New Section 89A: Transparency rules
1607.Subsection (1) of new section 89A of FSMA enables the Authority to make transparency rules to implement the Transparency Directive in the UK. Subsection (2) enables the rules to include provision for any matter arising out of or related to the Directive provisions.
1608.The Transparency Directive itself covers issuers whose securities are traded on regulated markets and people who hold voting rights attached to shares in such issuers. The scope of the rule-making power allows the rules to address other matters arising from the Directive’s implementation, for example, to ensure that secondary legislation adopted by the Commission can be incorporated into the transparency rules, and that optional aspects of the Directive can be implemented, where the Authority considers this appropriate.
1609.It is expected that rules made under section 89A(1) will implement the Transparency Directive by-
requiring holders of votes attached to shares in issuers to make disclosure about their holdings at certain thresholds (see new section 89B);
requiring issuers to make public their annual accounts and reports, prepared in accordance with the EU International Accounts Standards Regulation (Regulation (EC) 1606/2002), and, where appropriate, half-yearly and interim management statements about their business(see new section 89C);
requiring issuers to make notification about voting rights held by themselves in respect of their own voting shares (see new section 89D);
requiring issuers to notify the Authority and the market of any proposed change to their constitution (see new section 89E).
1610.Subsection (3)(a) enables the Authority to make rules about disclosures of voteholdings to UK markets that are not regulated markets (within the meaning of section 103(1) of FSMA) (such as the AIM). Subsection (3)(b) enables the Authority to make rules about disclosure in relation to certain comparable instruments in respect of voting shares. These are instruments that give the holder a level of economic, as opposed to legal, control over votes attached to shares. An example of the type of instrument that the rules could extend to cover is a contract for difference, known as a “CFD”.
1611.Subsection (4) specifies further matters that the rules may cover. These include: how the proportion of voting rights held by an issuer is to be determined; when voting rights held by one person may be regarded as being held by another; the nature, form, timing and presentation of any notification; and the circumstances in which any of the requirements of section 89A may not apply.
