The Autorité des marchés financiers draws investors’ attention to the consequences of the entry into force of new provisions for notifications of major holdings
From 1 October, the inclusion of cash-settled derivatives in the calculation of major holdings may result in thresholds being exceeded passively by holders of long positions established prior to that date.
Article 25 of the Act of 22 March 20121, which concerns amendments to the regime governing notifications of major shareholdings, will come into force on 1 October 2012.
From this date, investors will be required to aggregate to their holdings any underlying shares and voting rights of any cash-settled derivative or agreement having an economic effect similar to the holding of shares (including equity swaps, contracts-for-difference and cash-settled call options).
This aggregation will apply to all outstanding positions on 1 October 2012. As a result, the holders of such instruments and agreements may exceed a legal threshold on this date, passively, as a mere consequence of the entry into force of the law.
For example, an investor displaying on 1 October 2012 an outstanding long position in contracts-for-difference on6% of the capital and voting rights of an issuer, must report to the AMF and the issuer the exceeding of the legal thresholds of 5% of the capital and voting rights no later than 5 October 2012. While this investor will be deemed to hold a beneficial ownership – as defined in articles L.233-7 and L.233-9 of the Commercial Code – equal to zero until 30 September 2012 (as contracts-for-difference will remain outside the scope of aggregation until that date), this will no longer be the case on 1 October 2012, when the entry into force of the law will cause this investor to be deemed to hold a beneficial ownership of 6% of the capital and voting rights of the issuer.
Today the AMF published a summary of the answers received to the public consultation on amendments to the rules applicable to notifications of major holdings and declarations of intent contained in its General Regulations2. In this respect, it is specified that the AMF has decided to adopt the delta method of accounting for cash-settled derivatives and equivalent agreements.
Finally, a new version of the disclosure form for notifications of major holdings will be uploaded to theAMF’s website by 1 October 2012.AMF’s website by 1 October 2012.