PART IV

Regulation And Supervision of Stock Exchanges and Member Firms

28. —(1) Subject to such guidelines in this regard, as may be issued 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 the protection of investors, and notified to the Bank in writing and published in the Iris Oifigiúil, the Bank shall administer the system of regulation and supervision of approved stock exchanges and their member firms in accordance with the provisions of this Act in order to promote—

(a) the maintenance of the proper and orderly regulation and supervision of approved stock exchanges and their member firms, and the orderly and proper regulation of financial markets, and

(b) the protection of investors.

(2) Where the Bank is of the opinion that it is necessary in the interests of assessing the capacity of a stock exchange or a member firm to engage in an activity for which it has sought approval or authorisation or for which it stands approved or authorised under section 10 or 21 of this Act, it may commission an independent assessment of the capacity of the proposed stock exchange or of the approved stock exchange or of the proposed member firm or of the authorised member firm.

(3) Subject to subsection (4) of this section, the Minister may, after consulting with the Bank, prescribe the fee to be paid to the Bank by an approved stock exchange or member firm supervised by it under this Act and the Minister may prescribe different fees for different classes of approved stock exchanges or different classes of member firms.

(4) Regulations under this section may provide for such incidental or related matters as are, in the opinion of the Minister, necessary to give effect to such fees and where the Minister proposes to prescribe a fee under subsection (3) of this section he shall—

(a) notify the approved stock exchanges or authorised member firms of the class to which the proposed fee relates, of that proposed fee; and

(b) consider any representations made to him within a reasonable period, being not less than two months after the date the notification was sent by him to each approved stock exchange or authorised member firm concerned, as he shall specify in the notification.

(5) Notwithstanding any other provisions of this Act the Bank shall co-operate with the competent authorities in other Member States so that the responsibilities of each competent authority may be more effectively discharged.

(6) Without prejudice to the generality of subsection (1) of this section or to the Bank's powers under sections 15 , 27 and 56 of this Act, the Bank may carry out, at the request of another competent authority, verification that any member firm authorised by that competent authority is complying with the relevant regulatory requirements imposed by that competent authority or by the home Member State of such member firm.

29. —(1) Without prejudice to the power of the Bank to impose conditions or requirements or both under this Act and, without prejudice to the Bank's powers under subsection (2) or (4) of this section, where the Bank considers it necessary to do so in the interests of the proper and orderly regulation of approved stock exchanges or their member firms or the protection of investors, the Bank is hereby empowered to give a direction to all or any of the following, namely—

(a) any or all approved stock exchanges;

(b) any or all proposed stock exchanges;

(c) any or all former approved stock exchanges;

(d) any or all proposed member firms;

(e) any or all authorised member firms;

(f) any or all former authorised member firms;

(g) any or all member firms;

(h) any or all stock exchanges;

(i) directors and those responsible for the management of approved stock exchanges and authorised member firms;

in relation to any matter related to the operation of a stock exchange or any matter related to its member firms or any matter related to an acquiring transaction within the meaning of section 39 (2) of this Act.

(2) Without prejudice to the Bank's powers under subsection (1) of this section and without prejudice to the powers of the Bank to impose conditions or requirements or both under this Act, where the Bank is of the opinion that it is necessary to do so in the interests of the proper and orderly regulation of approved stock exchanges and their member firms or for the protection of investors, or where an approved stock exchange or a member firm—

(a) has become or is, in the opinion of the Bank, likely to become unable to meet its obligations to its creditors or its clients or both, or

(b) is not maintaining or is, in the opinion of the Bank, unlikely to be in a position to maintain adequate capital resources having regard to the volume and nature of its business, or no longer complies with capital or other financial requirements specified by the Bank from time to time or both, or

(c) has failed to comply with any condition or requirement imposed under this Act, and the circumstances are such that the Bank is of the opinion that the stability or soundness of an approved stock exchange or member firm is materially affected by this failure, or

(d) is conducting business in such a manner as to jeopardise and prejudice monies or investment instruments held by or controlled by it on behalf of clients or the rights and interests of those clients,

then the Bank may give a direction in writing to the approved stock exchange concerned or the member firm concerned or both to suspend for such period not exceeding twelve months, as shall be specified in the direction, any or all of the following, that is to say—

(i) the carrying on of the business of an approved stock exchange or of a member firm;

(ii) the making of payments to which paragraph (i) of this subsection does not relate;

(iii) the acquisition or disposal of any assets or liabilities;

(iv) entering into transactions of any specified kind or entering into them except in specified circumstances or to a specified extent;

(v) soliciting business from persons of a specified kind or otherwise than from such persons or in a specified country;

(vi) carrying on business in a specified manner or otherwise than in a specified manner;

which have not been authorised by the Bank.

(3) A direction under subsection (1) or (2) of this section may be given to a particular person or generally to all persons to whom those subsections apply or to a particular class of person or during a specified period of time or times, or by reference to any other matter which the Bank may consider appropriate.

(4) The First Schedule to this Act shall apply as respects a direction by the Bank under this section.

(5) Where the Bank gives a direction under this section, which said direction shall have immediate effect, the Bank may or, where the Bank is of the opinion that the said direction is not being complied with, the Bank shall apply to the Court in a summary manner for an order confirming the direction.

(6) The Court may, on an application being made under subsection (5) of this section, hear evidence from creditors and the Court may make, in any application under this section, such interim or interlocutory order, if any, as it considers fit.

(7) While a direction under this section is in force, no winding-up proceedings in relation to the approved stock exchange or authorised member firm or associated or related undertaking or, in the case of an authorised member firm or associated or related undertaking which is constituted as an unincorporated body of persons, no proceedings for an order of dissolution, may be commenced pr resolution for winding-up passed in relation to the approved stock exchange or authorised member firm or associated or related undertaking, and no receiver shall be appointed over the assets or over any part of the assets of the approved stock exchange or authorised member firm or associated or related undertaking and such assets shall not be attached, sequestered or otherwise distrained except with the prior sanction of the Court.

(8) The Court may hear proceedings or part of proceedings under this section otherwise than in public.

(9) A creditor who is affected by a direction under subsection (2) of this section may apply to the Court to vary or set aside that direction where it affects the interests of the creditor to a material degree.

30. —(1) Notwithstanding section 215 of the Companies Act, 1963, the Bank may, by presenting a petition, apply to the Court to have an approved stock exchange or former approved stock exchange or authorised member firm or former authorised member firm wound up on any of the following grounds, namely, that—

(a) an approved stock exchange or former approved stock exchange or authorised member firm or former authorised member firm is or, in the opinion of the Bank, may be unable to meet its obligations to its clients or creditors;

(b) the approval of the stock exchange or the authorisation of the member firm has been revoked and the former approved stock exchange or former authorised member firm has ceased to operate as a stock exchange or as a member firm respectively;

(c) the Bank considers that it is in the interest of the proper and orderly regulation of approved stock exchanges and their member firms or is necessary for the protection of investors that the approved stock exchange or former approved stock exchange or the authorised member firm or former authorised member firm be wound up;

(d) an approved stock exchange or a former approved stock exchange or an authorised member firm or a former authorised member firm has failed to comply with any direction given by the Bank under this Act.

(2) Where the petition for the winding-up of an approved stock exchange or former approved stock exchange or an authorised member firm or former authorised member firm is presented by a person other than the Bank, a copy of the petition shall be served on the Bank which shall be entitled to be heard on the petition.

(3) Where an approved stock exchange or former approved stock exchange or an authorised member firm or former authorised member firm is being wound up voluntarily and the Bank has reason tobelieve that any of the grounds set out in subsection (1) of this section applies, then, the Bank may apply to the Court to have that stock exchange or that member firm wound up by the Court.

(4) Where an approved stock exchange or an authorised member firm or former approved stock exchange or former authorised member firm is being wound up and the Bank is not a creditor, any notice or document, by whatever name called, which is required to be sent to a creditor of the approved stock exchange or authorised member firm or former approved stock exchange or former authorised member firm shall be sent also to the Bank.

(5) An officer of the Bank, or any other person, duly appointed in writing in that behalf by the Governor of the Bank or by an officer designated by the Governor of the Bank for the purpose of appointing persons under this section may attend any meeting of creditors of an approved stock exchange or authorised member firm or former approved stock exchange or former authorised member firm.

(6) (a) The Governor of the Bank, or an officer designated by the Governor of the Bank for that purpose, may appoint in writing an officer of the Bank or any other person to be a member of any committee of inspection appointed under section 233 or 268 of the Companies Act, 1963, in respect of the approved stock exchange, authorised member firm or former approved stock exchange or former authorised member firm, and

(b) a person duly appointed under paragraph (a) of this subsection shall neither be counted in computing the minimum or maximum numbers of members of such a committee prescribed under the Companies Acts, nor be removed from membership of the committee without the consent of the Bank.

(7) The rules of Court relating to the winding-up of companies shall, pending the making of rules of Court for the purposes of this subsection, apply for such purposes with such adaptations as may be necessary.

(8) In the case of an authorised member firm or a former authorised member firm which is constituted as an unincorporated body of persons, the Bank may apply by petition to the Court for a decree of dissolution and for that purpose, section 35 of the Partnership Act, 1890, shall extend to the Bank and shall apply as if the grounds specified at subsection (1) (a) to (d) of this section were incorporated therein.

31. —(1) Any person who advertises or causes to be advertised the services of a stock exchange—

(a) where that stock exchange, if established in Ireland, is not an approved stock exchange, or

(b) if established in a state outside the State, is not a stock exchange permitted to carry out business in accordance with the procedures set out in that state for the approval of stock exchanges, if any,

shall be guilty of an offence.

(2) Any person who advertises or causes to be advertised, or supplies, or offers to supply, investment services, or makes any other solicitation in respect of investment services, and who holds himself out to be a member firm where that person is not such a member firm shall be guilty of an offence.

(3) Without prejudice to the generality of any section in this Act empowering the Bank to impose conditions or requirements or both, the Bank may impose conditions or requirements or both on an approved stock exchange or member firm or may set out rules or approve of rules in the rules of an approved stock exchange in respect of advertising by an approved stock exchange or member firm as the Bank considers necessary, in the interest of—

(a) the orderly and proper regulation and supervision of an approved stock exchange or approved stock exchanges or a member firm or member firms; or

(b) the protection of investors.

(4) The Bank may impose a requirement on an approved stock exchange or its member firms or any or all of them to publish specified information or to display specified information at their premises.

(5) The Minister may prescribe information to be displayed by an approved stock exchange or its member firms at their premises.

(6) (a) If, with respect to any member firm, the Bank considers it expedient to do so, in the interest of the proper and orderly regulation of approved stock exchanges and their member firms or the protection of investors, it may give such member firm a direction in relation to the matter and form of any advertisement or other means of soliciting client money or investment instruments or business or in relation to the matter and form of any advertisement relating to any service provided or business being undertaken by the member firm, or to withdraw an advertisement or to cease advertising.

(b) Without prejudice to the generality of paragraph (a) of this subsection, a direction under this section may do all or any of the following:

(i) prohibit the issue by the member firm of advertisements of all descriptions or any specified description;

(ii) require the member firm to modify advertisements of a specified description in a specified manner;

(iii) prohibit the issue by the member firm of any advertisements which are, or are substantially, repetitions of a specified advertisement;

(iv) require the member firm to withdraw any specified advertisement or any advertisement of a specified description, or

(v) require the member firm to include specified information in any advertisement to be published by it or on its behalf or in any statement to the public to be made by it or on its behalf.

(7) If, in contravention of the provisions of subsection (1) or (2) of this section or in contravention of a direction under this section, a person issues, or causes to be issued, an advertisement inviting persons to enter or offer to enter into an investment agreement or containing information calculated to lead directly or indirectly to persons doing so, then, subject to subsection (10) of this section—

(a) he shall not be entitled to enforce any agreement to which the advertisement related and which was entered into after the issue of the advertisement; and

(b) the other party shall be entitled to recover any money or other property or investment instruments paid or transferred by him under the agreement, together with compensation for any loss sustained by him as a result of having paid money or transferred property or investment instruments under the agreement.

(8) If, in contravention of the provisions of subsection (1) or (2) of this section, or in contravention of a direction issued under this section, a person issues or causes to be issued an advertisement inviting persons to exercise any rights conferred by an investment or containing information calculated to lead directly or indirectly to persons doing so, then, subject to subsection (9) of this section—

(a) he shall not be entitled to enforce any obligation to which a person is subject as a result of any exercise by him after the issue of the advertisement of any rights to which the advertisement related; and

(b) that person shall be entitled to recover any money or other property or investment instruments paid or transferred by him under any such obligation, together with compensation for any loss sustained by him.

(9) The compensation recoverable under subsection (7) or (8) of this section shall be such as the parties may agree or as the Court may, on the application of either party, determine.

(10) The Court may allow any such agreement or obligation as is mentioned in subsection (7) or (8) of this section to be enforced or money or property or investment instruments paid or transferred under it to be retained if it is satisfied—

(a) that the person against whom enforcement is sought or who is seeking to recover the money or property or investment instruments was not influenced, or not influenced to any material extent, by the advertisements in making his decision to enter into the agreement or as to the exercise of the rights in question; or

(b) that the advertisement was not misleading as to the nature of the investment, the terms of the agreement or, as the case may be, the consequences of exercising the rights in question and that it fairly stated any risks involved in those matters.

(11) Where a person elects not to perform an agreement or an obligation which by virtue of subsection (7) or (8) of this section is unenforceable against him or by virtue of either of those subsections recovers money paid or other property or investment instrumentstransferred by him under an agreement or obligation he shall repay any money and return any other property or investment instruments received by him under the agreement or, as the case may be, as a result of exercising the rights in question.

(12) Where any property or investment instruments transferred under an agreement or obligation to which subsection (7) or (8) of this section applies has passed to a third party the references to that property or those investment instruments in this section shall be construed as references to the value of such property or investment instruments at the time of transfer under the agreement or obligation.

(13) If an advertisement or other solicitation to which this section relates is published and it does not include the name and address of the person who arranged with the publisher for the advertisement or solicitation, the Bank may, at any time within the period of 12 months after any publication of the advertisement or solicitation, request the publisher to supply the name and address of that person to the Bank and the publisher shall forthwith comply with that request.

(14) The Bank may—

(a) direct a person to publish a correction of a misleading advertisement concerning services of approved stock exchanges, or member firms, or

(b) direct a person to publish the correction of an advertisement which contravenes the provisions of this section, or

(c) direct a person to publish the fact that an offence under this section has taken place and that a fine, if any, has been imposed, or

(d) direct a person to publish the fact that a determination that there has been a breach of a condition or requirement under this section has been made under section 65 of this Act, or

(e) publish an advertisement correcting any misleading aspects of advertisements, published by approved stock exchanges or member firms.

(15) In this section—

“advertisement” includes every form of recommendation of any matter to which this section relates, including in particular the display or publication of any such matter by way of newspaper, leaflet, notice, circular, pamphlet, brochure, photograph, film, video, sound broadcasting, television, electronic communication or personal canvassing and references to the issue of advertisements shall be construed accordingly;

“established in Ireland” excludes any stock exchange which provides services electronically to Irish clients and whose head office or registered office is outside the State;

“specified” means specified in a direction under this section.

(16) Any person who fails to comply with a direction or a prescription imposed under subsection (5), (6) or (14) of this section, or whofails to comply with a request of the Bank under subsection (13) of this section, shall be guilty of an offence.

32. —(1) Section 31 of this Act shall not apply to a class of advertisement specified from time to time by the Bank for the purpose of exempting from that section—

(a) advertisements appearing to the Bank to have a private character, whether by reason of a connection between the person issuing them and those to whom they are issued or otherwise; or

(b) advertisements appearing to the Bank to deal with investments only incidentally; or

(c) advertisements issued to persons appearing to the Bank to be sufficiently expert to understand any risks involved.

(2) An exemption under subsection (1) of this section shall be subject to such conditions as may be specified by the Bank when granting the exemption.