What must issuers do so that shareholders and bondholders can exercise their rights?

These rules make sure investors can actually exercise the rights attached to their securities. A share issuer must treat equally all shareholders of the same class. The exam material, like the Directive, speaks of shareholders in the same position; the Cyprus text has said 'of the same class' since 2007. A debt issuer must treat equally all holders of debt securities that rank pari passu, in respect of every right attached to those securities.

Both kinds of issuer must make available in Cyprus all the facilities and information that holders need to exercise their rights, keep data intact and secure, and not prevent holders from exercising their rights through a proxy, subject to the company law of the place where the issuer is incorporated. Both must also make a proxy form available, on paper or where applicable electronically, to every person entitled to vote, with the meeting notice; where a meeting is called by public announcement rather than by notice to each holder, the form goes to each holder who asks for it. And both must designate a financial institution as their agent, through which holders can exercise their financial rights.

A share issuer must tell shareholders where and when meetings will be held and what is on the agenda, how many shares and voting rights there are in total, and that they have the right to take part. It must also publish notices or circulars on the allocation and payment of dividends and on new share issues, including how new shares are allotted, subscribed, cancelled or converted. The exam material presents the financial-institution agent and the dividend and new-share notices as duties that arise when a meeting is called by announcement without notice to each shareholder. Since 2007 the Law has made them general duties of every share issuer; the announcement case only changes how proxy forms are provided.

A debt issuer publishes notices or circulars on where and when holders' meetings take place and their agenda, on interest payments and any exercise of conversion, exchange, subscription or cancellation rights, on repayment, and on holders' right to take part. Dividend notices are for share issuers only. If only holders of debt with a denomination of at least €100,000 a unit, or the equivalent, are invited, the issuer may hold the meeting in any Member State, provided all the facilities and information holders need are available there; for debt admitted to an EU regulated market before 31 December 2010 the figure is €50,000 while the debt is outstanding.

Information may be sent electronically only if a general meeting has decided so and at least four conditions are met: the use of electronic means does not depend on where the holder, or a proxy, is based or resident; identification arrangements make sure holders are actually informed; holders are asked in writing to agree, and those who do not object within a reasonable period are treated as consenting; and any sharing of the costs respects equal treatment. A holder may later ask at any time to receive information in writing. The same conditions apply to debt issuers whose home Member State is Cyprus or which chose Cyprus as the meeting venue.

The exam material says written consent must be obtained from shareholders, and that debt holders must give written consent, although for both it also treats silence as consent. Since 2007 the Law has required only a written request for consent, and silence for a reasonable period counts as consent; a signed consent is not needed. For debt holders the exam material also leaves out the general-meeting decision, which the Law requires in both cases.

Breaching any of these communication duties exposes an issuer to a CySEC fine of up to €85,000, or up to €170,000 for a repeated breach, depending on gravity. That is far below the scale for the core disclosure duties.