Legislation amending the Finnish Securities Market Act (the “SMA”) was ratified by the Parliament on 23 October 2015. The amended SMA will implement the EU Transparency Directive (2013/50/EU) into Finnish legislation with the amendments entering into force on 26 November 2015. The main changes to the SMA relate to periodic reporting requirements, disclosure of major shareholdings and requirements to publish a prospectus.
1) Periodic reporting requirements
The amended SMA will introduce a more relaxed regime for periodic reporting. Under the previous regime issuers of shares and equity securities have been obligated to publish quarterly reports in addition to semi-annual and annual reports. Under the amended SMA, issuers will no longer be required to publish quarterly reports. Issuers may still voluntarily publish quarterly reports and the ongoing reporting requirements will continue to apply.
The amended SMA also affords additional time for the publication of annual accounts and report with the timeframe for publication being extended from three months to four months. The timeframe for the publication of semi-annual reports is extended from two months to three months.
2) Amended obligations regarding major shareholdings
The major shareholding thresholds triggering the disclosure obligation will continue to remain the same, i.e. the disclosure obligation will continue to be triggered when the shareholding or voting rights reach, exceed or fall below 5, 10, 15, 20, 25, 30, 50 or 90 percent or two thirds of the shares or voting rights of the company. However, the scope of financial instruments and other arrangements triggering the disclosure obligation will change. Some of the amendments will limit the scope of the disclosure obligation and some of the amendments will expand it.
For example, under the previous regime any agreement or other arrangement that, if realised, would result in a disclosure threshold being breached triggered the disclosure obligation. This will no longer be the case under the amended SMA where such an agreement or other arrangement does not qualify as a “financial instrument”. Further, the disclosure obligation will cease to apply with regard to such financial instruments that will result in a decrease in shareholding or voting rights as well as with regard to such financial instruments that entitle to acquire shares that will be issued only in the future.
On the other hand, the disclosure obligation under the amended SMA will extend to apply also to cash settled derivatives. In addition, new rules on calculating and aggregating current and future holdings are being introduced, which is expected to entail that the obligation to make a disclosure will apply more frequently.
3) Increase of the minimum threshold for the obligation to publish a prospectus
According to the current SMA, an issuer is not under an obligation to publish a prospectus, inter alia, when offering securities to the public with the total amount of the offer being less than EUR 1,500,000 for a period of 12 months. This threshold will in the amended SMA be increased to EUR 2,500,000. The rationale behind the increase is to reduce the administrative burden in small size issuances where the securities will not be listed on a regulated market.
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