ireland Treasury Shares Guide IBA Corporate and M&A Law Committee 2014

Transcription

1 Ireland Treasury Shares Guide IBA Corporate and M&A Law Committee 2014 Contact Paul White A&L Goodbody, Dublin

2 Contents Page GENERAL OVERVIEW 2 REGULATORY FRAMEWORK 3 ACQUISITION OF TREASURY SHARES 4 UTILIZATION OF TREASURY SHARES 11 SALE OF TREASURY SHARES 12 TREASURY SHARES AND TAKEOVER LAW 15

3 INTRODUCTION This guide provides a summary of the Irish law governing the purchase, holding and sale of treasury shares for both private limited companies and public limited companies incorporated in Ireland pursuant to the Irish Companies Acts It also sets out a general overview of the Irish rules, regulations, restrictions and disclosures that must be adhered to by Irish companies when dealing in its own shares. The contents of this guide are necessarily expressed in broad terms and limited to general information rather than detailed analyses or legal advice. Specialist professional advice should be obtained to address legal and other issues before a company considers dealing in its own shares. GENERAL OVERVIEW Is the buyback of shares permitted in your jurisdiction? Yes. An Irish company may, if so permitted by its Articles of Association, issue redeemable shares (or convert existing shares into redeemable shares) and redeem them. Alternatively, a company may in certain cases buyback its own shares. However, under Irish law a company is generally restricted from redeeming or purchasing its own shares unless it does so in accordance with the provisions of the Irish Companies Acts. Those provisions in general terms require the company to utilise distributable profits in buying back or redeeming its shares. What are the characteristics (maximum holdings, voting rights and other rights) of treasury shares? Treasury shares are a company s own shares that it has purchased or redeemed but not cancelled. These shares are available for subsequent re-issue as shares of any class, or alternatively they may be cancelled. The re-issue of treasury shares is generally treated in the same way as a new issue of shares. However, the issued share capital of the company does not increase as a result of the re-issue. Treasury shares form part of a company s issued share capital but they are not shown as an asset on a company s balance sheet, instead they are shown as a deduction in arriving at shareholder s funds.

4 Treasury shares are different to other types of shares, the principal difference being that the company is the registered owner of the shares. However, a company, as a shareholder cannot attend meetings, exercise its voting rights in relation to its shares or receive any distributions. The nominal value of treasury shares that may be held by a company at any one time cannot exceed 10% of the company s issued share capital. Where more than one class of shares in a company is in issue, the nominal value of shares that may be held in treasury for each class is 10% of the issued share capital of that class. However, this is always subject to the nominal value of total treasury shares held by a company not exceeding 10% of the company s total issued share capital. What are the main reasons to acquire treasury shares? Treasury shares give companies greater flexibility in managing their share capital which can assist in reducing the cost of capital. Treasury shares allow a company to hold its own shares for such periods as the company determines. This also allows a company to enhance its earnings per share as it can avoid costs associated with issuing shares. Treasury shares also allow a company to sell its shares without having to discount the price to the levels commonly needed for rights issues or placings and to avoid paying underwriting costs. Another benefit of acquiring treasury shares is the ability of the company to restore its distributable profits used to acquire the treasury shares. REGULATORY FRAMEWORK The Irish Companies Acts sets out the rules and regulations governing the acquisition, retention and sale of treasury shares for both private limited companies and public limited companies. In addition to complying with the provisions of the Companies Acts, companies whose shares are listed on the Main Securities Market of Irish Stock Exchange (ISE) must comply with the listing rules of the exchange (the Listing Rules), the Irish takeover rules 2013 (the Irish Takeover Rules) and the Irish market abuse rules 2012 (the Market Abuse Rules) when dealing in their own shares. Companies whose shares are listed on the smaller Enterprise Securities Market of the ISE (the ESM) must comply with the ESM Rules for Companies (ESM Rules) and also the Market Abuse Rules.

5 ACQUISITION OF TREASURY SHARES How can a company acquire treasury shares? Company s power to acquire its own shares A company can redeem its own shares and hold them in treasury if it is authorised to do so under its Articles of Association and those shares are or become redeemable shares. Section 210 of the Companies Act 1990 provides that a company may amend its Articles to convert its shares into redeemable shares. However, shares cannot be converted if as a result of the conversion the nominal value of the issued share capital which is not redeemable would be less than 10% of the nominal value of the total issued share capital of the company. In addition, if a shareholder notifies a company before the date of conversion of his unwillingness to have his shares converted, such conversion will not apply in respect to his shares. Resolutions under Irish law In order for a company to acquire its own shares it must resolve to approve the purchase of the shares by holding an extraordinary general meeting (EGM) of its shareholders. Resolutions are the means used to effect decisions of the members of a company in general meetings. There are two types of members resolutions under Irish law, ordinary resolutions and special resolutions. Ordinary resolutions represent the will of the majority of members of a company present in person or in proxy and entitled to vote on the proposed resolution. Whereas special resolutions represent the will of a qualified majority of 75% of members of a company present in person or in proxy and entitled to vote on the proposed resolution. A special resolution must be passed by the members of a company before a company can purchase its own shares. Method of acquisition of a company s own shares A company must purchase its own shares either off-market or on market in accordance with Section 214 of the Companies Act Off-market purchases involve the purchase of shares of a company that are not listed on a recognised stock exchange or which are listed but not subject to a marketing arrangement on that stock exchange. Market purchases involve the purchase of shares on a recognised stock exchange within Ireland or on an overseas market and which are subject to a marketing arrangement on that exchange. Overseas markets in this context include all recognised stock exchanges referred to in the Companies (Recognised Stock Exchanges) Regulations 2010 (S.I. No. 100 of 2010). A company may also acquire its own shares by entering into a contingent purchase contract pursuant to Section 214 of the Companies Act A contingent purchase contract is a contract that is entered into by a company in relation to its shares whereby the company may

6 become entitled or obliged to purchase its own shares. What is contemplated by a contingent purchase is that a company effectively acquires an option to buy back its shares. Any contract, whether contingent or not, in relation to an off-market purchase may only be valid for a period of 18 months from the date on which the relevant resolution approving its terms is passed by the company s shareholders. The form of contract should if necessary be renewed each year and a resolution to this effect proposed at each annual general meeting of a company. Acquisitions by listed company of its own shares For companies listed on the Main Securities Market of the ISE or the ESM, a circular must be sent to shareholders seeking their approval for the repurchase of the company s shares to be held in treasury. The circular should also include any adjustment to the rights of the holders which the company may propose. Are there any restrictions in acquiring treasury shares? (e.g. purpose-wise; accountingwise?) Irish Companies Acts restrictions Where a company has the power to redeem its shares it must redeem them in accordance with the provisions of Section 207(2) of the Companies Act Section 207(2) provides that a company can only redeem its shares: if the nominal value of its total issued share capital that is not redeemable is not less than 10%; the shares being redeemed are fully paid up; the terms of redemption provide for payment on redemption; the shares are redeemed out of the company s distributable profits (for public limited companies in accordance with the restrictions on distributions set out in Section 46 of the Companies (Amendment) Act 1983); and any premium paid on redemption is paid out of the profits of the company, or in certain circumstances, out of the proceeds of a fresh issue of shares, made for the purposes of redemption. In addition to the restrictions set out in Section 207, a company must also adhere to any terms of redemption that may be provided for in its Articles of Association. As set out above, the nominal value of treasury shares can not at any one time exceed 10% of the nominal value of issued share capital of a company. This includes any shares held in the company by any subsidiary of the company in pursuance of Section 224 of the Companies Act 1990 and/or any shares held by a person in his own name but acting on behalf of the company. Pursuant to Section 217 of the Companies Act 1990, once a purchase of a company s own shares has been authorised the company cannot assign its right to purchase the shares to another party. However, subject to certain conditions being met, a company can release such rights by passing a special resolution of the company.

7 Further restrictions for listed companies Under the Listing Rules a company must not purchase or redeem its own shares and must ensure that no shares are purchased on its behalf or by any member of its group during a prohibited period (being a close period (the period of 60 days immediately preceding a preliminary announcement of the listed company s annual results or, if shorter, the period from the end of the relevant financial year up to and including the time of announcement (Close Period)) or any period when there exists any matter which constitutes inside information in relation to the company) unless: (1) the company has in place a buy-back programme where the dates and quantities of shares to be traded during the relevant period are fixed and have been disclosed accordingly; (2) the company has in place a buy-back programme managed by an independent third party which makes its trading decisions in relation to the company s shares independently of, and uninfluenced by, the company; (3) the company is purchasing or redeeming shares other than shares whose price or value would be likely to be significantly affected by the publication of the information giving rise to the prohibited period; or (4) the company is redeeming securities (other than equity shares) which, at the time of issue, set out: (a) the date of redemption; (b) the number of securities to be redeemed or the formula used to determine that number; and (c) the redemption price or the formula used to determine the price. Listed companies must also adhere to certain disclosure obligations that effectively require companies to inform the market of the number of shares it holds in treasury at all times. Purchases of less than 15% Under the Listing Rules, unless a tender offer is made to all holders of a share class, purchases by a company listed on the Main Securities Market of the ISE of less than 15% of any class of a company s shares (excluding treasury shares) pursuant to a general authority granted by shareholders, may only be made if the price to be paid is not more than the higher of: (1) 5% above the average market value of the company s equity shares for the 5 business days prior to the day the purchase is made; or (2) that stipulated by Article 5 (1) of the Commission Regulation (EC) No 2273/2003 of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards exemptions for buy-back programmes and stabilisation of financial instruments. Purchases of 15% or more

8 Purchases by a company listed on the Main Securities Market of the ISE of 15% or more of any class of its shares (excluding treasury shares) must be made by way of a tender offer to all shareholders of that class. However, where a series of purchases are made pursuant to a general authority granted by the shareholders of the company, which aggregates to 15% or more of the number of shares of the relevant class in issue immediately following the shareholders meeting at which the general authority to purchase was granted, a tender offer need only be made in respect of any purchase that takes the aggregate to or above that level. Purchases that have been specifically approved by shareholders are not to be taken into account in determining whether the 15% level has been reached. Restrictions under the ESM Rules A company listed on the ESM must also ensure that its directors and applicable employees do not deal in any of its shares during a close period (two months preceding the publication of an ESM company s annual results). In addition, the purchase or early redemption by a company of its shares or sale of any shares held as treasury shares must not be made during a close period. This rule does not apply however, where individuals have entered into a binding commitment prior to a close period where it was not reasonably foreseeable at the time the commitment was made. However, the ISE has discretion to allow a director or applicable employee of an ESM company to sell its shares during a close period to relieve a person of severe personal hardship. Which authorisation is needed? Authorisation required under the Companies Acts The members of a company must pass a special resolution authorising the terms of the proposed acquisition by a company of its own shares. This involves the directors convening an EGM of its members giving 21 days' notice of same, in accordance with Section 133(2) of the Companies Act A proposed resolution should be presented by the company to its members requesting that the relevant authorisation is passed by way of a special resolution of the company s shareholders approving the terms of a proposed contract of purchase. It should be noted that the resolution must be passed before the contract to purchase a company s own shares is entered into and that a special resolution will not be effective unless a copy of the proposed contract of purchase (or written memorandum of the contract) is available for inspection by the shareholders of a company at the general meeting passing the resolution but also at the registered office of the company for at least 21 days before the EGM. Section 213(3) of the Companies Act 1990 provides a safeguard for shareholders in that it provides that a special resolution will not be effective if any member of the company holding shares to which the resolution relates exercises the voting rights carried by any of those shares in voting on the resolution and where the resolution would not have been passed if he had not done so.

9 Where a company has more than one class of shares in issue, consent of each class may be required before shares can be repurchased. It should be borne in mind that a company may not make a market purchase of its shares unless the purchase price has been authorised at a general meeting of the company s shareholders. Resolutions passed by shareholders of public limited companies must also specify the maximum number of shares to be acquired and also the maximum and minimum prices to be paid for the shares. Prices may be determined by specifying a particular sum or providing a basis or formula for calculating the amount of the price in question so long as the formula does not have any reference to a person s discretion or opinion. Authorisation required for listed companies The Listing Rules provide that any decision taken by a board of a company proposing that a resolution to purchase its own shares be passed by the members must be notified to the Regultory Information Service of the ISE (the RIS). Such notice should be made to the RIS as soon as possible and must include details as to the specific purchases (i.e. names of persons from whom the shares are being purchased) and the general authorisation to make purcahses. However, a company who wishes to renew an existing authority to pruchase its own shares to its shareholders do not have to make such notifications to the RIS. In addition, once a shareholders resolution is passed, the company must inform the RIS of same. What are the publicity requirements in the event of acquisition of treasury shares? Public disclosures required under the Companies Acts Section 222 of the Companies Act 1990 provides that copies of purchase contracts must be kept and made available for public inspection at a company s registered office for a period of 10 years after full performance of the relevant purchase contract. In addition, Section 226 of the Companies Act 1990 requires a company to deliver to the Irish Companies Registration Office within 28 days (or, in the case of an overseas market purchase, within 3 working days) a return in the prescribed form setting out details of each class purchased, the number and nominal value of the shares and the date upon which the shares were purchased by the company. Disclosures for listed companies under the Companies Acts Listed companies must, in accordance with Section 229 of the Companies Act 1990, inform the relevant stock exchange on which its shares are listed before the end of the next following day on which the purchase occurs, of the fact that its shares have been purchased.

10 If a company s shares are listed on a recognised stock exchange and are subject to an overseas market purchase, the company (or if a company subsidiary purchases its shares) must publish on their website for a continuous period of not less than 28 days from the day immediately after the day the shares are purchased (and a day in which the recognised stock exchange is open for business), details of the date, the location and name of the recognised stock exchange; the purchase price of the shares; and the number of shares purchased. Public disclosure requirements under the ESM Rules A company listed on the ESM must issue a notification without delay of the occurrence and the number of shares taken in and out of treasury and should include details of the date of such movement; the number of shares in each class involved; the total number of treasury shares for each class following such movements; and the number of shares of each class in issue less the total number of treasury shares in each class held by the ESM company following such movements. A company listed on the ESM must also from its admission date maintain a website containing information about the company, including details on the number of ESM securities in issue (noting any held as treasury shares) and, insofar as it is aware, the percentage of ESM securities that are not in public hands together with the identity and percentage holdings of its significant shareholders. This information must be up-dated at least every six months. Notification disclosures under the Listing Rules Any purchase of a company s own shares by or on behalf of the company or any other member of its group must be notified to the RIS as soon as possible, and in any event by no later than 7:30 a.m. on the business day following the calendar day on which the purchase occurred. The notifications should include details on the date of the purchase, the number of shares purchased (including details of which shares will be held in treasury or cancelled) and details on the purchase price. In addition, where shares are held in treasury, a statement of: (a) the total number of treasury shares of each class held by the company following the purchase and non-cancellation of such shares; and (b) the number of shares of each class in issue less the total number of treasury shares of each class held by the company following the purchase and non-cancellation of such shares. In addition, if as a result of holding treasury shares, a listed company is allotted shares as part of a capitalisation issue, the company must notify the RIS as soon as possible and in any event by no later than 7:30 a.m. on the business day following the calendar day on which allotment occurred of the following information: (1) the date of the allotment; (2) the number of shares allotted; (3) a statement as to what number of shares allotted have been cancelled and what number is being held as treasury shares; and (4) where shares allotted are being held as treasury shares, a statement of: (a) the total number of treasury shares of each class held by the company following the allotment; and (b) the number of shares of each class that the

11 company has in issue less the total number of treasury shares of each class held by the company following the allotment. Notification of purchases Any purchases of a company s own listed equity securities (other than equity shares) or preference shares, by or on behalf of the company or any other member of its group must be notified to the RIS when an aggregate of 10% of the initial amount of the relevant class of securities has been purchased, redeemed or cancelled, and for each 5% in aggregate of the initial amount of that class acquired thereafter. The notification must be made as soon as possible and in any event no later than 7:30 a.m. on the business day following the calendar day on which the relevant threshold is reached or exceeded. The notification must state: (1) the amount of securities acquired, redeemed or cancelled since the last notification; and (2) whether or not the securities are to be cancelled and the number of that class of securities that remain outstanding. Period between purchase and notification In circumstances where the purchase of a company s own shares is not made by a tender offer and the purchase causes one of the relevant threshold (as set out above) to be reached, a company may not purchase any further shares until it notifies the RIS of same (such notification should include details outlines above). Notification of cancellation Any cancellation of treasury shares must be notified to the RIS as soon as possible and in any event no later than 7:30 a.m. on the business day following the calendar day on which the sale, transfer or cancellation occurred. The notification must include: (1) the date of the sale, transfer or cancellation; (2) the number of shares cancelled; (3) a statement of: (a) the total number of treasury shares of each class held by the company following the sale, transfer or cancellation; and (b) the number of shares of each class that the company has in issue less the total number of treasury shares of each class held by the company following cancellation. Put and call options do they count as acquisition of own shares? Yes. Section 214 of the Companies Act 1990 provides that a company may purchase its own shares by a contingent purchase contract. As explained above, a contingent purchase contract is a contract that is entered into by a company in relation to its shares whereby the company may become entitled or obliged to purchase its own shares. Under the Listing Rules, if within a 12 month period a listed company purchases warrants or options over its own shares which when exercised give the company an entitlement of 15% or more of the company s existing issued shares, the company must send a circular to its

12 shareholders informing them of same. The circular should include information on the directors intentions regarding future purchases of the company s warrants and options, the number, terms and method of the warrants and options to be purchased, information on the prices to be paid and the parties from who the shares will be purchased from. UTILIZATION OF TREASURY SHARES Are there any statutory obligations to resell or redeem treasury shares? Treasury shares can be cancelled by the company in accordance with the provisions of Section 208 of the Companies Act 1990 or re-issued as shares of any class or classes pursuant to Section 209(5) and 209(6) of the Companies Act The maximum and minimum prices at which treasury shares may be re-issued off-market must be determined in advance by the company in a general meeting of its shareholders before any contract for the re-issue of the shares is entered into. The re-issue price once set by the shareholders will remain effective for such period as determined in the general meeting but it can be no longer than 18 months. Any re-issue of shares in contravention of the above shall be unlawful. How are treasury shares redeemed? Where a company has the power to redeem its shares it must redeem them in accordance with the provisions of Section 207(2) of the Companies Act Section 207(2) provides that a company can only redeem its shares: if the nominal value of its total issued share capital that is not redeemable is not less than 10%; the shares being redeemed are fully paid up; the terms of redemption provide for payment on redemption; the shares are redeemed out of the company s distributable profits (for public limited companies in accordance with the restrictions on distributions set out in Section 46 of the Companies (Amendment) Act 1983); and any premium paid on redemption is paid out of the profits of the company, or in certain circumstances, out of the proceeds of a fresh issue of shares, made for the purposes of redemption. In addition to the restrictions set out in Section 207, a company must also adhere to any terms of redemption that may be provided for in its Articles of Association. As set out above, the nominal value of treasury shares can not at any one time exceed 10% of the nominal value of issued share capital of a company. This includes any shares held in the company by any subsidiary of the company in pursuance of Section 224 of the Companies Act 1990 and/or shares held by a person in his own name but acting on behalf of the company.

13 SALE OF TREASURY SHARES How can the company sell treasury shares? A company may re-issue/sell its treasury shares. The re-issue of treasury shares are deemed to be an issue by the company of new shares and statutory pre-emption rights apply to the reissue of treasury shares in the same way as they apply to the allotment of new shares in a company. Therefore, a company must before re-issuing its treasury shares to a third party, first offer them to existing shareholders pro rata to their holdings unless the shareholders of the company pass a special resolution approving the disapplication of the statutory pre-emption rights in respect of those shares in accordance with Section 24 of the Companies (Amendment) Act Where a company, listed on the Main Securities Market of the ISE is proposing to sell treasury shares it must first offer the shares to: (1) existing holders of that class of equity shares (other than the listed company itself by virtue of the company holding treasury shares); and (2) holders of other equity shares of the listed company who are entitled to be offered them (in proportions to their existing holdings. However, pre-emption rights will not apply where: (1) a general disapplication of statutory preemption rights is authorised by the shareholders of the company; and (2) the issue or sale of treasury shares by the listed company is within the terms of its authority; or (3) the listed company is undertaking a rights issue or open offer and the disapplication of pre-emption rights is with respect to: (a) equity shares representing fractional entitlements; or (b) equity shares which the company considers necessary or expedient to exclude from the offer on account of the laws or regulatory requirements of another territory; or (3) the company is selling treasury shares to an employee share scheme; or (4) the company is an overseas company with a primary listing. Off market re-issue of shares Where treasury shares are re-issued by a company pursuant to Section 209(6) of the Companies Act 1990 a certain price for the shares must be obtained by the company. The sale price range for treasury shares is set by the members of the company in a general meeting and should provide for a maximum and minimum price which must be obtained before any contract is formed for the sale of the treasury shares. A company may vary or renew a determination of the sale price range for treasury shares before any contract for reissue of such shares is entered into by passing a special resolution of a company s members. However, the price once set, will remain in force for a period of 18 months from the date of passing the resolution or such lesser time as the resolution specifies.

14 Again, this is something which could be dealt with at an annual general meeting of the company when the share buy-back contract is approved. It should be noted that a reissue of treasury shares in contravention of the provisions of Section 209(6) of the Companies Act 1990 will render the reissue unlawful. Are there any restrictions for selling treasury shares? Restrictions under the Companies Acts The re-issue of Treasury Shares are considered to be the same as a new issue of shares in the company however, the issued share capital of the company will not be regarded as being increased by the re-issue. Pre-emption rights that apply to the allotment of new shares will also apply to the sale of treasury shares. Pre-emption rights come with costs and administrative burden of marketing shares to existing shareholders. A critical issue therefore is the extent to which treasury shares have to be counted towards the percentage of share capital that may be issued on a non-preemptive basis. Restrictions under the Listing Rules If a listed company issues shares out of treasury of a class that are already listed, the re-issue price must not be at a discount of more than 10% of the middle market price (the quotation for that share as derived from the daily official list of the ISE or any other publication of an recognised investment exchange (RIE) showing quotations for listed securities for the relevant date) of those shares at the time of agreeing the terms of the offer or at the time of the placing (as the case may be). However, this does not apply to the sale of treasury shares when the sale is completed under a pre-existing general authority to disapply statutory pre-emption rights or the terms of the offer or placing have been specifically approved by the shareholders of the company. Sales, or transfers for the purposes of, or pursuant to, an employees share scheme, of treasury shares must not be made during a prohibited period unless: (1) the transfers of treasury shares are in connection with the operation of an employees share scheme where the transfer facilitates dealings that do not fall within the provisions of the ISE model code on directors dealings; or (2) sales or transfers price or value would not be likely to be significantly affected by the publication of the information giving rise to the prohibited period. In addition, subject to certain exceptions for transfers related to share schemes, listed companies can not sell or transfer treasury shares in circumstances where the company has unpublished price sensitive information or during a Close Period. The offence of market manipulation and insider dealing under Irish market abuse law does not apply to the purchase

15 by an Irish public limited company of its own shares. However, this exemption is only available to public limited companies whose shares are listed on an EU regulated market. Which authorisation is needed for selling treasury shares? The members of a company must pass a special resolution authorising the terms of the proposed sale/re-issue by a company of its treasury shares. This involves the directors convening an EGM of its members giving 21 days notice of same in accordance with Section 133(2) of the Companies Act A proposed resolution will be presented by the company to its members requesting that the relevant authorisation is passed by a special resolution the terms of a sale of its treasury shares. This resolution must be passed at the same time as the resolution approving the repurchase by a company of its own shares. If the re-issue price for the treasury shares is not fixed at the same time as the original authorisation to purchase the shares, then the company is limited to either re-issuing the shares on a relevant stock exchange or cancelling them under Section 208 of the Companies Act Can treasury shares be sold other than via the stock exchange or by public tender offer? Yes, see above under Off-market issue of shares. What are the publicity requirements in the event of a sale of treasury shares? Under the Irish Listing rules companies are under an obligation to announce details of any sale or transfer and resulting position of any sale/re-issue involving treasury shares. Any sale or transfer for the purposes of or pursuant to an employees share scheme or cancellation of treasury shares by a listed company must also be notified to the RIS as soon as possible and in any event by no later than 7:30 a.m. on the business day following the calendar day on which the sale, transfer or cancellation occurred. The notification must include the following details: (1) the date of the sale, transfer or cancellation; (2) the number of shares sold, transferred or cancelled; (3) the sale or transfer price for each of the highest and lowest prices paid, where relevant; and (4) a statement of the total number of treasury shares of each class held by the company following the sale, transfer or cancellation and the number of shares of each class that the company has in issue less the total number of treasury shares of each class held by the company following the sale, transfer or cancellation.

16 What legal restrictions are there in order to avoid market abuse? Listed companies can not purchase, sell or transfer treasury shares in circumstances where the company has unpublished price sensitive information or in a Close Period, subject to certain exceptions for transfers related to share schemes. TREASURY SHARES AND TAKEOVER LAW What are the general implications of treasury shares under the applicable takeover law regime? The general approach of the Irish Takeover Rules is that treasury shares should be ignored in calculating percentage holdings of voting rights, share capital, relevant shares and when calculating disclosure obligation thresholds. However, sales or transfers of treasury shares by a target in the course of an offer are subject to Rule 21 of the Irish Takeover Rules on Frustrating Action. Rule 21 provides that except with the approval of an offeree in a general meeting or with the consent of the Takeover Panel, during the course of an offer or at any earlier time at which the offeree board have reason to believe that the making of an offer in respect of the offeree is or may be imminent the offeree shall not, and shall procure that no subsidiary of the offeree shall, among other things: (1) allot or issue any authorised but unissued shares (including treasury shares); or (2) issue or grant an option in respect of any unissued shares (including treasury shares).