Listed shares held by a private foundation: when a voting-rights threshold triggers a notification

Section 130(1) BörseG 2018 lists thresholds of 4%, 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%, 75% and 90%. A notification duty arises when the voting-rights percentage reaches, exceeds or falls below one of these thresholds through an acquisition or disposal. The rule covers direct and indirect holdings of shares.

The provision generally requires the shares of the issuer to be admitted to trading on a regulated market and Austria to be the issuer's home Member State. A notification to the exchange operating company is required where the issuer's securities are admitted to a regulated market operated by that company. The issuer's articles may also set an additional 3% threshold. That rule must be published on the issuer's website and notified to the FMA.

The initial review therefore requires more than a look at the custody account. The board must identify the issuer, regulated market, home Member State and any threshold in the articles. Only then can the relevant threshold be determined.

Under Section 130(2) BörseG, the percentage is calculated by reference to the total number of shares carrying voting rights. This applies even where the exercise of individual voting rights is suspended. The percentage must also be stated for all voting shares of the same class.

A notification duty can arise from an event that changes the distribution of voting rights. The calculation then uses the information published by the issuer under Section 135(1) BörseG. The percentage can therefore cross a threshold because the total number of voting shares changes, even where the foundation has not bought or sold shares on that day.

The file should record the former and new voting-rights percentage, the total number of voting shares, the relevant share class and the event that caused the change. A percentage without its calculation basis makes a timely notification more difficult.

Section 133 BörseG extends the notification duty to a person entitled to exercise voting rights in specified situations. These include an agreement with a third party on a long-term common policy and coordinated exercise of voting rights. Security interests can also matter where voting rights may be exercised without the security holder's express instructions or where their exercise can be influenced. A usufruct over shares may be relevant as well.

Attribution can also arise where the shares belong to a company in which the private foundation holds a direct or indirect controlling interest. Section 133 further covers voting rights held by a third party in its own name for the foundation and powers of attorney that may be exercised at the holder's discretion without specific shareholder instructions.

The review therefore needs a structure that goes beyond the foundation itself. Corporate agreements, trust arrangements, security interests, usufructs and powers of attorney belong in the file whenever they can influence the exercise of voting rights.

Under Section 130(1) BörseG, the notification must be made without undue delay and no later than two trading days. The period is calculated from the day following the day on which the person knows, or should have known in the circumstances, of the acquisition, disposal or possibility of exercising the voting rights. Where an event under Section 130(2) is involved, the relevant point is when the person is informed of that event.

The addressees are the FMA and the issuer. The exchange operating company must also be notified where the issuer's securities are admitted to a regulated market operated by that company. Internal circulation to the board, asset manager and legal advisers does not replace the statutory notification.

The time available to the board is therefore short. A reporting process should start when an increase, disposal, new power of attorney or change in the holding structure is planned. The date of knowledge and the relevant event should be recorded in a retrievable document.

The current custody statement, order or transfer record, register extracts for the companies involved and the issuer's information on the total number of voting shares should be kept in one file. For an indirect holding, the file must show the control chain.

The review should also cover agreements on coordinated voting, security interests, usufructs, trust arrangements and powers of attorney. The question is who can exercise the voting rights and on what legal basis. The label “asset management” does not answer the attribution question by itself.

The notification, proof of transmission, date of knowledge and calculation should be stored together. If the percentage changes again, the file will show which holding and attribution event were included in the earlier calculation.