New securities law rules on the duty of notification, financial reporting and publication of sanctions enter into force
As a consequence of the adopted amendments to the Danish Securities Trading, etc Act, which entered into force on 26 November 2015, revised versions of the Danish Executive Order on the Duty of Notification in respect of Major Shareholders (Danish: Storaktionærbekendtgørelsen) and the Danish Executive Order on Issuers' Duty to Provide Information (Danish: bekendtgørelsen om udstederes oplysningsforpligtelser) have been published. Nasdaq Copenhagen's rules for issuers of quoted shares have also been amended as a consequence of the amendments to the Danish Securities Trading, etc Act.
Amended rules on major shareholders' duty of notification
On 26 November 2015 a number of amendments to the Danish Securities Trading, etc Act entered into force and the consequences are:
- In future the duty of notification will include all types of financial instruments (derivatives) that are either an option to acquire shares already issued by the company in question or derive their value from shares that have already been issued.
- The rules on the duty of notification for major shareholders holding shares in an issuer whose shares are admitted to trading in Denmark but whose home member state is not Denmark has been repealed.
- A simplification of the rules on notification of issuers' holdings of own shares.
- The Danish Financial Supervisory Authority will be able to sanction gross or repeated violations of the duty of notification by suspending a shareholder's voting rights.
- Shares acquired for stabilisation purposes in accordance with Commission Regulation (EC) No 2273/2003 are no longer to be notified.
- A new standard form will be introduced that is to be used when making notifications to the Danish Financial Supervisory Authority.
According to the new rules, the duty of notification must be observed in three situations (the three basket principle):
- If the major shareholder's direct and indirect shareholding or the voting rights in a company must be notified;
- If the major shareholder's holding of equity financial instruments must be notified; or
- If the major shareholder's total holdings under 1) and 2) must be notified.
Amended rules for financial reporting
The amendments to the Danish Securities Trading, etc Act also entail that the rules for listed companies' financial reporting will be relaxed.
- The requirement as to publication of either interim financial statements or quarterly reports is abolished.
- The issuer's deadline for publishing half-year reports under the Danish Securities Trading, etc Act has been extended from two months to three months from after the expiry of the six-month period.
- The issuer's annual reports and half-year reports are now to be made available to the public for minimum ten years.
As a consequence, Nasdaq Copenhagen has made several amendments to the rules applying to the issuers of shares so that the rules on publication of interim management statements/quarterly reports are changed in accordance with the amendments to the Danish Securities Trading, etc Act. This implies that the requirement as to such statements/reports to be prepared is abolished in Nasdaq Copenhagen's rules for the issuers of shares.
It will still be possible for the issuers of shares to continue to publish, on a voluntary basis, interim management statements or quarterly reports. If they choose to do so they must be published in the same way as they are currently and the deadlines applying today will also apply in future.
It should also be noted that Nasdaq Copenhagen maintains the existing deadline for publishing half- year reports within two months from the expiry of the six-month period.
According to the amended rules for issuers, not only annual reports and half-year interim reports but all preliminary announcements of financial statements must be made available on the issuers' websites for a period of minimum ten years.
Further, section 1.1.3 of the Danish Corporate Governance recommendations still includes a recommendation that a company admitted to trading in a regulated market place publish quarterly interim reports.
Stock market announcements in EnglishAs something new the issuers may choose to publish company announcements only in English. Such a decision must be adopted by the general meeting by a simple majority of votes. Alternatively, the general meeting may also authorise the board of directors to adopt the decision. This change is due to a proposal made by the business committee for simpler rules (Danish: Virksomhedsforum for enklere regler) appointed by the Danish Government.
Abolishment of the duty of notification when new loans and any guarantees are granted
The requirement that an issuer must publish new loans and any guarantees that are granted or any security provided in that context is repealed. The issuer will still have to publish a company announcement to this effect if such granting is deemed to be inside information.
The significance of the new rules
The new rules mean that listed companies should review and update their internal securities law rules and internal procedures for the purpose of ensuring compliance with the new rules.
The review and updating should be completed when the rules enter into force on 26 November 2015.