Standard 5.2b. Disclosure obligation of the issuer and shareholder. Regulations and guidelines

Transcription

1 Standard 5.2b shareholder Regulations and guidelines

2 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) TABLE OF CONTENTS 1 Application 4 2 Objectives and structure 5 3 International framework and selfregulation 6 4 Legal basis 7 5 Ongoing disclosure obligation Information to be disclosed Release times Postponement of publication Prerequisites for postponement of the publication of information Acceptable reason Investors' position Maintaining the confidentiality of information Method of publication Fair disclosure Ban on the disclosure of inside information Decisions and matters to be published Prospects Profit forecasts Profit warning and preliminary information 17

3 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) 5.11 Individual transactions, orders and other business agreements Acquisitions and other corporate restructurings 19 6 Interpretation of disclosure of major holdings in Securities Markets Act Main contents of the provisions Shareholders and persons comparable to shareholders Calculation of holdings Basis for calculation Agreements and other arrangements Items to be included in a holding Shareholders and entities or persons closely associated Special cases Notification of a management company's holdings Disclosure of major holdings in intraday trading Exemption from the disclosure obligation granted by the FIN- FSA Making a notification Target company's disclosure obligation Receipt of information on changes in holdings Contents of a notification Listing 25 7 Reporting to the Financial Supervision Authority 27 8 Further information 28 9 Previous amendments to the standard 29

4 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) 1 APPLICATION (1) This standard applies to issuers of securities subject to public trading referred to in the Finnish Securities Markets Act (495/1989) (SMA) and parties subject to the obligation to disclose major holdings as provided for in the same act. (2) Provisions on the ongoing disclosure obligation and disclosure of major holdings contained in Chapter 2 of the SMA are also applied to Finnish issuers having issued a security that is publicly traded or admitted to corresponding public trading in the European Economic Area, and their shareholders. 1 (3) Chapter 2, section 7 of the SMA provides for the obligation of an issuer of a security admitted to public trading to publish, without undue delay, all its decisions as well as all information on itself and its activities that are likely to have a material impact on the value of the security. (4) Chapter 2, section 9 of the SMA contains provisions on the obligation of a shareholder to submit a notification on changes in its proportion of holdings to the Financial Supervision Authority (FIN-FSA) and to the company that is subject to the holdings (hereafter referred to as the target company). Chapter 2, section 10 includes provisions on the obligation of the target company to publish that information. 1 A regulated market referred to in the Investment Services Directive.

5 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) 2 OBJECTIVES AND STRUCTURE (1) This standard addresses the disclosure obligations applicable to issuers of securities admitted to public trading and their shareholders. (2) The purpose of the obligation to disclose information of material impact on the value of a security is to provide ongoing, reliable, comprehensive, timely, accurate and comparable information and to give that information simultaneously to all investors operating in the securities markets. The disclosure obligation applicable to issuers of publicly traded securities comprises the preparation of listing particulars in connection with new issues and a succeeding thereafter a regular and ongoing disclosure obligation. Issuers shall pursue a consistent and clear information policy to ensure that investors have access to reliable information as a basis for monitoring developments in the issuing company. (3) The purpose of the provisions on the ongoing disclosure obligation and this standard is to ensure that investors in the market have equal and simultaneous access to information. The ongoing disclosure obligation enables investors to make an informed assessment of the issuer and its securities and promotes transparency in the issuer's activities. (4) The aim of the provisions on the disclosure of major holdings is to ensure transparency in the structure of holdings and power, and changes therein, in listed companies. The disclosed information may also have an impact on the value of the target security. (5) Chapters of this standard address the general requirements concerning the ongoing disclosure obligation that apply to all issuers of securities subject to public trading. Chapters of the standard address certain issues mainly related to the ongoing disclosure obligation of the issuers of securities. Chapter 6 of the standard addresses disclosures of major holdings.

6 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) 3 INTERNATIONAL FRAMEWORK AND SELFREGULATION (1) The objectives and principles of the International Organization of Securities Commissions (IOSCO) as referred to in its Objectives and Principles of Securities Regulation, February 2002 have been recognised in the standard, in particular principle 14 that requires adequate, accurate and timely disclosure of the issuer's financial position and other essential factors affecting the value of its securities. According to the principle, offerings and listings of securities, acquisition of control of a company, disclosures of major holdings, and marketing of securities particularly in connection with offerings constitute crucial items of regulation. (2) The Principles for Ongoing Disclosure and Material Development Reporting by Listed Entities prepared by IOSCO's Technical Committee have also been taken into account in the standard. (3) Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (the so-called Transparency Directive) has also been accounted for. Amendments to national legislation required by the Directive shall be implemented by 20 January (4) Rules of the Helsinki Exchanges provide detailed requirements on the ongoing disclosure obligation of the issuing company.

7 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) 4 LEGAL BASIS (1) Most of the national legislation is based on EU regulations. The following EU directives include provisions on the disclosure obligations applicable to issuing companies and shareholders: Directive 2001/34/EC of the European Parliament and of the Council on the admission of securities to official stock exchange listing and on information to be published on those securities Directive 2003/6/EC of the European Parliament and of the Council on insider dealing and market manipulation (market abuse) Commission Directive 2004/72/EC of 29 April 2004 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards accepted market practices, the definition of inside information in relation to derivatives on commodities, the drawing up of lists of insiders, the notification of managers' transactions and the notification of suspicious transactions. Commission Directive 2003/124/EC of 22 December 2003 implementing Directive 2003/6/EC of the European Parliament and of the Council as regards the definition and public disclosure of inside information and the definition of market manipulation. (2) The obligation of an issuer or a shareholder to disclose information is provided for in national legislation in the SMA and the Decision of the Ministry of Finance on the Regular Duty of Disclosure of the Issuer of Securities (391/1999, Decision on Declaration of Major Holdings), adopted on the basis of the SMA. (3) In accordance with Chapter 2, section 7, subsection 6 of the SMA, the FIN- FSA may provide more detailed rules needed in the implementation of rules provided by the Commission by virtue of Directive 2003/6/EC of the European Parliament and of the Council on insider dealing and market manipulation (market abuse).

8 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) 5 ONGOING DISCLOSURE OBLIGATION 5.1 Information to be disclosed (1) The Market Abuse Directive defines inside information as any information of a precise nature which has not been made public, affecting, directly or indirectly, an issuer, which would likely have a significant effect on the price of a security. The Directive links inside information and information to be disclosed, however, in such a way that the issuer shall only disclose information directly related to the issuer itself. (2) In accordance with the Market Abuse Directive, the issuer shall publish as soon as possible any such information related directly to the issuer that is of a precise nature and likely to have a material effect on the value of its security. (3) In accordance with Chapter 2, section 7 of the SMA, an issuer of a security admitted to public trading shall publish and submit to the organiser of public trade, without undue delay, all its decisions as well as all information on itself and its activities that are likely to have a material impact on the value of the security. (4) The precise nature of information refers to such information that pertains to circumstances or events that have already emerged or taken place, or that can be expected to occur or take place with considerable probability. Another prerequisite is that an assessment of the potential effect of the information on the price of the security can be made. (5) The materiality of information refers to information that an investor behaving in a reasonable manner would likely use as one of the bases for an investment decision.

9 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) (6) The issuer shall assess itself which decisions and factors it must report and what kind of an effect various decisions and matters may have on the value of its security. (7) The assessment of materiality requires a pre-assessment of a decision or factor referred to in the provision, so the subsequent actual effect of the decision or factor has no significance when reviewing compliance with the disclosure requirement. Since effects on the value of the security only become known after the disclosure of the decision or factor, the issuer should aim at providing information on itself openly. (8) Assessment of the materiality of information may also depend on what information the issuer has previously disclosed. For example, if the issuer has previously published its objectives in relation to a certain business area, it would be justified to disclose its progress in achieving these objectives and potential changes of objectives. (9) Chapters contain a more specific discussion on the matters to be published. In assessing the materiality of a decision or factor, one of the determinants may be how investors and other market participants have previously reacted to similar information disclosed by the issuer or another issuer. If the decision or factor in question resembles in essence other circumstances that have occurred previously, there maybe justified grounds to use the previously adopted operational mode. (10) The disclosure obligation may also emerge in circumstances unrelated to a single factor or decision but rather the sum of various events that are likely to have an impact on the value of the issuer's security. For example, the disclosure obligation may arise from a combination of several acquisitions or disposals carried out in a certain time frame even if none of the transactions alone would exceed the disclosure threshold. (11) In accordance with the general objectives of the disclosure obligation, in its communication the issuer should also seek to provide, as a whole, a true and fair view as a basis for a well-founded assessment. Similarly, communication taken as a whole should not provide investors with a misleading view for example due to omissions or the focus chosen in releases. (12) The issuer may not avoid the publication of decisions or contracts in the scope of the disclosure obligation, such as M&A-related contracts or business contracts, by means of a non-disclosure agreement.

10 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) 5.2 Release times (13) Since one of the main objectives of the regulation concerning the disclosure obligation is to ensure that investors have equitable and simultaneous access to information, the Market Abuse Directive requires that issuers seek to publish decisions and matters referred to in Chapter 2, section 7 of the SMA without delay. (14) In accordance with Chapter 2, section 7 of the SMA, a decision made by the issuer has to be published without undue delay once it has been made. (15) The publication of a decision shall not be delayed, for example, by postponing the formal adoption of the decision. (16) Matters in preparation need not be published. However, if a preliminary contract or letter of intent is prepared, it shall be published. A preliminary contract or letter of intent does not have to be published, if the material parts and conditions of the final contract being prepared have not been determined specifically enough in the preliminary contract or letter of intent, or if the conclusion of the final contract is uncertain. (17) With regard to provisions in Chapter 2, section 7 of the SMA, the issuer has to begin to prepare the publication of information immediately once the matter to be published has come to its notice. Such information is considered to have come to the issuer s notice if it has come to the notice of any member of the board of directors or the managing director of the issuer. (18) A justified delay in the publication of information may be, for example, a situation in which the authenticity of the information has to be verified. Likewise, a situation may emerge where the matter to be disclosed requires discussion by the board, and a well-founded reason in this case would be that the board has, for example, a teleconference prior to the publication of the information. 5.3 Postponement of publication Prerequisites for postponement of the publication of information (19) In accordance with Chapter 2, section 7, subsection 2 of the SMA, an issuer may decide to postpone the publication of information belonging to the scope of the ongoing disclosure obligation if the prerequisites for postponement are met. In a similar manner and under similar requirements,

11 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) an issuer may also postpone the publication of certain parts of information. (20) Since the issuer need not disclose matters in preparation, the postponement of publication may become an issue mainly once the matter has evolved enough to be disclosed Acceptable reason (21) Postponement requires an acceptable reason, including, for example, the following circumstances: Ongoing acquisition negotiations or other negotiations or matters related to them in cases where the publication of information would likely have an effect on the outcome of the negotiations or their normal conduct. The postponement may also concern only one part of the information relating to the matter. Such a situation could emerge, for example, in the context of acquisition negotiations, when it may be justified to delay the publication of the transaction price until the conclusion of other similar negotiations in progress. Negotiations relating to the economic viability of the issuer in circumstances where such viability is subject to a grave and direct threat. The prerequisite in this case is that the publication of the information might severely endanger the interests of current and potential shareholders by hindering the conclusion of negotiations aiming at improving the issuer s financial state in the long term. A ban by authorities on publishing or releasing information. (22) However, the publication of information cannot be postponed on the basis of awaiting the actual development of the circumstances or events concerning the issuer and its activities Investors' position (23) If the issuer has valid grounds to postpone the publication of information, it shall then assess whether failure to publish information would endanger the investors position. (24) Endangerment of the investors position shall be assessed in light of whether failure to publish information would likely mislead investors Maintaining the confidentiality of information (25) The issuer shall also be able to ensure that information is kept confidential, which means that the issuer must control the dissemination and use of unpublished information regarded as inside information.

12 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) (26) Maintenance of the confidentiality of information requires at least the following (sections 27 29): (27) The issuer shall have arrangements in place to ensure that inside information cannot be accessed by others than those needing it for carrying out their duties. The control over inside information must be verified by the use of a company-specific insider register (see Standard 5.3 on declarations of insider holdings and insider registers). (28) The issuer shall ensure that persons authorised to use the information know and understand their responsibilities in relation to the control over inside information and are aware of the sanctions on the abuse of such information or their unjustified dissemination. If inside information is released outside the issuer, an appropriate non-disclosure agreement should then be made. A corporation acting on behalf of or for the issuer may also be obliged to keep its own company-specific insider register (see Standard 5.3). (29) The issuer must be capable of publishing information immediately if it cannot ensure the confidentiality of inside information. One indication of loss of confidentiality is a significant increase or decrease of the value of the issuer's security or an increase in its trading volume without a logical explanation. (30) Preparedness for publishing the information can be maintained, for example, by drawing up a communication plan for the project and keeping it updated for the duration of the project. This may also include drafting the actual release. (31) The issuer shall notify without delay the Financial Supervision Authority and relevant organiser of public trade on its decision to postpone the publication of information. (32) Notification to the Financial Supervision Authority shall be made by at the address markkinat@rahoitustarkastus.fi or by calling the FIN-FSA s Markets department at However, notification by telephone must be corroborated subsequently by or letter. The notification shall indicate the basis for postponement, its expected duration, if one can be determined, and the reasons why the postponement of publication would not endanger the position of investors.

13 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) 5.4 Method of publication (33) The publication of information means that the issuer brings a decision or matter referred to in Chapter 2, section 7 of the SMA to investors' attention through an operator of public trade or key media. (34) The issuer shall submit the information to be published in accordance with Chapter 2, section 7 of the SMA to the organiser of public trade and key media. The issuer shall release such information primarily through official publication channels as a stock market release. Publication as a press release or in an electronic network is not sufficient. (35) In addition, the issuer shall keep the published information on its Internet site at least until it releases a new annual review concerning the following financial period. 2 (36) In order for investors to receive information equitably and at the same time, the Financial Supervision Authority recommends that issuers keep any material used in investor and press conferences as current as possible and available to investors, for example, on the issuer s Internet site. Issuers should also consider their possibilities to record and report on the conferences following the publication of financial results through the Internet. 5.5 Fair disclosure (37) If the issuer or someone operating on its behalf or for it discloses to another party unpublished information that is likely to have a material effect on the security of the issuer, this information must be published immediately. (38) If the disclosure of information takes place unintentionally, the information must be published without undue delay. (39) However, there is no publication obligation if the person who received the information is obligated to keep it confidential. The confidentiality obligation may be based, for example, on law or a specifically made non-disclosure agreement. (40) The provision above underscores the requirement of equitability and simultaneity. The disclosure of information referred to in the provision refers to the disclosure of information outside the issuer. It may take place, for example, in an analyst or investor conference, sales event for an issue or a shareholders meeting. The information may consist of many individual 2 Chapter 2, section 10 c of the SMA.

14 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) factors, on the basis of which the audience is able form an opinion of the whole issue. 5.6 Ban on the disclosure of inside information (41) Inside information may not be disclosed to another party unless this takes places as part of the regular performance of the work, an occupation or duties of the disclosing person. The ban applies to everyone in possession of inside information. (42) Usually the allowed disclosure of inside information applies to listed companies and their representatives. The disclosure of information must be justified in terms of the running of the company. (43) For example, the following circumstances may be considered the ordinary performance of work, an occupation or duties and thus the disclosure of inside information is allowed. disclosure of inside information when the company gives a specific assignment (eg, corporate or capital restructuring) to an advisor or other agent, such an issue manager, attorney or other specialist. disclosure of inside information in negotiation situations (eg, corporate restructuring) to the other party of the negotiation and its advisor or other agent. disclosure of inside information within the group and the company in connection with the conduct of its ordinary business. disclosure of inside information when the other party is entitled to receive the information, such as a competition authority, securities market supervisory authority or an organiser of public trade. disclosure of inside information to lenders or potential credit rating agencies when this is necessary to receive credit or a credit rating or their conditions require so. in certain cases the disclosure of inside information to significant shareholders of the company may also be allowed. Such a situation could emerge, for example, when the company management is considering a course of action that would require at a later stage specific approval by the shareholders concerned or which would not in practice be appropriate to plan without the prior approval or support of significant shareholders.

15 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) 5.7 Decisions and matters to be published (44) Decisions to be published that are likely to have a material effect on the value of the issuer s security generally include, for example, decisions by the shareholders meeting and the board of directors concerning financial statements, share issues, the distribution of dividends, material changes in the company s operations or organisation and major appointments. (45) Matters related to the operations of the issuer to be published include, when they are material, decisions by authorities in Finland or abroad concerning the issuer, court decisions concerning the issuer and information from ongoing arbitration proceedings, measures by the authorities or legal proceedings that may have a material impact on the issuer's financial position. Further matters to be published may include information on financial or operational difficulties of group companies, significant customers or suppliers. (46) The issuer should publish any significant agreements made by shareholders on cooperation, pre-emption, options, repurchases and the exercise of voting rights which concern the issuer and have come to the issuer's notice as well as other shareholder agreements containing decisions on the exercise of voting rights. Other agreements or arrangements concerning the issuer made by the shareholders may also need to be published. (47) A disclosure obligation may arise to the issuer also in relation to transactions carried out by its top management on the issuer's securities, if such transactions change management shareholdings significantly. 5.8 Prospects (48) The issuer shall in its interim reports to the extent possible describe its likely future performance in the present financial period. The annual report in the financial statements should present an estimate of expected future developments. Based on the provisions mentioned above concerning interim reports and financial statements, the issuer itself assesses to what extent, which aspects of and for how long a term it will estimate its prospects. The same applies to assessments of prospects in other contexts. (49) Although there are usually many uncertainties related to the materialisation of published prospects, prospects should nonetheless be provided, since the management of the issuer is in the best position to assess the issuer s future developments.

16 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) (50) When compiling prospects, the issuer shall exercise appropriate diligence and caution. Prospects shall be well-founded and their bases shall be presented. The main uncertainties related to the prospects should be published. (51) The prospects presented must be kept clearly separate from other information, such as the business strategies or general goals of the issuer or business field prospects. The same also applies to changes in prospects in the context of the publication of a profit warning or preliminary information of interim report or annual accounts. (52) s concerning profit forecasts (Chapter 5.9 of this standard) also apply, where applicable, to the presentation of prospects. 5.9 Profit forecasts (53) Profit forecasts help investors in making a well-founded assessment of the issuer and the value of its securities. Since the management of the issuer is in the best position to assess the issuer's future development, the publication of profit forecasts is recommended. However, in providing profit forecasts, issuers should take into account that in connection with a potential securities issue, the Prospectus Regulation (EC No 809/2004) of the Commission requires an auditor s statement on profit forecasts. For this reason and to avoid any misconceptions, particular attention should be paid to the bases of profit forecasts and their presentation. (54) By definition, profit forecasts are estimates on future periods, whose wording specifically or indirectly states the probable minimum or maximum level of the issuer's results. Likewise, such information that can be used to calculate an approximate figure for future profit or loss also constitutes profit forecasts, even if there is no mention of a specific number or, for example, the words income, profit or loss. A dividend estimate shall also be regarded as a profit forecast if the issuer has published a method for determining the size of its dividend based on the results of a financial period as its dividend policy. (55) The following principles shall be observed in the compilation and publication of profit forecasts: 1) Understandability: information provided in connection with a profit forecast, such as justifications and background assumptions, shall be clear, unambiguous and understandable to the investor. 2) Reliability: profit forecasts shall not be given without careful analysis of the issuer's business and its development. Profit forecasts shall also be

17 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) based on realistic and well-founded estimates. 3) Comparability: profit forecasts given shall be comparable with financial statements/financial information given concerning the issuer. 4) Relevance: profit forecasts shall provide relevant information that a rational investor is likely to use as a basis for an investment decision. (56) The profit forecast shall match the issuer s reporting periods (eg the periods for compiling interim reports or its financial year). (57) The profit forecast shall express unambiguously for which result and period the forecast is being made. (58) The most important assumptions that growth and profitability forecasts are based on shall be presented in connection with profit forecasts as well as the factors related to the assumptions that the management of the issuer can have an effect on and those that are beyond its influence. (59) The practices and terms used in the publication of the issuer s profit forecasts should be as unambiguous, clear and consistent as possible. In connection with potential profit forecasts, the issuer should also provide information on the impact of its future prospects on its financial result, for example its operating profit before taxes or its earnings per share (EPS) Profit warning and preliminary information (60) If the issuer s result or the development of its financial position deviates from what it has previously estimated publicly or what can be justifiably deduced on the basis of information previously published by the issuer, and if this information is likely to have a material effect on the value of the issuer's security, the issuer may be obligated to publish information on the development of its results or financial position in the form of a profit warning or preliminary information of interim report or annual accounts. This applies to circumstances during the issuer s reporting period (profit warning) and after the end of the reporting period (preliminary information). (61) The profit warning and preliminary information relate to both circumstances in which the result or financial position is weaker than expected and circumstances in which it is better than expected. (62) Although the term profit warning indicates the development of profits, it can be considered to refer to all factors the future development of which the issuer has assessed. The same applies to preliminary information.

18 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) (63) If the issuer has published estimates on future developments, their materialisation shall be monitored carefully and in as timely a manner as possible. If the development of the issuer s result or financial position in the reporting period deviates materially from what the issuer has previously forecasted in public, the issuer's management shall assess whether it is justified to maintain the previously published forecasts in light of prevailing market conditions. If the risk of deviation from the forecasts is probable, a profit warning or preliminary information should be published. (64) In order to be able to assess the need for a profit warning or preliminary information, the issuer s reporting system must provide its management with timely information on the development of the company s financial state. (65) If certain details are not known precisely at the time of issuing a profit warning or preliminary information, the release shall seek to provide an estimate as precise as possible on the expected result and state the key reasons for developments deviating from the forecasts. The title of the release shall include a clear reference to the key content of the release, ie, a change in future prospects or a deviation thereof. In addition, the title shall indicate whether it is a question of exceeding forecasts or falling short of them Individual transactions, orders and other business agreements (66) An individual transaction, order or another agreement relating to the issuer's business shall be published if it is likely to have a material effect on the value of the issuer s security. The effect of an individual transaction or order on the price of securities is hard to assess in advance, but the effect of new market information on the value of a security may be material even if the deal or order would have no direct effects on the result. An individual deal or order may, for example, constitute an important breakthrough in new markets or it may influence market shares at a later stage. (67) That is why issuers are required to assess the significance of a transaction or order by announcing it publicly. There may be grounds to prepare a stock market release whenever there is cause to believe that the information is likely to have an impact on the share price or otherwise is so significant as to have a material effect on the company's business and profitability in the future. The release should indicate at least the counterparty of the contract and an estimate of its effect on the issuer's growth and results as well as other key issues concerning the significance of the transaction. In the context of assessing financial impacts, issuers should also seek to estimate the time frame in which impacts are expected.

19 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) 5.12 Acquisitions and other corporate restructurings (68) Acquisitions and disposals of companies and businesses as well as other types of corporate restructuring likely to have a material effect on the value of the issuer's security shall be published. (69) Based on the published information, investors should be able to assess the one-off financial impacts of the transaction or arrangement as well as its impact on the ongoing business, so that investors can assess the effects of the arrangement on the value of the issuer's security. This requires that the issuer disclose the consideration paid on the object of the corporate restructuring and an assessment on the effect of the transaction on the results and financial position of the issuer to the extent that is possible to estimate reliably on the date of publication of the transaction. The object of the transaction should be described to the extent that investors get a clear understanding of its core business, scale of operation, profitability and financial position. (70) After the transaction has taken place, the issuer should provide consistently information on the combination of the object with other operations. If the issuer has in connection with the publication of the transaction or thereafter presented estimates on the benefits or cost savings to be achieved through the transaction, their materialisation should be reported subsequently.

20 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) 6 INTERPRETATION OF DISCLOSURE OF MAJOR HOLDINGS IN SECURITIES MARKETS ACT 6.1 Main contents of the provisions Issued on 20 July 2006 Valid from 20 July 2006 (1) A shareholder is required to notify the target company and the FIN-FSA of the proportion of his holdings when it reaches, exceeds or falls below 1/20 (5%), 1/10 (10%), 3/20 (15%), 1/5 (20%), 1/4 (25%), 3/10 (30%), 1/2 (50%) or 2/3 (66.7%) (disclosure thresholds) of the voting rights or share capital (proportion of holdings) in the company. 3 Target company refers to a Finnish company whose shares are publicly traded or admitted to corresponding public trading within the European Economic Area. The target company is required to publish this information. 6.2 Shareholders and persons comparable to shareholders (2) Persons who may, directly or indirectly, exercise the managing and asset rights conferred by a shareholding are regarded shareholders or persons comparable to shareholders. Thus for example a person who is not a shareholder, but has a controlling interest in a company that has a shareholding, is comparable to a shareholder. A person, without a shareholding of his own, is also comparable to a shareholder in situations where the person by virtue of an agreement or in some other way is entitled to exercise the rights conferred by the shareholding of a third party. Such a situation arises for example when a shareholder passes on the power to 3 See chapter 2, section 9 of the Securities Markets Act.

21 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) exercise the managing rights conferred by his shareholding to an asset manager or some other agent. A similar situation arises when a management company or its representative is authorised to exercise voting rights attached to fund-owned shares. Likewise, a trustee who may exercise the rights of a holding belonging to a legally incompetent person is comparable to a shareholder. 6.3 Calculation of holdings Basis for calculation (3) In assessing whether a disclosure obligation has arisen, the proportion of holdings shall always be calculated, as set out in the Ministry of Finance decision on disclosure of holdings, in relation to the share capital entered in the trade register and the voting rights attached to the shares concerned. If, for example, the target company buys its own shares, this does not as such oblige shareholders to disclose their holdings. On the other hand, if the company invalidates its own shares, the relative proportions of the shareholders' holdings change, and individual shareholders must disclose their new proportions of holdings when they cross any of the thresholds referred to in chapter 2, section 9 of the Securities Markets Act. (4) Owing to the method determined for calculation of holdings, a shareholder may become obliged to disclose his holdings even when he has taken no action at all. This situation may arise when a shareholder refrains from participating in a rights issue and his diluted holdings fall below a threshold. Similarly, a change in the proportion of holdings may be brought about by a merger, resulting in the requirement for shareholders to disclose their holdings. (5) Also when assessing whether a disclosure obligation has been established due to convertible bonds or warrants, the proportion of holdings must always be calculated in relation to the share capital entered in the trade register. The effects on the share capital and voting rights of any later conversions or subscriptions shall not be taken into account. (6) In the calculation of holdings, no account is taken of possible voting restrictions laid down in law, articles of association etc Agreements and other arrangements (7) An agreement whereby, upon completion, a holding may reach, exceed or fall below a threshold may, for example, be a preliminary agreement, a

22 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) derivative contract, a repurchase or lending agreement which, when completed, results in an acquisition or transfer of shares or voting rights attached the shares. Other arrangements include share issues, convertible bonds, warrants and orders for acquisition of shares in the secondary market. If it is uncertain when the notification is made whether the agreement or arrangement will be completed, a new notification must be made when the agreement or arrangement has been completed or cancelled. (8) Since the main purpose of the obligation to disclose major holdings is to provide information on changes in the shareholders' voting rights in the target company, the FIN-FSA takes the view that no separate notification needs to be made in respect of securities lending agreements that are only entered into in order to offset delivery deficits, and settled at a central securities depository as laid down in section 15, subsection 4, paragraph 4 of the Act on Asset Transfer Tax (931/1996) Items to be included in a holding (9) When a holding is calculated from the viewpoint of the disclosure obligation, the current holding must be augmented or reduced by a change in the holding as a result of the completion of an agreement or some other arrangement. Account shall also be taken of earlier agreements and other arrangements which, when completed, will lead to the establishment of a disclosure obligation. Even if no disclosure obligation had been established at the time of the conclusion of an earlier agreement, a later share transaction may, for example, together with this agreement, establish a disclosure obligation. (10) A disclosure obligation is not established until it is known that a holding will reach, exceed or fall below a disclosure threshold. (11) This primarily concerns situations where the proportion of a holding can change by virtue of an agreement or some other arrangement. For example in the acquisition of shares through public offerings or subscription of convertible bonds or warrants, the proportion of holdings obtainable is not known with certainty. As far as public offerings are concerned, the ultimate holding is not known until the shares are allocated to the subscribers. Correspondingly, the holding obtained through convertible bonds or warrants may not be known until the end of the conversion or subscription period. (12) However, the disclosure obligation is established as soon as it is known that the holding will reach, exceed or fall below a threshold. (13) A shareholder or a person comparable to a shareholder must include in his total holding any holding that he can acquire through convertible bonds or

23 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) warrants, ie the minimum holding that the shareholder knows can be acquired by using his rights when all other subscribers also use their rights. Thus a situation may arise, where an action resulting in a change in a holding may have to be disclosed several times, as more details on the proportion of the holding are received Shareholders and entities or persons closely associated (14) A shareholder's total holding is deemed to include the holding of an entity or foundation controlled by the shareholder, the holding of a pension foundation or pension fund belonging to the shareholder or an entity controlled by the shareholder as well as holdings on which the shareholder may decide alone or in concert with a third party by virtue of an agreement or otherwise. (15) Control here refers to the right to exercise the majority of the voting rights by virtue of holdings or agreement or the right to appoint or dismiss the majority of the members of the target company's executive bodies Special cases Notification of a management company's holdings (16) According to the Mutual Funds Act (48/1999), a Finnish management company is allowed to invest assets of mutual funds under its management in the shares of the same limited company up to a maximum amount corresponding 10% of the company's share capital and 5% of the voting rights attached to the shares. In assessing the proportion of the management company's holdings, it is to be calculated as the total holdings in the target company of all mutual funds managed by the management company. (17) A parent company or other company that controls the management company in accordance with chapter 2, section 9 of the Securities Markets Act may, by virtue of its control, also exercise voting rights on behalf of the management company at the annual general meeting of the target company. (18) Consequently, the FIN-FSA considers that the parent company or other company as referred to above must also disclose the holdings of the management company, unless control in the management company is restricted, for example by a clause in the articles of association. 4 For a precise definition of control, see chapter 1, section 5 of the Securities Markets Act.

24 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) Disclosure of major holdings in intraday trading (19) If active trading (or lending) back and forth takes place and if, for the same series of shares, the same disclosure threshold is crossed back and forth during the day, the close-of-day position may be disclosed, if a threshold is crossed compared to the closure of the preceding day Exemption from the disclosure obligation granted by the FIN- FSA (20) The FIN-FSA may grant a professional investor exemption from the disclosure obligation provided that the investor refrains from seeking to influence the management of the target company. 5 However, exemption may be granted only for specific reasons. 6 In assessing whether exemption should be granted and in deciding whether specific conditions should be set, the FIN- FSA takes account of the general purpose of the disclosure obligation. The exemption may not jeopardise the investors' access to information on the general structure of holdings in the target company or on essential changes in a major shareholder's investment policy, such as an increase or decrease in his holdings. (21) A condition for granting an exemption is that the applicant expressly informs the FIN-FSA that he will not seek to influence the management of the target company based on the holdings referred to in the application. Influencing the management of the target company mainly means exercising the managing rights conferred by the holding, such as exercising voting rights at the annual general meeting or being a member of the board. According to the Ministry of Finance decision on disclosure of holdings, notification shall be made as soon as the exemption expires. 6.5 Making a notification (22) The disclosure obligation applies to both the shareholder and to closely associated entities or persons. According to current provisions, a parent company can make the notification on behalf of the shareholder. The proportion of a holding belonging to a shareholder or a person comparable to a shareholder also includes the holdings of closely associated entities or persons. Consequently, the parent company of a group must disclose the total holding of the entities under its control and its breakdown among them. On the other hand, the disclosure obligation also applies to the shareholder, and each shareholder shall, if necessary, disclose changes in his own proportion, although the total holdings of the controlled entities do not change. 5 See chapter 2, section 11, subsection 3 of the Securities Markets Act. 6 See Government Bill 209/1998.

25 THE FINANCIAL SUPERVISION AUTHORITY 5 Disclosure of information until further notice shareholder 5.2b J. No. 7/120/ (29) (23) Notifications that are made in compliance with the Ministry of Finance decision on disclosure of holdings must be submitted to the FIN-FSA by fax to Target company's disclosure obligation (24) The disclosure provisions apply to both domestic and foreign companies whose shares or depositary receipts relating to the shares are publicly traded in Finland. Moreover, the provisions apply to Finnish companies whose shares are traded in another EEA member state in a manner that constitutes public trade Receipt of information on changes in holdings (25) A company must publish all relevant changes in the proportion of votes or share capital that have come to its notice. How such changes have come to the company's notice is irrelevant. The information must be published even if the shareholder has not notified the company thereof. The information must, however, be reliable Contents of a notification (26) All such information must be provided that is required under the Ministry of Finance decision on disclosure of holdings. If a shareholder has submitted inadequate information, the company must supplement it, provided this is possible without undue delay or inconvenience. In such a case, however, the company must specify the details that it has added to the notification. (27) The target company must publish the information it has received on changes in holdings without undue delay no later than before the start of trading the following day. 7 (28) Only in exceptional cases where it is necessary to verify details of a notification or supplement details in it, may the company delay the publication of information for the period of time that is required to verify the authenticity of information Listing (29) A company that is about to be listed shall, in its listing particulars, publish the names of all shareholders who directly or indirectly hold a minimum of 5% of the company's shares and the size of those shareholders' 7 See chapter 2, section 10 of the Securities Markets Act.