Billy Kelleher (Cork North Central, Fianna Fail)

Amendment No. 5, as published, is to allow the Minister to make recommendations to recognise stock exchanges outside the State so companies can make the equivalent of a market purchase of its own shares on those exchanges. Part 11 of the Companies Act 1990 provides that a market purchase occurs when a company purchases its own shares on a recognised stock exchange. Market purchases must be authorised by a company at a general meeting and this authorisation is sufficient for all contracts for purchase of own shares for the period of the authorisation. That period is usually 18 months. Subsequent to the purchase there are obligations on the company to register purchases with the Companies Registration Office and to notify the relevant exchange on which the purchase was made. The exchange may then publicise the purchase.

For the purchase of own shares on stock exchanges that are not recognised, the terms of each individual contract for purchase of the shares must be authorised in advance by a special resolution of the company. Currently, the Irish Stock Exchange is the only recognised exchange for market purchase of own shares. The recognition of other exchanges is being made to facilitate international groups that are relocating their parent undertaking to Ireland and that wish to make market purchases of their own shares which are not listed on the Irish Stock Exchange.

The proposed amendment creates a new type of purchase called an overseas market purchase. This type of purchase will require the same authorisation as a market purchase and notification to the Companies Registration Office but as the stock exchanges on which the purchase is made will be outside the jurisdiction, a new notification requirement is being introduced. This will be an obligation on the company to publicise its purchase of own shares on the company website for not less than 28 days.

Amendment No. 2 as published extends the definition of recognised stock exchange so that it can include exchanges outside the State as well as individual markets on an exchange. Amendments Nos. 1, 3, and 4 are consequential to the above amendments.