Reports from the Danish Securities Council 1996

Chapter 2 - The activities of the Danish Securities Council in 1996

2.1 Issue of rules and supervision of the market

2.1.1 Issue of rules

In 1996 the Danish Securities Council issued a total of 7 executive orders on the fundamental framework for the market participants on the Danish securities market.

These executive orders are:

Executive Order No. 329 of 23 April 1996 on Prospectuses at the First Public Offer of Certain Securities issued by the Danish Securities Council.
Executive Order No. 330 of 23 April 1996 on the Requirements for the Prospectus to be Published before Securities Can Be Admitted to Stock Exchange Listing issued by the Danish Securities Council.
Executive Order No. 331 of 23 April 1996 on the Conditions for the Admission of Securities to Stock Exchange Listing issued by the Danish Securities Council.
Executive Order No. 332 of 23 April 1996 on the Reporting of Transactions in Securities Listed on a Stock Exchange, etc. is-sued by the Danish Securities Council.
Executive Order No. 333 of 23 April 1996 on Shareholders' Obligations to Disclose Information and on the Obligation to Submit an Offer When a Shareholder Acquires the Majority of the Voting Rights or a Controlling Influence in a Listed Company issued by the Danish Securities Council.
Executive Order No. 782 of 27 August 1996 on the Danish Securities Council's Fees in connection with the First Public Offer of Certain Securities issued by the Danish Securities Council.
Executive Order No. 783 of 27 August 1996 on Amendment of Executive Order on the Reporting of Transactions in Securities Listed on a Stock Exchange, etc. issued by the Danish Securi-ties Council.

The above executive orders are partly an updating of the rules in force so far with respect to the Danish Securities Trading, etc. Act's liberalisation of the securities market (abolition of the monopolisation of the companies on the market so that several stock exchanges, etc. can be established), partly the issue of new rules in a number of areas which so far have not been regulated by law or only been so to a limited extent, for instance the obligation to submit an offer and reporting.

The following comments can be attached to the individual executive orders:

By the Executive Order on Prospectuses at the First Public Offer of Certain Securities (Executive Order No. 329 of 23 April 1996) and the Executive Order on the Danish Securities Council's Fees at the First Public Offer of Certain Securities (Executive Order No. 782 of 27 August 1996), the practice which until May 1996 was administered by the Danish Commerce and Companies Agency (Erhvervs- og Selskabsstyrelsen) has been continued in respect of the so-called prospectuses for offer of securities not to be admitted to listing on a stock exchange. Pursuant to the Danish Securities Trading, etc. Act such prospectuses shall be submitted to the Danish Securities Council, but shall be published by the Danish Commerce and Companies Agency as before.

The purpose of the above executive orders, which have been issued in pursuance of Part 12 of the Danish Securities Trading, etc. Act, is to continue the implementation of Directive 89/298/EEC of 17 April 1989 coordinating the requirements for the drawing-up, scrutiny and distribution of the prospectus to be published when transferable securities are offered to the public.

The Executive Order on the Requirements for the Prospectus to be Published before Securities Can Be Admitted to Stock Ex-change Listing (Executive Order No. 330 of 23 April 1996) is primarily an updating of the rules in force up till then.

The purpose of the above executive order, which has been is-sued in pursuance of sections 23, 24 and 25 of the Danish Securities Trading, etc. Act, is to continue the implementation of Directives 80/390/EEC, 82/148/EEC, 87/345/EEC, 90/211/EEC and 94/18/EEC coordinating the requirements for the drawing-up, scrutiny and distribution of the listing particulars to be published for the admission of securities to official stock exchange listing.

The Executive Order on the Conditions for the Admission of Securities to Stock Exchange Listing (Executive Order No. 331 of 23 April 1996) has like the executive order mentioned in item 2 been updated with respect to the liberalisation on the securities market and been brought up to date with respect to the accounting information which issuers of securities listed on a stock exchange are required to provide. Besides, any failure to comply with the requirements laid down in the executive order will, contrary to the rules in force so far, be penalised with a fine.

The purpose of the above executive order, which has been is-sued in pursuance of sections 22, 26, 30 and 93 of the Danish Securities Trading, etc. Act, is to continue the implementation of Directives 79/279/EEC, 82/121/EEC and 82/148/EEC coordinating the conditions for the admission of securities to official stock exchange listing.

The Executive Order on the Reporting of Transactions in Securities Listed on a Stock Exchange, etc. (Executive Order No. 332 of 23 April 1996) and the Executive Order on Amendment of Executive Order on the Reporting of Transactions in Securities Listed on a Stock Exchange, etc. (Executive Order No. 783 of 27 August 1996) are an extension of the previous principle governing the reporting of transactions to the Copenhagen Stock Exchange which to a high extent left it to the stock exchange to lay down the specific framework of reporting. Such framework has now been laid down by the Danish Securities Council.

The purpose of the above executive orders, which have been issued in pursuance of sections 33 and 93 of the Danish Securities Trading, etc. Act, is to implement Article 20 in Directive 93/22/EEC of 10 May 1993 on investment services in the securities field. Accordingly, a new obligation has been imposed, namely to the stock exchange/competent stock exchange authority of the home Member State to report transactions in EU-securities which are not to be reported to the host Member State.

The Executive Order on Shareholders' Obligations to Disclose Information and on the Obligation to Submit an Offer When a Shareholder Acquires the Majority of the Voting Rights or a Controlling Influence in a Listed Company (Executive Order No. 333 of 23 April 1996) is an extension of section 30 and Part 8 of the Danish Securities Trading, etc. Act which have laid down the Rules of Ethics governing stock exchange operations in force so far with respect to shareholders' obligations to disclose information and take-over bids.

The rules governing take-over bids are a considerable tightening of the regulation of take-over bids as regards the procedure in connection with submission of a bid (deadlines, requirements regarding the document of the offer, etc.) just as any failure to comply with the provisions laid down in the executive order will be penalised with a fine.

Reference is made to sections 2.2 and 2.3 with respect to the Danish Securities Council's administration of the above executive orders.

The Danish Securities Council issued the executive orders in the spring of 1996 under a considerable pressure of work since the issue was to be completed by 1 May 1996. Therefore, the rules were largely a copy of the previous rules. Accordingly, the Danish Securities Council decided that the rules should be re-viewed within a short span of time. At the turn of the year 1996/97 this review was commenced, the Danish Securities Council asking a number of organisations and others for their comments on the present rules. In light hereof the Danish Securities Council expects a renewed issue of the executive orders during 1997/1998.

2.1.2 The Danish Securities Council's supervision of the market

As regards the general supervision of the market reference is made to section 1.2.1.

The Danish Securities Council's supplementary supervision of the market involves securities dealers, the companies and other players on the market including issuers and investors.

In 1996 the Danish Securities Council was notified of rules issued by the market operators the Copenhagen Stock Exchange, the Danish Securities Centre (Værdipapircentralen) and the FUTOP Clearing Centre (FUTOP Clearing-centralen A/S).

When the Danish Securities Council has received the rules issued by the market operators, the Danish Securities Council may direct them to amend the rules notified or the Council may lay down supplementary rules for these areas, cf. section 3 and section 83 (7) of the Danish Securities Trading, etc. Act.

In a few cases the Danish Securities Council has asked for further comments on the rules submitted which has led the market operators to change the rules themselves.

Published by the Danish Securities Council, May 1997
Electronic edition by Net Bureauet