Articles / Norway’s Amendments to EU’s Transparency Directive
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Norway’s Amendments to EU’s Transparency Directive
New rules that affect all equity certificates on the Oslo Stock Exchange have recently applied in Norway. Norway’s amendments to EU’s Transparency Directive is all about disclosure of shareholders. Several companies are now obligated to create a more transparent organization and can even be held accountable.
These amendments includes several changes that some companies may find difficult to adopt. The following article will serve as a guide about the most crucial aspects all business owners should consider.
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The EU Transparency Directive
The Transparency EU Directive decided to start demanding specific requirements from the shareholders of big enterprises. Although some of them had already been present in the Norwegian Securities Act, the directive announced it was time to strengthen those requirements and make them stricter.
The most important changes
Norway’s new amendments to the EU’s Transparency Directive comes with several important changes that apply to shareholders, including:
- Derivatives linked to listed shares
- Subscription Rights
- Extended Disclosure Deadline
- Lending of shares
- Amendments to define Closely Associated People
- Content of the Notification
Let’s dive deeper to find out what changes that you may be obligated to comply with.
A photography of EU Commission employees working with the Transparency Directive.
Investors Obligation to comply with the new Amendments
Previously, these rules applied to all shareholders, only certain shares and equity certificates were required to be included whenever an investor would calculate their holdings.
Key Changes in Detail
We will now go one deeper into the details of the changes to Norway’s Amendments to the EU Transparency Directive. Let’s find out what changes affect you.
Derivatives linked to listed shares should be included in holdings
Investors now have to disclose all holdings derivatives from these listed shares, as they have the same economic weight as other shares and equity certificates.
It doesn’t matter whether these holdings express the right to a settlement, as all derivatives must be disclosed no matter what.
Subscription Rights, Options with Rights to Non-issued Shares, and Ordinary Convertible Loands are no longer relevant
According to these new rules, all shareholders must disclose only the documents that provide them with unconditional rights to the company’s existing shares.
Other documents, such as subscription rights, convertible loans, and non-issued shares, shall not be included in these disclosure obligations.
This is especially important for those companies that use their shares as employee incentive programs; since they haven’t been issued, they won’t have to disclose them yet.
Extended Disclosure Deadline in Certain Situations
Before these new rules were applied, no one could ever exceed the designated disclosure deadline. If there was a situation in which they had to cross it, the shareholder should be immediately notified. However, with these new rules, the deadline will be extended to the second trading day after the opening of the regulated market.
Nonetheless, they should still notify the respective authorities after crossing the designated threshold. Still, keep in mind that absolute deadlines will still exist to retain some control over the whole process. The authorities will only consider exceptional cases with complicated calculations and different time zones.
The Norwegian Financial Supervisory is yet to update this section of the rules and explain how to comply with the new deadlines.
The Lender will be Required to Disclose the Lending of Shares
This is a new addition to the set of rules, as previously, lenders wouldn’t have to notify these, but now they must disclose their lent shares. They have to do this by specifying when they loaned them and when the borrower returned them.
Calculation of Holdings of Financial Instruments with Cash Settlements and Financial Instruments related to Indexes
Another aspect of the whole calculation process that changed with the new rules is related to the instruments used.
Some financial instruments meant to provide cash settlements will be calculated on a delta-adjusted basis, indicating the instrument’s theoretical value.
It also helps to understand how this value moves whenever the instrument changes its price.
Amendments to the Definition of Closely Associated People
The definition of closely associated people will also change with these new rules. It explains how the holding of close relatives, such as spouses and children, mustn’t be consolidated.
These closely associated people will only act in respect of the shares of the company when all investors have already committed to an internal policy that provides them with rights set on these new rules.
Limited Changes to the Content of the Notification
The Norwegian Financial Supervisory Authority has yet to disclose a standard formula for calculating these crossings. Although most of the information will remain the same, some parts will be completely new and need to be added.
Some of these new elements are a breakdown between all the shares, new financial documents issued throughout the year, and any other element that provided someone with a right for a settlement.
These new changes applied to the shareholders of big companies in Norway are meant to create a more transparent environment for everyone involved. Therefore, all of us must understand the ins and outs of the new policies.
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