On 9 February 2005 the Riigikogu adopted the Act Amending the Securities Market Act, Financial Supervisory Authority Act, Estonian Central Register of Securities Act, Money Laundering and Terrorist Financing Prevention Act and Credit Institutions Act.
The Securities Market Act saw the most change. The prior Securities Market Act has been effective in Estonia since 2001 and the regulation found therein had became partly obsolete. Therefore it was necessary to supplement the act and bring it into compliance with relevant EU directives. The amendments make Financial Supervisory Authorities supervisory activities more effective by requiring more information. Conflict of interest and market manipulation regulation is also tightened. Manipulation of the market now also includes distribution of misleading information. To prevent wrongful use of inside information the act sets forth an obligation for the issuer of a financial instrument to immediately disclose any inside information pertaining directly to the issuer. Pursuant to the act the issuer has the obligation to maintain the confidentiality of inside information and keep a list of so-called insiders. The act also sets forth an obligation for managers of companies listed on the stock exchange to notify the Financial Supervisory Authority of transactions conducted with the shares of such companies.
The requirement of notifying about transactions enters into force on 1 April 2005. As of 1 January 2006 providers of investment services have the obligation to notify the Financial Supervisory Authority of transactions conducted with securities of all companies listed on the stock exchanges of the EU Member States. Pursuant to the act the Financial Supervisory Authority must disclose on its website the data received, as well as precepts it has issued. The amendments to the act also pertain to investment recommendations. Persons who prepare investment recommendations may not have conflicts of interest, and may not give recommendations if those persons participate in preparing the securities issue of the issuer etc. Most of the amendments enter into force on 1 April 2005, except provisions for which a different time for entry into force has been set forth in the act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
