Detailed Contents. 1 Foundations of Capital Markets Legislature in Europe. 1 History 1 I. Introduction 2 II. Segré Report (1966) 2 III.

Transcription

1 Contents Detailed Contents List of Contributors List of Abbreviations xxix xxxi 1 Foundations of Capital Markets Legislature in Europe 1 History 1 I. Introduction 2 II. Segré Report (1966) 2 III. Phase 1: Coordination of Stock Exchange and Prospectus Laws ( ) 3 IV. White Paper on Completing the Internal Market (1985) 4 V. Phase 2: Harmonisation of the Laws on Securities Markets ( ) 4 VI. Financial Services Action Plan (1999) 5 VII. Lamfalussy Report (2000) 6 VIII. IX. Phase 3: Reorganisation of the Laws on Prospectuses and Securities ( ) 7 Continuation of Phase 3: Harmonisation of the Right to Take Over (2004) 10 X. White Paper on Financial Services Policy (2005) 11 XI. The de Larosière Report (2009) 12 XII. Phase 4: Towards a European Supervision (since 2009) 12 XIII. Phase 5: Regulation of Credit Rating Agencies ( ) 13 XIV. Continuation of Phase 5: Revision of the Framework Directives (since 2009) 13 XV. Continuation of Phase 5: Regulation on Short Sales (2012) 15 XVI. Continuation of Phase 5: Regulation on OTC Derivatives (2012) 15 XVII. Conclusion 16 2 Concept and Aims of Capital Markets Regulation 17 I. Concept 17 II. Regulatory Aims Efficiency of Capital Markets Regulatory Approaches 19 3 Legislative Powers for Regulating Capital Markets in Europe 20 I. Legal Foundations of the European Union 20 II. Rules on Competence 21 xi

2 1. Coordination of Provisions on the Protection of Shareholders and Creditors Coordination of Start-Up and Pursuit of Self-Employment Establishing an Internal Market 22 III. Legislative Instruments Overview Regulation Directive 24 4 Process and Strategies of Capital Markets Regulation in Europe 25 I. Process of Capital Markets Regulation Definition 27 (a) Market Regulation versus Market Supervision 27 (b) Capital Markets versus Financial Markets Regulation European Legislation 28 (a) Legislation in the Lamfalussy Process from 2002 to (aa) Committees on Capital Markets Regulation 29 (1) European Securities Committee 29 (2) Committee of European Securities Regulators 29 (bb) The Legislative Process 30 (1) Level 1: Framework Directives 30 (2) Level 2: Implementing Measures 30 (3) Level 3: Guidelines and Recommendations 32 (4) Level 4: Supervision of the Enforcement by Member States 32 (cc) Evaluation 33 (b) The Lamfalussy II Process 33 (aa) The New Level 2 34 (bb) Criticism 35 (cc) Graph: Lamfalussy II Process 36 II. Strategies of Capital Markets Regulation Minimum and Maximum Harmonisation 36 (a) Definitions 37 (b) Advantages and Disadvantages 38 (c) Tendency towards Maximum Harmonisation Regulatory Concepts in the Member States 39 (a) Transformation of European Law 39 (b) Accompanying National Law 40 (c) The Principles-based Approach to Regulation in the United Kingdom 40 (aa) Foundations of Principles-based Regulation 40 (bb) Effects of Principles-based Regulation on Enforcement 41 (cc) Evaluation 41 (dd) Outlook 42 (d) Self-regulation 43 xii

3 5 Sources of Law and Principles of Interpretation 44 I. Sources of Law European Law 44 (a) Framework Directives 44 (b) Takeover Directive 46 (c) Regulation on Credit Rating Agencies 46 (d) Regulation on Short Sellings 46 (e) Regulations on the European Supervisory Authorities 47 (f) Further Directives National Laws of the Member States 48 (a) Austria 48 (b) France 48 (c) Germany 49 (d) Italy 50 (e) Spain 51 (f) Sweden 51 (g) United Kingdom 52 II. Interpretation Importance of Interpretation Principles of Statutory Interpretation 54 (a) Textual Interpretation 55 (b) Contextual Interpretation 55 (c) Historical Interpretation 56 (d) Teleological Interpretation 57 6 Challenges for Academic Research and Teaching 59 I. Capital Markets Law as a Topic of Legal Research Intradisciplinarity 61 (a) Legal Nature 61 (b) Interpretation 62 (c) Coordination with other Areas of Company and Business Law 63 (aa) Accounting Law 64 (bb) Company Law Homo oeconomicus or Behavioural Finance? 66 (a) Basic Assumption: Rationality 66 (b) Behavioural Anomalies 66 (aa) Bounded Rationality 66 (bb) Overconfidence 66 (cc) Fairness 67 (dd) Prospect Theory/Framing/Risk Aversity 67 (ee) Hindsight Bias 67 (ff) Representativeness/Availability/Salience 68 (c) Relevance of the Results of Behavioural Economics for Capital Markets Law 68 II. The Relevance of Capital Markets Law for University Teaching in Europe 69 III. Outlook 71 xiii

4 2 Basics of Capital Markets Law 7 Capital Markets 73 I. Overview Trading Venue Primary and Secondary Markets Stock Exchanges 76 II. Regulated Capital Markets Scope of Application of the Legislative Acts on Capital Markets Law Definition Market Segments 80 8 Financial Instruments 82 I. Introduction 82 II. Securities Definitions in the Directives Shares Bonds Derivatives 85 9 Market Participants 87 I. Introduction 87 II. Issuers 88 III. Investors 89 IV. Other Persons as Norm Addressees Access to the Markets and Market Exit 93 I. Issuance of Shares 93 II. Admission to Trading of Shares 94 III. Market Exit Capital Markets Supervision in Europe 96 I. Introduction 98 II. European Requirements Institutional Organisation Powers 99 (a) Minimum Powers 99 (b) Additional General Clauses 100 (c) Proposals for Reforms 100 III. National Organisation of Capital Markets Supervision Institutional Concepts 101 (a) Model of Integrated Supervision 101 (b) Model of Sectoral Supervision 102 (c) Hybrid Models 103 (d) Distinction between Prudential Supervision and Conduct of Business Supervision 103 xiv

5 (e) Generally Preferrable Supervisory Model? Internal Organisation Administrative Powers 104 (a) Administrative Fines 104 (b) Other Administrative Measures 105 (c) Criminal Powers of Supervisory Authorities Liability of Supervisory Authorities Use of Resources and Sanctioning Activity 107 IV. Cooperation between the National Supervisory Institutions Cooperation within the European Union Cooperation with Third Countries 109 V. Competition between the National Supervisory Institutions 109 VI. The European Financial Supervisory Scheme The European Financial Markets Supervisory System 110 (a) Macro-prudential Level 111 (b) Micro-prudential Level The European Securities and Markets Authority (ESMA) 112 (a) Internal Organisation 112 (b) Independence 113 (c) Powers of Intervention towards the National Supervisory Authorities 113 (aa) Breaches of EU Law by the National Supervisory Authorities 114 (bb) Decisions on Emergency Situations and Disagreements 114 (1) Emergency Situation 115 (2) Disagreements between Competent Authorities in Cross-Border Situations 115 (3) National Fiscal Responsibilities Limit ESMA Powers 115 (d) Direct Supervision of the Market Participants 116 (aa) Warnings and Prohibition of Financial Activities 116 (bb) Supervision of Credit Rating Agencies 116 (e) Rule-Making Powers 117 (aa) Guidelines and Recommendations 117 (bb) Regulatory and Implementing Technical Standards 118 (1) Regulatory Technical Standards 119 (2) Implementing Technical Standards 120 (3) Assessment 120 (f) Judicial Review 121 (g) Liability Conclusion Sanctions 123 I. Introduction 124 II. Requirements in the European Directives on Capital Markets Law Criminal and Administrative Sanctions Civil Law Sanctions 126 III. National Sanctioning Systems 127 xv

6 1. France Germany Italy Spain Sweden United Kingdom 131 IV. Conclusion Market Integrity 13 Insider Dealing 133 I. Introduction 134 II. Regulatory Concepts Requirements under European Law 136 (a) Prohibitions Laid Down by the Market Abuse Directive 136 (b) Accompanying Rules 138 (c) Reform Implementation in the Member States 139 (a) Austria 139 (b) France 140 (c) Germany 140 (d) Italy 141 (e) Spain 142 (f) Sweden 142 (g) United Kingdom 143 III. Concept of Inside Information Overview Definition of Inside Information under European Law 145 (a) Information of a Precise Nature 145 (b) Potential Influence on the Price of Financial Instruments 148 (c) Reference to an Issuer of Financial Instruments 149 (d) Special Rules for Derivatives on Commodities and Front Running Transposition in the Member States 151 (a) Overview 151 (b) Germany 151 (c) United Kingdom 154 IV. Prohibitions Overview Prohibition of the Acquisition or Disposal of Financial Instruments 156 (a) European Requirements 156 (b) Legal Practice in the Member States 157 (c) The ECJ s Interpretation and Conclusions for the Legal Practice in the Member States Disclosure to another Person 159 (a) European Requirements 159 xvi

7 (b) Legal Practice in the Member States Recommending or Inducing 162 (a) European Requirements 162 (b) Legal Practice in the Member States Exemptions 163 V. Supervision European Requirements 164 (a) Functions and Powers of the Authorities 164 (b) Insider Lists 164 (c) Notification Obligation Legal Practice in the Member States 166 VI. Sanctions Penalties and Fines 167 (a) Regulatory Techniques 168 (b) Legal Frameworks for Penalties and Fines 169 (c) Reform Naming and Shaming Investor Protection by Civil Liability 172 VII. Conclusion Market Manipulation 174 I. Introduction 174 II. Regulatory Concepts Requirements under European Law Implementation in the Member States 177 III. Scope of Application Personal Scope Material Scope 178 IV. Prohibitions Regulatory System Core Definitions of Market Manipulation 179 (a) Information Based Manipulation 179 (aa) The Core Definition 179 (bb) Digression: Behavioural Finance 181 (b) Transaction-Based Manipulation 182 (aa) Core Definition and Signals 182 (bb) Exceptions 183 (1) Legitimate Reasons 184 (2) Accepted Market Practices 184 (c) Other Forms of Market Manipulation Examples of Market Manipulation 185 (a) Dominant Market Position 185 (b) Transactions at the Close of the Market 186 (c) Abusing the Access to the Media 187 V. Safe-Harbour Rules Introduction Buy-Back Programmes 189 xvii

8 (a) Aim of the Programme 189 (b) Disclosure Obligations 190 (c) Trading Conditions 190 (d) Restrictions Price Stabilisation 191 (a) Scope of Application 192 (b) Period of Stabilisation 192 (c) Disclosure and Organisational Obligations 193 (d) Ancillary Stabilisation 193 VI. Supervision Supervisory Mechanisms Investigatory Powers 194 VII. Sanctions Requirements under European Law Transposition in the Member States 196 (a) Criminal Sanctions 196 (b) Administrative Sanctions 197 (c) Investor Protection through Civil Liability 199 VIII. Conclusion Short Selling 201 I. Introduction 201 II. Potential Risks and Benefits of Short Sales Short Sales as a Means for Market Manipulation Short Sales as a Means for Destabilising the Financial System 203 III. National Regulatory Concepts 203 IV. The EU Short Selling Regulation Rules on Short Sales 204 (a) Prohibited Transactions 204 (b) Transparency Obligations Rules on Credit Default Swap Agreements Additional Powers of the National Authorities and the ESMA Sanctions 207 V. Conclusion Disclosure System 16 Foundations 209 I. Introduction 210 II. Transparency and Capital Market Efficiency Allocational Efficiency Institutional Efficiency Operational Efficiency 213 III. Disclosure Provisions as Part of the Regulation of Capital Markets The Importance of Legal Disclosure Provisions from an Economic Point of View 214 xviii

9 2. Disclosure Provisions as Part of Investor Protection 217 IV. Development of a Disclosure System in European Capital Markets Law Prospectus Disclosure 220 I. Introduction 221 II. Regulatory Concepts Requirements under European Law 222 (a) Requirements under the Prospectus Directive and Prospectus Regulation 223 (b) Supporting Rules Implementation in the Member States 225 III. Drawing up a Prospectus Scope of Application Exemptions from the Obligation to Publish a Prospectus 227 (a) Exceptions for Certain Addressees, Offers or Securities 228 (b) Exemptions for Certain Issuances in Cases of Public Offers 228 (c) Exemptions for Certain Issuances for the Admission to the Regulated Market 229 (d) Supplements Content, Format and Structure of a Prospectus 230 (a) General Rules 230 (b) Format of the Prospectus 230 (aa) Single or Separate Documents and Base Prospectus 230 (bb) Summary 231 (cc) Incorporation by Reference 233 (c) Distinction between Different Security Constructions 233 (d) Language of the Prospectus 234 (e) Annual Document 234 IV. Sanctions Requirements under European Law Supervisory Measures 236 (a) Suspension or Prohibition of an Offer 236 (b) Fines Sanctions under Criminal Law Sanctions under Civil Law 237 (a) Deficiencies of the Prospectus 237 (b) Claimant and Opposing Party 239 (c) Causation 240 (d) Responsibility 241 (e) Legal Consequences 242 V. Conclusion Periodic Disclosure 244 I. Introduction Development of a System of Periodic Disclosure Financial Accounting Information as the Basis of Financial Reporting 247 xix

10 II. Regulatory Concepts Requirements under European Law 248 (a) Transparency Directive 248 (b) Correlation with European Accounting Law as a Reflection of the Dualistic Regulatory Concept 249 (c) Addressee of the Disclosure Obligation Implementation in the Member States 250 (a) France 250 (b) Germany 251 (c) Italy 251 (d) Spain 251 (e) Sweden 252 (f) United Kingdom 252 III. Annual Financial Report Overview Financial Accounting Information 254 (a) Consolidated and Individual Accounts 254 (b) Management Report 256 IV. Half-yearly Financial Reports Overview Financial Accounting Information 257 (a) Consolidated and Individual Accounts 257 (b) Interim Management Report 258 (c) Auditing of the Half-yearly Financial Report 258 V. Quarterly Financial Report and Interim Management Statement Overview Content of Interim Management Statements Quarterly Financial Report 261 VI. Disclosure Procedures 262 VII. Sanctions Liability for Incorrect Financial Reporting 264 (a) Specific Liability for Incorrect Financial Reporting 264 (b) Liability under the General Civil Law Rules Sanctions under Criminal and Administrative Law 267 VIII. Conclusion Disclosure of Inside Information 270 I. Introduction Dual Function of Ad Hoc Disclosure Obligations Practical Relevance 273 II. Regulatory Concepts Requirements under European Law Implementation in the Member States 276 (a) Germany 276 (b) Austria 277 (c) Sweden 277 (d) France and Spain 278 xx

11 (e) Italy 278 (f) United Kingdom 278 III. Obligation to Disclose Inside Information Addressees 279 (a) Issuers of Financial Instruments 279 (b) Persons Acting on Behalf or on Account of the Issuer 279 (c) Companies Controlled by the Issuer Relevant Information 280 (a) Foundations 280 (b) Information Directly Concerning the Issuer 282 (c) Future Circumstances 283 (d) Corporate Group Constellations 284 (e) Relationship to Other Disclosure Rules No Offsetting of Information Prohibition to Disclose Other Information Publication Procedure 288 IV. Delay in Disclosure Foundations Legitimate Interests 290 (a) Requirements under European Law 290 (b) Legal Practice in the Member States 291 (aa) Attempts at a Dogmatic Approach 291 (bb) Further Constellations 293 (cc) Multi-Stage Decision-Making Processes No Misleading the Public Ensuring Confidentiality Conscious Decision by the Issuer? 297 V. Sanctions Importance of National Legal Traditions Civil Liability 299 (a) Germany 299 (b) Other Member States Administrative Sanctions 305 (a) Fines 305 (aa) Germany 305 (bb) France 306 (b) Naming and Shaming 307 (c) Further Administrative Sanctions Criminal Law 308 VI. Supervision 308 VII. Conclusion Transparency of Major Shareholdings and Financial Instruments 310 I. Introduction 312 II. European Concepts of Regulation Requirements under European Law 314 (a) Foundations 314 xxi

12 (b) Scope of Application and Regulatory Powers 315 (c) Disclosure Obligations 315 (d) Further Disclosure Requirements 316 (e) Reform Implementation in the Member States 317 III. Notification Obligations on Changes in Voting Rights Prerequisites 318 (a) Procedures Subject to Notification 318 (b) Thresholds 319 (c) Exemptions from the Notification Obligation Legal Consequences 321 (a) Notification 321 (b) Publication Attribution of Voting Rights 322 (a) Regulatory Concepts 322 (b) Cases of an Attribution of Voting Rights 323 (aa) Acting in Concert 323 (1) Legal Practice in France 324 (2) Legal Practice in Germany 325 (3) Legal Practice in Italy 327 (4) Legal Practice in Spain 328 (bb) Temporary Transfer of Voting Rights 328 (cc) Notification Obligations of the Secured Party 329 (dd) Life Interest 329 (ee) Voting Rights Held or Exercised by a Controlled Undertaking 329 (ff) Deposited Shares 331 (gg) Shares Held on Behalf of Another Person 331 (hh) Voting Rights Exercised by Proxy 333 (c) Exceptions Supervision Sanctions 334 (a) Administrative Fines 335 (b) Loss of Rights 335 (c) Investor Protection by Means of Civil Liability 336 IV. Notification Requirements when Holding Financial Instruments Prerequisites Legal Consequences Sanctions Reform 339 (a) United Kingdom 339 (b) Germany 339 (c) France 342 (d) Europe 343 V. Notification of Intent France Germany 345 xxii

13 3. Reforms at European level 346 VI. Conclusion Directors Dealings 348 I. Introduction 348 II. Regulatory Concepts Requirements under European Law 350 (a) Legal Foundation 350 (b) Additional Disclosure Rules Implementation in the Member States 351 III. Notification Requirements Prerequisites 352 (a) Persons Subject to the Notification Obligation 352 (b) Transactions Subject to the Notification Requirements Legal Consequences 353 (a) European Requirements on Notification and Publication 353 (b) Legal Practice in the Member States 354 IV. Supervision and Sanctions Requirements Laid Down by the Market Abuse Directive Fines and Criminal Sanctions Forfeiture of Profits Civil Liability 357 V. Conclusion Access to Information 358 I. Requirements under European Law 358 II. Implementation in the Member States Germany United Kingdom 359 III. Reform Disclosure of Information Necessary for Shareholders to Exercise their Rights 361 I. Introduction 361 II. Regulatory Concepts 361 III. Disclosure of Changes in the Rights Attached to Shares 362 IV. Disclosure of Information Necessary for Exercising Rights Information Necessary for Shareholders Information Necessary for the Holders of Debt Securities 363 V. Conclusion Disclosure Obligations in Takeover Law 365 I. Introduction 366 II. Transparency Regarding Defensive Structures and Mechanisms Regulatory Aims Transparency Requirements 367 (a) Structure of the Capital 368 (b) Restrictions Regarding the Transfer of Shares 368 xxiii

14 (c) Significant Shareholdings 368 (d) Holders of Special Rights 369 (e) System of Control for Employee Share Schemes 370 (f) Restrictions on Voting Rights 370 (g) Agreements between Shareholders 370 (h) Provisions on the Appointment and Replacement of Board Members 371 (i) Powers of Board Members to Issue and Buy Back Shares 371 (j) Change of Control Clauses 372 (k) Compensation Agreements 372 III. Obligation to Disclose Bids Types of Bids Decision to Launch a Bid Offer Document 374 IV. Mandatory Bid Legal Foundations and Aims Control Gaining Control by Acting in Concert 377 (a) Legal Foundations 377 (b) Legal Practice in the Member States 378 (aa) Sacyr/Eiffage (France) 378 (bb) WMF (Germany) 379 V. Conclusion Intermediaries 25 Investment Firms 383 I. Introduction 383 II. Investment Advisory Services Definition Obligations of Investment Firms 385 (a) Exploration and Assessment of the Suitability of an Investment 385 (b) Information Obligations Supervision Sanctions 386 III. Conclusion Financial Analysts 389 I. Introduction 389 II. Types of Financial Analysts 391 III. Regulatory Concepts Requirements under European Law Implementation in the Member States 393 IV. Specific Regulation of Financial Analysts Definition of Research Concerning Financial Instruments 393 (a) Recommending an Investment Strategy 394 xxiv

15 (b) Relevant Person Fair Presentation of Investment Recommendations 396 (a) General Requirements 396 (b) Special Requirements for Certain Persons Disclosure Obligations 397 (a) Identity of the Producer of Investment Recommendations 398 (b) Actual and Potential Conflicts of Interest 398 (aa) General Provisions 398 (bb) Special Requirements for Certain Persons 398 (1) Obligation to Disclose Certain Conflicts of Interest 398 (2) Further Disclosure Obligations Dissemination of Investment Recommendations Produced by Third Parties 401 (a) General Requirements 401 (b) Additional Obligations for Certain Persons Principle of Proportionality Sanctions 404 (a) Requirements under European Law 404 (b) Germany 404 (c) United Kingdom 405 V. Relevance of the General Rules of Conduct for Financial Analysts Market Manipulation 405 (a) Information-Based Manipulation 405 (b) Fictitious Devices or Any Other Form of Deception or Contrivance 406 (c) Scalping 407 (d) Effects of Implementing Directive 2003/125/EC on the Definition of Market Manipulation Prohibition of Insider Dealings Organisational Requirements 409 (a) General Organisational Requirements 409 (b) Special Organisational Requirements 411 VI. Conclusion Rating Agencies 413 I. Introduction Aims of Rating Effects of a Rating Market Structure and Development of Regulation in Europe 415 II. Regulatory Concepts 416 III. Scope of Application Subject Matter of Regulation Scope Definitions 418 IV. Regulatory Approach and Obligations Avoidance of Conflicts of Interest 419 (a) Independence of Credit Rating Agencies 419 xxv

16 (b) Persons Involved in the Rating Procedure Improvement of the Quality of Ratings Transparency Obligations 423 (a) Disclosure and Presentation of Credit Ratings 423 (b) Transparency Report Registration The Commission Proposals of November V. Supervision Foundations Procedure 427 VI. Measures and Sanctions Administrative Instruments Criminal Measures Civil Law Liability 428 (a) Legal Situation in the Member States 429 (b) Proposal for a European Civil Liability 430 VII. Conclusion Compliance in Investment Firms 28 Foundations 431 I. Compliance 432 II. Relationship between Compliance and Risk Management 432 III. Developments and Legal Foundations Organisational Requirements 436 I. Regulatory Concepts in European Law Overview Principles-based Approach to Regulation Regulatory Aim 442 II. Implementation in the Member States France Germany Italy Spain Sweden United Kingdom 445 III. Regulatory Objectives and Scope of Compliance Obligations Mitigation of Compliance Risk Scope of the Compliance Obligation 448 IV. Elements of a Compliance Organisation Compliance Function 449 (a) Requirements 450 (aa) Independence 450 (1) Operational and Financial Independence 450 (2) Organisational Independence 451 xxvi

17 (bb) Permanence and Effectiveness 453 (b) Responsibilities 453 (aa) Monitoring and Assessment 454 (bb) Advice and Assistance Compliance Officer 455 (a) Appointment 455 (aa) Registration and Qualification Requirements 455 (bb) Appointment of Members of Senior Management as Compliance Officers 457 (b) Legal Status 457 (aa) Independence towards Senior Management 457 (bb) Disciplinarian Independence and Protection against Dismissal 459 (c) Responsibilities and Powers 459 (aa) Informational Rights and the Right to Issue Instructions 459 (bb) Compliance Reporting 461 (1) Internal Reporting 461 (2) External Reports Chinese Walls 462 (a) Legal Foundations 463 (b) Elements 464 (aa) Segregation of Confidential Areas 465 (bb) Watch Lists and Restricted Lists 466 (c) Legal Effects 467 V. Sanctions Sanctions against Investment Firms Sanctions against the Senior Management and the Compliance Officer 470 VI. Conclusion Conclusion 30 A Review of the Past and Suggestions for the Future 473 I. Topics for Final Consideration 473 II. Capital Markets Law(s) in Europe or European Capital Markets Law? Degree of Existing Provisions Consistent Application of Law Supervision and Sanctions Conclusions 477 III. Prospects and Challenges Reorganisation of the European Sources of Capital Markets Law Regulatory Concepts Regarding Enforcement and Sanctions Legislation 2015: Stronger Influence of Legal Knowledge 481 xxvii

18 Bibliography 483 Subject Index 487 Index of National Laws 499 Index of National Laws by Country 505 Index of Supervisory and Court Rulings 511 xxviii