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Finland

The ministry of finance submitted a government bill on amending the Finnish Securities Market Act to parliament in October 1998.

Under the Securities Market Act the issuer of listed securities is under a two-fold disclosure obligation. The continuous disclosure obligation requires the issuer without further delay to disclose all decisions and other factors which might have a substantial effect on the value of the securities. The regular disclosure obligation requires the issuer, among other things, to publish an annual report and interim reports. The bill proposes to specify such regular disclosure obligation by harmonizing the Finnish regulations with the international practice by requiring issuers of listed equity and hybrid securities to publish quarterly interim reports and issuers of listed debt securities to publish semi-annual interim reports.

Furthermore, the bill proposes to tighten the thresholds triggering the flagging obligation of a shareholder. According to the bill, when a shareholder's holding in a Finnish limited liability company, whose shares are publicly traded in Finland or in the EEA, reaches, exceeds or falls below 5, 10, 15, 20, 25, 33.3, 50 or 66.6% of the voting rights or of the share capital in the target company in question, the shareholder is obliged to disclose the holding to the target company and to the Financial Supervision. The amendment would lower the minimum threshold for disclosure obligation from the existing 10% to 5% and add new thresholds of 15% and 25%.

The purpose of the stricter flagging obligation is, according to the bill, to improve equal treatment of Finnish and foreign investors by providing information on significant holdings in and on the ownership structure of listed companies. At present, information on the holdings by Finnish investors is publicly available due to the publicity of the target company's share register, regardless of the percentage of the holding. Foreign investors, on the other hand, are able to hold their shares in listed Finnish companies anonymously to up to 10%, due to the possibility of nominee registration. The amendment would consequently lower the maximum threshold of foreign anonymous ownership to 5%.

Due to the proposed stricter flagging thresholds and the fact that holdings by professional investors often fluctuate at short intervals above and below the flagging thresholds, the Financial Supervision could, according to the bill, grant an exemption from the flagging obligation to a professional investor whose intention is not to influence the management of the target company.

The amendments, once approved by parliament, are intended to become effective as of April 1 1999.

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