Directors (including shadow directors) and company secretaries are required by law to notify the company in writing of their interests in shares in, or debentures of, the company.

What constitutes a notifiable interest?  The obligation to notify covers both legal and equitable interests in shares or debentures of the company. Specific examples include shares, share options and contracts relating to the acquisition or disposal of shares. The interests held by a spouse or minor child (unless such a person is a director or secretary of the company) must also be notified.

When must a notification be made?   When the individual director or secretary:

• Has interests in shares or debentures of the company or any of the group companies on becoming a director or secretary
• Becomes, or ceases to be, interested in shares or debentures of the company or any of the group companies
• Enters a contract to sell shares or debentures of the company
• Assigns a right granted to him or her by the company to subscribe for shares or debentures of the company or
• Is granted a right to subscribe for shares or debentures of a group company or when he or she exercises any such right  

How is an interest notified when a notification event occurs?  A written notice must be given to the company setting out the number and class of share or debentures involved. The notice must state that its purpose is to fulfil this statutory obligation. The notice must be given within five days following the day on which the director or secretary becomes aware of the interest.

Where are notifications recorded?  Each company must maintain a register of notifications received, as well as information on subscription rights granted to directors or secretaries.

What are the penalties for failure to comply?  Any person who fails to fulfil an obligation to notify is guilty of an offence. In addition, such person’s rights and interests in the shares or debentures concerned are unenforceable in any legal proceedings. However, the court may grant relief in certain circumstances, such as where the breach has occurred by accident or inadvertence.

Additional similar disclosure requirements also apply to companies that are listed on a regulated market (e.g. the Irish Stock Exchange).

Contributed by Ruairi Bourke.

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