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29 May 2007
On March 15 2007 the government presented Government Bill 2006/07:65 on the transparency requirements for listed companies, among other things. The bill implements the EU Transparency Directive (2004/109/EC).
This update reviews the rules on information about major holdings in listed companies. The relevant provisions are set forth in Articles 9 to 15 of the directive, which is proposed to be implemented in a new Chapter 4 of the Financial Instruments Trading Act 1991.
In 1983 the Industry and Commerce Stock Exchange Committee issued rules on information about major holdings in listed companies. The rules were based on the corresponding regulations in the United Kingdom. The rules have since been revised on a number of occasions and the current set of rules was published in 1994. The current rules are part of the listing contract entered into by the Stockholm Stock Exchange and companies whose shares are listed on the exchange.
In addition to the committee's rules, a parallel set of rules is set forth in the current Chapter 4 of the act, which implements the minimum rules established by EU Directive 88/627/EEC on information to be published when a major holding in a listed company is acquired or disposed of. The rules set forth in the act were introduced in 1993.
When the committee reviewed its rules in 1994, it found that "the existence of two parallel systems of rules applying to the same phenomenon is per se impractical from the stock market point of view".(1) However, the committee considered that the provisions of the act would apply exclusively on relatively few occasions and that, on balance, the continued application of the committee's rules was justified as an autonomous regulatory structure.
In this context, the committee also emphasized that the statutory provisions must be applied separately, given that, among other things, the statutory provisions of the act differ significantly from the committee's rules. The most significant differences between the two sets of rules include the following:
The committee's rules and the act apply to all natural and legal persons in connection with acquisitions and disposals of shares in Swedish companies listed on a regulated market in Sweden.
In addition to these rules, the Act on Reporting Obligations for Certain Holdings in Financial Instruments 2000 sets out separate reporting obligations for certain natural and legal persons. However, the act is part of a separate set of rules on market abuse and applies only to persons with an insider position. The act imposes a reporting obligation for all transactions made - that is, there are no applicable thresholds. Its provisions are generally not affected by the implementation of the directive.
The directive goes further than the Swedish legislation on information about major holdings, which has resulted in a number of proposed changes to the legislation. However, in some respects the committee's rules are more extensive than those of the directive. Therefore, the legislature has proposed to introduce more far-reaching rules than those of the directive, given that the committee's rules are considered sound practice on the Swedish stock market and that the committee's rules will be abolished when the proposed rules enter into force.(2) The legislature has declared that the new rules must not be less far-reaching than the current rules, since this would otherwise represent a lowering of standards not only in Sweden, but also in relation to the other Nordic markets.(3)
The key provisions of the proposed new legislation are as follows:
The bill was submitted to Parliament in March 2007; it is expected that Parliament will decide on the legislation on May 31 2007. It is proposed that the new legislation will come into force by July 1 2007. On May 29 2007 the Stockholm Stock Exchange has made public the new listing agreement, which will enter into force on July 1 2007.
For further information on this topic please contact Niclas Rockborn or Sara Brunström at Gernandt & Danielsson Advokatbyrå by telephone (+46 8 670 66 00) or by fax (+46 8 662 61 01) or by email (firstname.lastname@example.org or email@example.com).
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