Nordic Market Update.

Transcription

1 Nordic Market Update. If you would like more information on any of the following articles, please contact the persons named after each item on +46 (0) Statement from the Swedish Securities Council on best market practice regarding statutory mergers that include at least one listed company Following its statement (2004:2) which was reported in NMU dated 27 February 2004 regarding the duty to disclose information in a statutory merger with cash consideration as being equivalent of the information required in a cash bid prospectus, the Swedish Securities Council (the Council ) has taken the initiative to make a statement (2004:23) regarding the use of statutory mergers as a substitute or complement to public takeover bids with a subsequent mandatory acquisitions of shares. As reported in the above-mentioned NMU, statutory mergers have become more common in Sweden due to changes in the Swedish tax law. According to the Council, the interests of minority shareholders may be prejudiced in statutory mergers, since the consideration can be determined by the majority shareholder without any impartial decision as is the case in the mandatory acquisition of shares following take-over bids. The Council states that the market players shall take into account best market practice when choosing between statutory mergers and take-over bids. Best market practice implies that confidence in the stock market must be maintained. Further, the Council states that it will monitor the developments in the market and may subsequently issue a statement in this regard. Finally, the Council requests that the Swedish Industry and Commerce Stock Exchange Committee oversee the market practices in this regard and should decide whether or not it ought to issue any rules as a result. Contact: Svante Johansson or Aila Andersson Contents Statement from the Swedish Securities Council on best market practice regarding statutory mergers that include at least one listed company 1 Swedish Covered Bonds 2 Statement regarding the point in time from which the rules regarding post settlement purchases apply 3 Statement regarding the transitional rules on mandatory bids 4 Statement regarding price differences between shares with special voting rights and shares with limited voting rights 4 Stockholmsbörsen s Disciplinary Committee. Advance information on financial performance to be given to the Stock Exchange 5 Stockholmsbörsen s Disciplinary Committee. Deficient information regarding CEO s benefits and incentive schemes at Skandia 6 Issue 8 30 September

2 Swedish Covered Bonds As mentioned in a previous issue of Nordic Market Update (Issue 6, 1 July 2004), the Swedish Covered Bonds Act (Sw: lagen (2003:1223) om utgivning av säkerställda obligationer) (the Act ) came into force on 1 July The Act is intended to enable Swedish banks and credit market companies authorised by the Swedish Financial Supervisory Authority ( SFSA ) to participate as issuers in the covered bonds market on terms commonly expected in the European covered bonds market. On 21 September 2004, the SFSA adopted the set of secondary regulations and guidance necessary for Swedish issuers to make use of the legislation. The SFSA s regulations were made available in final form on 22 September 2004 and will come into force on 15 October This means that Swedish issuers soon will be able to apply for, and obtain, the necessary licence to issue Swedish covered bonds (Sw: säkerställda obligationer) pursuant to the Act and eventually, make other final preparations to launch covered bonds. As is the case with other European covered bonds, the Swedish covered bonds can be described as the combination of senior unsecured debt obligations with recourse to a cover pool of assets, which, pursuant to the Act, may consist of mortgage credits, public sector credits and supplemental cover assets. Provided that the provisions of the Act are fulfilled (such as the matching requirements), the holders of covered bonds are entitled to receive payments when due under the bonds terms and conditions, even if the issuer goes into bankruptcy. The Act is based upon three fundamental principles regarding the collateralisation and matching requirements. These principles are that: (i) the nominal value of the cover assets in the cover pool must at all times exceed the nominal value of the covered bonds outstanding; (ii) the issuer s credits and supplemental cover assets in the cover pool shall be given such terms and conditions regarding currency, interest and interest period that a good balance is maintained with corresponding conditions for the covered bonds; and (iii) the cash flows generated by the cover pool and the derivative contracts must be such that the issuer can meet its payment obligations in respect of the covered bonds and derivative contracts. All of the cover assets must be entered into a register of the issuer to form part of the cover pool. The register must also contain information regarding the covered bonds and the derivatives used in relation to the cover pool and the covered bonds. In order to monitor that the register is kept in accordance with the Act, the SFSA shall appoint an appropriately qualified and independent inspector for each issuer. In order to obtain the necessary licence to issue covered bonds, the issuer must convert most of its already outstanding bonds and comparable debt securities that have been issued to finance credits that would be eligible for 2 Issue 8 30 September 2004

3 inclusion in the cover pool, into covered bonds. Alternatively, pursuant to a plan approved by the SFSA, the issuer may treat the holders of the outstanding bonds differently which, from the bondholders perspective, is equal to having the bonds converted. The issuer s decisions to convert existing bonds and debt securities into covered bonds, and to issue covered bonds, will be subject to the terms and conditions of the existing bonds and debt securities and other contractual undertakings that the issuer may have. The conversion will also give rise to commercial and rating implications which may have a significant impact on the procedures for conversion. Contact: Jörgen Durban or Anders Malm Statement regarding the point in time from which the rules regarding post settlement purchases apply In an anonymous statement, the Securities Council was asked from which point in time the rules regarding post settlement purchases of shares should apply. According to the rules, if the bidder acquires shares within nine months from the date of the settlement of the offer, the bidder shall make corresponding changes to the terms of the offer. According to the Council, the time limit of nine months shall begin when the bidder pays the shareholder, regardless of whether the bid has been extended or not. This implies that if the bid time is extended significantly, the time limit of nine months can expire before the time limit for acceptance of the offer has expired. Statement from the Securities Council 2004:22. Contact: Fredrik Lindqvist or Anna Bengtsson Nordic Market Update. 3

4 Statement regarding the transitional rules on mandatory bids According to the takeover rules, any person who, whether alone or together with related parties, acquires shares in a Swedish listed company leading to a stake equivalent to or exceeding 30 per cent. of the votes in the target company is obliged to make a public offer to acquire all of the remaining shares in the company. The present wording of the rules on mandatory bids came into force on the 1 September 2003, decreasing the limit for mandatory bids from 40 to 30 per cent. The transitional rules states that a shareholder that held more than 30 per cent., but less than 40 per cent., of the voting power in a listed company when the new rules came into force, does not have to make a mandatory bid until further shares are acquired. The Securities Council has now declared that such a shareholder may go below his initial holding, but not below 30 per cent., and back, without triggering the obligation to make a mandatory bid. Statement from the Securities Council 2004:26. Contact: Sigbjörn Olsson or Anna Bengtsson Statement regarding price differences between shares with special voting rights and shares with limited voting rights In the statement 2004:19, the Securities Council accounts for how price differences between A and B shares have been handled in all bids for companies listed on the Stockholm Stock Exchange during the period 1 January 2000 until 12 July The figures show that in ten out of twentyfive cases, the bidder offered a higher price for A shares. According to the Securities Council, the calculation of a market value for unlisted shares without any actual liquidity is difficult, since the extent to which special voting rights shall be given a special value (that is, a higher market value than listed shares) depends on the shareholder structure and possible planned changes to the shareholder structure. The Council referred to statement 2004:18 in which the Council found that a price difference of twelve per cent. between unlisted A shares with special voting rights and listed B shares with limited voting rights was reasonable. The Council also opined on the question of whether a bidder can offer a price that varies according to the bid s success, i.e. the compensation should 4 Issue 8 30 September 2004

5 be greater if the bidder receives more than ninety per cent. of the shares and the votes in the target company. The Council stated that neither the takeover rules nor sound stock market practice prevents such conduct. Statement from the Securities Council 2004:19 Contact: Krister Hansen or Anna Bengtsson Stockholmsbörsen s Disciplinary Committee. Advance information on financial performance to be given to the Stock Exchange The Guidelines to the Listing Agreement with Stockholmsbörsen (the Exchange ) states that a company shall disclose information regarding its business forecasts or adjustments of such forecasts to the Exchange prior to disclosing such information to the market. These Guidelines also apply where the company considers that a press release could essentially influence the market s perception of it. Ericsson issued a press release regarding its next income statement prior to having disclosed this information to the Exchange. Although the information had an influence on the market, Ericsson claimed that it had not breached the terms of the Listing Agreement. In addition, Ericsson declared that its usual policy is to disclose information to the Exchange before disclosing to the market. Since there are no explicit provisions that regulate the action in question and it is only addressed in the Guidelines, the Exchange s Disciplinary Committee determined that Ericsson s neglect could not be related to such a breach that could cause disciplinary actions. Contact: Jörgen S Axelsson or Aila Andersson Nordic Market Update. 5

6 Stockholmsbörsen s Disciplinary Committee. Deficient information regarding CEO s benefits and incentive schemes at Skandia An Investigation into management remuneration at Skandia has taken place. Stockholmsbörsen has imposed a fine of two annual charges on Skandia for deficient information in its annual report for the financial year ended 31 December Information that should have been provided related to the CEO s pension arrangements and details of other benefits and also the total costs incurred by the Skandia group under its incentive schemes. Contact: Jörgen S Axelsson or Aila Andersson Legally responsible: Martin Börresen Editor: Darragh Byrne darragh.byrne@linklaters.com This publication is intended merely to highlight issues and not to be comprehensive, nor to provide legal advice. Should you have any questions on issues reported here or on other areas of law, please contact one of your regular contacts at Linklaters, or contact the editors. Linklaters. All Rights reserved 2004 Please refer to for important information on the regulatory position of the firm. Stockholm Regeringsgatan 67 Box Stockholm Tel: (46-8) Fax: (46-8) We currently hold your contact details, which we use to send you newsletters such as this and for other marketing and business communications. We use your contact details for our own internal purposes only. This information is available to our offices worldwide and to those of our associated firms. If any of your details are incorrect or have recently changed, or if you no longer wish to receive this newsletter or other marketing communications, please let us know by ing us at marketing.database@linklaters.com 6 A /0.0/30 Sep 2004