CESR proposes to extend major shareholding notifications to instruments of similar economic effect to holding shares and entitlements to acquire shares. It advocates an approach that is consistent with the pan-European short-selling regime already proposed by CESR.
The consultation offers a high-level-issues paper proposing to extend major holding notifications to include all instruments that give a similar economic effect to holding shares and entitlements to acquire shares in the broadest sense. CESR considers that a broad definition balances the need for legal certainty with the potential for avoidance. The intention is to cover all instruments that can be used to create an economic long position.
While seeking to broaden the scope of the TD’s major shareholding disclosure regime, CESR does not seek to change the general principles underlying the current regime. The scope of the broadened disclosure regime is to remain limited to instruments referenced to shares to which voting rights are attached, already issued, of an issuer whose shares are admitted to trading on a regulated market.
The broad approach proposed by CESR seeks to coordinate national efforts in this area in order to achieve a more uniform approach for possible regulatory initiatives at national level. It will also be part of the feedback to the European Commission for its future review of the TD. The purpose of this consultation is limited to instruments that give a similar economic effect to holding shares and entitlements to acquire shares, and does not seek to harmonise other aspects of the TD’s application across the membership. CESR recognises the need for further harmonisation, and will seek to promote convergence in its advice to the European Commission as part of the review of the Directive.
Where appropriate, this consultation proposes an approach that is consistent with the pan-European short-selling regime proposed by CESR’s Task Force on Short Selling. It should be noted, however, that CESR considers these are two separate regimes serving different purposes.
It should also be noted that instruments creating a similar economic effect to holding shares and entitlements to acquire shares are generally entered into to give economic exposure without wishing to gain access to voting rights, and are an important source of liquidity to the market. CESR does not seek to discourage the use of such instruments, but only to make their resulting economic exposure transparent. Equally, the principles underlying CESR’s proposed approach to disclosure aims for meaningful notification, avoiding disclosure of information which is either unnecessary or potentially misleading to the market
Deadline for comments is 31 March 2010
© CESR - Committee of European Securities Regulators
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