Update Capital Market Law: Amendment Of The Voting Rights Notification Ordinance Effective July 1, 2020 - Electronic Voting Rights Notification Will Become Mandatory

Morrison & Foerster LLP

The Federal Financial Supervisory Authority (BaFin) has recently confirmed the date for the change to the Voting Rights Notification Ordinance (StimmRMV) to come into force. Voting rights notifications can only be sent to BaFin and the respective issuer electronically from July 1, 2020. However, there are no changes to the content of the reporting requirements.

The digitalization of voting rights reporting already indicated that it had been possible to submit voting rights notifications electronically to BaFin and the issuers since October 30, 2018. However, if notifications of voting rights were still able to be submitted in writing (i.e. by post or fax), this will in principle no longer be possible from July 1, 2020, because Section 2 of the Voting Rights Ordinance states: The notification is to be transmitted electronically.

The exclusively electronic submission is intended to create the basis for the purely electronic processing of all submitted voting rights notifications. BaFin expects this to result in nationwide synergy effects for reporting agents, issuers and BaFin itself. At the same time, possible sources of error are to be eliminated, since in the future there will be no laborious and error-prone manual transmission of the information received in the notification of voting rights to the publication system of a service provider.

In the following we give registrants and issuers an overview of the most important innovations and the resulting need for action.

Electronic transmission of the voting rights notification

Principle: electronically transmitted notification of voting rights

In future, the electronic transmission of voting rights notifications to BaFin will have to be carried out via the registration and publication platform (MVP) provided by BaFin. There are three options available for those who are required to report: filling out an online form, uploading an XML file or uploading via SOAP web service.

The notification of voting rights can be sent to the respective issuer either by email or using an electronic procedure set up by the issuer. In any case, the issuer must receive both a readable file and an XML data record (XML - Extensible Markup Language) in order to meet the reporting requirement.

If the person subject to the reporting requirement uses the online form in the MVP to transmit the notification of voting rights to BaFin, both files will be made available to him after the successful submission of the notification of voting rights via the platform. These can then be forwarded to the issuer without further adjustments and can also be forwarded to the issuer without further processing. This eliminates transmission errors and the publication of a notification of voting rights is much easier and safer for the issuer.

Practical tip

  • As of July 1, 2020, voting rights notifications must be sent to BaFin via the MVP and the respective issuer, either by email or using an electronic process set up by the latter. Transmission by fax or post will no longer be sufficient in the future.
  • Not all voting rights notifications sent electronically by e-mail meet the requirements of the StimmRMV. For example, a PDF scan of a voting rights notification sent by email does not meet the requirements of the StimmRMV. A voting form without an attached XML file is also not sufficient.
  • Failure to comply with the electronic form can result in a substantial fine.
  • Issuers should therefore ensure that the voting rights notification submitted by e-mail actually fully meets the requirements of the VRMV, in particular whether the necessary XML file is also included, after the amended VRMR comes into force. If this is not the case, it is advisable to send a quick note to the person responsible for reporting so that the person responsible can initiate a form-preserving transmission within the notification period. At the same time, the deadline for publication by the issuer should be agreed with BaFin.
Exception only in the event of technical faults at BaFin or the issuer

Only in the event of a technical malfunction of the reporting platform (Section 4 (2) of the Voice RMA, new version) or of the electronic systems of the issuer that are relevant for the receipt of messages (Section 6, paragraph 4 of the Voice of the Redemption Order, new version) that permit electronic transmission If the notification is impossible, the notification must be sent to BaFin or the issuer in writing by post or fax. However, technical disruptions on the part of the reporting party do not release the party from the obligation to electronically transmit the voting rights notification.

Special features for reporting agents

No transition period

If the reporting and publication platform is not already being used by the reporting party (e.g. to submit directors' dealings or buy-back / stabilization reports according to the MAR as well as prospectuses or to deposit final offer terms), the reporting party must register once and receive approval apply for the special procedure "Voting Rights Announcements (§§ 33 ff. WpHG)".

Even if the registration and admission takes place regularly within one working day after the application, reporting agents are advised to take care of the completion of these formalities before a voting rights notification has to be submitted, because: There is no transition period for the electronic submission of voting rights notifications. All voting rights notifications submitted after July 1, 2020 must be sent electronically. This also applies if the threshold contact date is before July 1, 2020 or if a voting rights notification submitted before July 1, 2020 needs to be corrected. In addition, delays in registration or admission do not interrupt the course of the period pursuant to section 33 (1) sentence 1 of the WpHG, within which a notification of voting rights must be submitted.

Practical tip

  • There is no transition period within which voting rights notifications could also be transmitted in the previous ways. Those subject to the obligation to report should therefore register with the MVP at an early stage, apply for admission to the specialist procedure and familiarize themselves with the special features of the online form in order to avoid violations of the obligation to report and possible (sometimes substantial) fines.
Right of the notifying party to choose in the case of several electronic transmission channels opened

Since there is no legal requirement that a notifying party must use a special transmission procedure provided by the issuer, the notifying party may also transmit the notification of voting rights to the issuer's email address specified in the legal notice or for receiving notifications of voting rights sufficient. Voting rights notifications sent to an issuer by email should be identified as such in the email subject by the notifier.

Furthermore, reporting agents should take care not to use an e-mail address other than the one specified in the legal notice or for receiving voting rights notifications, as there is otherwise a risk that the notification of voting rights will reach the responsible office at the issuer with a considerable delay. If publication is delayed by the issuer in accordance with section 40 of the WpHG, the person liable to report must - subject to consideration in individual cases - expect the notification of voting rights not to have been received by the issuer or not to have been received in good time. Voting rights notifications that are not submitted or that are delivered too late can in turn result in considerable fines.

Unlike when the electronic transmission system for voting rights notifications provided by the issuer is used, the notifying party is responsible for the integrity and confidentiality of the data transmission when the voting rights notification is sent by email.

Practical tip

  • Reporting agents, if any, should use the email address provided by issuers to receive voting rights notifications. This ensures that the notification of voting rights is sent directly to the responsible body at the issuer.
Coordination with BaFin, four-eyes principle, limited functionality of the MVP

As in the context of the current version of the StimmRMV, voting rights notifications can also be coordinated with BaFin in individual cases. However, it is not possible to reconcile drafts that are created via the online form of the reporting platform, since the MVP (until now) does not offer the option of saving or sending drafts of voting rights notifications. Restrictions for the users of the MVP involved in the reporting party also result from the fact that chains of controlled companies are not uploaded collectively, but can only be entered or inserted manually. In addition, the online form remains active only as long as entries are made; after 30 minutes of inactivity, the entries expire. Although BaFin intends to implement a print function in the online form,

Practical tip

  • Reporting agents who rely on compliance with the four-eyes principle when compiling their voting rights notifications are recommended to draft the voting rights notification based on the form that is currently used for the written submission, and to reconcile it internally and then into it Transfer the online form to the MVP. The same procedure should be appropriate for coordinating voting rights notifications with BaFin.

Special features for issuers

No MVP registration required to publish voting rights announcements

Issuers as recipients of the voting rights notifications do not expect similar far-reaching changes as for reporting agents. In particular, an issuer does not have to register on the platform or apply for admission to the specialist process in order to receive voting rights notifications and publish them in accordance with section 40 of the WpHG. However, if the issuer itself has to submit voting rights notifications, the same requirements apply as for other notifiers.

No stricter requirements for issuers to receive voting rights notifications

While issuers can provide their own electronic transmission systems for voting rights notifications, they cannot oblige reporting agents to use this system. Rather, the notification of voting rights (consisting of a readable file and an XML file) can then also be sent to the issuer by email.

Practical tip

  • Issuers should consider carefully whether to provide their own electronic transmission system for voting rights notifications, as they are responsible for the functionality of the transmission process and for the integrity and confidentiality of the data transmission when the system is used by reporting agents.

In the same way, issuers can provide an additional e-mail address for the transmission of voting rights notifications specified in the imprint and ask for a preferred use of this address. However, issuers can neither prescribe mandatory use of the different email address nor exclude the transmission of voting rights notifications to the email address given in the legal notice. In both cases, the issuer must ensure that emails from reporting agents are not blocked by an overly strict spam filter; Any issuance of a voting rights notification that is therefore delayed must in principle be attributed to the issuer. Something else applies

Practical tip

  • Issuers must ensure that voting rights notifications sent to the email address given in the imprint are also immediately forwarded to the publication office in the company.
  • If issuers provide an additional email address to channel the receipt of voting rights notifications, it should be easy to find on their website.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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