The Irish Stock Exchange (ISE) has issued a public censure to Bula Resources for improper share transactions by two of the company's directors, chairman and former Taoiseach Mr Albert Reynolds and Mr Patrick Gillen.

The censure is effectively a rap on the knuckles from the ISE, the first it has issued since 1996, but does not carry any financial penalty.

The last censure was issued to Clondalkin, the paper and packaging company which now operates as a private company and was based on the wrongful circulation of a circular.

In a statement, Bula said it accepted the decision and pledged to review its procedures and follow the recommendations issued by the ISE. "Bula Resources fully accepts the decision of the listing committee of the ISE in relation to a conversion of share options and dealing in shares in August of last year," the statement said.

The public censure follows an investigation by the ISE's listing committee into dealings in Bula shares by the two directors during a close period - the two-month timeframe preceding the announcement of company results during which directors are barred from trading shares. The rule aims to prevent people associated with a publicly quoted company from using price-sensitive information for their own financial gain.

The investigation centred on an option to buy Bula shares which was exercised by Mr Reynolds on August 13th, 2001 ahead of its interim results on September 27th.

The option entitled him to buy Bula shares at 1p each. On August 13th he acquired 40.4 million shares for £404,251 (€513,399) giving him a shareholding of 1.9 per cent.

When contacted yesterday, Mr Reynolds said he had nothing to add to the Bula statement.

At that date, the shares closed in Dublin at 19p, which would have allowed Mr Reynolds to realise an instant paper profit of £7.3 million (€9.2 million) but any profits on the shares are likely to have fallen since then.

A day later, August 14th, Mr Gillen bought 148,000 Bula shares also at 1p each. He is no longer a director of Bula and has not sold the shares. Their value is now also uncertain until the shares are re-listed.

Bula shares were suspended from trading on the exchange on April 11th, 2002 at 25 cents (19.6p) with expectations that the shares would fall sharply if they are relisted in the future.

The ISE's listing committee heard representations from the exchange and Bula and found it had failed to take "all proper and reasonable steps" to secure compliance with its code for directors. It also found that the company had given clearance to Mr Gillen to deal in the shares during the close period which was contrary to its code of conduct.

"The committee finds that the company was responsible for the above breaches, primarily due to a failure that adequate corporate governance controls were in place," according to the statement.

It has recommended that Bula should put in place proper procedures "to the satisfaction" of the exchange to ensure that the company and each of its directors is familiar with their obligations under the listing rules.

It has also directed the company to ensure future compliance by Bula and its directors with the listing rules.