The implementation of the EU Directive 2003/6/EC on insider dealing and market manipulation (the Market Abuse Directive), which aims to enhance investor confidence on the European financial markets and provide a common legislative framework for dealing with market abuse and disclosure issues, has been delayed in Finland.
On September 10 2004 a government bill was given to the Finnish parliament, proposing amendments to the Securities Market Act and certain related legislation. The constitutional committee of the parliament, however, declared a need to give its opinion on the compliance of some of the suggested new provisions with the Finnish constitution, delaying the implementation beyond the deadline of October 12 2004. It is expected that the Market Abuse Directive will be implemented into Finnish law in the beginning of 2005.
The government bill includes the following proposals:
- The use of insider information and market manipulation would be prohibited and sanctioned in accordance with two different systems. Offences committed deliberately or, in the case of misuse of inside information, by gross negligence, would continue to constitute criminal offences under the Penal Code. However, prohibitions against the use of inside information and market manipulation would also be included in the Securities Market Act. These prohibitions would, in line with the Market Abuse Directive, but contrary to the Penal Code, apply also in case of no intent or negligence by the offender.
- The Financial Supervision Authority would be vested with the authority to enforce the prohibitions and requirements of the Market Abuse Directive in administrative proceedings and to impose administrative sanctions, to the extent the offences do not fall within the scope of the Penal Code. The Financial Supervision Authority could impose non-monetary sanctions, such as public warnings and cautions as well as an infringement fee and, subject to certain procedural requirements, a consequence fee.
- The scope of the rules on statutory insiders would be widened to include, in addition to the management of a Finnish listed company, persons in a managerial position who regularly have access to inside information as well as persons closely related to insiders.
- The provisions on insider registers would obligate an issuer of listed securities to maintain a public insider register including up-to-date information on statutory insiders' securities portfolios. Additionally, a company-specific non-public insider register would have to be maintained with respect to employees and persons who regularly, or in connection with specific projects, have access to inside information.
- Securities intermediaries would be required to notify suspicious transactions to the Financial Supervision Authority without delay.
- The rules on ongoing disclosure obligations of publicly listed companies would be amended to allow delayed disclosure at the risk of the issuer, if there is an acceptable reason for it, and provided that the delayed disclosure does not jeopardize the interests of investors and that the issuer is able to ensure the confidentiality of the information. It is proposed that Finland would make use of the option, conferred in the Market Abuse Directive, to require an issuer to inform the Financial Supervision Authority and the regulated market place of a decision to delay public disclosure.
The government bill also includes proposals on provisions on fair disclosure and research reports, as well as safe harbour provisions on repurchase programmes and stabilization, in accordance with the EU Exemptions Regulation (2273/2003), which will apply in Finland once the Market Abuse Directive is implemented.
Tarja Wist and Nina Rosenlew