CBL Disclosure Requirements - Iceland
Disclosure Category: 1
In the case of holdings in securities listed on a Icelandic marketplace, and/or registered in an Icelandic Securities Register, the custodian is under an obligation to disclose the identity and holdings of customers and the identity of final beneficial owners holding applicable positions.
Customers entering into any transactions in the Icelandic domestic market hereby consent and are hereby deemed to consent to the disclosure and to the appointment of the requestor (for example, Fjármálaeftirlitið (the Financial Supervisory Authority – FSAI) as their attorney-in-fact, under power of attorney to collect from Clearstream such information as is required to be disclosed.
Customers are advised that local laws and regulations may require CBL to disclose securities trading and holding information and the identity of the ultimate beneficial owners of certain securities.
The Icelandic authorities are entitled to obtain information on the beneficial owners of any financial instrument held by the custodian in Iceland that is listed on a Icelandic marketplace, and/or registered in a Icelandic Securities Register.
Therefore, customers of CBL are only admitted to participate in the services offered by CBL on the Icelandic market if the CBL customer delivers, upon request by CBL, all or part of customer information such as information related to its customers and its customers' holding including, but not limited to:
- The identity of the beneficial owner of financial instruments held in a nominee accounts;
- The holdings of financial instruments and/or voting rights of the client beneficial owners.
Customer of CBL must deliver the information as requested by the FSAI and collected by CBL within the requested timeframe.
Therefore, if a customer does not provide such details, CBL reserves the right to exclude such customer from any services offered on the Icelandic market and to take all necessary steps in relation thereto.
Background and Legal basis
In the case of direct or indirect holdings of Icelandic securities in a nominee account with Nasdaq CSD Iceland (NCSD), the custodian is under the obligation to guarantee compliance with the rules on disclosure of information to FSAI. The FSAI may establish further rules on disclosure of information.
The legal basis for to disclosure of information is the Regulation No. 706/2008 on nominee registration and the custody of financial instruments in nominee accounts and, among others, Articles 2, 4, 6, 7, 8, 14 and 15 thereof.
The Act on Securities Transactions N° 108/2007 (the “Securities Transaction Act”) in accordance with its Chapter IX requires disclosure and notification of changes in significant proportions of voting rights to the FSAI and to the issuer.
Each customer hereby acknowledges and agrees to indemnify and hold harmless CBL from any and all expenses (including attorney fees) costs, penalties, losses, damages, judgments, suits or any other liabilities whatsoever incurred by the CBL due to the fact that it will have provided CBL with incomplete, untrue, misleading or inaccurate information or will not have provided CBL with the information requested in a timely manner.
Tax disclosure requirements
According to the Icelandic Tax Act (as defined below), if the identity of a beneficial owner is undisclosed for tax purposes, CBL may have to report details of the relevant CBL customer.
Background and legal basis
This obligation is based on Icelandic Act no. 90/2003 respecting income tax (the "Icelandic Tax Act" or "ITA") as amended and in particular on Articles 90, 92 and 94 thereof.
In the event that the identity of a beneficial owner of "shares, bonds or other financial instruments" (the "Instruments") is undisclosed for tax purposes, CBL may be requested to disclose to the Icelandic Tax Authorities details of the CBL customers holding Instruments on behalf of such beneficial owner (including the identity of the client, details of holdings and all other information requested).
If CBL's customer is the beneficial owner, CBL may have to disclose details about such customer.
The sanctions in the event of violation of the ITA's disclosure rules are set out in the ITA, in particular in Article 109 thereof.
Obligation to report threshold crossings (“Changes in significant proportions of voting rights”)
The FSAI and the issuer must be notified in a verifiable manner if voting rights or holdings in the company reach, exceed or fall below 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 50%, 66⅔% or 90% of a listed company. In such events, such issuer itself shall make such notification public (usually through the stock exchange).
Exemption from the notification requirement applies in relation to shares acquired for the sole purpose of clearing and settling within the usual short settlement cycle, or when a party holds shares in the capacity of custodian (provided that such custodian can only exercise the voting rights attaching to such shares under instructions given in writing or by electronic means).
The Securities Transaction Act can be found at: www.ministryoffinance.is/media/skjal/Act_No_108_2007_on_Securities_Transactions.pdf.
The FSAI may impose administrative fines on any party that does not fulfil the disclosure requirements. Fines imposed on a legal person may range in amount from ISK 50,000 to ISK 50 million (which may be changed from time to time).
According to the Securities Transaction Act (Article 145), the violation of, among others, Articles 78 and 79 of the Securities Transaction Act is subject to fines or up to two years of imprisonment.