Notification of changes in significant holdings in public limited companies
The Financial Instruments Market Act ("ZTFI") imposes the obligation to shareholders to inform public companies when an individual threshold of a significant holding has been reached or exceeded or that such holding has been reduced below the individual threshold of a significant holding on the basis of:
(i) legal transactions, involving acquisition or disposal of shares or other legal transactions resulting in a change in the holding of voting rights, or
(ii) corporate actions made by the public company or other legal facts.
The mentioned provisions do not apply only to public companies, the shares of which are admitted to trading on a regulated market, but apply mutatis mutandis to non-public companies, the shares of which are not admitted to trading on a regulated market if such company has at least 250 shareholders or more than EUR 4 million of total equity as evident from the most recent annual report published in accordance with the companies act (the second paragraph of Article 4 of the Takeover Act – "Zpre-1") on the last day of the year prior to the year relevant for the assessment. Shareholders, share option holders or reporting entity, have to submit a notification on the change of significant holdings to the Securities Market Agency ("ATVP"), simultaneously with the submission of the notification to the public company.
Thresholds of significant holdings are the holdings of voting rights pertaining to each individual shareholder and representing 5, 10, 15, 20, 25 percent, 1/3, 50 or 75 percent of all voting rights in this public company. The basis for establishing a significant holding consists of all shares with voting rights, including company's own shares and the shares for which the exercising of voting rights is limited by law or the articles of association of the company in accordance with the law.
When supervising the notification of significant holdings, the Securities Market Agency noticed that reporting entities are late in notifying the public company on changes of significant holdings or they incorrectly interpret the moment of acquisition or disposal of significant holdings in a public company when a contract with suspensive conditions ("conditions precedent") has been concluded or in case of corporate actions of a public company. In order to avoid any future irregularities and committing a misdemeanour, the Securities Market Agency published the explanation on deadlines for reporting.
A shareholder or a reporting entity must send a notice on the change of significant holdings to the public company as soon as possible but no later than the fourth trading day following the day:
(i) they became aware of the acquisition, disposal of shares or of the possibility of exercising voting rights or on which they should have been aware of those facts, regardless of the date on which the acquisition or disposal of shares or possibility of exercising voting rights takes effect; or
(ii) they became aware of a corporate action or legal fact.
In accordance with the Decision regulating the information about significant holdings, the moment of acquisition or disposal for the purposes of reporting shall be the day when the binding legal transaction was concluded (and not the transfer of shares by the Central Securities Clearing Corporation – "KDD"), based on which the shareholder, the reporting entity or the share option holder has acquired or disposed of shares or share options, by virtue of which a threshold of a significant holding has been achieved, exceeded or decreased under a certain threshold. If a legally valid rescission of the binding transaction occurs, the shareholder, share option holder or reporting entity, shall be obliged to inform the public and the Security Market Agency about that fact within the same deadline and the same manner.
In case of corporate actions of a public company, the moment of acquisition, disposal of shares or share options is not the day when the binding legal transaction (subscription and payment of shares) was concluded, but the day when the shareholder, the share option holder or the reporting entity became aware of that fact.