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The Finnish Financial Supervision Authority (FSA) has issued five new guidelines, which concern offering of securities, tender offers and mandatory redemption, continuous duty of disclosure, flagging, and pro forma financial statements. Becoming effective on March 1 2002, the new guidelines replace the former guidelines on internet subscription location (K/30/2000/PMO), share subscriptions and sales via the internet in part (K/14/98/PMO) and the interpretation of disclosure provisions in the Securities Markets Act (K/23/99/PMO).

Offering of securities: The guideline regarding the offering of securities defines, among other things, new requirements on how to describe risk factors and future prospects in an offering document. The guideline is applied also, when applicable, on the offering of securities in private limited companies. When offering securities, the offeror and its representative must give adequate information on circumstances substantially affecting the value of the offered securities and prepare a prospectus. The duty to publish a prospectus becomes effective on July 1 2002. The guideline also contains instructions regarding the correcting of errors in prospectuses and new exemptions on language requirements concerning prospectuses.

Tender offers and mandatory redemption: The guideline regarding public tender offers and mandatory redemption contains, for example, specific interpretations on the equality requirements of a tender offer and imposes a minimum of two weeks and a maximum of three months length for the offer period. The offer period may be prolonged in specific circumstances, such as pending merger control clearance. The FSA further recommends that a statement from the board of the target company be requested and, if issued, this must be included in the tender document. Enclosed in the guideline there is a list of minimum requirements for a tender document. The new guideline also specifies the FSA's interpretation of the provisions on mandatory offers, for example, by regarding the 12-month weighted average price as the main principle for calculation of the redemption price. In the FSA's view deviations from the above should be based on circumstances relating to the company and not the market.

Continuous duty of disclosure: In the guideline concerning continuous duty of disclosure, the FSA specifies requirements on how and where to publish the required information. The continuous duty of disclosure requires disclosure of circumstances substantially affecting the value of the security. All information must be published by the issuer of securities without delay. The FSA recommends that the published information should also be made available at the same time on the company's website. When publishing future prospects, the issuer should also disclose the basis for such prospects. The FSA recommends that the impact of future prospects on the financial situation of earnings per share be published as well.

Flagging: The guideline on flagging specifies the flagging obligation when an agreement, which will lead to the reaching, exceeding or falling below of the set thresholds, is completed. The declaration of holdings must be made without delay and sent by fax to the FSA and the company in question. The FSA recommends that newly-listed companies make an additional declaration of holdings following the listing of the company.

HEX guideline for acquisition of own shares by listed companies introduced

A guideline regarding the acquisition of own shares by listed companies has been issued by the Helsinki Exchanges (HEX) and became effective on April 2 2002. This guideline was prepared in cooperation with the Central Chamber of Commerce and the Union of Industry and Employers. The purpose of the guideline is to enable listed companies to acquire their own shares without rendering themselves guilty of misuse of insider information. In general, the aim of the guideline is that acquisitions of own shares by listed companies will not decrease confidence in the securities market.

According to the guideline, instructions regarding acquisition of own shares must be given to a third party such as a stockbroker who may independently execute the commission. The commission document must be dated and delivered to the Helsinki Exchanges and the FSA on request. The Helsinki Exchanges must be informed about all acquisitions of own shares immediately following execution and before the commencement of the next trading day at the latest. It is recommended that listed companies do not acquire own shares during the 14 days preceding the publishing of financial statement bulletins or interim reports.

Dimitrios Himonas

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