Disclosures FAQs – Highwire Extensions

Australia Major Shareholding Disclosures

Q1. What are the thresholds?

The initial threshold for Australia is 5%. Once this threshold is reached you are required to disclosure 1% changes. The 1% changes are swinging thresholds (e.g if you disclose at 7.3%, your next threshold will be <6.3% or >8.3%).

Q2. What is the deadline for reporting?

A substantial holder must give the notice to the listed entity and market operator within 2 business days after becoming aware of the information.

Please note that if a takeover bid has been made the deadline is reduced to 9:30am on the next trading day.

Q3. What notification form must be used?

The initial substantial holding, that is, when they begin to have a substantial holding. This is done using ASIC Form 603: Notice of initial substantial holder.

Any movement of at least 1% in that substantial holding. This is one using ASIC Form 604: Notice of change of interests of a substantial holder.

Ceasing to have a substantial holding. This is done using ASIC Form 605: Notice of ceasing to be a substantial holder.

Q4. Where is the notification form sent?

This notice must be given to a listed company, or the responsible entity for a listed managed investment scheme.

A copy of this notice must also be given to each relevant securities exchange.

Q5. Where can I find the ACN/ARSN number required in the form?

The ACN can be found for the relevant company by searching the ABN Lookup via the following link:

https://www.abr.business.gov.au/

Q6. What is an associate?

The definition of associate is set out in section 9 of the Corporation Act 2001 which provides that an Associate has the meaning given by sections 10 to 17.

Q7. What is a “relevant interest”?

The definition of “relevant interest” can be found in sections 608 and 671B(7) of the Corporations Act 2001.

A person has a relevant interest in securities if they:

are the holder of the securities; or
have power to exercise, or control the exercise of, a right to vote attached to the securities; or
have power to dispose of, or control the exercise of a power to dispose of, the securities.

It does not matter how remote the relevant interest is or how it arises. If 2 or more people can jointly exercise one of these powers, each of them is taken to have that power.

Q8. What is “registered holder of securities”?

A person who is the registered holder of shares will have a relevant interest in those shares, unless the person holds the shares as a ‘bare trustee’ for the beneficial holder (ie. the person can only deal with or vote the shares upon the beneficial holder’s instructions). Often a professional custodian or nominee holder will be considered a ‘bare trustee’.

RG 5 provides that the person currently registered as the holder of the securities in which the person in the first column has a relevant interest (e.g. if the voting shares or interests are directly held, the same person will occupy the first and second columns).

If the identity of the present registered holder cannot be determined (e.g. an on-market purchase that has not yet settled or a relevant interest arising from an exchange-traded option), write ‘unknown’.

Q9. Who is the “Person entitled to be registered as holder”?

List the person(s) who are entitled to be registered as holder of the securities that are the subject of the relevant interest.

In many cases, the circumstances giving rise to the relevant interest will involve the holder of that relevant interest having a right to become (if they are not already) registered as the holder of the securities—for example, if the relevant interest arises because shares or interests are:

held by a custodian on trust; or
acquired under an agreement that has not yet settled (including an on-market purchase).

Q10. Making a notification without ASX Online

The MAO has a facility for lodgement of documents by fax. This is primarily for use by person other than listed entities who do not have access to ASX Online and who need to give a document to ASX under the Corporations Act.

The fax numbers are as follows:

For announcements sent within Australia	1300 135 638
For announcements sent from New Zealand	0800 449 707
For announcements not sent from Australia or New Zealand	+61 2 9347 0005 +61 2 9778 0999

Canada Major Shareholdings

Data

Denominators

Dual Disclosures

Issuer Limits

Japan Major Shareholding

Q1. Do you disclosure when you fall below the 5% threshold?

The filing requirement will be triggered if there was a decrease/increase of the shareholding more than 1%. Falling below 5% may not result in a disclosure if the position movement from previous disclosure is not 1%.

E.g. If the previous shareholding ratio was 5.65%, you will need to file a report when your shareholding ratio became less than 4.65%.

Q2. How do you calculate the costs for acquisition for a Japan Major Shareholding Disclosures?

In general, the calculation of funds of acquisition is similar to the valuation of inventories. It means that (i) you are calculating the “value” or “acquisition cost” of the shares that remain in your possession at a certain point of time, and (ii) you can take into account the costs of acquisition when you calculate funds of acquisition, but cannot take into account the cost of sale of shares or sales proceeds.

Examples:

You purchased 2,000,000 shares of a company at JPY 100 per share on 1 January 2020, and again purchased 3,000,000 shares of the same company at JPY 150 per share on 2 January 2020. Then, you sold 2,500,000 shares on 3 January 2020.

In this case, it is not clear whether such 2,500,000 shares were purchased on 1 January or 2 January. Therefore, you can choose from (a) the first-in, first-out method (“FIFO”), (b) the average method (“AM”) or (c) any other reasonable method of calculating the acquisition cost of the remaining 2,500,000 shares.

(a) If you choose FIFO, 2,000,000 of 2,500,000 shares will be deemed to be purchased on 1 January and the rest (500,000 shares) will be deemed to be purchased on 2 January. Therefore, the funds of acquisition of the remaining shares should be JPY 375,000,000*.

* (2,000,000 shares x JPY 100) + (3,000,000 shares x JPY 150) = JPY 650,000,000 [funds of acquisition of the initial 5,000,000 shares]
(2,000,000 shares x JPY 100) + (500,000 shares x JPY 150) = JPY 275,000,000 [funds of acquisition of the shares sold]
JPY 650,000,000 – JPY 275,000,000 = JPY 375,000,000 [funds of acquisition of the remaining shares]

(b) If you choose AM, the acquisition cost corresponding to the sold shares is calculated by using the average cost before selling the shares. Therefore, the funds of acquisition of the remaining shares should be JPY 325,000,000**.

** {(2,000,000 shares x JPY 100) + (3,000,000 shares x JPY 150)}/ 5,000,000 shares = JPY 130 [average cost per shares before selling the shares]
JPY 130 x 2,500,000 = JPY 325,000,000 [funds of acquisition of the shares sold]
JPY 650,000,000 – JPY 325,000,000 = JPY 325,000,000 [funds of acquisition of the remaining shares]

To sum up, the funds of acquisition of the shares in possession after each transaction are as follows:

Date	Transaction	Number of shares owned	Funds of Acquisition
1 Jan 2020	Purchased 2,000,000 shares at JPY 100	2,000,000	JPY 200,000,000
2 Jan 2020	Purchased 3,000,000 shares at JPY 150	5,000,000	JPY 650,000,000
3 Jan 2020	Sold 2,500,000 shares at certain price	2,500,000	(a) JPY 375,000,000 (b) JPY 325,000,000

Date

Transaction

Number of shares owned

Funds of Acquisition

1 Jan 2020

Purchased 2,000,000 shares at JPY 100

2,000,000

JPY 200,000,000

2 Jan 2020

Purchased 3,000,000 shares at JPY 150

5,000,000

JPY 650,000,000

3 Jan 2020

Sold 2,500,000 shares at certain price

2,500,000

(a) JPY 375,000,000

(b) JPY 325,000,000

Q3. Does Japan have swinging thresholds?

Yes. Japan uses swinging thresholds. Meaning that disclosure is made when there is a >1% movement from the last disclosure. E.g. the first disclosure is made at 6.5%, which means that another disclosure will be made only if your holdings go <5.5% or >7.5%..

Q4. In the Report of Possession of Large Volume section 5, you are required to disclosure the status of the acquisition or disposition over the past 60 days regarding Share Certificates. Is the calculation of 60 days calendar days or business days (i.e excluding weekends and holidays)?

Calculation of the above period of 60 days should be based on calendar days, not on business days (excluding weekends and holidays).

Japan Short Selling

Netherlands Major Shareholdings

Takeover Dealing Disclosures

TDAD

United States Major Shareholdings

Q1. Our position has fallen below the 10% threshold do we have to make a 13G month end disclosure?

Not necessarily. Once an Eligible Institutional Investors breaches the 10% threshold, they must disclose 5% +/- changes from their last disclosure position. E.g if their previous disclosure was 12.5%, the next month end disclosure will be for a breach of either 7.5% or 17.5%.

Q2. When do I calculate 13G disclosure positions?

Institutional investors must file a Schedule 13G within 45 days after the calendar year in which the investor holds more than 5% as of the year end or within 10 days after the end of the first month in which the person’s beneficial ownership exceeds 10% of the class of equity securities computed as of the end of the month.

Q3. Do I need to file an annual 13G amendment if only the percentage of the securities owned has changed?

No amendment is required if there have been no changes in the information filed on the prior Schedule 13G. Likewise, no amendment is required if the only change in information is the percentage of the securities owned by the stockholder and that change resulted solely from a change in the number of shares outstanding.

Q4. Do I need to file a 13D amendments if my position falls below the 5% threshold, but is less than a 1% reduction?

A disposition that reduces a reporting person’s beneficial ownership interest below the 5% threshold, but is less than a 1% reduction, is not necessarily a material change that triggers an amendment to Schedule 13D. However, we suggest an amendment in such a circumstance to eliminate the reporting person’s filing obligations if the reporting person does not in the near term again expect to increase its ownership above 5%.

Q5. Do you need to continue to file in respect of delisted stocks?

A reporting obligation continues to arise, considering the below responses in the Form25 FAQs:

How long does it take for delisting and deregistration under Section 12(b) to occur once a Form 25 is filed?

In general, once a Form 25 is filed, delisting occurs automatically within 10 days, which is the automatic effective date of the Form 25. However, deregistration under Section 12(b) does not occur for another 80 days, as pursuant to General Instruction 5 to Form 25 and Rule 12d2‐2(d)(2), deregistration occurs 90 days after the filing of the Form 25. If the filer needs to amend the Form 25 before the 10‐day delisting period runs, then deregistration occurs 90 days from the filing of the amended Form 25.

Miscellaneous

Q1. What instruments are not in scope for shareholder disclosures?

Although regulators have widened the scope of instruments included in shareholder disclosure rules, particularly with the including of cash settled derivatives in many jurisdictions, it is generally accepted that the following instruments are not included in shareholder disclosure:

Bonds including corporate debt and other fixed-income securities that do not have exposure to sovereign debt
Swaps linked to interest rates (interest rates are not in scope for Shareholding Disclosure irrespective of the derivative), commodities, and FX
Money Market Instruments such as Commercial Paper and Certificates of Deposits
Commercial Property such as a lovely office looking across Central Park
Commodities futures on commodities, etc

Q2. Which rules are based on investment discretion and which are based on control of voting rights?

Many rules are triggered by either having investment discretion or by having control of voting rights.

13D & G

This is seen for example in Sections 13(d) and (g) of the Securities Exchange Act 1934 ( SEA), which requires any person or group of persons who directly or indirectly acquire or have beneficial ownership of more than 5% of any class of an issuer’s outstanding Section 13 Securities to file a schedule 13D report or alternatively, if they qualify, a schedule 13G report:

Rule 13d-3(a) provides that “beneficial owner” includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares:

Voting power which includes the power to vote, or to direct the voting of, such security; and/or,
Investment power which includes the power to dispose, or to direct the disposition of, such security.

TDAD

There is a notable issue in Germany, where the implementation of the Transparency Directive focuses on having control of voting rights, rather than investment discretion.

Q3. How do we monitor for Poison Pills?

The term poison pill refers to a defence strategy used by a target firm to prevent or discourage a potential hostile takeover by an acquiring company. Poison pills allow existing shareholders the right to purchase additional shares at a discount, effectively diluting the ownership interest of a new, hostile party.

Due to the dilution, Poison Pills can affect the denominator in the case of a company diluting shares to prevent a takeover. This dilution can result in a position inadvertently breaching a threshold required a disclosure.

Q4. What are the French double voting rights rules?

Loi Florange provides that registered shareholders of at least two years in a company listed on a regulated market automatically assume double voting rights, unless the issuer decides otherwise by a two-thirds majority shareholder vote.

Thus many foreign asset managers are now likely to see their percentage holdings of voting rights in such companies decrease, because while they themselves are not likely to qualify for the statutory double voting rights, other existing French shareholders can. As foreign asset managers typically hold their shares in French companies through a local nominee, rather than being registered in their own name, they are in essence forced to re-consider their custodial arrangements or risk being permanently disqualified from the automatic double voting rights. While this clearly may raise strategic issues relating to voting power for such managers, they must also be aware of possibly falling below any applicable percentage thresholds and thus triggering the shareholder filing requirements outlined above.

One way they can remain aware is by consulting the “regulated information” required to be disseminated by issuers under the TD: in any month in which such an issuer’s amount of outstanding voting rights changes, it must publicly disclose the new amount by the end of such calendar month.