New Rules for Notification of Changes in major shareholdings

2016-02-01 | News Reporting Markets

An overview of some of the legislative amendments following the entry of the revised Transparency Directive (2013/50/EU) into Swedish law on 1 February 2016.

Notification of changes in major shareholdings

The laws governing major shareholding notifications and the related criteria for the content of a notification are first and foremost listed in Chap. 4 of the Financial Instruments Trading Act (1991:980) and Finansinspektionen's regulation (FFFS 2007:17) governing operations on trading venues. The Transparency Directive has been revised and there are therefore several new notification-related features that will be incorporated into Swedish Law as of 1 February 2016.

The following changes are of particular importance:

  • The major shareholding notification requirements will cover a wider array of financial derivative instruments. Prior to the entry into force of the revised directive, the major shareholding notification requirements applied to instruments which gave the holder the right to acquire already issued shares admitted to trading on a regulated market. Another category has now been added for instruments that are not included in this category, but are referenced to shares referred to in it and have an economic effect similar to those instruments, whether or not they are settled physically or in cash. For instruments with cash settlement, the amount of shares and voting rights will be calculated on a delta-adjusted basis with reference to the notional amount of underlying shares.
  • The deadline for submitting a major shareholding notification to Finansinspektionen has been extended. The current deadline for submitting a major shareholding notification expires at the end of the trading day following the day of the transaction that triggered the obligation to notify Finansinspektionen. This deadline will be extended, whereby a notification post-February 1st will instead have to be submitted as soon as possible, but at the latest on the third trading day following the day of the triggering transaction.
  • The laws governing major shareholding notifications will no longer be applicable to shares acquired for stabilisation purposes. This applies on the condition that the voting rights attached to these shares are not exercised or otherwise used to intervene in the management of the issuer.
  • A holder will no longer be obliged to account for the indirect holdings of closely related persons. Chapter 4, section 4, second paragraph, points 9-11 in the Financial Instruments Trading Act (1991:980) will be removed.

As a result of these amendments, Finansinspektionen's electronic reporting system for major shareholding notifications and the alternative paper form will also change.

Financial reporting

The requirement for issuers of instruments admitted to trading on a regulated market to publish and submit quarterly financial statements or reports to the competent authority in its home member state is removed. The principal reason for this is to ease the administrative burden for small- and medium sized enterprises, as well as to facilitate their access to financing through regulated markets. Another reason is that less of a focus on the issuer's short-term financial statements will promote more long-term, sustainable investment strategies.

Home member state

The definition of which country is to be regarded as an issuer's home member state has been partly altered. A major reason for this amendment is to be able to link issuers to a home member state within the EEA, even if the issuer in question has not opted to actively select one. This will make it harder for issuers to avoid supervision by refraining from making an active choice about the home member state to which they belong in cases where one is not appointed to them by default.

For issuers who according to the Directive have the possibility of actively choosing and announcing their home member state but do not do so within the prescribed time frame, the home member state(s) will be the state in which the issuers' instruments are admitted to trading on a regulated market.

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