Scope of instruments qualifying for disclosure enlarged
The broadened definition of Financial Instruments under sec 91a Stock Exchange Act now includes instruments which do not grant an enforceable right to acquire voting shares but which make the acquisition of voting stock (economically) possible. Under the new rules it is irrelevant whatever an instrument provides for a cash settlement or physical delivery of the underlying shares. Thus total return swaps and cash settled options and contracts for difference will have to be disclosed. The new disclosure requirements also cover instruments relating to baskets and indices, if the shares of the issuer exceed 20% of the total value of the basket or index.
Disclosure Threshold starting at 4%
The current statutory disclosure thresholds starting with 5% being the lowest disclosure threshold stay unchanged. However, the amendment legislation introduces a new additional threshold at 4%. Moreover, companies may provide for a lower disclosure threshold of 3% in their articles of association. It is unlikely that many companies will make use of this possibility. Until date only 2 companies use a similar possibility to provide in their articles of association for lower a statutory threshold, namely to forcestake-builders to launch a mandatory offer when exceeding a threshold lower than the statutory threshold of 30% provided for under the Takeover Act.
No Grandfathering but disclosure by 28 February 2013
By 28 February 2013 those reaching or exceeding the new thresholds of 4%,or 3% if provided under the listed companies articles of association, or any other additional disclosure threshold by financial instruments newly qualifying for disclosure as of 1 January 2013, must notify the Financial Market Authority, the Vienna Stock Exchange and the Issuer.
Sanctions now include suspension of voting rights
Under the 2012 legislation, the administrative law fines for non-compliance with the disclosure requirements have been increased to EUR 150,000.
Under a new Sec 94a, the law newly provides for a temporary suspension of the voting rights of the shares affected by the non-disclosure until six months from the date of disclosure. The suspension of voting rights will not be triggered if, including by request of the issuer, the shareholder notifies within 2 trading days, provided the total shareholding, including the shares affected by the stake-building, of that shareholder or shareholders acting in concert do not reach 15% of the total voting stock of issuer and the number of shares not yet notified is below 3%. Different from Germany, the Austrian rules on non-compliance with disclosure obligations do not providefor a suspension of dividend claims.
About the author
Christian Herbst, Dr., LL.M. (Harvard)
is a partner of Schönherr Rechtsanwälte GmbH, Attorneys at Law, Vienna
Tel: +43 1 534 37 129 Fax: +43 1 534 37 6129