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Transparency Directive: Consultation on implementation of the major shareholding notification provisions

The purpose of the Transparency Directive  is to enhance transparency in EU capital markets in order to improve investor protection and market efficiency. It does this by establishing rules on periodic financial reports and other continuing reporting obligations, and the disclosure of major shareholdings, for issuers whose securities are admitted to trading on a regulated market in the EU. The Directive must be implemented into national law by all Member States no later than 20 January 2007.

Most of the requirements of the Transparency Directive can be implemented by secondary legislation and the Treasury will consult on proposed regulations in due course. However, the proposed approach for those parts of the Transparency Directive relating to the disclosure of shareholdings – historically part of company law – requires primary legislation and the Government proposes to include the necessary provisions in the Company Law Reform Bill.

The Government is consulting on its proposed policy approach for implementation of the major shareholding notification provisions of the Directive.  The policy approach is included in the Company Law Reform White Paper published on 17 March 2005 (see below) and a Partial Regulatory Impact Assessment (RIA) has also been published (see below).

The Government welcomes submissions on all aspects of its policy approach and the RIA by 10 June 2005 and, in particular, on the following questions.

1. Do you agree with the proposal that the principal obligation of disclosure should be changed from the current 'interest in shares' under the Companies Act 1985 to control of exercisable voting rights  under the Directive?

2. Do you agree with the proposal to remove non-traded public limited companies from the scope of the disclosure regime?

3. Do you agree with the proposal to give the FSA powers to make issuers admitted to trading on non-regulated markets in the UK (and those with qualifying holdings in those issuers), subject to the regime where appropriate for market transparency reasons?

4. Do you agree with the proposal to repeal the current criminal sanctions for breach of notification obligations and give the FSA powers to deal with breaches of notification obligations equivalent to those it has to deal with breaches of rules under FSMA?

5. Do you agree with the proposal to maintain the scope of the current Companies Act regime and give the FSA equivalent powers to require disclosures in respect of holdings of financial instruments?

6. Do you have any comments on the likely costs of implementation of the major shareholdings notification provisions of the Directive?

7. Do you have any comments on the impact on competition of implementation of the major shareholdings notification provisions of the Directive?

8. Do you have any comments on the impact on small business of implementation of the major shareholdings notification provisions of the Directive?

Further detail on the policy proposals will be made available during the process.  In addition, the FSA will in due course undertake its own consultation exercise on the detailed rules and implementing measures it proposes under the Directive.

Consultation responses for this exercise should be sent by 10 June 2005 to:

Transparency Directive: Major Shareholdings Notification Consultation
Capital Markets and Governance Team
HM Treasury
1 Horse Guards Road
London
SW1A 2HQ

Fax: 020 7451 7524
E-mail: eve.engledow@hm-treasury.x.gsi.gov.uk

Please ensure that all responses provide details of the organisation the views of which are being represented.

Unless respondents indicate otherwise, it will be assumed that they have no objection to their response being made public.

The DTI will forward to HM Treasury any responses it receives to the Transparency Directive section of the CLR White Paper.

The report is available below in Adobe Acrobat Portable Document Format (PDF). If you do not have Adobe Acrobat installed on your computer you can download the software free of charge from the Adobe website. For alternative ways to read PDF documents and further information on website accessibility visit the HM Treasury accessibility page. 

PDF file of Company Law Reform White Paper, Chapter 4 (see section 4.17, pages 52 – 55) (external website)  

PDF file of Partial Regulatory Impact Assessment  (188KB)

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