The Dutch Authority for the Financial Markets (AFM) has recently emphasized the significance of notifications concerning substantial holdings and gross short positions in its latest market watch. The AFM’s scrutiny and commentary in this publication shed light on its examination of recent substantial holding notifications, underlining the growing need for careful and accurate reporting in this regard.
A key aspect highlighted by the AFM is the obligation of holders of substantial positions in Dutch or foreign issuers listed on regulated markets to notify the AFM. This notification requirement is designed to enhance market transparency, providing insights into share tradability, revealing concentrations in shareholding or voting, and identifying potential conflicts of interest. The AFM underscores the vital role of the notification obligation as a crucial source of information on the ownership of Dutch-listed issuers in its market watch.
Presently, the AFM’s scrutiny of substantial holding notifications primarily focuses on ensuring timely submissions, characterized as ‘without delay’, along with a ‘marginal’ assessment of accuracy and completeness. The AFM cross-references these notifications with other accessible information, including issuers’ annual reports, MiFIR transaction reporting, SFTR securities financing information, and EMIR derivative transactions. Looking ahead, the AFM envisions utilizing these datasets to automatically identify any substantial holding positions that have not been notified correctly. In cases of non-compliance or inaccurate and delayed notifications, the AFM may take enforcement actions, such as imposing administrative fines amounting to up to 10% of the violating party’s net revenue. Notably, the AFM intensified its enforcement efforts last year, imposing fines for substantial holding notification obligation violations, marking a notable escalation in actions compared to the previous instance in 2017.
The market watch also provides an illustrative example involving Exor’s acquisition of a substantial holding position in Philips. Exor had engaged Goldman Sachs to build a stake in Philips on its behalf, but the AFM deemed the initial notification by Goldman Sachs insufficient. Subsequently, the AFM urged Goldman Sachs to revise and update its notification, emphasizing the regulatory expectations regarding accuracy and completeness.
These developments and examples underscore an augmented focus by the AFM on substantial holding reporting. The regulatory body emphasizes the responsibility of market participants to accurately report acquisitions or disposals of substantial holding positions. Failure to comply with the notification obligation may result in enforcement actions by the AFM, including the imposition of administrative fines. Market participants are advised to remain vigilant regarding these evolving developments and exercise increased diligence when reporting substantial holding positions to the AFM.
