Notification of major holdings
Who is subject to the obligation to notify major holdings?
The obligation to notify major shareholdings and proportions of voting rights (flagging obligation) applies to listed companies’ shareholders, persons comparable to a shareholder and the listed company itself.
The purpose of the flagging obligation is to provide investors with equal opportunities to receive information on a listed company’s structure of ownership, voting rights and changes therein. This information may have a material influence on the value of the shares of the listed company.
The flagging obligation concerns proportions of shareholdings and voting rights in a Finnish company whose shares are subject to trading on a regulated market in an EEA member state or, upon application or with the consent of the issuer, on a multilateral trading facility in Finland. The flagging obligation begins from the admission of the share to public trading. The multilateral trading facility in Finland is First North Growth Market Finland (hereinafter First North). An amendment to the Securities Market Act, which extended the flagging obligation to First North companies, entered into force on 19 April 2024. The flagging obligation is subject to a transition period, however:
Transition period for First North companies
The flagging obligation will be applied to First North companies in stages under a transition period provided for in the Act (163/2024). A shareholder of a First North company and a person comparable to a shareholder must make a flagging notification to the target company and to the Financial Supervisory Authority (FIN-FSA) as follows:
1. Holdings exceeding flagging threshold on 19 April 2024
If a holding or proportion of voting rights is at least 5% at the time of the entry into force of the Act on 19 April 2024, and such a holding has not been previously disclosed, a flagging notification must be made no later than two months after the entry into force of the Act (163/2024), i.e. no later than 19 June 2024.
2. Exceeding a flagging threshold during the transition period 19 April–19 June 2024
If a holding reaches, exceeds or falls below a flagging threshold during the two-month transition period from 19 April to 19 June 2024, a flagging notification must be made within this transition period, i.e. no later than 19 June 2024.
3. Flagging after the end of the transition period from 20 June 2024
From 20 June 2024, flagging notifications must be made in accordance with the normal rules.
The obligation to notify major shareholdings and proportions of voting rights (flagging obligation) is based on the provisions of chapter 9 of the Securities Market Act on the notification of major holdings and voting rights.
A flagging obligation always extends to the highest body exercising control in a control chain. A shareholder need not submit a flagging notification of a major shareholding if one is submitted by a person exercising control over the shareholder.
Shareholders or persons comparable to shareholders must notify the listed company and the FIN-FSA of changes in their holdings when their own holdings and/or the holdings of controlled entities exceed, fall below or reach the flagging thresholds for voting rights or shares in the listed company.
Persons comparable to shareholders include persons who do not themselves own shares in the target company but exercise control over a shareholding company, as well as persons who are not themselves shareholders but who can exercise asset or managing rights conferred by shares, or who hold financial instruments giving rise to a flagging obligation.
Listed companies themselves have an obligation to disclose a breach of flagging thresholds due to the acquisition, disposal or annulment of their own shares.
A flagging obligation also applies to unlisted series of shares.
Which circumstances require a notification?
A flagging notification is made whenever one’s proportion of holdings or votes in any listed company reaches, exceeds or falls below a flagging threshold. The thresholds are 5%, 10%, 15%, 20%, 25%, 30%, 50%, 2/3 and 90% of the number of voting rights or shares in a company.
A flagging notification may arise on the basis of
- Existing proportions of holdings and voting rights.
- A so-called long-position acquired through financial instruments1.
- On the basis of the sum of points 1 and 2.
1 The flagging obligation applies to financial instruments carrying entitlement to acquire shares already issued or leading to a corresponding financial position. The financial instruments may be physically or cash settled.
A flagging obligation arises when any of the proportions specified in 1–3 above reaches, exceeds or falls below the flagging threshold.
A flagging notification may also arise without any specific measures taken by the shareholder. For example:
- Shareholdings are diluted due to an increase in the number of shares in a company as the result of a share issue,
- a holding increase due to the annulment of the listed company's own shares or
- a long position in a financial instrument changes in response to a change in its so-called delta value.
A shareholder’s holdings and voting rights include, among other things, holdings and voting rights of entities or foundations controlled by the shareholder and holdings and voting rights of pension foundations and funds of the shareholder or an entity controlled by the shareholder.
A flagging notification must be based on information disclosed by the listed company about the total number of voting rights and total number of shares. The buy-back of shares by a listed company does not affect the obligation of a shareholder to notify major holdings. This is because the treasury shares held by the company are not deducted from the total number of shares. Only the annulment of repurchased shares reduces the total number of shares and has an impact on the proportions of voting rights and shareholdings.
When and how to make and publish a notification of major shareholdings?
A flagging notification must be made without undue delay, but no later than the next trading day after the shareholder has learned or should have learned of a transaction leading to the breach of a flagging threshold.
A flagging notification is made in writing on a notification form and sent to the listed company and the FIN-FSA at liputukset(at)finanssivalvonta.fi.
Complete the flagging notification form in accordance with the instructions. Specify separately any existing proportions of holdings and voting rights, a long-position taken by financial instruments and their combined amount.
Submit the notification both to the listed company and the FIN-FSA. The notification submitted to the FIN-FSA should be sent to the registry office by e-mail, at liputukset(at)finanssivalvonta.fi.
A flagging notification is published by the listed company:
- When a listed company receives a flagging notification, it must publish the information in the notification without undue delay.
- If a shareholder’s notification is incomplete, the company may supplement it, provided that this does not cause any unreasonable delay or inconvenience. In such a case, however, the company should indicate the details it has added.
- If the listed company does not provide all the information required in the notification form, it should also mention this when disclosing the notification. Any other information provided in the notification must also be disclosed at the same time.
The FIN-FSA does not publish flagging notifications.
Flagging notifications of listed companies can be searched by company in the Officially Appointed Mechanism for stock exchange releases. The flagging notifications of First North companies are available on their websites.
Exceptions to the flagging obligation
Regulations provide for exemptions to the flagging obligation of fund management companies, credit institutions, investment service providers and market makers.
Chapter 9, section 8 and 8 a-c of the Securities Markets Act provide on exceptions concerning the obligation to notify, on the notification of the application of an exception and on exemptions.
Notifications of exceptions submitted to the FIN-FSA (pdf)
Exemptions from the obligation to notify granted by the FIN-FSA (pdf)
Market maker notifications on the application of notification exceptions submitted to the FIN-FSA (pdf)
Notification form concerning a notification exception (Word)
Disclosure of holdings in listed companies
No flagging obligation arises in respect of changes in holdings and voting rights occurring before a company’s share is admitted to trading on a regulated market or, upon application or with the consent of the issuer, on a multilateral trading facility in Finland.
The prospectus for a company listing on a regulated market identifies shareholders whose proportion of holdings or voting rights amounts to at least 5%. The company description of a company listing on the First North market also provides a description of the ownership structure of the company. As a result of an initial public offering or sale, however, the information on company ownership changes. This means that there is no timely information on holdings in the market with which to compare subsequent flagging notifications. Disclosing such details of the company’s shareholders in the form of a stock exchange release or a company announcement after the listing has been completed enhances investors’ access to information and sound securities markets practices.
Regulation
Chapter 9 of the Securities Markets Act (in Finnish)
Further information
Examples of notification of major holdings (in Finnish) (pdf)
Notification of major holdings Q&A (in Finnish) (pdf)