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9 1995

STOCK EXCHANGE ACT, 1995

PART II

Stock Exchanges

Prohibition of unlawful stock exchanges.

8. —(1) No person shall establish a stock exchange in the State unless it is an approved stock exchange.

(2) No person shall operate a stock exchange established in the State unless it is an approved stock exchange.

(3) A person who contravenes subsection (1) or (2) of this section shall be guilty of an offence.

(4) In this section “established in the State” excludes any stock exchange which provides services electronically to Irish clients and whose head office or registered office is outside the State.

Grant of approval.

9. —(1) Subject to the provisions of this section, the Bank may grant or refuse to grant to any person applying to it under this section an approval to operate as an approved stock exchange.

(2) The grant of an approval under subsection (1) of this section may be given unconditionally or may be given subject to such conditions or requirements or both as the Bank considers fit.

(3) Whenever the Bank refuses to approve of a proposed stock exchange under this section, it shall serve notice on the proposed stock exchange, and on the Minister, of its refusal to grant approval and state the reasons therefor.

(4) An application for approval under subsection (1) of this section shall be in such form and contain such particulars as the Bank shall specify from time to time and, without prejudice to the generality of the aforesaid, shall include a copy of the memorandum of association and articles of association of the proposed stock exchange and a copy of the rules under which the applicant proposes to conduct its business.

(5) A proposed stock exchange shall not be approved of by the Bank unless—

(a) it is a company incorporated under the Companies Acts,

(b) it satisfies the Bank that the memorandum of association and articles of association and the rules of the proposed stock exchange contain sufficient provisions so as to enable it to operate in accordance with this Act and in accordance with any conditions or requirements, or both, as the Bank may impose,

(c) it has the minimum level of capital, which shall be specified by the Bank under this section,

(d) it satisfies the Bank as to the probity and competence of each of its directors and managers,

(e) it satisfies the Bank as to the suitability of each of its qualifying shareholders,

(f) its registered office and its head office are in the State, and

(g) its rules provide that—

(i) where there has been an inquiry into any disciplinary matter, at the conclusion of the inquiry, a written report of that inquiry shall be made by or on behalf of that stock exchange, and

(ii) the stock exchange shall send a copy of a report of an inquiry into any disciplinary matter to the Minister and the Minister for Enterprise and Employment, where the Minister, with the consent of the Minister for Enterprise and Employment, so requests.

(6) The Bank shall specify, from time to time, the level of capital to be maintained by an approved stock exchange.

(7) A proposed stock exchange shall not be granted approval under this section unless its memorandum of association, articles of association or its rules provide that the Board of Directors of that stock exchange is broadly based and is so composed so as to secure a balance between the interests of the different member firms and users of the stock exchange services, and the public interest.

(8) In the interests of the common good, and to promote the protection of investors and the maintenance of proper standards of conduct and practice, the requirements of subsection (7) of this section shall not be satisfied unless—

(a) the Bank is satisfied that the Board of a stock exchange includes a number of persons, independent of the operation or management of that stock exchange and independent of its member firms, for the purpose of facilitating the promotion of the protection of investors and the maintenance of proper standards of conduct and practice;

(b) the chairperson of the Board of the stock exchange is a person independent of the operation or management of that stock exchange and independent of its member firms; and

(c) the rules or memorandum of association or articles of association of the stock exchange provide either or both of the following, namely that—

(i) the Board of that stock exchange can consider disciplinary matters involving, and complaints against, member firms, whether at the request of the member firm concerned or of the management of the stock exchange or of the complainant or otherwise,

(ii) if the rules provide that such disciplinary matters or complaints can be considered by a number of members of the Board, the rules provide that in such cases the Board members shall include at least one member of the Board who is independent of the management and operation of that stock exchange and independent of its member firms.

(9) The Bank may impose a requirement on a proposed stock exchange or an approved stock exchange to organise its business or corporate structure, or the control of any associated or related undertaking not supervised by the Bank, such that the stock exchange concerned and, where appropriate and practicable, the business of any associated undertaking or related undertaking either collectively or individually is capable of being supervised to the satisfaction of the Bank under this Act.

(10) The Bank may, at any time prior to the grant or refusal of approval, request further information from a proposed stock exchange or may instruct an authorised officer to make such inquiries or carry out such investigation as may be necessary for the purpose of evaluating an application under this section and such inquiries or investigations shall be carried out in accordance with this Act.

(11) Any appointment to the Board of Directors of an approved stock exchange or to the post of manager, chief executive or post equivalent thereto on, or after, the granting of an approval under this section shall be subject to the prior approval in writing of the F Bank, which said approval shall not be given unless the approved stock exchange satisfies the Bank as to the probity and competence of the proposed appointee.

(12) Any proposed amendment or addition to the said memorandum of association or articles of association or rules of an approved stock exchange shall be made only with the prior consent in writing of the Bank, and the Bank may approve of, or refuse to approve of, such amendment or addition.

(13) An approved stock exchange shall establish and maintain procedures to investigate complaints against itself and its member firms.

(14) A proposed stock exchange shall be informed—

(a) within six months of the date of receipt of the application for approval or within six months of entry into force of this section, whichever is the later, whether or not the approval has been granted, or

(b) where additional information in relation to the application for approval has been sought by the Bank, within a period of six months after the receipt by the Bank of the additional information, or the period of twelve months after the receipt of the application for approval, whichever is the sooner.

(15) It shall be an offence for a proposed stock exchange to apply for approval under this section knowingly or recklessly using false or misleading information or by knowingly or recklessly making false or misleading statements.

(16) (a) Subject to paragraph (b) of this subsection, the Minister may lay before each House of the Oireachtas a copy of a report into any disciplinary matter prepared by or on behalf of an approved stock exchange.

(b) The Minister shall not lay a report referred to in paragraph (a) of this subsection before each House of the Oireachtas unless he and the Minister for Enterprise and Employment think it proper to do so having due regard to the exigencies of the common good and the rights of any person referred to in that report.

(c) A report laid before each House of the Oireachtas under paragraph (a) of this subsection shall be privileged but the conferring of privilege on that report shall not affect the rights, duties or liabilities of any person concerned with the preparation or publication by or on behalf of an approved stock exchange of that report.

Existing stock exchange.

10. —(1) Notwithstanding section 8 of this Act, the Irish Stock Exchange shall be deemed to be an approved stock exchange on the coming into operation of this section and shall stand approved of under this Act until the Bank has granted or refused an approval to it:

Provided that, no later than three months after the coming into operation of this section, it—

(a) incorporates as a company under the Companies Acts, if it is not already so incorporated, and

(b) applies to the Bank under section 9 of this Act for an approval and, in that section, references to proposed stock exchange shall be construed accordingly.

(2) Pending a decision by the Bank to approve or not to approve of the Irish Stock Exchange or during the three months referred to in subsection (1) of this section, or during both such times the Bank may do either or both of the following, namely:

(a) impose on it such conditions or requirements or both as it thinks fit relating to the proper and orderly regulation and supervision of the Irish Stock Exchange or in relation to the protection of investors or in relation to both or in respect of associated undertakings or related undertakings, or both;

(b) issue directions under this Act.

(3) The Irish Stock Exchange may appeal to the Court against the imposition of any condition or requirement or the giving of any direction under this section.

(4) On hearing an application under subsection (3) of this section, the Court may confirm, vary or rescind any condition, requirement or direction imposed under this section.

Imposition of conditions or requirements on approved stock exchanges.

11. —(1) Without prejudice to section 9 of this Act, where the Bank grants an approval under that section or consents to any proposed amendment or addition to a memorandum of association or articles of association or rules, it may do all or any of the following in the interests of the proper and orderly regulation and supervision of approved stock exchanges and their member firms or any or all of these:

(a) make its approval or consent subject to such conditions or requirements or both as it considers fit,

(b) impose conditions or requirements or both which relate to matters in an associated undertaking or related undertaking,

(c) at any time after its approval, impose conditions or require- ments or both on an approved stock exchange and either amend or revoke any condition or requirement or both imposed under this paragraph or paragraph (a) or (b) of this subsection,

(d) at any time after its approval, impose a requirement that the approved stock exchange add, amend or revoke rules of that stock exchange,

(e) at any time after its approval, impose a requirement that the approved stock exchange add to or amend the memorandum of association or articles of association of that stock exchange:

Provided that the said conditions or requirements do not contravene any guidelines in that behalf which may be issued to the Bank, from time to time, by the Minister with the consent of the Minister for Enterprise and Employment in the interests of the proper and orderly regulation and supervision of stock exchanges and their member firms and published in the Iris Oifigiúil.

(2) Any condition or requirement referred to in subsection (1) of this section may be imposed in relation to any or all of the following, namely—

(a) an approved stock exchange;

(b) all approved stock exchanges;

(c) a class of approved stock exchange;

(d) a specified period of time or times;

(e) all authorised member firms;

(f) a particular class of authorised member firm;

(g) an associated undertaking or related undertaking of an approved stock exchange;

(h) any matter, as the Bank may consider appropriate, in the interests of the proper and orderly regulation and supervision of approved stock exchanges and their member firms.

(3) An approved stock exchange or member firm may appeal to the Court against the imposition of any condition or requirement imposed under subsection (1) of this section and, on hearing an appeal under this section, the Court may confirm, vary or rescind any condition or requirement imposed under this section.

Refusal to consent to amendment of rules, etc.

12. —(1) Subject to subsection (2) of this section, the Bank may refuse to consent to an amendment of, or addition to, the memorandum of association, articles of association, or both, or to the rules of an approved stock exchange, in all or any of the following circumstances, namely, where it is expedient to do so in the interest of the proper and orderly regulation of that approved stock exchange or its authorised member firms or in order to protect investors.

(2) Whenever the Bank refuses to consent to an amendment or addition to the memorandum of association, or articles of association, or both, or to the rules of an approved stock exchange, it shall serve notice on the approved stock exchange concerned stating that it refuses to consent to the amendment or addition and setting out the reasons for the refusal in the notice.

Procedure on refusal to grant approval, etc.

13. —(1) A proposed stock exchange on whom a notice has been served under section 9 (3) of this Act or an approved stock exchange on whom a notice has been served under section 12 (2) of this Act may, within 21 days of receipt of the notice, appeal to the Minister and the Minister shall consider any such appeal and may uphold or reject it.

(2) When considering an appeal under this section, the Minister shall consult with the Minister for Enterprise and Employment, the Bank and the proposed stock exchange or the approved stock exchange concerned as the case may be; provided that the period taken for consideration does not exceed three months.

(3) If the Minister, with the consent of the Minister for Enterprise and Employment, upholds an appeal made under this section, he shall inform the Bank of his decision and shall publish notice of his decision in the Iris Oifigiúil within 28 days of such decision being communicated to the Bank and the Bank shall grant approval of the proposed stock exchange or consent to the proposed amendment of or addition to the memorandum of association, articles of association or rules of an approved stock exchange.

(4) An appeal under this section shall be accompanied by the prescribed fee.

(5) The Public Offices Fees Act, 1879, shall not apply to any fees charged under this section.

Revocation of approval.

14. —(1) The Bank may revoke its approval of an approved stock exchange in all or any of the following circumstances, namely, where—

(a) a request has been made to it in that behalf by an approved stock exchange,

(b) an approved stock exchange—

(i) has failed to operate as a stock exchange within 12 months of the date on which the approval to be an approved stock exchange was granted, or

(ii) has failed to operate as a stock exchange for a period of more than 6 months, or

(iii) is being wound up.

(2) Without prejudice to the power of the Bank to revoke an approval under subsection (1) of this section, the Bank may apply to the Court, in a summary manner, for an order revoking the approval of an approved stock exchange in any or all of the following circumstances, namely, where—

(a) it is expedient to do so in the interest of the proper and orderly regulation of approved stock exchanges or their member firms or in order to protect investors or in any or all of these circumstances;

(b) an approved stock exchange has been convicted on indictment of any offence under this Act or any Act under which the Bank exercises statutory functions or any offence involving fraud, dishonesty or breach of trust;

(c) circumstances have materially changed since the granting of approval to that stock exchange such that, if an application for approval was made at the time of the application to the Court, a different decision would be taken in relation to the application for approval;

(d) the approval was obtained by knowingly or recklessly making false or misleading statements, or by knowingly or recklessly using false or misleading information;

(e) an approved stock exchange has failed to comply to a material degree with a requirement of this Act;

(f) an approved stock exchange no longer fulfils any or all of the conditions or requirements which were imposed when approval was granted or which were subsequently imposed;

(g) an approved stock exchange—

(i) no longer complies with capital or other financial requirements, specified by the Bank from time to time, or

(ii) is not maintaining or is unlikely to be able to maintain adequate capital or other financial resources having regard to the volume and nature of its business;

(h) an approved stock exchange becomes unable or, in the opinion of the Bank, is likely to become unable to meet its obligations to its creditors or suspends payments lawfully due;

(i) a director, manager or qualifying shareholder of an approved stock exchange is no longer deemed by the Bank to fulfil the conditions of competence and probity required by section 9 of this Act to be a director or manager or a qualifying shareholder of an approved stock exchange;

(j) an approved stock exchange has so organised its business or corporate structure that the approved stock exchange and, where appropriate, any related undertaking or associated undertaking, either collectively or individually, is no longer capable of being supervised to the satisfaction of the Bank under this Act.

(3) When the Bank proposes to revoke the approval of an approved stock exchange or proposes to apply to the Court for an order to revoke approval of an approved stock exchange the following procedure shall apply, namely, the Bank shall serve notice on the stock exchange concerned and each of its member firms of its intention and shall state its reasons in the said notice.

(4) Where an application is made to the Court under this section the Court may make such interim or interlocutory orders as the circumstances may require.

(5) Where approval of a stock exchange is revoked and where the stock exchange concerned is not a company which is being wound up—

(a) the former approved stock exchange and its member firms shall continue to be subject to the duties and obligations imposed by this Act until all the liabilities, duties and obligations of the said stock exchange have been discharged to the satisfaction of the Bank,

(b) the former approved stock exchange shall, as soon as possible, after the revocation, notify the Bank, its member firms and such other persons, if any, as the Bank indicates are to be notified of the measures being taken to discharge without undue delay the liabilities, duties and obligations of the said stock exchange,

(c) in the case where—

(i) the former approved stock exchange has notified the Bank in accordance with paragraph (b) of this subsection and the Bank is of the opinion that the measures being taken or proposed to be taken for the purposes of that paragraph are not satisfactory, or

(ii) the former approved stock exchange has not so notified the Bank and the Bank is of the opinion that the said stock exchange has failed to so notify as soon as possible after the approval is revoked, or

(iii) the Bank is of the opinion that the former approved stock exchange has failed to take all reasonable steps to notify persons which the Bank has indicated, under paragraph (b) of this subsection, are to be notified,

then, subject to subsection (9) of this section, the Bank may give a direction in writing to the former approved stock exchange or, where necessary, to any of its authorised member firms for such period, not exceeding six months, prohibiting the former approved stock exchange or its authorised member firms, as the case may be, so directed from any or all of the following, namely—

(I) creating any liabilities;

(II) dealing with or disposing of any assets or specified assets of the former approved stock exchange or of its authorised member firms in any manner;

(III) engaging in any transaction or class of transactions or specified transaction;

(IV) making payments;

without the prior authorisation of the Bank, and the Bank may further direct that former approved stock exchange within two months of the initial direction to prepare and submit to the Bank for its approval a scheme for the orderly discharge of the liabilities, duties and obligations concerned.

(6) Where the approval of a stock exchange is revoked and the stock exchange is a company which is being wound up—

(a) the liquidator of the former approved stock exchange shall, in addition to his duties and obligations in respect of the winding-up, be subject to the duties and obligations to which the former approved stock exchange would be subject if it were a former approved stock exchange to which subsection (5) of this section relates and that subsection shall for the purposes of this subsection be construed accordingly;

(b) notwithstanding paragraph (a) of this subsection, the Bank may, where its approval of a stock exchange is revoked and where the Bank considers it appropriate in the circumstances, remove, on giving notice to that effect in writing to the former approved stock exchange, the duties and obligations imposed on the liquidator concerned to comply with paragraph (b) of subsection (5) of this section and may impose in writing on that liquidator such further duty or obligation which corresponds to that set out in paragraph (b) of that subsection;

(c) nothing in this subsection shall be construed as affecting any duty or obligation under this Act of the member firms of the former approved stock exchange concerned.

(7) The Bank shall publish notice of any revocation of an approval of a stock exchange in the Iris Oifigiúil within 28 days of revocation.

(8) An approved stock exchange whose approval has been revoked under this Act shall cease to operate as a stock exchange and it shall be an offence for any person to provide an investment service on a former approved stock exchange.

(9) Where the Bank gives a direction under subsection (5) of this section, it may apply to the Court, on being satisfied that the direction has not been complied with and the Court may confirm or set aside or vary the direction on such terms and for such period as the Court thinks fit.

(10) The Bank shall not exercise its powers under subsection (2) (i) of this section unless it has given the approved stock exchange an opportunity to remove the director, manager or qualifying shareholder or otherwise deal with the concerns of the Bank in relation to the probity or competence of the person concerned within such period of time as the Bank may specify.

(11) An application under this section may be heard otherwise than in public.

Maintenance of books and records by approved stock exchanges.

15. — (1) (a) An approved stock exchange shall keep at an office or offices within the State such books and records (including books of accounts) as may be specified, from time to time, by the Bank and shall notify the Bank of the address of every office at which any such books or records are kept.

(b) A person who contravenes paragraph (a) of this subsection shall be guilty of an offence.

(2) The Bank may specify different books and records for the purpose of this section in relation to different approved stock exchanges or different classes of approved stock exchange.

(3) Books and records kept pursuant to this section shall be—

(a) in addition to any books or other records to be kept by or under any other enactment, and

(b) retained at least for such period as the Bank may specify.