AIB flotation - expatriates

I never suggested that UAE law has extra-territorial effect.

This has nothing to do with where business is conducted. That concept is simply not relevant in this context.

This only relates to where the offer is made and to whom it is addressed.

Sarenco

Would the following work?

1) This offer complies with the Prospectus laws in Ireland and the UK.
2) This offer is restricted to Irish and UK institutions, citizens of Ireland and residents of Ireland and the UK.
3) Potential buyers from outside Ireland and the UK should check their own legislation to make sure that they comply with it.

Brendan

No Brendan, that wouldn't work.

Let me try and explain it a different way.

For reasons of cost and administrative simplicity, the Bank/Department want to limit the number of jurisdictions whose laws they need to comply with or even consider. Accordingly, the offer (as reflected in the prospectus) is only addressed to and directed at persons in Ireland and in the United Kingdom and otherwise at "qualified investors" (essentially financial institutions) in other EEA member states.

This has nothing to do with citizenship. In fact, it would breach EU law to limit the offer to Irish citizens. A Spanish citizen, for example, is perfectly entitled to take up the offer if they live in Ireland and have an account with an accredited intermediary.

Neither the Bank nor the Department can unilaterally contract out of any applicable laws. As such, investors can't simply be told that the offer may not lawful in their jurisdiction so if they take up the offer they do so at their own risk. That doesn't prevent or preclude a disgruntled shareholder from subsequently seeking redress on the basis that the offer was unlawful in their jurisdiction, which is precisely what the Bank/Department want to avoid.

The bottom line is that the way the Bank/Department is proceeding is what works.

What's the fuss about here? Are we seriously suggesting that the Department should be spending money on getting approval and hiring local legal teams to approve all documentation in every country that we have a few Irish people so that a few ex pats can take part in this flotation which retail investors should avoid like the plague. This is standard procedure for every bond or equity issue. The issuer will always try and cut down on regulatory and legal costs and target the large professional investor base in certain countries. They will even ban professional investors in certain countries if they consider the regulatory work to be prohibitive in marketing in that country. This is not illegal. It's not a scandal. It is common sense.

Agreed Sunny.

The fact we are discussing this at all seems bizarre to me.

Sarenco said:

Accordingly, the offer (as reflected in the prospectus) is only addressed to and directed at persons in Ireland and in the United Kingdom and otherwise at "qualified investors" (essentially financial institutions) in other EEA member states.

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But does the fact that the offer is only addressed to and directed at persons in Ireland and the UK (and I fully understand, and in fact agree with, the commercial and legal logic for doing that) require that unsolicited applications from outside those jurisdictions cannot be accepted?

In other words, was the decision by the Department in this regard driven by legislation or policy?

I agree that the costs of compliance should be kept to a minimum, and certainly nothing should be spent to facilitate people outside Ireland.

But I still do not understand the explanation why any sale has to be limited to any geographic area.

Joe Hill said:

In other words, was the decision by the Department in this regard driven by legislation or policy?

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The restrictions are driven by a desire to avoid potentially breaching the laws of any other jurisdiction and the adverse consequences that could flow from same.

There is nothing remotely unusual about restricting a public offering to persons located in particular jurisdictions. Recent public offerings by PTSB, Green, etc. were similarly restricted.

What is somewhat unusual (although by no means unique) about the AIB offering is the minimum subscription amount and the requirement for retail investors to have an account with an accredited intermediary. The political/policy reasons for these requirements should be pretty obvious.