Under Section 91 of the Stock Exchange Act, persons that directly or indirectly acquire or sell the shares of an issuer whose shares are admitted to trading on a regulated European Economic Area (EEA) market must immediately (or no more than two trading days later) inform the Austrian Financial Market Authority, the exchange operating company and the issuer of the share of voting rights held after the completion of the acquisition or sale if their proportion of voting rights reaches, exceeds or falls below 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%, 75% or 90%.

This also applies to the thresholds stated by such issuer in its bylaws, under Article 27 (1)(i) of the Takeover Act (published in the Federal Law Gazette I 127/1998). The denominator is the total number of shares carrying voting rights of an issuer's outstanding capital.

Derivative instruments

Section 91a of the act extends the long disclosure rules applicable to shares to certain share-related instruments - held directly or indirectly by a natural or legal person - which would result in an entitlement to acquire (on such holder's own initiative and due to a formal agreement) previously existing shares to which voting rights are attached.

In this context, qualifying financial instruments include transferable securities, options, futures, swaps, forward rate agreements and other derivative contracts (eg, depositary receipts), provided that they grant the direct or indirect holder the right to acquire previously issued shares.

Admittance for trading

In order to be subject to long disclosure requirements, shares (as well as shares underlying qualifying financial instruments) must be admitted to trading on a EEA regulated market. In particular, with respect to capital increases, the disclosure regime must be observed in relation to the acquisition and sale of newly issued non-listed shares - including non-listed shares underlying qualifying financial instruments - where such non-listed shares are issued by an issuer whose other outstanding shares have already been admitted to trading on an EEA regulated market.

Capital increases

In the context of capital increases, issuers may grant financial instruments to investors or pre-existing shareholders for the acquisition of new shares in their company. In such circumstances, the shares underlying the financial instruments are typically not yet issued (ie, do not yet exist) and the long disclosure requirements are therefore not yet applicable.

In order to determine the point at which long disclosure requirements for such rights are triggered, it must therefore be assessed when the new shares underlying the rights will be considered to be 'issued' in the course of capital increases. In this context, the provisions of the Stock Corporation Act stipulate that:

  • with respect to an ordinary or authorised capital increase, the new shares will be regarded as issued as soon as a stock corporation's ordinary and authorised capital increase has been officially entered into the Austrian Companies Register, as this entry will legally effect the capital increase; or
  • a contingent capital increase will be legally effected as soon as new shares have been allocated to the new holders - the new shares will therefore be considered issued with this allocation, instead of by way of the official entry in the Austrian Companies Register (as this could be made up to one month after the lapse of the stock corporation's business year).

Long disclosure requirements in relation to such rights are therefore triggered as soon as any listed or non-listed new shares in a listed company underlying the rights are considered issued, as described above, and the rights could therefore be considered as qualified financial instruments.

Comment

Failure to comply with the respective share disclosure regime is an administrative offence and may result in a fine of up to €30,000. It is therefore recommended to specifically assess whether any of the stipulated thresholds in relation to the proportion of voting rights will be reached, exceeded or fallen below before acquiring or selling rights which could later be considered qualified financial instruments.