CySEC Advanced Chapter 13 Flashcards: Transparency Laws | ExamPass CY

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Scope

To which issuers do the Transparency Requirements Laws apply?: Issuers whose securities are admitted to trading on a regulated market. Issuers listed only on an MTF, or whose securities are merely offered OTC, are not covered.

Periodic reporting

When must the annual financial report be published, how long kept, and what does it contain?: No later than four months after the financial year end, kept publicly available for at least 10 years. It contains the audited annual financial statements, a management report, and statements by the board, CEO and CFO (where the CEO/CFO are not board members).
When must the half-yearly financial report be published, and what are its components?: No later than three months after the first six months of the financial year (kept available 10 years). It contains interim financial statements (per IFRS), an interim management report, and statements by the board, CEO and CFO. If unaudited, this must be stated.
What must the interim management report include?: Important events in the first six months and their impact on the interim statements; a description of principal risks and uncertainties for the remaining six months; a comparative economic analysis versus the previous corresponding period; and, for share issuers, related-party transactions.
Which issuers must report payments to governments, and on what basis?: Issuers active in the extractive industry (mining, oil and gas) or the logging of primary forest — reported on a consolidated basis.
Who is exempt from periodic reporting, and what debt denomination is exempt?: The Republic, regional/local authorities, the ECB, CBC and other EU central banks, the EFSF, and qualifying public international bodies. Issuers of debt with a denomination of at least €100,000 per unit are exempt (€50,000 for debt admitted before 31 December 2010).

Ongoing disclosure

At what thresholds must an issuer disclose acquisition/disposal of its own shares, and how quickly?: At 5% and 10% of total voting rights — as soon as possible and no later than the next working day.
How often must an issuer publish its total voting rights and capital?: At the end of each calendar month in which a change has occurred — separate from the immediate notifications for specific threshold crossings.
How quickly must changes in the rights attached to share classes be disclosed?: Immediately and without delay — including changes in terms that indirectly affect holders (e.g. loan terms or interest rates on debt securities).

Major shareholding

At what thresholds must a shareholder notify, and to whom?: When voting rights reach, exceed or fall below 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%. Notification must go to BOTH the issuer and CySEC, as soon as possible and no later than the next working day.
How are voting rights calculated, and what beyond shares triggers notification?: On all shares with voting rights attached — even where the right to vote is currently suspended. The obligation also extends to holders of financial instruments (options, futures, convertibles) that entitle them to acquire, dispose of, or exercise voting rights.
Name situations exempt from the shareholder notification obligation.: Market makers crossing 5% acting in that capacity; shares held for clearing/settlement released within three working days; custodians voting only on instruction; trading-book holdings ≤5% not exercised; short-term ESCB monetary-authority operations; and stabilisation holdings where voting rights are not exercised.
When do concerted action, collateral, or proxy arrangements trigger notification?: When you hold votes via a party with a concerted-action agreement on the issuer's management; when you control the voting rights of shares lodged as collateral and intend to exercise them; or when you can exercise proxy votes at your own discretion — all require notifying the issuer and CySEC.

Sanctions

What are the maximum fines for failing to disclose periodic/ongoing information?: For a legal person: €10,000,000 or twice the profits gained/losses avoided, whichever is higher. For a natural person: €2,000,000 or twice profits/losses, whichever is higher. Breach of the monthly total-voting-rights disclosure (item 2) is a lower tier: €85,000, rising to €170,000 on repetition.

Equal treatment

How must issuers treat shareholders and debt holders?: Share issuers must treat all shareholders in the same position equally. Debt-security issuers must treat all holders ranking pari passu equally in respect of all rights attached to those securities.

Disclosure mechanics

Through which channels must issuers make public disclosures?: By announcement to CySEC and the Cyprus Stock Exchange (which list it on their websites) AND on the issuer's own website. A single channel alone does not satisfy the obligation.
When may an issuer delay disclosure of inside information?: Only where immediate disclosure would prejudice its legitimate interests (e.g. it could affect the outcome of ongoing negotiations) AND the delay would not mislead the public. Advance CySEC approval is not required; CySEC is informed at the time of eventual disclosure.

Shareholder communication

What communication requirements apply for meetings and electronic notices?: A proxy form must be made available together with the notice of the meeting. Where meetings are called by general announcement, the issuer must designate a financial institution as agent so holders can exercise their rights. Electronic notification requires approval in a general meeting, identification arrangements and written consent; consent is presumed if no objection is raised.