Amendment of the Luxembourg Transparency Law
The Transparency Law 1, which is the implementing act for disclosure and dissemination of
regulated information by issuers whose securities are admitted to trading on a regulated
market and whose home Member State within the meaning of the Transparency Directive 2 is
Luxembourg, has been amended by the Luxembourg Parliament on 21 April 2016 (the
“Transparency Amending Law”). The Transparency Amending Law implements, among
others, Directive 2013/50/EU of the European Parliament and of the Council of 22 October
2013 (the “Transparency Amendment Directive”) 3. The Transparency Amending Law is yet
to be published in the Luxembourg official gazette before it will come into force.
The Transparency Law is not only relevant for issuers of listed securities but, depending on
their type of investment, certain provisions of the Transparency Law are also relevant for
investors in such issuers.
The main purpose of the Transparency Amendment Directive was to improve the prior
regime that had been created by the Transparency Directive, in particular to make regulated
markets more attractive to small and medium-sized issuers and to increase the transparency
of the ownership as well as the prices of listed shares.
The key changes, including most notably the abolition of the obligation to publish quarterly
financial information, the extension of the deadline for the publication of half-yearly financial
reports, as well as the widened scope of major holding notifications with respect to so-called
specific financial instruments including new aggregation rules, are summarised below.
Key changes to the Transparency Law brought about by the
Transparency Amending Law
I.
Financial reporting
Abolition of interim
management
statement/quarterly
financial report
The obligation imposed on issuers whose shares are admitted to
trading on a regulated market to publish interim management
statements or quarterly financial reports has been abolished.
Extension of the
deadline for the
publication of half-yearly
financial reports
The deadline for issuers whose shares are admitted to trading on a
regulated market publishing half-yearly financial reports has been
extended from two to three months after the end of the reporting
period. 5
1
Issuers may continue to report quarterly on a voluntary basis. 4
Law of 11 January 2008 on transparency requirements for issuers of securities, as amended.
Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of
transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated
market and amending Directive 2001/34/EC.
3
The Transparency Amendment Directive was due to be implemented by 26 November 2015.
4
Interim financial information may qualify as price sensitive information, in which case it will have to be published, stored and
communicated to the Commission de Surveillance du Secteur Financier (“CSSF”) as is customary.
5
Irrespective of how long the period is extended, in the case of Luxembourg issuers of securities admitted to trading on any
regulated market and issuers whose securities are admitted to trading on the regulated market of the Luxembourg Stock
Exchange, any inside information within the meaning of the Market Abuse Law must still be published as soon as possible
(other relevant jurisdictions to be checked where the securities are admitted to trading elsewhere).
2
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II.
Disclosure of government payments
Introduction of reporting
obligations in connection
with payments to
governments
III.
New loan issues
Abolition of disclosure
of new loan issues
IV.
The requirement for the issuer to disclose new loan issues has
been abolished. 7
Amendments to articles of association
Abolition of the
obligation to report
proposed amendments
to the articles of
association to the CSSF
and regulated markets
V.
As per the amended text of Article 5 of the Transparency Law,
companies active in extraction (oil, gas and minerals) or logging
within primary forest industries must declare in a separate annual
report payments made to governments in the countries where they
conduct their activities. 6
The requirement for the issuer to inform the CSSF and the
regulated market(s) prior to a proposed amendment to its
instrument of incorporation, statutes or articles of association has
been abolished. 8
Notifications of major holdings
Widened scope of major
holding notifications with
respect to so-called
specific financial
instruments
New obligations have been introduced in connection with
notifications of major holdings. As a result of these new obligations
holdings of (a) financial instruments that, on maturity, give the
holder, under a formal agreement, either the unconditional right to
acquire or the discretion as to his right to acquire, shares to which
voting rights are attached, already issued, of an issuer whose
shares are admitted to trading on a regulated market; and (b)
financial instruments which are not included in point (a) but which
are referenced to shares referred to in that point and with
economic effect similar to that of the financial instruments referred
to in that point, whether or not they confer a right to a physical
settlement, must now also be disclosed.
Calculation of voting
rights
Regarding cash settled financial instruments the number of the
voting rights must be calculated on a ‘delta-adjusted’ 9 basis, by
multiplying the notional amount of underlying shares by the delta of
the instrument. 10
6
This obligation will become effective with the financial year beginning 1 January 2016 or during the calendar year 2016.
The modification of this rule is without prejudice to the obligation to disclose inside information within the meaning of the
Market Abuse Law as is customary.
8
In particular in the context of listed shares, the amendment of the articles of association of the issuer may still be subject to
disclosure under various obligations, e.g. if the issued capital was modified or if the rights attaching to listed shares were
amended. The modification may also have to be disclosed under applicable listing rules.
9
Delta indicates how much a financial instrument’s theoretical value would change in the event of variation in the underlying
instrument’s price and provides an accurate picture of the exposure of the holder to the underlying instrument.
10
ESMA is yet to publish regulatory technical standards to specify the methods for determining delta.
7
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New aggregation rules
introduced
Aggregation rules apply henceforth where the number of voting
rights relating to specific financial instruments held directly or
indirectly, aggregated with the number of voting rights relating to
shares held directly or indirectly reaches, exceeds or falls below a
relevant threshold set out in the Transparency Law.
Stabilisation exemption
introduced
In addition to, among others, the exemptions in connection with
shares and depository receipts acquired for the purpose of clearing
and settlement within the usual short settlement cycle by
custodians and market makers in certain circumstances or voting
rights held in the trading book, a new exemption to the major
holding notifications has been added in connection with voting
rights attached to shares acquired for stabilisation purposes in
certain circumstances.
VI.
Additional powers to the CSSF
Delisting, publications,
injunctions
The CSSF is now also authorised
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VII.
to request the delisting of financial instruments if it finds
that the provisions of the Transparency Law have been
infringed or if it has reasonable grounds for suspecting that
the provisions of the Transparency Law have been
infringed;
to request the publication of regulated information, of a
suitable corrigendum in respect of regulated information
and of adequate modifications of future regulated
information;
to issue stop orders in connection with behaviour that is in
breach of the Transparency Law.
Penalties
Administrative penalties
New administrative penalties apply in the event of failure to notify
or publish regulated information within the required deadlines.
These include:
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for legal entities, the higher of (i) up to (a) €10,000,000 or
(b) 5% of the total annual turnover according to the latest
available annual accounts (or, where the legal entity is a
parent undertaking or a subsidiary of a parent undertaking
which has to prepare consolidated financial accounts, up to
5% of the total annual turnover or the corresponding type of
income according to the latest available consolidated
annual accounts of the ultimate parent undertaking); and
(ii) up to twice the profits gained or losses avoided because
of the breach. These penalties due to a relevant breach by
a legal entity may be imposed on the members of its
governing bodies as well as on any other person
responsible, by virtue of the applicable law, for the breach.
for natural persons, the higher of: (i) up to €2,000,000 or (ii)
up to twice the amount of the profits gained or losses
avoided because of the breach.
Exercise of sanctioning
powers
When determining the type and level of administrative sanctions or
measures, the CSSF must take into account all relevant
circumstances, including where appropriate, in addition to the
gravity and the duration of the breach, the importance of profits
gained or losses avoided and the losses sustained by third parties
as a result of the breach:



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the degree of responsibility;
the financial strength, for example as indicated by the total
turnover or the annual income;
the level of cooperation with the competent authorities;
previous breaches
of or by the natural person or legal entity responsible.
VIII.
Publication of decisions by the CSSF
Subject to the possibility, in certain predefined circumstances, of delaying and/or anonymising
its publication, the CSSF must publish on its website every decision on administrative
sanctions and measures it imposes for a breach of the Transparency Law without undue
delay, including at least information on the type and nature of the breach and the identity of
natural persons or legal entities responsible for it. Any decision published this way will remain
available online for five years.
The above merely regroups the main amendments to the Transparency Law and is not
intended to be exhaustive. Please feel free to contact us for further information.
This publication is intended to provide information on recent legal developments and does not cover every aspect
of the topics with which it deals. It was not designed to provide legal or other advice and it does not substitute for
the consultation with legal counsel before any actual undertakings.
For further information please contact:
François Warken
Partner, Capital Markets
francois.warken@arendt.com
© 2016 Arendt & Medernach
Caroline Motzer
Senior Associate, Capital Markets
caroline.motzer@arendt.com