Bank of Ireland Group plc today published a notice of an Extraordinary General Meeting (EGM), to be held on January 19, 2021.

The purpose of the EGM is to put to vote certain resolutions which are necessary to ensure shares in the company can continue to be settled electronically when they are traded on Euronext Dublin and the London Stock Exchange and remain eligible for continued admission to trading and listing on those exchanges.

In order for trading in shares to be settled electronically, shares must be in uncertificated (i.e. dematerialised/non-paper) form. Approximately, 97 % of the company’s issued share capital is held in uncertificated form. These uncertificated shares (“Participating Securities”) are not represented by any share certificates, nor do they need to be transferred by the execution of a written stock transfer form. Instead, they are currently transferred by operator instructions issued via CREST System, which is the London-based securities settlement system operated by Euroclear UK & Ireland Limited (EUI).

The regulation of central securities depositories (CSDs), which operate securities settlement systems, is harmonised across the European Union under the EU Central Securities Depositories Regulation (Regulation (EU) No. 909/2014) (CSDR).

As a result of Brexit, EUI will, at the end of the Brexit transition period on 31 December 2020, no longer be subject to EU law. A European Commission decision has extended the current temporary status as a “recognised” CSD for the purposes of CSDR granted to EUI to 30 June 2021. Die to this, it is expected that the CREST System will cease to be available for the settlement of trades in Participating Securities with effect from June 30, 2021.

In December 2018, Euronext Dublin announced that, based on the analysis it had carried out of four possible CSD options for settlement post-Brexit, it had selected the CSD operated by Euroclear Bank SA/NV, an international CSD incorporated in Belgium (Euroclear Bank), to replace the CREST System as the long-term CSD for electronic settlement of trades in securities of Irish companies.

At this point, no alternative securities settlement system authorised to provide settlement services in respect of Irish securities has been actively engaging with Irish market participants to facilitate the transition of Irish shares to its settlement system. As a result, no alternative securities settlement system to the Euroclear System is expected to be available for the electronic settlement of trades in the company’s Shares on or before 30 June 2021.

To facilitate a common migration procedure from EUI to an alternative CSD, which is authorised for the purposes of CSDR for all Irish listed companies whose shares are currently held and settled through the CREST System, the Oireachtas (the Irish Parliament) enacted the Migration of Participating Securities Act 2019. To participate in the migration procedure under the Migration Act, eligible companies must, among other requirements, pass certain shareholder resolutions prior to 24 February 2021 at a general meeting of its shareholders.

As it is essential for Bank of Ireland that electronic settlement of trading of its shares can continue on Euronext Dublin and on the London Stock Exchange, the purpose of the EGM is to consider, and if thought fit, approve a number of resolutions which are intended to facilitate the migration of the company’s Participating Securities from the CREST System to the settlement system operated by Euroclear Bank, an international CSD incorporated in Belgium.

Subject to the approval of the Resolutions, it is intended that the migration will occur as part of Market Migration, which is expected to occur in mid-March 2021.

If the Resolutions are not passed, and the company does not participate in the migration, all participating securities in the company will be required to be re-materialised into certificated (i.e. paper) form and shareholders will no longer be able to settle trades in the shares electronically. This could materially and adversely impact trading and liquidity in the shares as it would result in significant delays for shareholders and investors wishing to sell or acquire shares.

It would also put at risk the continued admission to trading and listing of the shares on Euronext Dublin and the London Stock Exchange as the absence of electronic settlement of shares would mean that the company would cease to meet the eligibility criteria for admission to trading on Euronext Dublin and the London Stock Exchange.