Our point of view

Nordic Market Newsletter 8/2012

17 September 2012


The European Commission proposes regulation for an information document to be provided to retail investors
The European Commission has adopted a proposal for a new Key Information Document (KID) to be produced by manufacturers of packaged retail investment products (PRIPs) and provided to potential retail customers. The proposal for a regulation on key information documents on investment products is intended to facilitate understanding and comparison by retail investors of certain PRIPs.
The European Commission has enacted directives amending the UCITS directive and the directive on insurance mediation in order to make the regulation more easily accessible in relation to PRIPs.

New rules on short selling
From 1 November 2012, all countries of the EU will be subject to uniform legislation regarding short selling with the entry into force of EU regulation 236/2012 on short selling and certain aspects of credit default swaps. The new rules will increase supervision of certain short selling, which will be subject to a notification requirement. Also the supervisory authority will publish all short selling positions exceeding, or falling short of, certain values. Further, the authority will be able to restrict or prohibit short selling under exceptional circumstances.

European Securities and Markets Authority ESMA publishes ETF guidelines
The ESMA has published guidelines on Exchange-Traded Funds (ETFs) and other UCITS issues. The main content of the guidelines concerns recommendations on information that should be given to investors, specific rules for UCITS and the criteria for financial indexes in which UCITS may invest.


Prospectuses published pursuant to new EU rules
Amendments to EU prospectus regulation entered into force as of July 2012, and the first prospectuses drawn up pursuant to the new rules have now been published in Finland. The amendments mainly affect the prospectus summary, the contents and form of which are now regulated in more detail than earlier. Summaries must now have the same format throughout the EU. They are drawn up in table format in the order of presentation provided by the new EU rules (Introduction and warnings, Issuer and any guarantor, Securities, Risks and the Offer). Increasingly, the summary is becoming a standardized stand-alone section.

The European Securities Markets Authority (ESMA) is yet to provide technical guidance on disclosure, and market practice has not been fully established. However, some references have been obtained from initial regulator feedback. In Finland, the Financial Supervisory Authority (FSA) has paid particular attention to disclosure in summaries. The disclosure is largely copied from other parts of the prospectus, but must follow the set format and address the specific summary requirements. The FSA has also drawn attention to the scope of disclosure in the summary in particular. Risk factors, for example, must be briefly described rather than merely listed with cross references to the other parts of the prospectus. While disclosure must be condensed it is important to ensure that the summary gives an appropriate overview of the issuer and the investment opportunity to investors.

The uniform format of summaries may facilitate review by potential investors. It is important, however, to recognize that the full prospectus provides the basis for the liability of the issuer or other parties responsible for the prospectus.


The Swedish Government publishes guidelines on corporate governance in state-owned companies
The Swedish Government recently updated its State Ownership Policy with guidelines on corporate governance in state-owned companies. The State Ownership Policy mainly addresses the Swedish Government’s position on important questions of principles, procedures for external reporting and guidelines for terms of employment for senior executives. The State Ownership Policy makes adherence to the Swedish Code of Corporate Governance obligatory.

Swedish Financial Supervisory Authority

Proposal for new rules regarding secured bonds
The Swedish Financial Supervisory Authority (Sw. Finansinspektionen) proposed new rules regarding secured bonds which would come into force on 1 March 2013. The purpose of the amendments is to enhance transparency and simplify handling of secured bonds, for both issuing companies and the supervising authority. The amendments will primarily affect companies issuing, or intending to issue, secured bonds.

The Swedish Securities Council
The Swedish Securities Council has issued the following statements concerning mandatory bids and exemptions from takeover rules.
In statement 2012:19, Melker Schörling Ltd (MSAB) intended to subscribe for shares in BNS Holding Ltd (BNS), which in turn controlled more than 30 per cent of the shares in the listed company Aarhus-Karlshamn Ltd (AKK). MSAB controlled the majority of the shares in BNS, and BNS had continuously controlled more than 30 per cent of the shares in AKK since the company was introduced to the Stock Exchange. The Swedish Securities Council found that MSAB’s intended subscription for shares in BNS would not result in an indirect change of control in AKK and consequently the mandatory bid rules were not applicable.

In statement 2012:20, Everbring Fulfillment & Logistics Ltd intended to subscribe for shares in a non-cash issue of shares in Hartelex Ltd (in essence a sale of assets in exchange for shares) and acquire shares from the principal owners, which would put Everbring over the threshold that triggers the mandatory bid obligation. However, the Swedish Securities Council found that non-cash issues and acquisitions due to reconstruction of a company in economic difficulties in general fulfil the requirements for exemption from the mandatory bid obligation. The Council exempted Everbring from the mandatory bid obligation, under the conditions that (i) the shareholders in Hartelex Ltd be informed of the percentage of votes and capital that Everbring would obtain after the share issue and the acquisitions and (ii) the share issue resolution be supported by two thirds of the shares and votes represented at the general meeting.

In statement 2012:21, NH Invest intended to subscribe for shares in a new share issue in Thenberg & Kinde Fondkommission Ltd. The acquisition would put NH Invest over the threshold that triggers the mandatory bid obligation. The Swedish Securities Council considered that Thenberg’s financial difficulties constituted ground for exemption from the mandatory bid obligation. The Council granted an exemption for NH Invest under the conditions that (i) the shareholders in Thenberg be informed of the percentage of votes and capital that NH Invest would obtain after the share issue and (ii) the share issue resolution be supported by two thirds of the shares and votes represented at the general meeting.


Corporate Bonds – New guidelines from the Danish Financial Supervisory Authority
On 4 July 2012, the Danish Financial Supervisory Authority (the “Danish FSA”) published a new set of guidelines (the “Guidelines”) regarding whether or not a banking licence will be required in connection with the issuing of corporate bonds by companies.

The Guidelines have been issued due to uncertainties in relation to whether or not the issuing of corporate bonds constitutes “deposits or other repayable funds from the public” and triggers a requirement for a banking licence pursuant to the Danish Financial Business Act (the “FBA”). The background for the Guidelines is that the Danish FSA intends to harmonise the Danish practice with the practice of the other EU countries and thereby improve companies’ access to capital markets through the issuing of corporate bonds.

The Guidelines will replace the previous guidelines issued in 2007 by the Danish FSA.

The most significant change is that an issuance of corporate bonds which is subject to the prospectus requirement (or covered by certain of the exemptions thereto) pursuant to the Danish Securities Trading Act, will in the future, as a main rule, fall outside the scope of Sections 7 and 334 of the FBA.

An issuer that wishes to issue corporate bonds will, therefore, as a main rule not be required to hold a banking licence pursuant to the FBA, if it is subject to the obligation to publish a prospectus or covered by one of the relevant exemptions to the prospectus requirement. In connection with resale, it is the view of the Danish FSA that the exemption from the banking licence requirement (due to the “professional investor exemption” rule) will not apply if the issuer at the time of issuance knows that the corporate bonds are to be sold on to non-qualified investors.

Tax reform 2012 – The Danish government has proposed several bills amending various Danish tax laws
The bills are introduced as part of the Tax Reform 2012 and deal among other things with rules regarding work abroad, foreign labour, capital pension and taxation of shareholder loans. The bills include the following proposals:


Changes to the Oslo Stock Exchange regulations

Changes to Continuing Obligations
The Oslo Stock Exchange recently adopted certain amendments to its regulations concerning the continuing obligations of companies listed on the Oslo Stock Exchange and Oslo Axess.

The Securities Trading Act (No:Verdipapirhandelloven) has been amended concerning notification requirements for primary insiders. From 1 July 2012 the regulation is only applicable to companies with residence in Norway. The Oslo Stock Exchange has enacted separate regulation imposing notification requirements for primary insiders for companies with residence outside of Norway. Foreign companies bounded by national law to publish information about security trading are exempted from the obligation. The Oslo Stock Exchange however recommends concerned companies to forward information regarding primary insiders’ security trading in order to satisfy the need for information for all market participants.

Changes to the EFT rules
The Oslo Stock Exchange has amended the EFT rules in accordance with the amendments made to the UCITS IV Directive. In addition, new legislation not based on the EU-directive has been enacted. The main changes to the Securities Funds Act (No:Verdipapirfondloven) are requirements for a specific document to provide information to investors.

Oslo Børs
Changes to the bond rules and the ABM rules
The Norwegian bond rules and ABM rules have been revised as a consequent of the Norwegian Securities Trading Act (No: Verdipapirhandelloven) (adopted 15 June 2012). The new rules came into force 10 July 2012 without notice period.

  • Lowering of the amount for deductible travel expenses
    The maximum deduction for travel expenses will be halved from DKK 50,000 to DKK 25,000. The proposal will make it less attractive for people with a permanent residence abroad to take low-paid work in Denmark for shorter periods.
  • Hiring-out of labour
    The proposal suggests a tightening of the current rules on taxation of hiring-out of labour. If foreign workers are working for a foreign employer and the work is an integrated part of the work of a Danish company, the remuneration received by the foreign workers shall be taxed in Denmark, in accordance with the rules on taxation of hiring-out of labour. The amendment is based on the OECD guidelines for hiring-out of labour.
  • Increased taxation of foreign labour
    The proposal suggests a tightening of the rules on tax liability to Denmark. Tax liability occurs when a person resides in Denmark in one or more periods of time exceeding 183 days within a 12-month period. It will no longer be a condition for the tax liability of the worker that the employer is subject to tax in Denmark either as a resident or a permanent establishment.
  • Abolishment of the tax exemption for income earned abroad
    Under the current rules, an individual tax resident of Denmark who earns income abroad can presently be fully or partly exempted from Danish tax on the same income acquired abroad. If the bill is passed, such individuals will in the future only be granted credit relief.
  • Taxation of loans from a company to its shareholders
    It is suggested to impose withholding tax on admission of illegal shareholder loans. Such shareholder loans will be treated as salary or dividend to the shareholder.
  • Taxation of capital pension contributions
    It is suggested to abrogate the right to deduct contributions to capital pension. The bill introduces a new pension scheme where contributions however are not deductible and no income tax will be imposed at payout from the pension.
  • Increase of the employment allowance
    The employment allowance will be increased gradually from 5.6 percent to 10.65 percent in 2022. Single parents will be entitled to receive an extra allowance.
  • Top-rate tax bracket
    The threshold for the top-rate tax bracket will gradually be raised from DKK 389,000 to DKK 467,000 over a 10-year period.