Nordic Market Update. Contents If you would like more information on any of the following articles, please contact the persons named after each item on +46 (0)8 665 6600
Exception from the mandatory bid obligation: Swedish Securities Council statement The Swedish Securities Council (Sw. Aktiemarknadsnämnden) has published a previously secret statement (2003:10) concerning an exception from the mandatory bid obligation in the Swedish Industry and Commerce Stock Exchange Committee’s takeover recommendation. Taurus Petroleum, listed on the Stockholm Excange, had a history of losses and its management planned to change the company’s business through an acquisition of RaySearch, an unlisted company. Taurus planned to acquire RaySearch through an issue in kind, whereby the owners of RaySearch would receive more than 96 per cent. of the shares in Taurus as consideration. The majority owner of RaySearch, Johan Löf, would receive 46 per cent. of the Taurus shares, with an option to acquire an additional 1.6 per cent.
Exception from the mandatory bid obligation: Swedish Securities Council statement 1 Proposal to alter the rules on personal liability for a company’s obligations 2 Proposed new rules on board members’ entry into and departure from service 2 New requirements for listing of companies on the Stockholm Exchange3 Act on Financial Advice to Consumers 4 Changes in the terms for warrants considered as a taxable disposal 4
Johan Löf submitted an application to the Securities Council to obtain an exception from the mandatory bid obligation. In his application, Löf said that he had no intention of selling down below the mandatory bid threshold. Even though the Securities Council found there were reasons for upholding the mandatory bid obligation, an exception was granted. The takeover recommendation says that exceptions may be granted in connection with issues in kind and, according to the Council, it can take into consideration any support that the issue in kind has received from the shareholders of the issuer. As a condition for the exemption, the Council demanded that the
Issue 6 2003-06-30
issue in kind was supported by at least 90 per cent. of both shares and votes at the Taurus general meeting. Contacts: Svante Johansson or Björn Kristiansson
Proposal to alter the rules on personal liability for a company’s obligations One or more company officials can, in certain situations, become personally liable for the company’s unfulfilled obligations, the most common example being unpaid taxes and state dues. The Swedish government has proposed new rules which will alter the liability so that it will require intention or gross negligence on the part of the company official. Currently, the liability is a no-fault liability. The new rules are planned to take effect from 1 January 2004. Contacts: Svante Johansson or Björn Kristiansson
Proposed new rules on board members’ entry into and departure from service In order to make economic abuse harder, the Swedish government has proposed alterations to the rules for legal entities. For companies limited by shares, one of the proposals is that a change of the composition of the board will not become effective until the change has been notified to PRV, the Swedish Patent and Registration Office. The responsibility and liability for board members who have resigned from office will therefore continue to apply until the registration notice has been received by PRV. The new rules are planned to take effect from 1 July 2004. Contacts: Jörgen S. Axelsson or Björn Kristiansson
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New requirements for listing of companies on the Stockholm Exchange The Stockholm Exchange will sharpen the requirements for the listing of new companies. The new listing requirements will also apply to companies that are already listed on the Stockholm Exchange. The new regulations include: – Prior to listing, a company must have undergone a legal examination conducted by an external lawyer. The Exchange Auditor will determine whether the scope, quality and actuality of the legal examination is satisfactory. – The company’s board must have established an information policy that includes a section covering the stock market’s information requirements and how a number of information activities must be organized. In ample time prior to the listing, the company must have implemented procedures governing how the release of information will be conducted. The company’s board must also have participated in the preparation of at least one quarterly report. – On the initial date of listing on the Stockholm Exchange, the price of the company’s shares must be at least SEK 25 each. – All board members, senior executives and elected auditors of a candidate company must undergo training, arranged by the Stockholm Exchange, covering the listing agreement, listing requirements and insider issues. – Not more than one elected member of the board may be employed operationally in the ongoing business of the company. The board members who are independent in relation to the company must account for more than half of the elected members of the board. The board must normally include at least two directors elected by a general meeting and who are independent of the company’s major shareholders. At least one of these two directorrs must have experience of the requirements to which a listed company is subject. The new listing requirements will become effective on 1 July 2003 with respect to those companies that initiate a listing process after this date. For companies whose shares or depositary receipts are already registered with or listed on the Stockholm Exchange at the time the listing requirements become effective, the following will apply:
Nordic Market Update.
– The composition of the company’s board must comply with the new requirement regarding independence not later than the Annual General Meeting in 2004. – The company must have adapted to all of the other relevant requirements not later than 1 July 2004. Further information can be found at www.stockholmsborsen.se. Contacts: Jörgen S. Axelsson or Svante Johansson.
Act on Financial Advice to Consumers The Swedish Government has now proposed legislation in accordance with the committee proposal for a new act on financial advice to consumers (previously reported in NMU in June 2003). The new act is proposed to enter into force on 1 July 2004. Contacts: Svante Johansson or Anna Wilbe
Changes in the terms for warrants considered as a taxable disposal The Supreme Administrative Court has confirmed a ruling that warrants should be considered as disposed of for tax purposes when the terms governing exercise of the warrants are changed. This means that a capital gain, or loss, should be computed at the time of the change of terms. The warrants should be considered as sold at this time, regardless of whether the market value of the warrants is the same after the change of terms. The situation behind the decision was as follows. A company had issued warrants to their employees. The warrants were issued at market value. A change of the terms for the issued warrants was contemplated. The change meant that the period in which the warrants could be exercised was prolonged. The tax board concluded in its ruling that the duration of a warrant is a fundamental component in the valuation of a warrant. A decision to extend the duration should, for this reason, be treated as if the original warrant was sold in exchange for a new warrant. The original warrant should be considered as being disposed of at a price corresponding to the market value at the time of the change of the terms. Since the holders of the warrants were employees, the difference between that price and the market value of the warrant after the change of terms should be treated as salary income for the holders.
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The company also asked about an alternative change of terms where the extended duration was combined with a higher exercise price. In this alternative the market value of the warrants did not change, since the higher value due to the extended duration was balanced by the higher exercise price. The tax board concluded that the warrants should be considered as being disposed of in such a case as well. However, no taxable benefit for the employees occurred in this alternative, since the market vale of the warrant was the same after the change of terms. Whether or not a convertible bond should also be treated as having been sold if the time for subscription of shares is extended has not yet been tested in case law. Contacts: Lars Jonsson or Magnus Hagevi.
All of us on the Nordic Market Update team would like to wish you Happy Summer! We will not be producing a July edition of this newsletter but will be back in August.
Nordic Market Update.
Editor: Sophie Spread Email: [email protected]
Ansvarig utgivare: Martin Börresen This publication is intended merely to highlight issues and not to be comprehensive, nor to provide legal advice. Should you have any questions on issues reported here or on other areas of law, please contact one of your regular contacts at Linklaters, or contact the editors. Malmö Stortorget 8 SE-211 34 Malmö Tel: (46-40) 665 65 00 Fax: (46-40) 97 19 17
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