Micheál Martin (Cork South Central, Fianna Fail)

The legislative and regulatory regime that applied to the DCC-Fyffes case was Part V of the Companies Act 1990. Part V has been largely repealed with the introduction of a new more robust and more wide-ranging regime which came into effect on 6 July 2005. This new regime consists of the Market Abuse (Directive 2003/6/EC) Regulations 2005 and Part 4 of the Investment Funds, Companies and Miscellaneous Provisions Act 2005, which together transposed the EU market abuse directive. This directive provides for a common EU legal framework for preventing, detecting, investigating and sanctioning both insider dealing and market manipulation, that is, where someone seeks to distort the price of financial instruments or disseminates information in a manner that gives false or misleading signals about financial instruments. It also provides for a common approach on disclosure of price sensitive information to the market to limit scope for insider dealing.

While the Irish Stock Exchange was the competent authority for purposes of the old Part V regime, member states are no longer permitted to designate market operators-stock exchanges as competent authorities under the new market abuse regime. The directive specifically requires that the competent authority must be an administrative authority "completely independent from all market participants". The Irish Financial Services Regulatory Authority — the Financial Regulator — has been designated as the competent authority for policing and enforcing compliance under the new legislation. The new regime applies to any financial instrument admitted to trading on a regulated market or where a request for admission to trading on such a market has been made. Essentially this covers the vast majority of listed companies in Ireland.

It does not, however, apply to dealings-transactions in financial instruments of companies listed in the new Irish Stock Exchange junior market, known as IEX, which was launched last year. While markets such as IEX are outside the scope of the directive, it is planned to bring them in from a national policy viewpoint. The Financial Regulator asked that we should defer doing this until the new legislation had been bedded down and it is planned to make the necessary changes later this year.

Additional information not given on the floor of the House.

In the meantime IEX companies continue to be subject to the Part V regime by virtue of provisions in the Investment Funds, Companies and Miscellaneous Provisions Act 2005.

While acknowledging in her judgment in the DCC-Fyffes case on 21 December 2005 that Part V of the 1990 Act has been largely repealed by the new legislation, Ms Justice Laffoy nevertheless expressed the view that it would be prudent if section 109(1)(b) of Part V, in so far as it is still of relevance, were reviewed by the Legislature with a view to eliminating the uncertainty she perceives it creates. Section 109(1)(b) deals with civil liability and the judge saw some scope for argument as to the precise person to whom the provision refers. The issue is being examined by the Department in consultation with the company law review group with a view to seeing what legislative and-or drafting changes are necessary to address the issue raised by the judge.

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