Einde inhoudsopgave
The Decoupling of Voting and Economic Ownership (IVOR nr. 88) 2012/1.4.1
1.4.1 Existing Disclosure Requirements
mr. M.C. Schouten, datum 01-06-2012
- Datum
01-06-2012
- Auteur
mr. M.C. Schouten
- JCDI
JCDI:ADS599421:1
- Vakgebied(en)
Ondernemingsrecht / Rechtspersonenrecht
Voetnoten
Voetnoten
McCreevy, supra note 52.
ECGI et al., supra note 48, Exhibit B, at 150 (merely observing that '[f]or a number of [control enhancing mechanisms], notification of the acquisition or disposal of major holdings is required when specified thresholds have been crossed'); European Commission, supra note 115, at 78 (noting that '[t]he requirements of the Transparency Directive do not impose disclosure of the measure of shareholder separation between investments and voting rights. . . . Such disclosure would however be valuable as it would allow to measure separation between the cash flow rights (e.g., economic risks) and the voting rights in the case of shareholders holding a significant block') (although the Commission's impact assessment was published at a later date than the date Commissioner McCreevy held his speech, one would assume that he must have been aware of its main findings prior to deciding on whether or not to pursue one share-one vote); ECGI et al., supra note 48, at 94 ('[i]nvestors argue that transparency measures may be necessary in order to improve the level of information on the existence and impact of any of the control enhancing mechanisms').
ECGI et al., supra note 48, at 9 (noting that stock lending and derivatives would be worth studying, but that it is very difficult to do so partly due to a lack of transparency); European Commission, supra note 115, at 79 (noting that in response to decoupling major shareholders could be required to disclose to what extent and by what means they have reduced their economic risk); see also Brav et al., supra note 41, at 1748 (finding that in approximately 16.1% of the cases in their sample hedge funds report derivative positions in the target companies, that these are mostly securities with embedded option features issued by the target companies and not derivatives representing countervailing positions that offset the economic interests from the long positions, but noting that this information is likely incomplete given that disclosure is not mandatory).
Rule 13d-3 of the Exchange Act, 17 C.F.R. § 240.13d-3(2010).
The standard notification form published by the Commission merely acknowledges that the laws of individual Member States may require reporting not only of voting rights but also of shares held; see also CESR, supra note 186, at 29, 49 (stating that 'CESR believes that that the inclusion of the number of shares should not be mandated,' even though elsewhere in the document it is stated that 'it is clear that the intention of the Transparency Directive is to impose ongoing obligations on shareholders in respect of acquisitions and disposals of both shares and voting rights').
Becht, supra note 8, at 87.
Exchange Act Rule 16a-1(a), 16a-2, 17 C.F.R. § 240.16a-1(a), 16a-2(2005). But see Hu & Black, supra note 2, at 873 (explaining that transparency is still limited).
Transparency Directive, supra note 10, art. 3(1) (though only with respect to holders of shares in issuers for which they act as a 'home Member State').
CESR, Summary of Responses to Questionnaire on Transposition of the Transparency Directive, CESR/08-514B (2008); see also European Commission, supra note 135.
Simmons & Simmons, Disclosure of Share Ownership in Listed Companies: An International Legal Survey 18, 19, 25 (2004) (reporting that such mle exists in the Netherlands, Finland, and France).
CESR, supra note 228, at 4, 5.
Id. at 3.
Market Abuse Directive, supra note 100, art. 6(4).
Commission Directive 2004/72/EC, supra note 159, art. 6(3)(d).
Exchange Act Rule 16a-1(a), 16a-2, 17 C.F.R. § 240.16a-1(a), 16a-2(2005).
European Commissioner McCreevy, announcing he would neither pursue one share-one vote nor expand disclosure requirements, has stated that the Transparency Directive already contains ample provisions on transparency.1Remarkably, this statement appears to have been based, at least in part, on two studies acknowledging that the Directive offers limited insight and that investors believe increased transparency may be necessary.2 The studies also point at the Jack of transparency with regard to the decoupling of voting rights from economic ownership through securities lending and derivatives.3 Indeed, the Directive offers hardly any transparency with respect to cash flow rights and even less with respect to empty voting. Acquiring a substantial number of shares per se does not trigger a disclosure obligation, contrary to the U.S.4 The Directive also falls short of requiring disclosure of the number of shares held on the notification form, let alone arrangements affecting economic exposure.5The fact that cash flow rights did not need to be reported onder the precursor of the Directive was identified more than a decade ago as a major reason why it was difficult to measure the separation between ownership and control in European firms.6 Unfortunately, the Directive has not changed this. U.S rules again go much further, especially for shareholders whose stake exceeds 10% by requiring them to disclose not only the number of shares and options held but also other arrangements affecting their economic exposure.7
Despite the limited scope of the Directive's disclosure rules, the rules at the level of individual Member States may be tighter, given that the Directive allows this.8 While Member States have indeed imposed stricter disclosure requirements in many respects, they have not done so with respect to economic interests.9 Only in a few Member States can a disclosure obligation be triggered both as a result of acquiring voting rights and as a result of acquiring shares.10 Moreover, only in about half of the Member States are notifying shareholders required to report the percentage of share capital held in addition to the percentage of voting rights held, while there is no mention of reporting pure economic interests.11
Member States have also taken divergent approaches with respect to securities lending. In some Member States, securities lending triggers a disclosure obligation on the part of both the borrower and the lender, while in others only on the part of the borrower.12 In the laffer case, the market remains unaware of both the fact that the borrower has no economic interest and the fact that the lender no longer has the voting rights initially reported.
A related question is whether the Market Abuse Directive requires disclosure of capital interests and hedging by insiders. Basically, the answer is yes. Under this directive, a disclosure obligation is triggered in the case of transactions in the share or "derivatives or other financial instruments linked to them."13 Moreover, the notification should include a description of such financial instruments.14 These rules thus have a broader scope than the rules onder the Transparency Directive — pretty much like U.S. rules on insider trading do.15 As such, they could provide inspiration for possible expansion of the Directive's disclosure obligations, the need for which becomes clear in the following section.