President and CEO Hans-Ole Jochumsen says: "The new rules should be seen as an expression of our intention to contribute to supporting and improving the standards of the Investor Relations activities of the companies, while providing investors with the best possible basis for pricing the listed securities. For several years, quite a lot of companies have been able to maintain a very high standard of the information provided, and now we are introducing a number of new rules which raise the minimum requirements. On several main points we have made the requirements for issuers of listed securities and unit trust certificates more rigorous. In the new disclosure rules, we have for instance put further pressure on the listed companies in order to make them act upon our recommendation to publish quarterly reports, which we consider to be "best practice", and which is to a wide extent a requirement voiced by the market participants. Thus, in future the companies must explain in their annual report and accounts why they do not follow our recommendation. In this way we are ensuring that more companies reflect on and publish their reasons for not wishing to follow or not being able to follow our recommendation."
Other important amendments applicable to limited liability companies are stated below:
Management remuneration and incentive schemes
In order to avoid unnecessary speculations over management remuneration in addition to the ordinary remuneration, in their annual reports and prospectuses listed companies must describe whether and how they remunerate their board of directors and management board according to special or exceptional agreements. Listed companies must also provide a more detailed description of incentive schemes in order to enable investors to make a better assessment of such schemes and thus price the shares better.
Information about extensions of and changes in activities
Where a company passes a resolution to extend or change its activities significantly, for instance in connection with major acquisitions / divestments and mergers / demergers, it must promptly publish detailed information on this. If the company is not able to immediately provide detailed information about the consequences of the changes, it must notify the Stock Exchange of when it expects to publish detailed information so that the market will have a satisfactory basis for its assessment of the share.
Financial ratios in all preliminary statements of results
The vast majority of listed companies are already publishing financial ratios in all their preliminary statements of results today. In order to enable analysts and other users of financial statements to prepare comparative analyses across the listed companies, we have made it a requirement that all preliminary statements of results should include financial ratios.
Agreements on stabilisation schemes
In continuation of the issuing or flotation of (the shares of) a company, investors should be able to read the level of the price of the share during the period immediately after the issue. Therefore, the company must make public any agreements entered into with its financial agents on entering the market for a limited period after the issue in order to stabilise the share price, for instance so that it does not fall below the initial offering price.
Recommendation of the preparation of a written policy for Investor Relations activities
It is very important that listed companies actively seek to build shareholder and investor goodwill in order to support a good share liquidity in the stock market. We recommend that the companies should prepare a policy for their Investor Relations activities aimed at ensuring that these activities are performed in keeping with our recommendations.
The following brief description is applicable to unit trusts:
During the past couple of years, the Danes have really become aware of unit trusts as an opening for investment, and this has of course bred a demand for more as well as more frequent information.
The intrinsic value must be published not less than three times a day
It is important to investors to know the intrinsic value in order to be able to assess the price of the unit trust certificates. Unit trusts must continuously, and not less than three times a day, publish the intrinsic value and other relevant data such as the issue price and the redemption price. The values must be calculated immediately before the time of publication. The market must also continuously be provided with information about the substance of any essential agreements entered into between for instance the unit trust and its management company and custodian bank.
The amplified rules applicable to unit trusts are a supplement to the rules issued by the Danish Financial Supervisory Authority in the unit trust field.
The new rules come into effect on 1 January 2002
Thus, issuers have a little more than one and a half months to organise their provision of information and presentation of accounts according to the new rules.
The new rules can be found on the website of the Copenhagen Stock Exchange www.fondsborsen.dk.
