Money, Money, Money – Swedish Regulator Issues Fines for Major Shareholder Disclosure Failings

It’s been a busy couple of months for the Swedish Supervisory Authority (Finansinspektionen) – so far in 2021, they have issued fines totaling SEK 20,390,500 (USD 2,462,174) for shareholder disclosure failings.

With fines ranging from SEK 11,000 to SEK 5,100,000, as displayed in the graph below, non-compliance with Swedish disclosure requirements can be a costly affair.

But what are the rules, and why are shareholders failing to comply? Below we highlight the key shareholder disclosure requirements in Sweden.

The Transparency Directive has been implemented through Chapter 4 of the Financial Instruments Trading Act. Major shareholders are obliged to submit major shareholding notifications concerning changes to their holdings in companies whose shares are admitted to trading on a regulated market.

The notification obligation applies when shareholders acquire or dispose of shares in a listed company and thereby reach, exceed or fall below the 5, 10, 15, 20, 25, 30, 50, 66 2/3 and 90 per cent thresholds for voting rights or number of shares in the company.

This is where the Swedish disclosure regulations go beyond the minimum requirements stipulated in the Transparency Directive – the calculation should be made in regard to the total number of shares (including buybacks!), as well as the number of voting rights for the total number of shares of the issuer.

Under the main rule in Chapter 4, Section 4 of the Financial Instruments Trading Act, a person’s notifiable holding encompasses those shares they hold in their own name or on behalf of a third party. However, under the aggregation rules, there are several situations in which shares that are formally held by a third party have to be counted as part of the holding of the person with a notification obligation. Accordingly, this means that a change in one person’s holding may trigger a major shareholding notification obligation for a third party.

The major shareholding notification provisions also apply to holdings of depository receipts that confer voting rights for the shares represented by the depository receipts. Financial derivatives that grant entitlement to acquire already issued shares are also included.

Additionally, the disclosure obligations apply to other derivatives that belong to the same underlying shares and that have a similar economic effect as owning the derivatives that grant entitlement to acquire already issued shares, whether they are entitled to physical or cash settlement.

Notifications can be reported via the Finansinspektionen website using a Swedish e-identification. E-identification requires a Swedish civic registration number.

For those that do not have a Swedish e-identification, they can populate the “Changes in shareholdings notification” form and send it via e-mail or fax to Finansinspektionen.

Finansinspektionen provides a helpful step-by-step guide to filing the form.

The majority of the fines issued so far this year are a result of late notifications. The deadline for major shareholding notifications are short – a major shareholding notification must be submitted to both the issuer and FI as soon as possible, but no later than the third trading day following the day on which the major shareholding notification obligation arose.