GUIDE AND INSTRUCTIONS. Listed companies. MARKET MONITORING 1 February 2016

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1 GUIDE AND INSTRUCTIONS Listed companies MARKET MONITORING 1 February 2016

2 Dnr TABLE OF CONTENS About this guide 4 Abbreviations and terms 5 Introduction 7 Stock exchange information 8 Regulated market 8 HOME MEMBER STATE 8 Stock exchange information data base 9 Sanctions 11 Notification of major shareholdings 12 Notification of major shareholdings 12 Passive notification of major shareholding 13 Deadlines and notifications 14 Sanctions 14 Insider register (NOTE! Valid until July 2016) 16 The company s notification of persons holding insider positions 16 Notification obligation of persons holding an insider position 18 How to provide notification 20 Deadlines 22 Closed period 23 Sanctions 24 Logbook (NOTE! Valid until July 2016) 25 List of persons with insider information 25 Sanctions 27 Accounting supervision 28 Content, organization and purpose of the supervisor 28 Sanctions 28 Report of payments to authorities 30 ESMAs guidelines about alternative performance measures 31 Prospectuses and public takeover bids 32 Prospectuses 32 2

3 Public takeover bids 32 Sanctions 33 Prospectuses 34 Public takeover bids 34 Sanctions 35 Buy-backs and stabilisation trading (NOTE! Valid until July 2016) 37 Acquisition and disposal of own shares 37 Stabilisation 38 Sanctions 39 3

4 About this guide This guide is primarily intended as support for people working at listed companies and their advisors. The purpose of this guide is to provide information about applicable provisions and clarify Finansinspektionen s (FI) working methods and considerations when processing matters relating to listed companies. This guide is also intended to contribute to an efficient processing and consistent application of provisions. Note that matters relating to prospectuses are only addressed at a general level in this guide. This guide has no legal effect and FI s comments regarding interpretation and application of applicable rules of law shall therefore not be given normative significance. This means, for instance, that FI s assessment in an individual case can deviate from the guide, and that the guide is not a binding advance ruling of FI s decision in the processing of an individual matter. The guide will be updated regularly and can be found on FI s website, Questions about the content of the guide can be addressed to Market Monitoring, , listedcompanies@fi.se 4

5 Abbreviations and terms ABL The Companies Act (2005:551) AMN The Swedish Securities Council AnmL Reporting Obligations for Certain Holdings of Financial Instruments Act (2000:1087) EEA European Economic Area ESMA The European Securities and Markets Authority FFFS Finansinspektionen s Regulatory Code FI Finansinspektionen IFRS International Financial Reporting Standards Insider information Information of a precise nature regarding a circumstance that has not been disclosed or is not generally known and that is intended to materially affect the price of financial instruments. See also Article 1.2 of implementing directive 2003/124/EC. LHF Financial Instruments Trading Act (1991:980) Listed company Company whose securities are admitted to trading on a regulated market LUA Stock Market (Takeover Bids) Act (2006:451) LV Securities Market Act (2007:528) MAD Market Abuse Directive Directive 2003/6/EC of the European Parliament and of the Council regarding insider dealing and market manipulation (will be replaced in July 2016 by 2014/57/EU) MiFID Directive of the European Parliament and of the Council on markets in financial instruments and on the amending Council Directives 85/611/EEC and 93/6/EEC, and the Directive (2000/12/EC) of the European Parliament and of the Council and repealing Council Directive 93/22/EEC (Legislation to conform to new MiFID is expected to enter into force in January 2017). MmL Financial Instruments Trading (Market Abuse Penalties) Act (2005:377) Prospectus Directive Directive 2010/73/EU of the European Parliament and of the Council amending 2003/71/EC from 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/43/EC 5

6 Prospectus Regulation Commission Regulation (EC) no. 809/204 of 29 April 2004 regarding implementing Directive 2003/71/EC of the European Parliament and of the Council as regards information contained in prospectuses as well as the format, incorporation by reference and publication of such prospectuses and dissemination of advertisements Takeover Directive Directive 2004/25/EC of the European Parliament and of the Council on takeover bids Transparency Directive Directive 2004/109/EC of the European Parliament and of the Council on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC. Last amended through Directive 2013/50/EU. ÅRL Annual Accounts Act (1995:1554) 6

7 Introduction In this guide, the term listed company denotes a company whose securities are admitted to trading on a regulated market in Sweden. AnmL defines such companies as stock market companies. However, FI chooses the term listed company because parts of the guide can be of interest for some foreign companies. Today, there are two regulated markets in Sweden for trading in equities, one of which is run by Nasdaq Stockholm AB and the other by Nordic Growth Market NGM AB. This document does not currently address companies whose securities are admitted to trading on MTF s (First North, Nordic MTF and Aktietorget) or trading organised by investment firms. However, as EU s new Market Abuse Regulation (596/2014/EU) and Market Abuse Directive (2014/57/EU) come into effect on 3 July 2016, certain parts of this document (for example those related to insider trading) will be updated in the near future in order to also incorporate issuers whose financial instruments are admitted to trading on MTFs, as well as participants in the market for emission allowances. Through the EU s action plan for financial services, an array of new provisions relating to listed companies has been introduced in Sweden. First there was the requirement for listed companies to prepare their consolidated accounts according to IFRS. Then came the requirement of disclosure of insider information in MAD and requirements on the preparation and content of prospectuses in the Prospectus Directive. Later on came the Takeover Directive, which regulates takeovers, the Transparency Directive with provisions for periodic financial information and notifications of major shareholdings, and MiFID, which includes provisions regarding the terms for admission to trading on a regulated market. On the whole where Sweden is concerned, this means that many of the provisions that had existed for a long time in the framework of selfregulation have been confirmed by law. The provisions e.g. aim to counteract market abuse and ensure that investors promptly have access to relevant and clear information in order to assess the price of shares and other financial instruments. Confidence in the securities markets is upheld through high standards of market transparency. 7

8 Stock exchange information Regulated market A stock exchange is a firm that has received authorisation from FI to operate one or more regulated markets for trade in securities. The term "regulated market" is defined in Chapter 1, section 5, line 20 of LV. There are currently two stock exchanges in Sweden with the possibility of admitting shares to trading: Nasdaq OMX Stockholm AB and Nordic Growth Market NGM AB. Foreign stock exchanges in the EEA are also covered by the term regulated market, but stock exchanges outside of the EEA are not. By way of introduction, it should be noted that it is the stock exchange that decides if a company s securities are to be admitted to trading on a regulated market. FI does not process the matter of admission to trading. A listed company enters an agreement with the stock exchange, and in doing so not only becomes subject to public provisions in legislation and regulations, but also to the stock exchange s provisions. Trading on a regulated market The requirements placed on companies whose shares are traded on a regulated market are stricter than those on companies whose shares are traded on another marketplace. The requirements placed on companies whose shares are traded on regulated markets include the following: the consolidated accounts must be prepared according to IFRS, price-sensitive information and periodic financial information must be published, changes in the number of shares or votes must be disclosed on the last trading day of the month, the company must give notification of persons holding an insider position in the company, and if the insider position of such persons changes or cease (this obligation ceases to apply as of July 2016 when the new Market Abuse Regulation goes into effect). HOME MEMBER STATE A listed company that has its registered office in Sweden and whose securities are admitted to trading on a regulated market as a rule has Sweden as its home Member State. If the company has securities admitted to trading on one or several foreign regulated markets, the company is also subject to the provisions applicable in those countries, which is known as the host Member State. A country may prescribe stricter provisions than those prescribed by the Transparency Directive for companies who have the country as their home Member State, but not for companies who have the country as their host 8

9 Member State. The provisions that affect listed companies primarily apply to the ongoing disclosure obligation, the periodic financial information and also insider registration and provisions regarding notifications of major shareholdings. Listed companies which do not have their registered office in Sweden can also have Sweden as their home member state. The provisions about companies home and host Member States are set forth in Chapter 1, sections 7 10 of LV (observe the amended wording as of 1 February 2016 in sections 8-9 and the addition of two new sections, 9a and 9b). If a company may choose a home Member State, it shall disclose its choice and report its home Member State to Finansinspektionen. There are also home Member State provisions in Chapter 2, sections of LHF. These provisions become relevant in specific situations; for example when establishing which country is authorised to process an application for approval of a prospectus. One of the intentions behind the amended Transparency Directive (2013/50/EU) has been to integrate more closely the separate wordings about home Member States in LV and LHF. Stock exchange information data base Listed companies are obligated to disclose information regarding their operations and securities which is of significance for assessment of the price of the securities. The information must also be submitted to FI, where it is stored and made available in FI s stock exchange information database. What shall be disclosed? Examples of information that must be disclosed include: periodic financial information (Chapter 16 of LV): annual and consolidated reports semi-annual reports report of payments to administrative authorities other price-sensitive information (Chapter 15, section 6 of LV) Further requirements on the disclosure of information can ensue from the provisions established by the stock exchanges which listed companies undertake to comply with in conjunction with their securities being admitted to trading. How shall the information be disclosed? The information must be disclosed in a fast and non-discriminatory manner so that the information reaches the general public in Sweden and other EEA countries as simultaneously as possible. This is specified in Chapter 17, section 2 of LV and Chapter 10, section 10 of FFFS 2007:17. Legislation in the area presupposes that different information channels or media are used to disseminate information in the home Member State and in the EEA alike. To this end, national newspapers and international 9

10 newspapers, specialist periodicals, news agencies and financial websites can be used. There is no exact definition of which newspapers, magazines, websites and so on that are to be used. Relevant media can change over time. The requirement on the issuer should be to use different channels to disseminate the information in the home Member State and in the EEA so that the information is properly disseminated among investors. Dissemination should not be deemed adequate if only one newspaper or website is used; instead, there should be a mix of different channels. Listed companies shall also submit information to the media for publishing in a secure manner, so that there is no risk of the information being distorted or of unauthorized parties accessing the information. The information shall be submitted as unedited and complete text and, when applicable, it shall be specified that the disclosure of the information is such that is incumbent on the listed company according to LV and LHF. It is not permitted to make a reference to LV and LHF if the disclosure is occurring for a reason other than the application of these provisions. Besides disclosing the information through dissemination to the general public, the information shall be available on the listed company s website. Information storage at FI Published information shall at the same time be submitted to FI for storage and to be available on FI s website. According to Chapter 10, section 16 of FFFS 2007:17, the information shall be submitted to FI electronically. It is recommended to include a descriptive heading to make the information clearer. Listed companies often use news distribution agencies to publish information. These distribution agencies can also undertake to submit the published information to FI. However, the listed company always bears the ultimate responsibility for ensuring that the information is received by FI. Further instructions about the practical procedure of submitting information to FI can be found at FI s website. The storage of information at FI guarantees the fulfilment of the obligation set forth in the Transparency Directive to keep the information available to the public for least 10 years. Language Chapter 10, section 13 of FFFS 2007:17 provide provisions regarding the language of the information. If the company s securities are admitted to trading only in Sweden, and the company has Sweden as its home Member State, the information shall normally be published in Swedish. If the company s securities are admitted to trading in Sweden and in one or several other EEA countries, the information shall be published either in Swedish, English or a language accepted in the other country(ies). Companies whose securities are admitted to trading in Sweden but have another EEA country as their home Member State shall publish the information in Swedish or English. Following an application, FI can grant exemptions from the language provisions. Notifications of exemptions have thus far been issued for companies wishing to publish prospectuses and ongoing information in English. Such cases have been a matter of foreign companies whose 10

11 shareholder composition is such that they may be expected to comprehend the information in English. Sanctions The stock exchanges are responsible for monitoring listed companies to ensure that they comply with the applicable provisions regarding the disclosure of periodic financial information and other price-sensitive information, and FI in turn performs monitoring of the stock exchanges to ensure that they fulfil this task. FI may request corrections, subject to a fine, from listed companies if information is missing or erroneous in the stock exchange information database, even if the listed company has appointed a news distribution agency to fulfil its obligations. 11

12 Notification of major shareholdings Notification of major shareholdings A notification of major shareholdings denotes the disclosure of changes in major holdings of shares in listed companies when the holding has reached or passed certain threshold values. The obligation to provide a notification of major shareholdings applies to both natural and legal persons. The notification of major shareholdings shall be sent to both the listed company and FI. FI then publishes the notification of major shareholdings. The notifications of major shareholdings are subsequently stored in FI s stock exchange information database and are available there. The purpose of the provisions is to provide high standards of transparency of the ownership structure of the listed company, thus increasing the public confidence in the securities market. The provisions regarding notification of major shareholdings are set out in Chapter 4 of LHF. The Act is supplemented by Chapter 12 of FFFS 2007:17, which provides additional information related to the content of a notification of major shareholding. Threshold values Chapter 4, section 5 of LHF specifies that notification shall be given of a change in a holding if the change results in reaching, exceeding or falling below any of the thresholds 5, 10, 15, 20, 25, 30, 50, 66 2/3 and 90 per cent of the percentage of all shares or voting rights in the listed company. Note that the provisions apply to all shares in the listed company. This means that all types of shares, if at least one of them is admitted to trading on a regulated market, are to be included. The listed company s repurchased shares are also to be included. Holdings subject to major shareholding notification According to the main rule, a person s shareholding comprises the shares held by the person in his or her own name for his or her own account on the one hand and on behalf of a third party on the other (Chapter 4, section 4 of LHF). However, there are several provisions in Chapter 4 of LHF that specify situations in which shares shall be included in a person s holding even though they are formally held by another party. A change in a person s holding can thus trigger an obligation to submit a notification of major shareholdings for another person. Notification of major shareholdings regarding financial instruments other than shares The provisions regarding notifications of major shareholdings are not only applied to shareholdings, but also to holdings of depository receipts that 12

13 carry voting rights for the referenced shares, financial instruments that carry the right to acquire shares already issued and other remaining derivatives that refer to the same underlying shares and have a similar economic effect as holding derivatives in the first category, whether they entail a right to a physical or cash settlement. The instruments covered by the obligation to submit a notification of major shareholdings are specified in Chapter 4, section 2 of LHF. Notification of major shareholdings in the acquisition and disposal of own shares A listed company that acquires or disposes of its own shares and thus reaches, exceeds or falls below any of the limits specified in Chapter 4, section 5 of LHF shall disclose this as soon as possible and at the latest by 12:00 three trading days after the acquisition or transfer. 1 No notification of major shareholdings shall be submitted to FI. Disclosure shall instead occur in the usual manner through a press release published on the website of the listed company, and the press release shall also be submitted to FI s stock exchange information database. See also under Buy-backs and stabilisation trading with regard to reporting to the stock exchange. Note that when applying the provisions regarding the obligation to notify major shareholdings in Chapter 4, section 3 and 9 LHF as of 1 February 2016 an exemption is made for shares that are acquired within a buy-back programme and stabilisation trading for financial instruments. The procedure is required to follow the conditions set out in the implementation Directive (EC) number 2273/2003 of MAD concerning exemptions for buy-back programmes and stabilisation trading. Another requirement is that the voting rights for these shares may not be used or used in any way that affects the governance of the issuer. Passive notification of major shareholding Obligation of the listed company According to Chapter 4, section 9, first paragraph of LHF, a listed company is obliged to disclose corporate actions that have resulted in a change in the number of shares or votes. Disclosure shall occur on the last trading day of the month. In other words, it does not suffice to disclose the change directly. Publication of the information shall occur in the same way as described in the section Stock exchange information. Obligation of the shareholder A shareholder who in a share issue, for example, chooses not to subscribe for new shares and whose shareholding is thus diluted, can fall below a threshold. The obligation to submit a notification of major shareholdings when the holding has passed a threshold due to a similar corporate action occurs 1 However, according to ABL it is not possible for the company to acquire more than 10 per cent of its own shares. 13

14 only after the listed company has disclosed the change in the total number of shares or votes on the last trading day of the month. The shareholder thus only needs to verify once a month if there has been a change in the number of shares in the listed company. Deadlines and notifications The deadlines for notifications of major shareholdings are short. Information regarding acquisitions or disposals of major shareholdings are typically of great interest to the market and should thus be disseminated as quickly as possible. According to Chapter 4, section 10 of LHF, a notification of major shareholdings must be received by both the listed company and FI as soon as possible, but no later than three trading days following the emergence of the obligation to submit the notification of major shareholdings. If the transaction is carried out on a regulated market, the notification shall be received at the latest three trading days following the business day, and if the transaction has been carried out outside a regulated market, at the latest three trading days after the agreement date. If the obligation to provide notification of a major shareholding emerges through a change in the number of shares in the listed company, the notification must be received at the latest three trading days after the listed company disclosed the change in the total number of shares or votes on the last trading day of the month. FI publishes the information in a notification of major shareholdings. This shall occur at the latest by on the trading day after the day when the notification was received by FI. The party submitting the notification of major shareholdings is responsible for the accuracy of its content and for the notification being submitted to FI on time. It is not incumbent on FI to verify the content of a notification and FI is not liable in the event of a notification of major shareholdings being erroneous despite FI publishing the information. The information to be contained in a notification is specified in Chapter 12, section 10 of FFFS 2007:17. The notifications of major shareholdings are stored after publication and are searchable in the stock exchange information database on FI s website. There is also information here about how to provide a notification of major shareholdings directly on FI s website using e-identification 2. Sanctions FI shall decide to charge an administrative fine to a party that does not fulfil its obligations according to Chapter 4, sections 3 or 9, first and second paragraph, within the prescribed time. The fine shall be a minimum of SEK 15,000. The maximum fine depends on several circumstances and also takes into consideration whether the 2 Note that a notification of major shareholdings made using e-identification on FI s website is not automatically sent to the listed company; a separate notification must be sent. 14

15 case concerns a natural or legal person. More details about the factors considered when establishing the maximum fine can be found in Chapter 6, section 3b of LHF. FI may wholly or partly waive the fine if the breach is negligible, excusable or if there are other special reasons. 15

16 Insider register (NOTE! Valid until July 2016) Public confidence is a cornerstone for the efficient functioning of the stock market. Persons holding an insider position at Swedish listed companies shall therefore disclose their shareholdings in the listed company and changes in these holdings by notification of such to FI s insider register. Listed companies shall notify FI of the persons who hold an insider position in the listed company 3. Persons holding an insider position are specified in section 3 of AnmL. 4 The insider register has three main purposes: to counteract abuse of insider information to serve as a basis for FI s supervision operations with regard to market abuse and insider trading, and to provide the stock market and mass media with information about the securities transactions of persons holding an insider position and of those closely related thereto. The register is public and most information is searchable and can be downloaded from FI s website. It is important to note that, at the same time, a shareholder may have the obligation of both providing notification of a change in the holding to the insider register and submitting a notification of major shareholdings. In such cases, two notifications must occur, even though FI is the recipient of both notifications. Provisions regarding the insider register can be found in AnmL. Further information about notification obligation to the insider register, questions and answers and examples of how to complete a notification is also available at FI s website. The company s notification of persons holding insider positions Swedish listed companies that have issued shares and other share-related financial instruments that are subject to trading on a regulated market in 3 Excepting persons whose insider position is based on large holdings. See more about this under the heading The company's notification of persons holding insider positions. 4 Note the difference between the terms person holding an insider position and insider. A person holding an insider position is designated as a person who, through his or her position or assignment at the listed company, is deemed to have access to insider information on a regular basis. The term insider refers to a person who, on a certain occasion, has insider information. This person does not need to have any formal association with the listed company, but could be anybody. 16

17 Sweden or in another EEA state shall notify FI of the persons holding an insider position in the company. Foreign limited liability companies shall also notify FI of the persons who hold an insider position in the company if Sweden is the company s home Member State. 5 The notification from the listed company, or from the listed company s parent company if the notification relates to people at the parent company, shall be submitted to FI at the latest 14 calendar days from the day the insider position arose or was changed. Persons holding an insider position are then in turn obliged to report their shareholding, and subsequently report changes in the holding in the listed company on an ongoing basis. Note that a person holding an insider position can conceivably have more than one position that gives rise to the insider position, for example a Managing Director who is also a member of the board of directors, and in such cases the listed company shall report all types of insider positions held by the person. According to section 3 of AnmL, the following natural persons are deemed to be likely to regularly access insider information regarding the listed company, and hence hold an insider position: 1. a member or alternate member of the company s or its parent company s board of directors, 2. a managing director or deputy managing director of the company or its parent company, 3. an auditor or deputy auditor of the company or its parent company, 4. a general partner in a partnership which is the company s parent company, though not a limited partner, 5. a holder of an other senior executive position or a qualified assignment of a permanent nature for the company or its parent company, if the position or assignment can normally be assumed to result in access to non-public information about circumstances that may affect the price of the shares in the company, 6. executives or service providers according to 1 3 above or an other senior executive at a subsidiary, if such a person normally can be assumed to have access to non-public information about circumstances that may affect the price of the shares in the company, 7. a person owning shares in the company that correspond to at least ten per cent of the share capital or the voting rights for all shares or votes in the company, or owning shares of this scope together with a natural or legal person who is closely related to the shareholder in the manner set out in section 5, first paragraph, and 8. a person whose closely related parties in accordance with section 5, first paragraph, line 4 or 5 owns shares in the company that correspond to at least ten per cent of the share capital or voting rights for all shares in the company. No special assessment is required for persons included in line 1 3 above. In other words, when they take on the position or assignment, they shall be reported to the insider register by the listed company. The notifying 5 Chapter 2, sections 37 9 of LHF specify when Sweden is the home Member State. 17

18 company must make an assessment in individual cases regarding which persons hold an insider position according to line 5 and 6 above. At the request of the listed company, or its parent company, FI can assess whether an executive or consultant shall be deemed to hold such an insider position. A fee is charged for such an assessment. However, it can be generally mentioned that the following terms need to be met for there to be an insider position according to line 5 or 6: the position or assignment can be assumed to involve access to insider information, not just incidentally but on a more regular basis the position or assignment must be managerial in nature 6 or of a qualified type 7 the assignment shall be permanent in nature Persons holding an insider position as a major holder according to line 7 or 8 shall not be reported by the company; it is the person holding the insider position who is responsible for providing notification of the insider position. Certain difficulties can arise in assessing whether there is an insider position as a major holder when it comes to determining whether a legal person shall be deemed closely related or not to the person holding the insider position; see more about this under Notification obligation of persons holding an insider position. To register as a major holder, see more under How to provide notification. Notification about insider position The notifying company is also responsible for notifying certain persons holding an insider position at the company about their insider position in accordance with sections 7 and 8 of AnmL. The persons that shall be notified are those who hold an insider position according to line 5 or 6. Notification shall occur in conjunction with the company notifying FI of persons holding insider positions, i.e. at the latest 14 calendar days after the insider position arose. Forms are available at FI s website. The form Company report notification of insider position (501A) can be used for the company s notification to people with an insider position according to line 5 or 6. Notification obligation of persons holding an insider position Persons holding an insider position shall notify FI of their own and closely related parties holdings of shares and other financial instruments subject to a notification obligation. Notification shall also be given of changes in the holding. Notification of a holding shall be received at the latest five 6 This means, for example, in the case of the secretary to the Managing Director of the listed company, that the former shall not be deemed to hold an insider position and should hence not be reported to the insider register. 7 Qualified type denotes assignments that are normally dealt with by the board of directors or the level immediately under, or in assistance to the executive management or at the corresponding level in the company's organisation. 18

19 business days after the insider position arose, or at the latest five business days after the date of notification if the person holding the insider position belongs to the group described in line 5 or 6 in The company s notification of persons holding insider positions. According to section 5 of AnmL, the following persons are considered to be closely related: 1. spouse or cohabitant of the notifier, 2. minor children who are in the custody of the notifier, 3. other closely related parties to the notifier than those set out in 1 and 2, if they have shared a household with him or her for at least one year, 4. a legal person over whose operations the notifier has a material influence and in which the notifier or a person set out in 1-3, or several of these persons together, hold - shares totalling ten per cent or more of the share capital or of the participations, or - an economic interest consisting of the right to receive ten per cent or more of the return, or - voting rights totalling ten per cent or more of the voting rights for all shares or of the voting rights of the highest decision-making body, 5. a legal person over whose operations the notifier has a material influence and in which the notifier or a person set out in 1-4, or several of these persons together, hold shares, economic interests or voting rights as set out in 4. For a legal person to be deemed to be closely related to the person holding the insider position, both the requirement regarding material influence and the requirement regarding shares, economic interest or voting rights must be met. Material influence denotes that the influence over the operations is so great that the financial result of the legal person is dependent on the action of the person holding the insider position. This requirement is deemed to be met if the person holding the insider position is a member of the board of directors, has an executive position or is the dominant owner in the legal person. Line 4 and 5 above also relate to foreign legal persons. The financial instruments subject to notification A person holding an insider position shall register his or her shareholdings and changes in the holdings to the insider register. Section 2 of AnmL stipulates that other financial instruments are also included. The main rule is that notification shall be given for all holdings, including any holdings of closely related parties, and changes therein. There are, however, a number of exemptions for financial instruments and types of transaction that do not require notification. 19

20 Examples of exemptions are: 1. Holdings in an endowment insurance provided that the insurance company is not a closely related legal person to the person holding the insider position. 2. Allotment of subscription rights in a preferential share issue. Note that if more subscription rights are purchased, or the allotted subscription rights are sold, notification shall be made thereof. 3. Allotment of redemption rights. 4. Allotment of employee stock options, provided that the options were received gratuitously, have a long maturity, are only intended for the employees of the company, are linked to employment and cannot be transferred. When the employee stock options are exercised and shares are received, the increase in the number of shares shall be reported. Please specify in the notification that the shares were acquired though exercising employee stock options. 5. Transactions between closely related parties. 6. Bonus issue, split or reverse split. 7. Interim share conversion (paid subscription shares). Although there is no notification obligation for line 5 7, FI wishes that these changes in holdings nevertheless are reported so that the register is as up-to-date and as correct as possible. How to provide notification There are three ways to notify the insider register: 1. Directly via FI s website using e-identification 2. Direct notification through Euroclear Sweden AB 3. Written notification FI primarily advocates notifications using e-identification or direct notification. This reduces the processing time and minimises the risk of erroneous notifications. Notification using e-identification The simplest way for persons holding an insider position to provide notification of a change in their and closely related parties holdings is to do so directly on FI s website using e-identification. The following changes in the holding of shares and American depository receipts (ADR) can be registered on FI s website: purchases and sales share loans bonus issues splits reverse splits gifts Other financial instruments must be registered in writing. 20

21 Through the online reporting service, persons holding an insider position are also able to enter the website and gain an overview of all transactions and changes (including other financial instruments) that relate to the person holding an insider position or his or her closely related parties. Persons holding an insider position who use FI s website for their notifications can also choose to have a confirmation sent to them by directly after the change in holding is made. Direct notification through Euroclear Sweden AB Persons holding an insider position can apply to have information regarding shareholdings automatically transferred from Euroclear Sweden to FI, provided that the following terms are met: all shares held by the person holding the insider position and closely related parties that are to be included in the direct notification must be held through an owner-registered security account at Euroclear Sweden persons holding an insider position and any closely related natural or legal persons to be included in the direct notification must have a Swedish personal ID number and a corporate ID number, respectively neither the shares of the person holding the insider position nor those of the closely related party may be jointly owned At FI s website, further information about direct notification is available, as well as form 505 which can be used for the application. Direct notification only applies to shares; all other financial instruments subject to a notification obligation must be reported by means of written notification. An insider report holdings at the time the insider position arose (initial notification) must be sent to FI within the prescribed time, even if an application for direct notification has been made. Written notification Wherever possible, FI advocates the notification alternatives described above over written notification. In certain situations, however, a written notification is required, for instance: Company report persons holding insider positions (501) Company report notification of insider position (501A) Insider report holdings at the time the insider position arose (502) 8 Insider report change in holdings (503): 9 Used primarily to notify of changes in holdings of financial instruments other than 8 If there is an insider position as a major holder, the date is specified of when the major holding was reached, i.e. when at least 10 per cent of the shares or votes in the listed company were received, and the box Major holder is checked. 21

22 shares. Changes in shareholdings should primarily be registered using FI s web-based reporting tool More forms are available at FI s website. Each individual form contains further instructions about how to fill it in. Deadlines The following is a summary of the deadlines regarding reporting to the insider register: Type of notification: Company report persons holding insider positions Company report notification of insider position 10 Insider report holdings at the time the insider position arose (initial notification) Insider report change in holdings Insider report change in closely related party s holdings Insider report insider position due to major shareholdings Notification to be received Within 14 calendar days Within 14 calendar days Within 5 calendar days Within 5 calendar days Within 5 business days from the notifier gaining knowledge about the change having occurred Within 5 business days from the acquisition of at least 10 per cent of the shares or votes Performed by The listed company The listed company Person holding the insider position Person holding the insider position Person holding the insider position Person holding the insider position 9 If the change has led to all holdings in the listed company of the person holding the insider position and of any closely related parties collectively reaching or exceeding 10 per cent of the total number of shares or votes in the listed company, the box Major holder shall be checked. 10 Note that this notification does not need to be received by FI within a prescribed time, but FI nevertheless recommends sending it in. The deadline relates to the notification itself to the person holding the insider position by the listed company. 22

23 Closed period AnmL contains provisions regarding limitations on trading in financial instruments for certain senior executives and for the listed company s trading in its own shares. The limitations are stipulated by section 15 of AnmL and consist of a general ban on trading 30 days before the publishing of ordinary interim reports, including the day of publishing. Closed period before ordinary interim reports The general ban on trading applies to the following persons holding an insider position: a member or deputy member of the listed company s or its parent company s board of directors a managing director or deputy managing director of the listed company or its parent company an auditor or deputy auditor of the listed company or its parent company The ban also applies to parties closely related to these persons holding insider positions and listed companies that trade in their own shares. Investment firms that buy shares or other financial instruments on behalf of customers or when the sale is statutorily required are however not included. The trading ban means that persons holding an insider position mentioned above and their closely related parties, as well as the listed company itself, may not trade in shares or share-related financial instruments in the listed company 30 days prior to publishing ordinary interim reports, including the day of publishing. Section 16 of AnmL specifies certain exemptions from the ban, namely in the event of disposal according to the terms of a public bid to purchase shares or of the disposal of allocated issue rights, redemption rights and other similar rights such as conversion rights. As a rule, the following situations are not covered by the trading ban: The trading ban does not include the listed companies decisions about and implementation of new share issues, or persons holding insider positions exercising already allocated issue rights or redemption rights The trading ban does not include persons who exercise an option at the expiration date. The trading ban does not include gratuitous transfers such as gifts or acquisitions according to family law such as separation of property and inheritance. If exceptional circumstances exist, FI may, following application, grant further exemptions from the trading ban. 23

24 Sanctions FI shall decide to charge a special fee in the event of failure to comply with the provisions of AnmL. If a person holding an insider position has not reported holdings or changes in holdings within five business days, or if the information in the notification has been inaccurate or misleading, a fee equalling 10 per cent of the consideration is charged. The fee shall be a minimum of SEK 15,000 and a maximum of SEK 350,000. If payment is not made, there is a fee of SEK 15,000. If a listed company or a listed company s parent company has not reported a person holding an insider position or a change in the insider position within 14 calendar days, a fee of SEK 15,000 is charged. The same amount, SEK 15,000, applies if the listed company has not submitted a notification within the prescribed time. In the event of breach of the trading ban, the fee is 10 per cent of the consideration, although a minimum of SEK 15,000 and a maximum of SEK 350,000. If the breach is negligible or excusable, or if there are other special reasons, the fee can be waived wholly or partially. 24

25 Logbook (NOTE! Valid until July 2016) List of persons with insider information Listed companies shall keep a list of natural persons who, due to their employment or assignment, work for the listed company and have access to insider information concerning the company. The list is usually called a logbook. The logbook is not to be confused with the insider register. The insider register is a public register of persons who, due to their position at a listed company, can normally be assumed to have access to insider information on an ongoing basis. However, the logbook is only kept by the listed company itself. If there is no insider information, there is no obligation to actively keep a logbook. Neither is there an obligation to submit information about the logbook to FI on an ongoing basis. However, FI has the right to request to view the logbook at any time. It shall be possible to send the logbook to FI immediately, and it must therefore be continually updated. The provisions about the logbook derive from MAD and are set out in section 10a of AnmL. There are also provisions about the logbook in Article 5 in an implementing directive 11 for MAD. The purpose of the legislation is, on the one hand, to facilitate investigations into prohibited insider trading, and on the other hand to prevent persons with insider information from using the information for their own gain or the gain of another. The logbook also constitutes an instrument for listed companies to maintain control of the people holding specific insider information. According to section 10b of AnmL, FI has the right to issue regulations regarding what a logbook shall contain and about notification to the persons included on the list. FI has not yet exercised this right. Below, FI provides some guidance about the rules of law regarding the logbook. This guide does not have the character of regulations or general guidelines. It is the listed company s obligation to specify the persons who, due to their employment or assignment, work for the listed company and receive insider information. External parties that are involved in processes that prescribe establishing a logbook may keep their own logbooks of those to whom they disseminate information. These subordinate logbooks shall always be available to the principal and included in the main logbook whenever the listed company so wishes. If FI requests the logbook from the listed company, it shall be submitted complete with subordinate logbooks. 11 Directive 2004/72/EC Accepted market practices, the definition of inside information in relation to derivatives on commodities, etc. 25

26 A logbook shall be kept for each action that constitutes insider information. This means that a listed company can keep several logbooks in parallel. For example, a listed company can keep a logbook regarding an interim report, while at the same time keeping a logbook regarding acquisitions or major orders, etc. There is no requirement on the structure of a logbook. It may or may not be kept in a computer-assisted manner. However, it is important to carefully assess security issues. Unauthorised persons shall not be able to access the list. For example, it is important to consider who in practice can access the document and how the access can be limited. The logbook shall be saved for at least five years after it was drawn up or after the date when it was last updated. Content of the logbook The logbook shall contain a list of persons who at any given time have insider information. This means, for example, that if a person has knowledge about a specific event, this person shall be entered on the list regardless of whether the person has been reported to FI s insider register or not. To make the content clearer, it can be presented in a list of bullet points, here with FI s comments: Identity of the person entered on the list. Identification requires more information than the name and surname, such as address and position or personal identification number. Information regarding who submitted the information to the person to be entered in the logbook. Reason for why the person has been entered into the logbook. The role of each executive in the ongoing process shall be specified, as well as the specific insider information held by the person. Date and time of when the person in question received the information. Information about updating of the logbook. Updating shall occur when the reason for a person being entered on the list changes, when a new person has been entered on the list, or when a person already entered on the list no longer has access to insider information. The list shall be updated as soon as circumstances change. In FI s opinion, this means that updating shall take place as soon as possible and at the latest on the same day as the change arises. The date of the update shall be specified. Notification of the implications of being entered in the logbook The listed company shall notify in writing the person entered into the logbook about what this implies, and this notification shall be done 26