IMPORTANT NOTICE: This version is a translation of the original Swedish decision and is only made available for information purposes.

Transcription

1 1 IMPORTANT NOTICE: This version is a translation of the original Swedish decision and is only made available for information purposes. NASDAQ STOCKHOLM S DECISION September 11, 2018 DISCIPLINARY COMMITTEE 2018:08 Nasdaq Stockholm Cassandra Oil AB (publ) DECISION The Disciplinary Committee decides to delist Cassandra Oil AB s shares from trading on Nasdaq First North. The delisting shall take place not later than November 20, Motion The shares in Cassandra Oil AB (publ) ( Cassandra Oil or the Company ) are admitted to trading on Nasdaq Stockholm s (the Exchange ) MTF Nasdaq First North. The Company has signed an undertaking to comply with the Exchange s rules for Nasdaq First North, (the Rulebook ) in effect from time to time. In summary, the Exchange has alleged that Cassandra Oil, on repeated occasions and over the course of several years, violated Sections 2.2.4, 4.1, and of the Rulebook through deficient disclosure of information, violated Article 2(1)(b) of the Commission s Implementing Regulation (EU) No. 2016/1055 of June 29, 2016 (the Implementation Regulation ), and acted in such a manner as to damage, or risk damaging, public confidence in the securities market and that Section of Supplement B to the Rulebook is thus applicable.

2 2 Citing Section 7.3 and Supplement B to the Rulebook, the Exchange has requested that the Disciplinary Committee order that the Company s shares be delisted in accordance with Section (a) (iii) of the Rulebook. Cassandra Oil has substantively admitted the facts invoked by the Exchange but has denied that the Company is guilty of the alleged violations of the Rulebook. A hearing in the matter took place before the Disciplinary Committee on August 29, 2018, at which the Exchange was represented by Karin Ydén (Head of Issuer Surveillance), Niklas Ramstedt (Associate General Counsel), Caroline Sjölund (Regulatory Compliance Specialist) and Andreas Blomquist (Senior Legal Counsel). Cassandra Oil was represented by Anders Olsson (CEO), Per Olsson (Advisor), and Karolina Carlsson (Head of PR). Reasons for the decision The Rulebook The Rulebook prescribes the following: Section 2.2.4: The Issuer must possess the organization and staff required in order to comply with the requirements regarding disclosure of information to the market as set forth in Chapter 4. Section 4.1: The Issuer shall disclose inside information in accordance with Article 17 of the Market Abuse Regulation, EU No. 596/2014 ( MAR ). Section 4.2.1: Sections 4.2 and 4.4 contain certain disclosure requirements that go beyond the requirements in Article 17 of MAR. Consequently, the information set out in Sections 4.2 and 4.4 should always be disclosed irrespective of whether it constitutes inside information which require disclosure pursuant to MAR. Information to be disclosed in accordance with these Sections shall, regardless if considered inside information, be disclosed in the same manner as inside information in Section 4.1, unless otherwise stated. Section 4.2.6: Where the Board of Directors or the general meeting of shareholders of the Issuer has adopted a resolution in respect of the issuance of new shares or financial instruments with a right to subscribe for newly issued shares or where the Board of Directors decides to propose such a resolution to the general meeting of shareholders, the Issuer shall immediately publish the resolution, the reasons for the issue, the principal terms and conditions for the issue, as well as the party/parties to whom the issue is directed. Section of Supplement B: The Exchange may impose the sanctions set out in (a) (i) (iii) also in situations where an already listed Issuer, despite fulfilling all admission requirements, is considered to damage public confidence in the Exchange, Nasdaq First North or the securities markets in general. Article 2(1)(b) of the Implementation Regulation prescribes that the information must clearly identify that it is inside information. Whereas recital 16 of MAR states that where inside information concerns a process which occurs in stages, each stage of the process as well as the overall process could constitute inside information. An intermediate step in a protracted process may in itself constitute a set of circumstances or an event which exists or where there is a realistic prospect that they will come into existence or occur, on the basis of an overall assessment of the factors existing at the relevant time. However, that notion should not be interpreted as meaning that the magnitude of the effect of that set of circumstances or that event on the prices of the financial instruments concerned must be taken into consideration. An intermediate step should be deemed to be inside information if it, by itself, meets the criteria laid down in this Regulation for inside information.

3 3 According to Article 7 of MAR, inside information is information of a precise nature, which has not been made public, relating, directly or indirectly, to one or more issuers or to one or more financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments [ ]. According to article 17.1 of MAR, an issuer shall inform the public as soon as possible of inside information which directly concerns that issuer. The issuer shall also ensure that the inside information is made public in a manner which enables fast access and complete, correct and timely assessment of the information [ ]. Considerations Disclosure of information in connection with share issues On February 2, 2017, the Company published a press release with information that it had entered into a financing agreement (the Financing Agreement ) according to which a consortium with registered offices in London and Dubai intended to invest SEK 36 million in the Company through monthly securities issues over the course of 12 months. No additional information about the consortium in question was provided in the press release. On May 17, 2017, the Company published a press release with information to the effect that the Company had issued 2,713,188 new shares at a price of SEK 1.60 per share, as a part of the ongoing private placement announced on February 2, The press release did not contain any information regarding to whom the share issue was directed. On July 27, 2017, the Company published its interim report for the period April 1 June 30, It was apparent from the press release, through which the interim report was published, that the Company had received an additional SEK 2,771,697 and that the Company would issue an additional 1,732,311 shares at a price of SEK 1.60 as a part of the ongoing private placement. However, no such share issue has been registered with the Swedish Companies Registration Office, and the press release did not contain information regarding to whom the share issue was directed. Other than the share issues made public on May 17, 2017 and July 27, 2017, the Company did not announce any additional monthly share issues in accordance with the plan made public in the press release on February 2, On August 10, 2017, the Exchange requested documentation for the share issues which the Company had made public on May 17, 2017 and July 27, According to the documentation, the right to subscribe for shares in the share issue vested in a number of private individuals and a Swedish limited company. The Exchange has argued: The execution of the Financing Agreement constitutes inside information. The Exchange notes that the Financing Agreement was entered into on January 20, 2017 but that the press release about the Financing Agreement was not made public until February 2, The Company has not applied a delayed disclosure of information according to MAR. The Company thus violated Sections 4.1 and of the Rulebook by not having published inside information as soon as possible. The press release published on February 2, 2017 also contained information that the other party to the Financing Agreement was a consortium with registered offices in London and Dubai. However, the Exchange notes that the right to subscribe for shares vested in a number of the Swedish private individuals and a Swedish limited company. The Company thus violated Sections 4.1 and of the Rulebook by having published an incorrect identity of the investors in the share issue. With respect to the press release published on February 2, 2017, the Exchange finally notes that the release stated that the consortium intended to invest SEK 3 million per month over the course of 12 months. The extent to which investments were actually made, however, differs significantly from this information. By not having published material changes in previously published information, the Company also violated Section in combination with Sections and 4.1 of the Rulebook.

4 4 With respect to the press releases of May 17, 2017 and July 27, 2017, the Exchange notes that these did not contain any information regarding the identity of the investors to which the share issues were directed. The Exchange therefore considers that the Company thus violated Section of the Rulebook. With respect to the press release of May 17, 2017, the Exchange further notes that the Company stated therein that the information contained in the press release was the type of information which the Company was obligated to make public according to MAR. However, the Company subsequently stated that the information was not to be regarded as inside information. Consequently, in the opinion of the Exchange the press release was erroneous and potentially misleading and therefore the Company violated Section 4.1 of the Rulebook and Article 2(1)(b) of the Implementation Regulation. The Company has argued: Cassandra Oil denies that the Company is guilty of the alleged violations of the Rulebook. With respect to the disclosure of the execution of the Financing Agreement, the agreement was contingent on a resolution being adopted by the Board of Directors which occurred at a meeting of the board held on January 31, 2017 and publication was made immediately in conjunction with the resolution. With respect to the point that the scope of the consortium s investments did not amount to what was stated in the press release of February 2, 2017, it was also stated in this press release that the investment might increase or decrease. The Company also estimates that the consortium with its registered offices in Dubai and London will invest in the future in accordance with the Financing Agreement which is why the Company did not publish that the share issues carried out thus far were primarily subscribed for by Swedish private individuals. With respect to the information contained in the press release published on May 17, 2017, the Company does not believe that this constituted inside information. The Disciplinary Committee notes that the Company has stated that the reason it did not disclose the signing of the Financing Agreement until February 2, 2017, despite the fact that the agreement was entered into on January 20, was that the agreement was conditional on the approval of the Board of Directors and that this was not obtained until January 31. According to MAR, an intermediate step in a protracted process can be deemed as inside information if it per se fulfills the criteria for inside information. According to the Disciplinary Committee, the execution of the Financing Agreement constituted a step in such a protracted process since, at this time, there must be deemed to have been actual prospects for the Financing Agreement to be realized in the near future. In light of the Company s strained financial situation and the value of the Financing Agreement, it appears as likely that the information regarding the signing of the Financing Agreement would have a significant effect on the price of the shares if it were made public. The Disciplinary Committee thereby finds that the Company had an obligation, as soon as possible after the signing of the Financing Agreement, to make public information regarding this and that the Company, by not announcing the execution of the agreement until 13 days after signing, violated Section 4.1 of the Rulebook. In the press release of February 2, 2017, the Company stated that the other party to the financing agreement was a consortium with its registered offices in London and Dubai which would invest SEK 36 million through share issues in the Company. In reality, the share issues that were carried out within the scope of the Financing Agreement were subscribed for by a group of Swedish investors and the share issues, according to the evidence presented to the Disciplinary Committee, brought the Company less than SEK 5 million. The press release of February 2, 2017 did state that the investment might decrease but this cannot be deemed to release the Company from its obligation to make public information that the share issue only provided the Company with less than one-sixth of the capital the Company had previously announced. Consequently, by providing incorrect and misleading information regarding who was entitled to subscribe in the relevant share issues, and regarding the value of the share issues and by not having

5 5 made public material changes in previously published information, the Company violated Section in combination with Sections and 4.1 of the Rulebook. The Company also violated Section of the Rulebook by not stating in the press releases regarding the share issue decisions of May 17, 2017 and July 27, 2017, to whom the share issues were directed. Since it was, according to the Company, incorrectly stated in the press release of May 17, 2017 that the information in the press release was the type of information which the Company was obligated to make public according to MAR, the Company also violated in this respect Section 4.1 of the Rulebook as the press release therefore was misleading. Disclosure of information regarding the decision concerning a balance sheet for liquidation purposes At the meeting of the Board of Directors of the Company held on January 30, 2017, the Board of Directors adopted a resolution, according to the minutes of the meeting, to cause a balance sheet for liquidation purposes to be prepared. Information regarding this was not, however, made public by the Company. The Exchange has argued: According to the Exchange, an information disclosure obligation arose for the Company when the Company identified a need to prepare a balance sheet for liquidation purposes. By not having made public information regarding the resolution, the Company violated Section 4.1 of the Rulebook. The Company has argued: The resolution to prepare a balance sheet for liquidation purposes was taken on the basis of the Company s strained financial position but the outcome was that the Company s auditors stated that no need existed to prepare a balance sheet for liquidation purposes and in light of this the Company does not believe that the information needed to be made public. The Company has also stated that no balance sheet for liquidation purposes was ever prepared, and that the minutes from the meeting of the Board of Directors held on January 30, 2017 incorrectly stated that such a balance sheet was prepared. The Disciplinary Committee notes that Section 7 of the minutes of the Company s Board meeting held on January 30, 2017, which were attested by the Company s Chairperson and another director and signed by the secretary of the Board, states that the Board of Directors resolved at the meeting to cause a balance sheet to be prepared for liquidation purposes. Consequently, the Disciplinary Committee does not find the Company s claim that a balance sheet for liquidation purposes was never prepared to be credible. The fact that the Board of Directors adopted a resolution to prepare a balance sheet for liquidation purposes must, in the opinion of the Disciplinary Committee, regardless of the results of the balance sheet for liquidation purposes, be deemed to be information which, if made public, would be likely to have a significant effect on the price of the Company s shares. The information was thus of such a nature that the Company was obligated according to Article 17 of MAR to immediately make it public. The Disciplinary Committee therefore finds that the Company, by not having disclosed information regarding the resolution to prepare a balance sheet for liquidation purposes, violated Section 4.1 of the Rulebook. Disclosure of information regarding a fire in the Company s shop premises On May 28, 2017, an article was published at with information that the Company s workshop suffered a serious fire on that day. The Company s CEO was quoted in the article. On May 29, the Company published a press release containing information about the fire and stated that the fire had destroyed most of the Company s CASO facility on the premises. According to the press release, the Company believed that the damage would be covered by insurance. On May 30, the Company published a clarification with information that the direct effects of the fire might entail some, but not serious, delay in

6 6 the Company s central projects. On July 7, the Company published a press release containing information that the damaged facility was insured in the amount of approximately SEK 75 million and that the damage would be covered by the Company s insurance. On July 27, in conjunction with its interim report, the Company announced that the Company s earnings were negatively affected in the amount of SEK 43.7 million as a consequence of write-downs following the fire. On September 1, 2017, the Company announced in a press release that, due to the fire, the Company had lost both sales profits and operating revenue and that a delay in receiving insurance compensation entailed a postponement of the start of production causing significant financial damage to the Company. However, the press release stated that the Company believed that this would also be covered by the Company s insurance. More specific information regarding the extent of the damage was not provided. On February 14, 2018, the Company announced that a statement of claim had been filed against the Company s insurance company based on claims for insurance compensation related to the fire. According to the press release, Cassandra Oil was seeking a ruling from the District Court that the Company was entitled to insurance compensation under the insurance terms and conditions and ordering the insurance company to pay out SEK 40 million. The statement of claim stated that the Company had received notice as early as June 29, 2017 that the insurance company did not intend to pay out insurance compensation for the damage and that subrogation claims had been brought against the Company for the damage to the property where the Company s industrial building was located. All of the press releases stated that the information was the type of information which the Company was obligated to publish according to MAR. The Exchange has argued: The Exchange notes that published an article about the fire as early as May 28, 2017 in which the Company s CEO was quoted, but that the Company did not disclose information about the fire until May 29. In addition, the Company was declined insurance compensation for the damage as a consequence of the fire on June 29, but the Company did not make public information about the denial until September 14. The Exchange questions whether the Company, on these occasions, had disclosed the information as soon as possible in accordance with Section 4.1 of the Rulebook. The Exchange raises the same question regarding the Company s failure to make public detailed information regarding the financial impact the fire had on the Company until the publication of the Company s interim report on July 27, 2017, since the Company, in the opinion of the Exchange, was obligated to make this information public as soon as the impact was possible to determine which must have been at a significantly earlier point in time than July 27. By not having made public information regarding the financial consequences of the fire as soon as possible, and by not having quantified the financial impact related to the lost sales profits, operating income, and the delayed start of production, the Company violated Section 4.1 of the Rulebook. The Company has argued: The Company does not believe it violated the Rulebook with respect to the disclosure of information regarding the fire on May 28, The fire occurred on a Sunday morning and the Company CEO was transported by ambulance to a hospital where he was admitted for care for several days. The Board of Directors was informed and held a meeting by telephone on Sunday evening. A press release regarding the events was sent out on Monday morning. With respect to the publication of information regarding the insurance compensation, the Company has chosen to maintain a low profile during the ongoing negotiations with the insurance company and prior to a future trial, and the Company still believes that the insurance compensation will be paid out. The Disciplinary Committee notes that it is uncontested that the information regarding the fire, its financial consequences for the Company, and regarding the prospects for the Company to obtain insurance compensation constituted inside information. After the fire had broken out in the morning of

7 7 May 28, 2017, the Company had an obligation to make public information about this as soon as possible. However, the Company did not make public the information about the fire until 07:59 CET on May 29, 2017 after information about the fire already been published by Dagens Industri the previous day. The Company also had an obligation, as soon as possible after the Company received a denial on June 29, 2017 of its request for insurance compensation for the damage from the fire, to make public information regarding the insurance company s decision, which however the Company did not make public until September 14. Finally, the Company also had an obligation to make public, as soon as possible, complete and correct information regarding the economic effects on the Company of the fire. However, the Company did not make public information to the effect that the Company needed to make write-downs of goods in stock and inventory as a consequence of the fire in an amount of SEK 43.7 million until its quarterly report of July 27, 2017, which must be deemed to be information which the Company had access to before July 27, Taken as a whole, the Disciplinary Committee finds that the Company s disclosure of information in conjunction with the fire was deficient in several respects and that Cassandra Oil, in all cases pointed out now by the Exchange, violated Section 4.1 of the Rulebook. Disclosure of information regarding a sale of the CASO facility On the evening of September 24, 2017, Cassandra Oil entered into an agreement regarding the sale of a CASO facility to REAKTOR APS (the Sale and Purchase Agreement ). The transaction was made public in a press release on September 25 at 12:13 CET. According to the press release, the Company would receive a partial payment in the amount of EUR 2 million prior to October 25, The Exchange contacted the Company in order to discuss the timing of the publication whereupon the Company stated that disclosure could not take place until September 25 since the Company s CEO was traveling. On November 7, the Company published a press release containing information that the Sale and Purchase Agreement had been adjusted to cover two CASO facilities. On November 18, an interview was published with the Company CEO in which he stated that the Company had not received any partial payment from REAKTOR APS as previously published and that, instead, a larger partial payment would be received by the Company later on. On November 20, after contacts with the Exchange, the Company published the information which had come out during the interview in a press release in which it was stated that the Company would receive a first partial payment of EUR 1 million within two months and that future payments would take place through an annuity over the course of five years. In all of the press releases, it was stated that the information in the press releases constituted the type of information which the Company was obligated to disclose according to MAR. The Exchange has argued: The Exchange is of the opinion that the Company did not disclose information regarding the signing of the Sale and Purchase Agreement as soon as possible and that Cassandra Oil thus acted in contravention of Section 4.1 of the Rulebook. The information which was published through the interview with the Company s CEO to the effect that the Company had not received payments in accordance with what the Company had previously announced must also have been regarded as inside information taking into consideration the Company s strained financial situation, and therefore this information was also not published as soon as possible. The information was also not diclosed in a nondiscriminatory manner in that it was made public through an interview in Dagens Industri. The Exchange therefore believes that, in these respects as well, Cassandra Oil violated Section 4.1 of the Rulebook. The Company has argued: The Sale and Purchase Agreement was a result of a renegotiation of the previous agreement and, for the Company s part, was an unanticipated event where the results could not

8 8 be foreseen. Considering the Company s strained financial position, it was natural that the Sale and Purchase Agreement, prior to publication, be approved by the Company s Chairman of the board of directors. This approval could not be obtained until the morning of September 25 since the Company s CEO was traveling until that time. The disclosure was made as soon as possible and Cassandra Oil believes that the Company, in this disclosure, did not violate any provision of the Rulebook. The Disciplinary Committee notes that it is uncontested that the information regarding the execution of the Sale and Purchase Agreement as well as the information that the Company had not received any partial payment from REAKTOR APS as had previously been published, and that a major partial payment would instead be received from REAKTOR APS further down the line, constituted inside information. The Company was thus obligated according to Article 17 of MAR to make public information regarding each event. In the opinion of the Disciplinary Committee, the fact that the Company made the information regarding the signing of the Sale and Purchase Agreement public at 12:13 CET on September 25, 2017 despite the fact that the agreement had been entered into during the evening of September 24, 2017, constitutes a violation of Section 4.1 of the Rulebook. As the Exchange has stated, that the delay was a consequence of the fact that the CEO was traveling is not relevant to the assessment. The Disciplinary Committee also shares the opinion of the Exchange that the Company s disclosure on November 20, 2017 that the Company had not received payments in accordance with what it had previously announced, after this information had been published in Dagens Industri on November 18, constitutes a violation of Section 4.1 of the Rulebook. Decision regarding incentive program for the board of directors and senior management On March 29, 2018, Cassandra Oil published a notice of its annual general meeting to be held on April 26, 2018 with a proposal regarding the issuance of warrants to be subscribed for by the Chairman of the Board of Directors and the Company s subsidiary for transfer to directors, senior management, and other key persons in the Company. Since the proposal entailed that the Board of Directors would be given the right to participate in the same incentive program as employees of the Company, the Exchange inquired on the same day as to the Company s view of the incentive program s compatibility with generally accepted behavior in the Swedish securities market and the statement by the Swedish Securities Council AMN 2002:01. The Company replied on April 4 that its legal advisers considered the incentive program compatible with generally accepted behavior on the Swedish securities market. Following several followup questions by the Exchange, however, the Company amended the proposal so that the incentive program was broken down into two separate programs, one directed to the Chairman of the Board of Directors and one to employees of the Company. The amended proposal was published in a press release on April 9, The Exchange has argued: There was an imminent risk that the general meeting would have adopted a resolution regarding an incentive program in contravention of generally accepted behavior on the Swedish securities market if the Exchange had not intervened. According to the Exchange, it is therefore likely that the Company s actions damaged, or risked damaging, public confidence in the securities market. Section of Supplement B to Rulebook is thus applicable. The Company has argued the following: The Company admits that the proposed incentive program is not compatible with generally accepted behavior on the Swedish securities market. However, through the intervention by the Exchange, the Company avoided taking a decision in accordance with the proposal.

9 9 The Disciplinary Committee notes that it is uncontested that the wording of the proposed incentive program contravened generally accepted behavior on the Swedish securities market. In addition, the Disciplinary Committee shares the opinion of the Exchange that the Company s actions risked damaging public confidence in the Exchange and Nasdaq First North. According to Section of Supplement B of the Rulebook, there are therefore grounds to impose a disciplinary sanction on the Company. The requirement of sufficient capacity for disclosure of information The Exchange has argued: In light of the above-stated violations and the long period of time during which these continued, and taking into consideration previous regulatory violations for which the Company has been criticized by the Exchange, Cassandra Oil does not fulfill the requirement of sufficient capacity for providing information to the market according to Section of the Rulebook. The Company has argued: The Company has always had, and will continue to have, the goal of living up to and complying with generally accepted behavior on the Swedish securities market. The Exchange s recurring comments and questions have caused the Company to view seriously the alleged deficiencies. The Company has found itself in a difficult situation, both financially as well as operationally, as a consequence of the fire in Västerås and protracted licensing proceedings for projects in Spain and Denmark. Since the licenses in Spain have now been completed and there are openings for financing, the Company views the future optimistically. In order to improve compliance with generally accepted behavior on the Swedish securities market, the Company has entered into an agreement to retain legal expertise and immediately appoint a position for creating routines, training of management and directors and for continuously supporting and monitoring the Company s compliance with generally accepted behavior on the Swedish securities market. The Disciplinary Committee notes that the violations which the Disciplinary Committee has found Cassandra Oil guilty of demonstrate that the Company s organization and staffing with respect to the disclosure of information is, and has been for a long period of time, deficient. Based upon what transpired at the hearing before the Committee, it has also been shown that the Company lacks insight into the requirements imposed on a listed Company s disclosure of information. The Company has also not credibly shown that it has taken the measures required in order to correct these deficiencies. The Disciplinary Committee concludes that Cassandra Oil lacked, and continues to lack, sufficient capacity for providing information to the market according to Section of the Rulebook. In conclusion, the Disciplinary Committee believes that Cassandra Oil, on a number of occasions and for a long period of time, committed several serious violations of the Rulebook. The regulatory violations have damaged, and are damaging, the confidence of the market and the general public in the Exchange, Nasdaq First North and the Swedish securities market generally. The violations now relevant, together with the Company s previous violations of the Rulebook which were the subject of criticism by the Exchange in decisions dated May 12, 2015 and July 14, 2016, demonstrate that the Company lacks the organization and expertise required to fulfill the listing requirements. Based on an overall assessment, the Disciplinary Committee rules that Cassandra Oil s shares are to be delisted from trading not later than November 20, 2018.

10 10 On behalf of the Disciplinary Committee, Marianne Lundius Former Justice Marianne Lundius, MBA Ragnar Boman, authorized public accountant Svante Forsberg, director Carl Johan Högbom, and director Jack Junel participated in the Committee s decision. Secretary: Jur. kand. Erik Lidman