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DANISH UPDATE: Nasdaq Introduces a Common Nordic Main Market Rulebook for Issuers of Shares

Nasdaq has introduced a “Nordic Main Market Rulebook for Issuers of Shares” (the “Rulebook”), comprising Nasdaq Copenhagen, Nasdaq Helsinki, Nasdaq Iceland and Nasdaq Stockholm (the “Exchanges”). The Rulebook entered into force on 1 May 2020 and is comprised of two parts. The first part is a harmonized set of rules applicable to issuers of shares on the main markets of the Exchanges. The second part is made up of specific provisions applicable to each of the Exchanges, supplementing the common provisions.

The rules applicable to issuers of shares on the Exchanges have until the introduction of the Rulebook been set out in specific rulebooks applicable to each of the Exchanges. The rules set by the Exchanges supplement applicable legislation and thus also reflect different requirements in each jurisdiction.

In connection with the harmonization of the rules, Nasdaq has taken the approach that requirements previously set out in supplementing guidance text to each of the provisions, should be included in the text of the rule in question. It has thus been the intention that rules should explicitly set out the requirements imposed on the issuers and to increase clarity, objectivity and foreseeability of the rules.

With respect to the provisions applicable to any one of the specific Exchanges only, these generally relate to (1) various requirements for admission to trading as the local practices vary in each jurisdiction, (2) differences relating to different legislation in each jurisdiction and (3) different market practice and requirements based on regulation by national authorities.

At least with respect to Denmark, Nasdaq Copenhagen historically had a very prominent role with respect to the regulation of the capital markets and setting the rules applicable to issuers and market participants. However, due to changes in legislation, including harmonization across the EU and adoption of the EU Market Abuse Regulation (“MAR”), much of the powers to regulate the market has either reverted to the legislator, with respect to the national Danish legislation and implementation of EU directives, or to the Danish Financial Supervisory Authority, with respect to the interpretation and enforcement. Following these trends, it is therefore a natural next step to further harmonize the rules still set by Nasdaq in the Nordics.

It should be noted that Nasdaq Copenhagen has also used the opportunity to clarify the requirements for categorizing company announcements to be made public to the market. Also, Nasdaq Copenhagen has announced its interpretation of the requirements under MAR with respect to the announcement of inside information. This includes a number of typical cases that constitute inside information along with the format for such announcements. While this serves as useful guidance, especially with respect to what is expected by Nasdaq Copenhagen in relation to the issuers, the interpretation of what constitutes inside information and enforcement of applicable rules in a Danish context legally falls under the supervision of the Danish Financial Supervisory Authority.

Also, of particular interest to issuers on Nasdaq Copenhagen, is the specific requirement that de-listing of shares generally requires such resolution to be passed by a general meeting, where the proposal must be adopted by at least 90% of the votes cast as well as at least 90% of the Share Capital represented at the general meeting. Further, in addition to notice being given, shareholders must be offered a reasonable level of compensation. This requirement is set out in the supplementary rules of the Rulebook relating to Nasdaq Copenhagen and is further described in XBMA update of 21 January 2020 (https://xbma.org/danish-update-nasdaq-copenhagen-introduces-90-majority-requirement-for-de-listings/), where the exemptions to this rule along with its legal implications are also addressed.

The Rulebook results in both a number of general changes applicable to all relevant exchanges, in addition to changes applicable only specific exchanges.

Of general material impact to each of the Exchanges are the following changes:

  1. MAR guidance has been removed from the rulebook and included in separate guidance for each of the Exchanges in the form of supplements or general guidance. This is due to fact that although MAR applies across the jurisdictions comprised by the common rulebook (except Iceland), national practices and jurisprudence apply.
  2. The requirement to disclose closely-related party transactions have been removed, since this requirement now appears from national legislation implementing the Shareholders Rights Directive II (again, exceptions apply with respect to Iceland, where the directive does not apply).
  3. The previous requirements for experience for board of directors and management in companies wishing to be listed have been removed. Instead, board and management must have held their positions in a period of three months prior to listing, have participated in the preparation of one financial report and must have participated in a seminar on the obligations of listed companies held by the relevant Exchange.

Nasdaq has further provided specific explanations, comparing the provisions of the Rulebook to the existing provisions. This consists of a general description, a cross-reference table and a short comment to each provision in the Rulebook.  When considering these, we consider the following specific changes of particular importance to Nasdaq Copenhagen:

  1. More specific requirements with respect to board and management with respect to companies wishing to be listed.
  2. Separate and more flexible document regarding guidance on disclosure requirements, supplementing ESMA and the Danish FSA-interpretation.
  3. Alignment of timing of disclosure of financial reports, so they are to be disclosed at such times as set out in the Danish Capital Markets Acts.
  4. Clarification that annual and half-year accounts must be prepared and disclosed, while it is voluntary to disclose Q1 and Q3 reports.
  5. Provisions with respect to special acquisition companies have been deleted, since they have never been used.
  6. Possibility of granting waiver from disclosure rules, e.g. in case of dual listings, any such waiver to be disclosed.
  7. The issuer must be able to demonstrate on-going business-activities.
  8. Codification of liquidity requirements.
  9. Financial calendar is only required to be disclosed on website or similar and not by a company announcement.
  10. Separate provisions on takeovers, including process for disclosure and notices to exchange.
  11. New rule on suspension of shares from trading in case of non-compliance.