Linklaters

The FSA is consulting on some changes that it proposes to make to its Disclosure and Transparency Rules. The proposals include:

Disclosure of shareholdings during a rights issue

• amending DTR 5.3 to exempt investors who passively receive rights during a rights issue period from any obligation to announce a change in holdings otherwise triggered by receipt of these rights. The availability of this exemption is based on an absence of shareholder intention to change its economic exposure in relation to the issuer. To qualify for the exemption, the investor must undertake no trading during the rights issue period in the nil-paid rights received or in disclosable instruments relating to the issuer. This reflects the approach set out in the FSA’s Questions and Answers on Disclosure of Contracts for Difference (published in June 2009) available here.

Issuer announcements of total voting rights

• amending DTR 5.6 (which requires announcements of total voting rights at each month end) to require issuers to announce immediately a significant change in the number of shares in issue (e.g. on completion of a rights issue). The FSA proposes that “significant” in this context should mean where an issue represents a dilution of 10 per cent. or more. This amendment is to avoid misleading disclosure based on month-end announcements that do not reflect the actual number of shares in issue.

Audit of third country issuers

• clarifying that the exemption provided by DTR 4.4.8R, from the need to publish annual, half-yearly and interim accounts in accordance with the DTRs, does not extend to the requirements on auditors in DTR 4.1.7R(4). This clarification means that an issuer whose registered office is in a non-EEA State and whose relevant laws are considered “equivalent” by the FSA remains subject to the provisions on audit reports and auditor registration even though exempt from the rules on publishing accounts.
• clarifying that the provisions in DTR 4.1.7R(4) do not apply to an issuer which has only debt securities admitted to trading the denomination per unit of which is at least €50,000.

The consultation paper FSA CP 10/1 is available here. The closing date for responses is 6 March 2010.