Disclosure Requirements - Finland
Disclosure Category: 1
CBL has been granted a right by the Finnish CSD, Euroclear Finland (EFI), to act as an account operator and clearing party in the Infinity system of EFI and holds financial instruments on behalf of its customers in a custodial nominee account(s).
CBL must comply with the mandatory disclosure requirements as provided in the Act on the Book-Entry System, the Investment Services Act (14.12.2012/747), Securities Markets Act and Finnish Tax Act and disclose upon request the name of the beneficial owner, where this is known, as well as the number of securities held by the owner. If the name of the beneficial owner is not known, CBL is required to disclose corresponding information about the representative acting on behalf of the owner
The Finnish Tax Act requires an account operator in the Infinity system of EFI to report annually per record date, details of the beneficial owners of the securities and their holding or, if the identity of the final beneficial owner is undisclosed or unknown for tax purposes, the identity and positions of the customers holding on behalf of such a beneficial owner.
Customers entering into transactions in the Finnish domestic market consent and are hereby deemed to consent to disclosure and to the appointment of the requestor (for example, but not limited to the listed company, its agent or the Finnish Authorities) as their attorney-in-fact, under power of attorney, to collect from CBL such information as is required to be disclosed. Customers not willing to give this consent cannot hold such securities and/or financial instruments in their account with CBL.
Background and legal basis
Disclosure requirements of the book-entry system and securities market
According to Chapter 4, Section 4 of the Act on the Book-Entry System and Settlement Activities 16.6.2017/348, as amended, and Chapter 8 of the Securities Market Act (14.12.2012/746), the nominee registration custodian (in this case, CBL) shall, upon request, notify the requestor (the Finnish Financial Supervision Authority (FIN-FSA), the issuer or its agent) of the name of the beneficial owner of the book entries, where this is known, as well as of the number of book entries held by the owner.
If the name of the beneficial owner of the book entries is not known, the nominee registration custodian shall notify of corresponding information about the representative acting on behalf of the owner as well as submitting a written declaration to the effect that the beneficial owner is not a Finnish legal or natural person.
The FIN-FSA may issue further provisions on the manner in which the information about the beneficial owner of the book entries, or about the representative acting on behalf of the beneficial owner of the book entries, as well as the contact information necessary for their identification shall be given. If the nominee registration custodian does not follow the rules and provisions given (for example, to properly disclose the information of the beneficial owner), the right to act as a nominee registration custodian can be denied.
Tax disclosure requirements
In accordance with Finnish Tax Act (11.8.1978/627) as amended, an account operator in the Infinity system (in this case CBL) of EFI, has to provide information for the purposes of annual report to the Finnish Tax Authorities which includes details of the relevant customers if the identity of a beneficial owner is undisclosed for tax purposes.
If at the time of issuance the annual tax report to the Finnish Tax Authorities (FTA) CBL has no knowledge of the identity of the final beneficial owner to whom a dividend subject to Finnish withholding tax was made, CBL is under obligation to report the details of the CBL customers’ holding on behalf of such beneficial owners (including the identity of the customer, details of holdings and all other information requested).
If CBL customer is the beneficial owner, CBL will disclose the details about such customer.
Annual TRACE reporting requirements
To comply with Finnish disclosure and reporting requirements, Clearstream Banking, as an Authorised Intermediary (AI), is requested to provide the following details about certified intermediary banks/beneficial owners holding publicly listed Finnish equities:
Certified status of customer
Name, TIN, address, legal status and dividend income details of the Clearstream Banking customer (beneficial owner).
Name, Finnish and local TIN, address, legal status and dividend income details of the Clearstream Banking customer.
To ensure the details included in the Clearstream Banking annual TRACE reporting are correctly reflected towards the FTA, AI customers will be requested to validate and confirm to Clearstream Banking that the reportable figures are correct and in line with the reporting that the AI customer will include in its own annual reporting to the FTA.
Other reporting obligations
Obligation to report threshold crossings
The Securities Market Act (14.12.2012/746), Chapter 9, Article 5, regulates the application of the thresholds detailed hereunder. The obligation to report the crossing of thresholds falls upon the beneficial owner; that is, the party eligible to vote.
Each shareholder shall disclose information on his portion of holdings to the company and the FIN-FSA when the portion reaches or exceeds or falls below 5%, 10%, 15%, 20%, 25%, 30%, 50%, 66.66% or 90% of the voting rights or total number of shares of a Finnish company whose share publicly traded.
The disclosure notification shall be submitted without undue delay, but no later than one business day after the shareholder knew or should have known of a contract under which his portion of holdings reaches or exceeds the threshold provided for or falls below it.
The information shall also be disclosed when a shareholder or a person corresponding to a shareholder is party to a contract or other arrangement that, when effected, results in reaching, exceeding or falling below the said threshold.
Where the duty of disclosure arises from the shareholder being party to a contract, the disclosure shall, however, be made without unreasonable delay after the date on which the beneficial owner knows or should have known of the relevant transaction, but not later than on the date of the conclusion of the contract. The shareholder need not make the disclosure referred to herein if the disclosure is made by an organisation or foundation that controls the shareholder.
Directive (EU) 2017/828 of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement (the second shareholder’s rights directive “SRD II”) has been transposed into, inter alia, the Securities Markets Act, the Companies Act and the Act on Investment Services in 10 April 2019 (SDR II Law).
The Act on the Monitoring of Foreign Corporate Acquisitions in Finland regulates the monitoring and confirmation of corporate acquisitions made by foreign citizens.
Only corporate acquisitions in the defence sector and the dual-use goods sector are subject, without exception, to advance confirmation by the Finnish public authorities. Such confirmation is granted upon request. Regarding the defence material industry, monitoring covers all foreign owners. In other respects, monitoring only applies to foreign owners domiciled outside the EU and EFTA states.
In the civil sector, monitoring is targeted at Finnish enterprises considered critical to securing vital functions within society. Within the civil sector, corporate acquisitions are subject to declaration.
Corporate acquisition refers to a situation, in the case of a limited liability company, in which a foreign owner gains control of a minimum of 10% of the total number of votes accompanying company shares. Alternatively, such ownership may involve corresponding, dominant control over the company in question, or over another monitored entity.
Penalties for non-compliance with the threshold crossings are defined in the Act on Financial Supervision. According to the Act on Financial Supervision, anyone who wilfully or through negligence does not fulfil his disclosure obligation shall be liable to an administrative fine.
Anyone who wilfully or through negligence does not comply with the requirements for confirmation as per the Act on the Monitoring of Foreign Corporate Acquisitions shall be liable to a fine for an acquisition offence.
Shareholder identification as set out in the SRD II Law
The SRD II Law provides for the right for issuers of listed shares in scope of the SRD II Law, to identify their shareholders.
Issuers can request intermediaries at each level of a custody chain to promptly provide relevant shareholder identification information, to facilitate such identification.
In accordance with SDR II Law as amended, an intermediary (in this case CBL) shall, upon receipt of the shareholder identification request, transmit the request to the next intermediaries in the custody chain (that is, CBL customers with holdings in the requested securities). According to SRD II Law, the intermediary forwarding such request, is also obliged to give the issuer the details of the following intermediary in the chain. A response to the shareholder identification disclosure request shall be sent by every intermediary in the custody chain directly to the recipient's address defined in the request and without delay. CBL will generate the response as required, with information regarding shareholder's identity, limited to CBL books only.