Nordic Market Update. If you would like more information on any of the following articles, please contact the persons named after each item

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OMX introduces the OMX List

OMX introduces the OMX List

The buy-back rules and the rules on information prior to election of board members issued by NBK cease to be in force 2

OMX has introduced a new listing system covering the Nordic exchanges (the “OMX List”). The OMX List harmonises the listing rules and systems across the Nordic and Baltic region. OMX aims to create an easier operating environment for market participants and to enable investors to choose from a wider variety of investment opportunities. OMX envisages that these changes will increase the number of market participants and increase market activity. OMX proposes that the OMX List (including harmonised listing requirements) will be introduced into the exchanges in Stockholm, Helsinki and Copenhagen in mid 2006. The OMX List will replace the current A List and O List in Stockholm, the Main List, I List and NM List in Helsinki and the current list in Copenhagen. All the currently listed companies and future applicants will be listed in the OMX List and should use their local stock exchanges as their point of contact.

The Securities Council – Statement regarding prospectus requirements

Large Cap (market value more than 1 billion euro);



Mid Cap (market value between 150 million and 1 billion euro); and



Small Cap (market value less than 150 million euro).

An amended SwedishAmerican tax treaty

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The Securities Council – Exemption from the Mandatory Bid Obligation

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OMX anticipates that the new listing structure will not change the tax position in any of the three countries. OMX expects that in the future shares currently listed on the Stockholm Stock Exchange’s A List (officially listed companies) as well as a limited number of Stockholm Stock Exchange’s O List Issue 10 ⏐ 31 October 2005

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The Securities Council – Statements regarding Old Mutual’s Takeover Offer for Skandia 3

Companies will be presented on the list, first in terms of market capitalisation, and then by industry sector, following the international Global Industry Classification Standard (GICS). There will be three new market capitalisation segments: •

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companies (those that have transferred from the A List), will be subject to wealth tax under Swedish tax law, unless Swedish legislation changes. The OMX List will not change the trading currency of a listed company’s stock, it will continue to be the local currency. Further, the different clearing and settlement organisations in Denmark, Sweden and Finland will remain the same. OMX is working on the harmonisation of the Baltic markets in parallel with its creation of the OMX List, in order to create an integrated Nordic/Baltic market place. The changes to the regulatory environment and the listing requirements have yet to be outlined in detail. We will monitor the situation and provide updates when new information is available. Further information is available at www.omxgroup.com Contacts: Jörgen S. Axelsson or Roger Johnson

The buy-back rules and the rules on information prior to election of board members issued by NBK cease to be in force The Swedish Industry and Commerce Stock Exchange Committee (“NBK”) (Sw: Näringslivets Börskommitté) has confirmed that the rules concerning buy-backs and disposals of own shares, and the rules concerning information prior to the election of the board of a stock market company, are no longer in force. The buy-back rules, although revised, are included in the new Stockholm Exchange (Sw: Stockholmsbörsen) listing agreement which has applied since 1 July 2005. It should be noted that the Stockholm Exchange has not included any rules regarding buy-backs of own shares by way of a public tender offer to the company’s shareholders. According to NBK, the Swedish Code of Corporate Governance (Sw: Svensk kod för bolagsstyrning) contains rules which have the same effect as the previous rules concerning information to be given prior to the election of the board of a stock market company. These two set of rules have ceased to have effect as of the end of June 2005. Contacts: Peter Högström or Michael Persson

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Issue 10 ⏐ 31 October 2005

The Securities Council – Statement regarding prospectus requirements A Swedish stock market company (the “Company”) made an offer for a Swiss listed company (the “Target”), with consideration comprising of both cash and shares in the Company. In connection with the offer, the Company prepared an offer prospectus in accordance with Swiss law. According to the Swedish Companies Act (the “Act”) (Sw: Aktiebolagslagen), a company that issues shares must, in certain cases, prepare a new issue prospectus. This was one of those cases. If a new issue prospectus is necessary it must be made available at least three days prior to the date when the subscription or application for subscription may take place. The offer prospectus contained almost the same information as is required from a new issue prospectus, but not all. The question for the Securities Council (Sw: Aktiemarknadsnämnden) was whether it was consistent with best practice in the Swedish stock market to say that the Company had fulfilled its prospectus obligations by issuing the offer prospectus. In its statement, the Council emphasised the importance, when prospectus requirements apply, that the addressee of an offer is not only given satisfactory information in order to make its decision, but also sufficient time to evaluate the information. According to the Council, this meant that all the information required to be included in a new issue prospectus must be provided at a time during which the addressee may apply for subscription of the newly issued shares. The Company was not criticised despite the lack of information in the offer prospectus, since this was the first time the issue had come before the Council and therefore there was no established best practice on this point. It is implied in the statement that if the offer prospectus had contained all the information required by a new issue prospectus, there would have been no ground for criticism. Statement from the Securities Council 2005:37. The Securities Council’s statements are available in Swedish on www.aktiemarknadsnamnden.se. Contacts: Svante Johansson or Magnus Hannesson

The Securities Council – Statements regarding Old Mutual’s Takeover Offer for Skandia The Securities Council (Sw: Aktiemarknadsnämnden) has made two new statements regarding Old Mutual’s takeover offer for Skandia. These statements are additional to the four statements outlined in the previous issue of Nordic Market Update. The first statement confirms the Council’s Nordic Market Update.

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earlier position that Old Mutual is permitted to guarantee that it will give those shareholders with less than 1 000 Skandia shares cash consideration at 100 %, even though the consideration applicable to all shareholders was a mix between cash and Old Mutual shares. However, the Securities Council found that Old Mutual could not guarantee that those shareholders with small holdings only receive shares in Old Mutual as consideration, as that would mean that those shareholders would receive a higher value for their shares when compared to shareholders receiving the mixed consideration, and there was no practical or other reason justifying that result. In the second statement, the Securities Council answered a number of queries put forward by the Swedish Shareholders Association (Sw: Aktiespararna). The queries were; (a) a claim that in its prospectus Old Mutual threatened to de-list Skandia’s shares; (b) whether the prospectus was drawn up in accordance with the Takeover Rules, as part of the information given in an appendix was in English, and also that information regarding shareholder support differed substantially from information made public by Old Mutual elsewhere; (c) whether Old Mutual had made the prospectus available to the shareholders in accordance with the rules; and (d) if the lack of information in the offer information brochure, in relation to the Skandia board’s statement regarding the offer, was in accordance with sound stock market practice. The Council had no objection to the use of prospectus appendixes, or the provision of some information in English only. The Council found that the information in the prospectus on the possible delisting of Skandia’s shares did not constituted a de-listing threat. Further, the prospectus had been made public in the correct manner. The Council did, however, find that Old Mutual had provided ambiguous information in the prospectus regarding shareholder support, and that information on the target board’s statement should have been included in the information brochure. The Securities Council statements 2005:32 and 46. The Securities Council’s statements are available in Swedish on www.aktiemarknadsnamnden.se. Contacts: Fredrik Lindqvist or Björn Kristiansson

An amended Swedish-American tax treaty After negotiations with the USA concerning an amendment to the SwedishAmerican tax treaty, the amendments should soon be ratified by the Swedish Parliament. The most important amendment is that dividends may be distributed without being subject to withholding tax, provided that certain conditions are met. Currently, withholding tax at the rate of 5 % is levied on a company’s dividend distribution to a company holding not less than 10 % of the votes in the distributing company. The withholding tax is otherwise 15 %.

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Issue 10 ⏐ 31 October 2005

The amended tax treaty still includes these withholding tax provisions and also includes certain other provisions which attempt to eliminate withholding tax on dividend distributions, provided that certain conditions are met. One general condition is that the recipient company has to hold not less than 80 % of the votes in the distributing company for a continuous period of at least 12 months. As a further condition, one of the specifically mentioned provisions in the section concerning limitation on benefits must be met. An extract of the most important provisions, all relating to the receiving company, is outlined below: (i) the company’s principal class of shares is regularly traded on one or more recognised stock exchanges and either its principal class of shares has to be primarily traded on a recognised stock exchange located in the contracting state of which the company is a resident (or in the case of a company resident in Sweden, a recognised stock exchange located within the EU, European Economic Area, or Switzerland), or the company’s primary place of management and control is in the contracting state of which it is a resident; (ii) at least 50 % of the votes and value of the shares in the company are owned directly or indirectly by five or fewer companies entitled to benefits under clause (i) above, provided that in the case of indirect ownership, each intermediate owner is a resident of either contracting state; (iii) at least 95 % of the aggregate voting power and value of its shares is owned, directly or indirectly, by seven or fewer persons that are equivalent beneficiaries and less than 50 % of the company’s gross income for the taxable year is paid or accrued, directly or indirectly, to persons who are not equivalent beneficiaries in the form of payments that are deductible for the purposes of the taxes covered by the amended treaty in the company’s state of residence. Another important amendment is that no withholding tax will be levied on the distribution of dividends to pension funds, provided that certain conditions are met. The amended treaty is expected to come into force during the Spring of 2006, although no specific date has been set. Contacts: Lars Jonsson or Mounir Tajiou

Nordic Market Update.

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The Securities Council – Exemption from the Mandatory Bid Obligation In three recent statements, the Securities Council (Sw: Aktiemarknadsnämnden) has granted exemptions from the mandatory bid obligation in connection with main owners of companies subscribing for new shares or convertibles in new issues. In two of the statements, the listed companies were in financial distress. The Securities Council granted exemptions on the condition that the shareholders are informed of the transaction and its effects before the general meeting takes place, and that the decision on the new issues is taken with a two third majority. In the third statement, the largest shareholder in a listed company had already been granted an exemption from the mandatory bid obligation until November 2006, and wanted this exemption to encompass subscriptions in a new share issue. The Securities Council granted the exemption. Statements from the Securities Council 2005:43, 44 and 45. The Securities Council’s statements are available in Swedish on www.aktiemarknadsnamnden.se. Contacts: Svante Johansson or Björn Kristiansson

Editor: Darragh Byrne Email: [email protected] 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. © Linklaters. All Rights reserved 2005 Please refer to www.linklaters.com/regulation for important information on the regulatory position of the firm. We currently hold your contact details, which we use to send you newsletters such as this and for other marketing and business communications. Stockholm Regeringsgatan 67 Box 7833 103 98 Stockholm Tel: (46-8) 665 66 00 Fax: (46-8) 667 68 83

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