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Irish Stock Exchange revises listing rules

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The Irish Stock Exchange has published a series of revisions to its listing rules, which are effective from 24 September 2009. 

Kinetic Partners says the revisions are a welcome and timely move by the exchange and are in keeping with its commercially aware approach to the listing regime, and its tendency to adapt quickly to changing market trends.

The exchange has also taken the opportunity to include in the new code certain policy notes that have been issued over the last number of years, including previously introduced changes related to custody requirement, counterparty risk and revisions around financial information and side pocket classes. 
Chapter 5 deals with the financial information requirements for listing, whilst Chapter 8 deals with the continuing obligation requirements that listed funds must adhere to. 
Unaudited interim reports 
The exchange has retained the requirement to produce an unaudited interim report for each listed fund. The interim report must now: provide details on the period and future prospects for the fund; state the fund’s investment activities and profit and loss for the period; provide a condensed balance sheet or statement of net assets (including a statement of realised gains and losses); and supply the net asset value per unit at the period end.

Audited annual report and accounts 
In keeping with the exchange’s wish that disclosure should be appropriate and not overly prescribed, some the previous disclosure requirements in the annual accounts have been removed. The criteria regarding the preparation of the fund’s schedule of investments has also been broadened to allow for the most suitable construction of information. 
Circulation of reports and accounts 
According to Kinetic Partners, the requirements for circulating reports and accounts to unitholders have changed to reflect practice that has existed for a number of years. The exchange accepts that attaching accounts and reports to emails may not always be practical given the size of the attachment. In order to comply with the requirements of 5.24(g) and 5.25(d), the exchange has provided guidance that it would be acceptable to email unitholders, or provide a release, with a link to a website where the accounts would be available. If unitholders do not have access to electronic communication, alternative arrangements can be made. 
Market Abuse Directive 
Previously, the code provided specific obligations of disclosure related to a fund’s exchange listing, but since then there has been extensive activity in relation to European directives for listed funds. The Market Abuse Directive is based on the principles of transparency and equal treatment of market participants, and aims to reinforce protection against insider dealing and market manipulation. In addition, the directive imposes a number of key obligations which will apply to open-ended funds which are listed on the Stock Exchange or “admitted to trading on regulated markets”. 
Equality of treatment for unitholders 
The exchange has extended Rule 8.11 which deals with treating unitholders equally, to read: “A listed fund must ensure equality of treatment for all unitholders who are in the same position. Where unitholders within the same class receive equality of treatment the Exchange will be satisfied that this condition has been met.” This means that all unitholders within the same class must be treated equally by the listed fund. In certain circumstances it will be possible to provide unitholders within the same class with different terms, provided that the directors are satisfied that such unitholders are not in the same position.

Fee rebates  
For the avoidance of doubt, rebates from the investment manager to individual unitholders are not covered by the listing rules of the exchange. These are a private matter between the manager and the unitholder and remain outside the scope of the listing rules.  
Other changes 
The exchange has also included other requirements which reflect some of the experiences and market trends over the last year or two. This includes a requirement to notify the exchange of any material change in the investment strategy or redemption policy of a listed fund. There is also now a requirement that any change in auditor is notified and that if a new director is appointed to the fund, it must be stipulated as to whether the director is acting in an independent capacity. Other changes include some streamlining of rules to take account of umbrella company structures where the underlying portfolios have a legally segregated status.
Kinetic Partners acts as listing sponsor for funds listed on the ISE.

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