Form of notifications about voting rights at the issuer will change

28.01.2016 Form of notifications about voting rights at the issuer will change

After the Law on Securities was amended according to the requirements of the EU Transparency Directive at the end of 2015, the Bank of Lithuania prepared a new draft of the Rules for Giving Notifications about Acquisition or Loss of a Block of Shares and Other Financial Instruments Granting the Voting Rights (the “Rules”).

Mantas Gofmanas, Senior Associate of TGS Baltic, says that the draft is aimed at harmonising the currently effective relevant rules to the regulation amended by the Law on Securities, also at approving a new form of informing about acquisition/loss of voting rights, which is recommended by the European Securities and Markets Authority (ESMA) for all the EU Member States. This should bring more clarity and transparency both for investors investing in different EU Member States and for issuers, as well as for financial markets supervision authorities of different EU Member States.

The Rules will implement the requirement of the Law on Securities for persons to duly notify not only about acquisition/loss of 5, 10, 15, 20, 25, 30, 50, 75 and 95 percent of votes in the general meeting of shareholders of the issuer, but also to provide analogous information if these limits are overstepped by direct or indirect acquisition/loss of (i) financial instruments, which according to an official agreement, at their maturity term, give the right or possibility to acquire already issued shares of the issuer, which carry voting rights, or (ii) financial instruments related to the said financial instruments and having a similar economic effect.

According to the Law on Securities and the Rules, the following instruments are deemed financial instruments: (i) transferrable securities; (ii) options; (iii) futures; (iv) swaps; (v) forward interest rate transactions; (vi) contracts for difference; (vii) any other transactions or arrangements having similar economic effect, which can be conducted by settling accounts in securities or in cash.

After the approval of the Rules, the procedure of giving and announcing the above-discussed notifications will not change – the issuer’s shareholders will have to give notifications about acquisition/loss of voting rights at the issuer and other financial instruments granting the right to vote to the Bank of Lithuania and the issuer immediately, but in any case no later than within 4 trading days. The issuer, in its own turn, will have to announce them under the established procedure within 3 trading days after receipt of the notifications. But it is important that, after the approval of the Rules, they will clearly provide that a presented notification must indicate the whole chain of controlled companies, through which the voting rights at the issuer and/or financial instruments are managed, starting with the ultimate controlling natural person or legal entity.