The expected rule change has been prompted by financial watchdogs in the UK, who announced last week new proposals to scrap the existing requirement forcing investors to disclose holdings as soon as they go above 3% of a target company. The proposal is to raise the threshold to 5%, which is the minimum standard across Europe.

Because so many Irish companies are also listed in London, any changes to disclosure rules in the UK would have to be copied by Dublin according to Deirdre Somers, director of listings at the Irish Stock Exchange.

"If London were to change its policies, there's a very strong argument that we should follow suit, " she said. "London has a very robust regulatory regime and it is in the interests of the Irish market to be carried into that regime."

The move would mean that investors such as Denis O'Brien, who has accumulated a 3% holding in Independent News & Media, could in future keep their activities secret until their stake has passed the 5% threshold.

A 5% disclosure threshold already exists in Irish company law, which means that investors need only show their hand after their holding goes above this level. But the stock exchange's tighter rules require companies to notify the market if they become aware that any shareholder has acquired more than 3% of their stock. This is why IN&M, rather than Denis O'Brien, revealed the existence of the telecom millionaire's stake.

Any watering down of disclosure requirements is likely to cause concern among companies, which feel increasingly vulnerable as a new wave of merger and acquisitions sweeps world markets and leading Irish companies are seen as takeover targets.

Australian investment house Babcock & Brown, which has accumulated a stake of just under 29% in Eircom, is in talks with the phone company about a possible bid. Irish Life & Permanent and food company Greencore, in which financier Dermot Desmond holds a 22% stake, are also seen as possible takeover targets.

Apart from a higher threshold for initial disclosure, UK regulators are also considering watering down the rules if further stake building takes place. At present investors have to notify the market at each 1% notch above 3%.

One option would be for notification only at the 5%, 10%, 15%, 20%, 25%, 30% and 50% levels, according to the regulator.

Stake builders would also be given more time to disclose to the market. At present, they have to do so within two days of the notifiable event, but this could be lengthened to seven days.