What is Shareholding Disclosure monitoring and reporting?
Shareholding disclosure rules require investment firms to monitor and report complete and accurate disclosures of their share and derivative holdings to a relevant competent authority and/or issuer once certain parameters are met.
There are a number of different types of shareholding rules:
- Substantial shareholding rules (also referred to as major shareholding and long disclosures) – these are designed to provide transparency to the market, the issuer, and the relevant regulator, about positions that are being accumulated, provide information on who can vote at the company’s AGM or who has access to voting rights.
- Short position disclosures– these are a tool for regulators to have transparency of those responsible for shorting an issuer.
- Takeover disclosures – these allow additional transparency whilst a company is under offer to ensure fair treatment of shareholders.
- Issuer Requests – in some jurisdictions issuers or their investor relations representatives are able to legally request disclosure of your holdings in their issuer and the identity of other parties to that position. The aim is to provide the issuer with transparency of their shareholders.
- Sensitive Industry – this can often be a pre-approval requirement before you trade in a certain industry above a certain threshold. These are industries that a government wants to protect such as the financial industry, defence, and aviation. Restrictions on foreign ownership of issuers can also apply.
- Foreign Ownership – restrictions can be placed on the collective percentage all “foreigners” can own. Ownership over this level can include forced sale and sanctions.
- Articles of Association– companies may include lower thresholds for disclosure within their company’s articles of association and include their own sanctions for non-compliance.
