European legislation that came into force yesterday may help boost investment in the Irish economy, industry sources said.
While some experts are concerned increased legislation may deter companies from seeking listings within the European Union, the prospectus directive in fact makes it easier for companies to raise money by allowing one set of documentation to be used in all EU member states.
"This creates a huge business opportunity for Irish professionals and the Irish Stock Exchange," said Brendan Heneghan, a partner at law firm William Fry in Dublin. "As an English-speaking country, we have an advantage over other European countries and will no doubt see an increase in interest from companies outside of Europe and maybe as far afield as Australia and South Africa."
Another industry source confirmed there had already been a significant amount of interest from US companies considering Ireland as their domicile.
The aim of the directive is to improve the efficiency of the capital-raising process within the EU, while at the same time enhancing levels of investor protection, Michael Ahern, the minister for Enterprise, Trade and Employment said yesterday as he signed the proposals into law.
Under the terms of the new legislation, once a company has had its listing document approved by the financial regulator in its home country, it will be able to move anywhere throughout Europe without submitting it for reapproval. The only thing the company will have to do is translate the document into the appropriate language. Yesterday's approval of the directive came one day behind the UK, though well ahead of other EU member states such as France and Italy, who have yet to pass the law.
Tara Doyle, a partner in the banking and financial services division at Matheson Ormsby Prentice, said the prompt introduction of the directive was a very positive sign for the Irish financial services industry. "The fact they did it on time will boost the reputation of the Stock Exchange around the world," she said, adding that the new rules will have significant knock-on effects for Ireland's debt markets.
"It's a wonderful opportunity for the exchange to consolidate its position within the debt market in Europe and globally," said Ms Doyle. "The new legislation has got rid of an age-old law which was hopelessly out of date, and brought in a uniform policy."
She said one of the main benefits was that firms now knew what rules they had to comply with regardless of what jurisdiction they were trading in.
The signing of a second piece of EU legislation, the market abuse directive, was delayed slightly and should be approved next week, said a spokesman for the Department of Enterprise, Trade and Employment. Its aim is to create a common approach across the EU for preventing and detecting financial malpractices such as insider dealing.
Once introduced, financial institutions will be required to maintain up-to-date insider lists and report any suspicious transactions to the regulator. Until now, Irish law has only required companies to monitor insider dealing and did not have a provision for market manipulation.
The Ifsra rejected assertions made by the UK's financial services regulator that the new rules may encourage companies to be overcautious and report incidents that are above board.
