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20 September 2005
As of July 1 2005 insider trading legislation has been extended to apply to all transactions in listed securities, whether they are on-market or off-market. The prohibition against trading on the basis of inside information or disseminating inside information has also been extended to apply to all persons having obtained inside information, irrespective of how and in which capacity the information was obtained. The scope of the legislation on market manipulation was extended so that any actions likely unduly to affect market prices or other conditions for trade in financial instruments may constitute improper market manipulation.
As of July 1 2005 a general prohibition has been in effect against directors, executive managers and certain other persons trading in the company's shares during the 30 days preceding interim financial reports (date of publication included). Exemptions include the tendering of shares in a public offer and the sale of subscription rights. Violations may result in a fine of up to Skr350,000. Notably, the 'three-month' rule - which restricts short swing trading by corporate insiders - has been repealed, effective as of July 1 2005.
As of July 1 2005 Swedish companies with listed securities are required continuously to maintain and update a list of employees and other persons working for the company who have access to inside information. The list must indicate the persons with access to the inside information, the reason why these persons are on the insider list and the date on which the insider list was updated or created. The list must be saved for five years and be provided to the Financial Supervisory Authority on request. The company is required to ensure that all persons on the list are aware of their legal obligations and of the penalties that might be imposed as a result of a breach of their obligations. The new requirement to maintain insider lists goes further than the present stock exchange rules and requires additional measures to be taken by issuers. The authority does not currently intend to issue regulations on how to maintain insider lists. Failure to keep a list (wholly or partly) or to provide it to the authority may result in a special fine of up to Skr1 million.
Persons discharging managerial responsibilities with an issuer and their connected persons are required to report their dealings in the company's securities. 'Connected persons' include the following:
Notably, the scope of 'connected persons' has been broadened as of July 1 2005 to include other relatives with whom the person has shared a household for more than one year (eg, children over 18 years still living at home). Furthermore, small holdings and transactions are no longer exempted, but new exemptions from the reporting duty include reduction of holdings due to reverse splits and certain other technical changes of the holdings.
The report must also state where the transaction was executed and at what price. A file must reach the authority not later than five working days after the date of the transaction, which, in practice, may represent a somewhat shorter notification period than previously.
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