In January 2010 the Financial Services Authority (FSA) published Quarterly Consultation No. 23 (CP 10/1). Chapter 5 of CP 10/1 proposes changes to Chapter 4 (DTR 4) (which deals with periodical financial reporting) and Chapter 5 (DTR 5) (which deals with vote holder and issuer notification rules) of the Disclosure and Transparency Rules (DTRs). The FSA proposes the following amendments:

  • Proposed amendment to DTR 4.4.2R to clarify that DTR 4.1.7R(4) does not apply to a company that only has debt securities admitted to trading the denomination of which is at least 50,000 Euros (or an equivalent amount) per unit. The FSA also proposes to amend DTR 4.4.8R to clarify that the exemption provided under this provision does not extend to DTR 4.1.7R(4) such that an issuer whose registered office is in a non-EEA State and whose relevant laws are considered equivalent is not exempted from the rules on audit reports.
  • Proposed amendment to DTR 5.3 concerning disclosure obligations relating to the passive receipt of nil-paid rights. The amendment will allow investors who passively receive rights during a rights issue period (and who do not intend to change their economic exposure in relation to the issuer) an exemption from any obligation to aggregate those nil-paid rights with their other holdings to determine whether they need to announce a change in holdings under DTR 5. However, if during the rights issue period the shareholder trades in nil-paid rights or otherwise trades in any disclosable instruments relating to the issuer, this exemption will not be available as such trades would indicate a positive wish to change the shareholder’s economic exposure to the issuer. In those circumstances the shareholder would need to aggregate all the nil-paid rights received with any previous holdings of disclosable instruments to determine whether a new disclosure obligation arises under DTR 5.
  • Proposed amendment to DTR 5.6 concerning the disclosure by issuers of total voting rights (TVR). The amendment will require issuers to announce a change in the TVR of each class of share that it has admitted to trading on a regulated or prescribed market at any time during a month in which the change has a significant diluting effect (for example, due to the completion of a rights issue). The FSA suggests a figure of 10 per cent or more should be the significance threshold. If this is the only change in a month, there will be no requirement to announce the TVR again at the end of the month.

Responses to CP 10/1 should be received by the FSA by 6 March 2010.

(FSA, Consultation Paper 10/1: Quarterly Consultation No. 23 which includes proposed changes to the Disclosure and Transparency Rules, January 2010)