HIRTEEN Irish companies listed in London with a market value of £9 billion are at risk having their shares suspended because of Brexit chaos.
As the UK moves towards the end of the Brexit transition period, fears of HGVs causing customs bottlenecks in Kent or feuding fishermen in the Channel are making headlines.
But the UK’s exit from the European Union also risks causing havoc for listed companies as close ties between the London and Dublin stock exchanges are unpicked.
For more than two decades, many Irish companies have settled their shares using CREST, the London-based Central Securities Depository (CSD), yet EU rules mean that from next year, this will no longer be allowed.
With the clock ticking on Brexit talks this is another headache for UK negotiators who risk seeing London’s standing as a financial centre damaged if no deal is cut.
Irish issuers are now in a race against the clock to ensure they can migrate to the new CSD, which is to be run out of Belgium by Euroclear Bank.
Whilst this primarily impacts shares listed on Euronext Dublin, it also hits 13 Irish companies who now only trade their shares in London.
These range from small cap energy firms right up to one member of the FTSE 100 – DCC, the marketing and support services giant. UDG Healthcare, worth £1.8 billion, also faces the issue as does Magners cider maker C&C.
Ryanair and Diageo are two other giants listed in both London and Dublin. They also need to act but are at less risk of falling through a gaping hole in the system.
Companies have to confirm their migration readiness by mid-February, after obtaining shareholder approval.
Brussels has agreed to a very short extension in a bid to maintain an orderly market, but issuers are said to be scrambling to make the necessary arrangements.
Some have described the situation as “chaotic” and “exasperating” with guidance slow to arrive, despite the Irish parliament passing legislation on Christmas Day last year in a bid to streamline the move.
Hardeep Tamana, managing director of Avenir Registrars (Ireland), said: “Companies risk running out of time to meet the migration deadline, which in turn leads to the real possibility that shares could be suspended. We are working closely with our Irish issuers to get ready for the migration and waiving migration fees at what is a challenging time for many, but would urge anyone without a migration plan in place to address this now”.
A Euronext spokesman said: “There is a market wide project underway since 2016 to migrate settlement of Irish securities from CREST to Euroclear Bank in March 2021 and deliver a post-Brexit long term solution for the settlement of Irish securities. All Irish market stakeholders are actively engaged in this project.”