Capital Markets: Debt 2019 Comparisons

Last Updated June 10, 2019

Law and Practice

Authors



Advokatfirman Vinge KB was established through a merger between a number of leading Swedish firms in 1983, Vinge is one of the largest firms in Scandinavia today, with some 300 lawyers in seven Swedish and overseas offices. Vinge is a full-service law firm, with a substantial international practice, which has acted in most of the major M&A in Sweden in recent years and has consistently achieved top positions on Mergermarket’s list of M&A advisers in the Nordic market as well as Tier 1 rankings with the leading ranking institutes. The firm regularly represents clients in connection with large international financing transactions, including project financing and structured finance arrangements. Vinge also advises domestic and international clients within a number of specialist areas, such as competition law and compliance, employment, IT, insolvency, insurance, IP, litigation and arbitration, marketing, private equity, property, public procurement, tax, telecommunications, and transport. In addition to four offices in Sweden, the firm has a presence in Brussels.

Nasdaq Stockholm (regulated market), Nordic Derivatives Exchange (regulated market) and Nasdaq First North Bond Market (“MTF”).

The main difference in terms of governance and specific listing requirements is between regulated and non-regulated markets/MTFs. Information requirements are however somewhat harmonised between the debt markets due to EU regulations. The above-mentioned regulated markets have distinct segments for various types of fixed income instruments (eg, corporate bonds, government bonds, mortgage bonds, structured products and sustainable bonds, etc) and an issuer may have to adhere to certain additional listing requirements in order to list a specific type of fixed income instrument successfully, such as a structured bond or a convertible bond.

Nasdaq is the hub of fixed income instruments in the Nordic region. All major types of debt instruments can be listed on their markets, including, but not limited to, medium-term note programmes (“MTNs”), euro medium-term note programmes (“EMTNs”), sustainable bonds, mortgage bonds, convertibles, structured products, certificates and government bonds.

Issuers that wish to list green, social or sustainable bonds must comply with further listing criteria. 

Each relevant market place has its own approval process and will independently review and approve each listing application submitted to them in respect of (i) the issuer and (ii) the fixed-income instrument. The Swedish Financial Supervisory Authority (“SFSA” or “Finansinspektionen”) is the regulatory body that reviews and approves a prospectus, where relevant. Any company description (being a very light version of a prospectus) to be filed in connection with a listing on Nasdaq First North Bond Market will only be reviewed by Nasdaq First North and not by the SFSA.

The following is an example of the Nasdaq process (which may be more or less formalised when listing on Nasdaq First North Bond Market):

The listing process for debt instruments is the same for all instrument types. The process is comprised of two simple stages.

  • Issuer Application

A new issuer must first be approved by the exchange. The application to be approved as an issuer is uploaded through Nasdaq Listing Center, an online tool that lets issuers send all required documentation electronically. The review of the issuer application is completed within two weeks.

  • Instrument Application

Approved issuers can submit applications to list instruments via Nasdaq Listing Center. The instrument application process takes a maximum of two business days but is completed within one day when the application is received before 10 am.

The process set out above applies in similar fashion to both (i) a standalone debt offering and (ii) the establishment of a debt issuance programme with Nasdaq Stockholm or Nasdaq First North Bond Market to the extent that the relevant issuer wishes to admit its fixed-income instruments to trading. If no listing is required or wanted by the issuer then there is no need to file any application with any debt market.

The issuer will need to apply for the SFSA’s approval of its bond prospectus (Sw. prospect) or MTN-prospectus (Sw. grundprospekt) when establishing a standalone debt offering and a debt-issuance programme. The application for approval (which is fully standardised) is one and the same regardless of whether it is a standalone offering or debt programme, and to the extent a prospectus has already been approved and is still in force there is no need to apply for the approval of a new prospectus or file any other application with the SFSA for the purpose of approving a debt issuance (whether it is a tap issue under standalone documentation, or under the existing framework amounts to a debt-issuance programme).

See 1.4 Regulatory Bodies.

See 1.4 Regulatory Bodies.

Relevant listing rules for the relevant exchange, the Transparency Directive as implemented and the Market Abuse Regulation.

The details below are based on the general listing requirements for fixed income instruments on Nasdaq Stockholm main market as adopted on 3 January 2018.

The issuer must be duly incorporated or otherwise validly established according to the relevant laws and regulations of the country of incorporation or establishment.

If the issuer is a limited company, it must be public. The issuer must have a share capital of at least SEK500,000, or the equivalent amount in another currency.

The issuer should have published annual accounts for at least three years in accordance with the accounting laws applicable in the issuer’s home country. Where applicable, the accounts should also include consolidated accounts for the issuer and all its subsidiaries.

The general rule is that the issuer should have complete annual accounts for at least three years. In order for an exemption to be granted from the requirement to have annual accounts for three years, there must be sufficient information for the Exchange and the investors to evaluate the development of the business and to form an informed judgment of the issuer and its instruments.

Well in advance of the registration, the issuer must establish and maintain adequate procedures, controls and systems, including systems and procedures for financial reporting, to enable compliance with its obligation to provide the market with timely, reliable, accurate and up-to-date information in accordance with the Rule book.

Mutual Listing Requirements Regarding the Instruments

The instrument must be freely negotiable.

The registration application must apply to all of the instruments that are part of the issue.

Instruments must be registered in a register with Euroclear Sweden or, following the consent of the Exchange, with another Swedish or foreign Central Securities Depository (“CSD”) or similar institution.

If required, the issuer must prepare and publish a prospectus prior to registration. The relevant authorities must have approved such prospectus.

If the issuer is domiciled in a country other than Sweden but within the EEA, the issuer should submit the prospectus to the Exchange together with a certificate of approval issued by a competent authority in the issuer’s home country. If the issuer is granted an exemption from submitting a prospectus in accordance with the Prospectus Directive, this should be declared in the certificate. The issuer should provide certification that the approved prospectus has been submitted to the Swedish Financial Supervisory Authority (Finansinspektionen).

If the Exchange considers certain information to be important and in the interest of investors, the Exchange may require the issuer to post supplementary information on its website.

An issuer who is not obliged to submit a prospectus in accordance with the Prospectus Directive should instead issue and publish on its website a listing document with information about the issuer. The listing document should consist of a summary signed by the issuer, general terms and conditions, final terms and financial information regarding the issuer. If the issue of instruments is a standalone, the issuer should submit financial information as well as the general terms and conditions and final terms. The financial information should consist of the annual report and the latest interim report.

Additional Listing Requirements for Structured Products

Only structured products with a total nominal amount of a minimum of SEK2 million, or the equivalent amount in foreign currency, may be registered.

The issuer should, in the prospectus, the final terms or the marketing brochure, undertake to provide bid prices and, if possible, offer prices of the instruments to be registered.

The issuer must, in the prospectus or the final terms, clearly stipulate whether or not it undertakes to repay the nominal amount on the reimbursement date. If there is a fixed interest rate to be repaid on the reimbursement date, this must be clearly stipulated in the prospectus or the final terms.

The prospectus or the final terms describing the instrument must contain an adequate description of how any return is to be calculated. This must also be clarified by providing a minimum of three examples of the possible return in the final terms or in the marketing brochure.

The final terms shall be signed by an authorised company signatory of the issuer.

Additional Listing Requirements for Retail Bonds

Only retail bonds with a total nominal amount of minimum SEK2 million, or the equivalent amount in foreign currency, may be registered.

The issuer should, in the prospectus, the final terms or the marketing brochure, undertake to provide bid prices and, if possible, offer prices of the instruments to be registered.

The issuer must, in the prospectus or the final terms, clearly stipulate whether or not it undertakes to repay the nominal amount on the reimbursement date. If there is a fixed interest rate to be repaid on the reimbursement date, this must be clearly stipulated in the prospectus or the final terms.

The final terms shall be signed by an authorised company signatory of the Issuer.

Additional Listing Requirements for Tailor-Made Products

Only tailor-made products with a total nominal amount of minimum SEK2 million, or the equivalent amount in foreign currency, may be registered.

The issuer should, in the prospectus, the final terms or the marketing brochure, undertake to provide bid prices and, if possible, offer prices of the instruments to be registered.

The issuer must, in the prospectus or the final terms, clearly stipulate whether or not it undertakes to repay the nominal amount on the reimbursement date. If there is a fixed interest rate to be repaid on the reimbursement date, this must be clearly stipulated in the prospectus or the final terms.

The size of a board lot may not be less than SEK100,000 or the equivalent amount in foreign currency. The minimum amount for trading Tailor Made Products is SEK50,000 or the equivalent amount in foreign currency.

The prospectus or the final terms describing the instrument must contain an adequate description of how any return is to be calculated. This must also be clarified by providing a minimum of three examples of the possible return in the final terms or the marketing brochure.

The final terms shall be signed by an authorised company signatory of the issuer.

Additional Listing Requirements for Convertible Bonds

Only convertible bonds issued by an issuer whose shares are listed, or at the same time will be listed at a well-recognised exchange or equivalent regulated market, may be registered.

Verified minutes from the board of directors meeting where the decision to issue convertible bonds was taken shall be attached to the application. The application must be signed by the board or the CEO of the issuer.

Additional Listing Requirements for Corporate Bonds

Only corporate bond loans with a total nominal amount of minimum SEK2 million, or the equivalent amount in foreign currency, may be registered.

The issuer must, in the prospectus or the final terms, clearly stipulate whether or not it undertakes to repay the nominal amount on the reimbursement date. If there is a fixed interest rate to be repaid on the reimbursement date, this must be clearly stipulated in the prospect or the final terms.

The final terms shall be signed by an authorised company signatory of the issuer.

Additional Listing Requirements for Benchmark Bonds

Only benchmark bond loans with a total nominal amount of minimum SEK2 million, or the equivalent amount in foreign currency, may be registered.

The issuer must, in the prospectus or the final terms of the listing document, clearly stipulate whether or not it undertakes to repay the nominal amount on the reimbursement date. If there is a fixed interest rate to be repaid on the reimbursement date, this must be clearly stipulated in the prospectus or the final terms.

The final terms shall be signed by an authorised company signatory of the issuer.

See 2.2 Eligibility Requirements for Listing Debt Securities on the Exchange(s).

For companies incorporated in a foreign jurisdiction, procedures are no different, only for settlement, generally a quite flexible process when it comes to debt instruments.

No response provided.

In all cases an independent third party will be appointed as agent and security agent on behalf of the bond-holders for the purpose of holding any pledged assets and representing the bond-holders in decision-making matters under the applicable terms and conditions. Listed fixed-income instruments will always be registered with a CSD so the agent will not be required to administer any payments other than confirming disbursements of the net proceeds from the bond issuance (to the extent such proceeds have initially been deposited on a pledged bank account). Depending on the intended use of proceeds from the bond issue (eg, project financing or acquisitions) there may be an escrow mechanic that provides that all net proceeds from the bond issue must be deposited in a bank account of the issuer that has been pledged to the bondholders and the agent. Such proceeds may then only be disbursed subject to the fulfilment of certain conditions precedent, the satisfaction of which will be confirmed by the agent.

Retail and wholesale offerings are generally structured in the same terms of a deal structure, security package, etc. However, it should be noted that wholesale offerings dominate the Swedish bond market and that retail offerings have only recently begun to gain traction amongst certain investors.

Generally, orphan SPV structures are only used for structured products (ie, securitations) and other more commonly issued corporate/retail bonds are normally issued by the parent company of the group or a holding company higher up the corporate structure, but still relatively close to the operational companies of the group.

See 2.2 Eligibility Requirements for Listing Debt Securities on the Exchange(s).

  • The nominal amount of each security will determine whether it is retail or wholesale and consequently whether the prospectus and transaction documentation must be written in or translated into Swedish, which it must be if retail and the nominal amount per security is less than EUR100,000.
  • Determine which dealer banks/arrangers are to engage in the transaction (the standard is having multiple banks engaged to ensure a broad investor base) and bear in mind that each bank may often be engaged as issuing agents under the debt programme.
  • No agent will be appointed under a Swedish debt programme so the issuer must be mindful that it will have a more active role in any bond-holder meeting/written procedure to amend or waive any term of the applicable terms and conditions.
  • The SFSA’s administration process of the approval of the prospectus will be 20 business days for first-time issuers and Nasdaq’s (and NGM’s) administration for the approval of the issuer and the relevant instrument (if the instruments are to be listed) will be a minimum of 10-15 business days, which needs to be considered carefully for timing purposes.

An agent (also acting as security agent on behalf of the investors), arranger(s) and one or two legal advisers representing the issuer and the arranger(s) respectively. If a single legal adviser is used the legal adviser is appointed as deal counsel and will be, in most cases, formally acting on behalf of the arranger(s).

Please note that appointing a paying agent is not necessary since Euroclear Sweden will be handling all payments to the investors. The issuer is required to open a Swedish bank account over which it will grant a right for Euroclear to make withdrawals. The issuer will credit that account with sufficient funds prior to the relevant interest payment or repayment date and Euroclear will debit such account and make the transfers to the registered holders of the debt securities.   

In most cases it is the issuer’s legal counsel that is responsible for the listing process of the relevant debt security whilst legal counsel of the arranger(s) will review and comment on the draft prospectus as the process with the SFSA comes along.

Arranger(s):

  • structuring of transaction;
  • credit research;
  • drafting and agreeing mandate letter with issuer;
  • drafting a short-form term sheet (normally one page);
  • drafting the investor presentation;
  • book-building/sales process/roadshow.

Arranger(s) Legal Adviser:

  • drafting the dealer agreement/issuing agent agreement;
  • drafting the terms and conditions;
  • carrying out due diligence (most often very light by way of management interview or confirmatory questionnaire);
  • drafting of risk factors based of due diligence;
  • drafting inter-creditor agreement (if any);
  • drafting the security documents (if any);
  • negotiating agency agreement with Nordic Trustee or Intertrust (ie, the two entities providing trustee services to act on behalf of the investors);
  • liasing with Nordic Trustee or Intertrust (ie, primarily collecting comments on the terms and conditions and (if any) the inter-creditor agreement and the security package);
  • affiliating the debt instruments with Euroclear;
  • drafting application forms to buy the bonds.

Issuer(s)' Legal Adviser:

  • negotiating the mandate letter;
  • negotiating all documents drafted by the counsel for the arranger(s) and aiding the issuer with due diligence work;
  • arranging for the affiliation of the issuer with Euroclear (unless already in place);
  • arranging for LEI-code;
  • drafting of prospectus;
  • listing at the relevant exchange/debt market.

Agent:

  • provide trustee services and acting as security agent (holding any transferable security on behalf of the investors);
  • receiving and confirming conditions precedent and ensuring issuer compliance with on-going undertakings (eg, information undertakings and financial covenants);
  • distributing information to the investors regarding the bond and the issuer (eg, in the event of a default or exercise of call/put option) and vice versa;
  • arranging and holding of bondholder meetings/written procedures.

A debut issuance/listing

A certified adviser has for a long time been required in connection with the listing of debt instruments on Nasdaq First North Bond Market but, from 1 January 2019, will no longer be required, hence no additional advisers to those set out above under 5.1 Advisers Appointed in Connection with the Issuance will be required in relation to a debut issuance/listing. Please refer to 5.1 Advisers Appointed in Connection with the Issuance for additional details regarding the differences in roles played by the relevant advisors.

Made by a foreign company

More or less the same advisers will be involved in the transaction, but there may be a need for foreign counsel to ensure enforceability of the relevant transaction documents.

A draw-down under an existing programme

This is typically done without involving the legal advisers, ie, it is normally handled by the arranger(s).

The prospectus rules in Sweden are based on the Prospectus Regulation and Directive as implemented into Swedish law.

A prospectus is required when either an offering to the public is made or securities are admitted to trading on a regulated market. In bond offerings it is, in practice, only offerings to qualified investors and not retail, which is why it is only the admittance to trading requirement that comes into play if the bonds are admitted to trading on Nasdaq Stockholm, Nordic Derivatives Exchange or Nasdaq First North Bond Market.

Please refer to the Prospectus Regulation for the main categories of information or disclosure to be included in a prospectus.

The board of directors of the issuer has responsibility and/or liability for the content of the prospectus.

There are no differing content requirements for offering documents, depending on which exchange securities are listed on between Nasdaq Stockholm and Nordic Derivatives Exchange (as a prospectus approved by the SFSA will be required in connection with a listing on both these exchanges). Nasdaq First North Bond Market’s requirements are less invasive and somewhat vaguely formulated in their rulebook, which does not provide for a lot of transparency, unfortunately (however, no prospectus is required when listing on this exchange).

There are different content requirements for offering documents, depending on whether the issue is wholesale or retail. Generally, a retail prospectus will require more in-depth information regarding the financial history of the issuer/group and the prospectus as well as the transaction documentation will need to be written in Swedish or at least be translated into Swedish. Exemptions from this language requirement can be obtained with relative ease if the nominal amount of each relevant debt security is at least SEK1 million.

All prospectuses are formally approved by the SFSA and registered with them. A prospectus will be required in relation to a listing on Nasdaq Stockholm and Nordic Derivatives Exchange whilst a company description (ie, a very light prospectus) will be required for the listing on Nasdaq First North Bond Market (“MTF”).

For exemptions to the requirement to produce a prospectus which are frequently relied upon, please refer to the Prospectus Regulation.

For specific marketing or publicity restrictions in respect of an offering of debt securities, please refer to the Prospectus Regulation.

A book-building process is used for debt offerings in Sweden.

Normally, the underwriting for an offering of debt securities generally structured would be firm commitments from the investors but the arrangers will normally only commit to arrange the deal on a best-effort basis without any actual obligation to underwrite or buy any bonds themselves.

Key terms of the subscription/dealer agreement are:

  • Issuer’s confirmation of the bookrunner’s/arranger’s assignment as dealer;
  • General obligations of the bookrunner/arranger (also as issuing agent) in relation to the offer to sell the bonds to investor and setting out clear conditionality for providing its services to the issuer;
  • General undertakings from the issuer (eg, compliance with transaction documents/sanctions, laws, tax indemnities, preparation of prospectus, ensure affiliation of bonds with CSD, etc);
  • Customary representations and warranties of the issuer for the benefit of the bookrunner/arranger (due incorporation, due execution, no MAE/default, etc);
  • Conditions precedent for the bookrunner/arranger to perform its obligations;
  • Fees and expenses;
  • Indemnification for the benefit of the bookrunner/arranger;
  • Notices;
  • Force majeure and limitations of liability;
  • Governing law, jurisdiction and confidentiality.

Customary EU-wide regulations apply to an offering of debt securities.

There are no formal any restrictions concerning the use of foreign governing law and/or jurisdiction for debt issuances, but it is very unusual. There are, however, a number of English law-governed EMTN Programmes that have been passported and registered with Euroclear Sweden and listed on Nasdaq Stockholm. It remains to be seen what will happen with such EMTN Programmes after Brexit.

See 9.1 Restrictions on the Use of Foreign Governing Law and/or Jurisdiction for Debt Issuances.

Foreign judgments

Pursuant to the provisions of the  Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012, on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the “2012 Brussels Regulation”), a judgment in the courts of a Member State (as defined therein, ie, all Member States of the European Union) and which is enforceable in such a Member State, will be directly enforceable in the Kingdom of Sweden upon the satisfaction of the formal requirements of the 2012 Brussels Regulation without any declaration of enforceability being required. It should be noted, however, that a party may apply for refusal of recognition or refusal of enforcement, as applicable, in accordance with the 2012 Brussels Regulation. Such an application shall be submitted to the relevant district court (Sw. tingsrätt).

Pursuant to the 2012 Brussels Regulation, if a judgment contains a measure or an order which is not known under the laws of the Member State in which the recognition of the judgment is invoked or in which the enforcement of the judgment, the court settlement or the authentic instrument is sought, that measure or order shall, to the extent possible, be adapted to a measure or order known under the laws of that Member State which has equivalent effects attached to it and which pursues similar aims and interests.

Pursuant to the provisions of the 1988 and 2007 Lugano Conventions on the Recognition of Judgments in Civil and Commercial Matters (the “Lugano Conventions”), a judgment in the courts of a Contracting State (as defined in the Lugano Conventions) and which is enforceable in such a Contracting State, will be directly enforceable in the Kingdom of Sweden only upon the satisfaction of the following requirements: (a) that a motion for enforcement has been filed with the relevant district court (Sw. tingsrätt) as provided by law and has been granted; (b) that no appeals lie against the judgment entered in the courts of such Contracting State; (c) that the courts of such Contracting State had jurisdiction; (d) that summons has been duly served on the respondent in the proceedings before the courts of such State; (e) that the judgment is not inconsistent with a prior judgment given between the same parties in the same matter; and (f) that the judgment does not contravene fundamental principles of the legal order or the public policy of the Kingdom of Sweden.

A judgment in the courts of a state which is not, under the terms of the 2012 Brussels Regulation, the 2000 Brussels Regulation and the Lugano Conventions, a Member State (as defined in the 2012 Brussels Regulation and the 2000 Brussels Regulation) or a Contracting State (as defined in the Lugano Conventions), would not be recognised or enforceable in the Kingdom of Sweden as a matter of right without a retrial on its merits (but will be of persuasive authority as a matter of evidence before the courts of law, administrative tribunals or executive or other public authorities of the Kingdom of Sweden). However, there is Swedish case law to indicate that such judgments:

  • that are based on contract which expressly acknowledge the jurisdiction of courts outside the Kingdom of Sweden;
  • that were rendered under observance of due process of law;
  • against which there lies no further right to appeal; and
  • the recognition of which would not manifestly contravene fundamental principles of the legal order or the public policy of the Kingdom of Sweden,

should be acknowledged without retrial on its merits.

Foreign arbitration awards

An arbitral award would be enforceable in Sweden without re-examination or re-litigation of the matter, unless:

  • the parties were incompetent under applicable law to enter into the arbitration agreement or were not duly represented, or the arbitration agreement is invalid under the law chosen by the parties as the applicable law, or in the absence of such an agreement, the law of the place where the award was rendered; or
  • the party against whom enforcement is sought had not received due notice of the arbitral proceedings or otherwise was unable to be represented in the proceedings; or
  • the award purports to resolve issues not included in the arbitral agreement or the request for arbitration; or
  • the arbitral tribunal has been appointed or composed in a manner contrary to an agreement by the parties or, in the absence thereof, contrary to the provisions of the law pursuant to which the award was rendered or the law of the place in which it was rendered; or
  • the award purports to resolve an issue that is not arbitrable under the laws of Sweden; or
  • the award contravenes Swedish public policy.

The courts of Sweden or arbitral tribunals sitting in, or applying the procedural laws of Sweden, may award judgments or give awards in currencies other than the local currency, but the judgment debtor has the right under the laws of Sweden to pay the judgment debt (even though denominated in a foreign currency) in the local currency at the rate of exchange prevailing at the date of payment. However, the judgment creditor may, subject to availability of the foreign currency, convert the local currency into the foreign currency after payment and remove that foreign currency from Sweden, and a choice of currency provisions by the parties to an agreement will not automatically be held by the courts of Sweden to constitute a right to refuse payment in Swedish kronor (“SEK”).

No notarisations, etc, are needed. Please also note that that concepts of “consideration” and “deeds” do not exist in Sweden.

There are a number of perfection requirements all depending upon the kind of assets over which the security is granted. In general, it should be noted that in order to obtain a perfected security interest, the pledgor must be deprived of the right and possibility to, eg, dispose of the pledged asset.

The enforceability of any of the transaction documents related to an issuance of debt securities is not affected by a bond-holder being domiciled in a foreign jurisdiction,per se. Please note, however, that sanctions, etc, could indirectly affect enforceability.

Normal selling/offer restrictions on financial instruments apply and any foreign entity seeking to offer bonds in Sweden should engage legal counsel to ensure compliance with local laws and financial regulations (eg, prospectus requirements) and should, in particular, be mindful of triggering prospectus/offering obligations in both Sweden and its own country of incorporation.

Debut standalone issuance (from early to late stage in the offering)

(i)       Negotiating engagement letter with arranger(s): approximately one week’s work;

(ii)       Registration of issuer as a public limited-liability company (required for listing): approximately/approximately two to three weeks’ work including registration with the Swedish Companies Registration Office.

(iii)       Affiliation of the issuer with Euroclear and ordering of LEI-code/approx: approximately one to two weeks’ work.

(iv)       Insider - and communications policy-drafting, preparing revised version of the issuer’s website and entering into contract with news distributor to ensure MAR-compliance: approximately one to two weeks’ work.

(v)       In parallel with items (ii) – (iv), draft and negotiate term sheet(s), risk factors, security documents, agency agreement and ancillary conditions precedent for the bond issue: approximately two to four weeks’ work.

(vi)       In parallel with items (ii) – (v) above, conduct legal and financial due diligence, credit research and drafting of investor presentation: approximately two to four weeks’ work.

(vii)       Once approaching final period of due diligence work, conduct sales teach-in for sales representatives, book meetings with investors and arrange for pre-sound feedback on deal structure and near final draft term sheet and transaction documents: approximately one to five days’ work.

(viii)       Once items (ii) – (vii) are complete, schedule a “go” or “no-go” call for the bond issue and launch the transaction publicly shortly thereafter (subject to a verification call with management): approximately four to six weeks’ work, depending on the level of due diligence, sales process and extent of transaction documents.

(ix)       Upon completion of item (viii), road show for the sale of the bond and final feedback from the investors will be scheduled and carried out: approximately one to five days’ work.

(x)       In parallel with item (ix), start finalising final terms and conditions, security documents and other transaction documents subject to input from the investors: approximately one to five days’ work.

(xi)       Once approaching final period of tasks set out under items (ix) and (x), start book building, pricing and preliminary allocation of the bonds: approximately one to three days’ work.

(xii)       Once all items above are complete, carry out a final short confirmatory due diligence call with management to confirm that everything is in order. Shortly thereafter the aarranger(s) will finalise the transaction and close the books and settlement of the bond proceeds (this is normally T+5).

(xiii)       Drafting of prospectus will be initiated once the books have closed and will normally have to be approved by the SFSA within 60 days to meet certain tax-related requirements for investors. T – the drafting and administration process with the SFSA will take approximately 30-40 days. Kindly note that a prospectus will in almost all debt offerings only be prepared for a listing and not for the offering itself due to the often-high nominal amount of each bond or limited amount of investors that are approached.

(xiv)       Once the prospectus is approved, the admissions process of having the issuer approved by the relevant exchange will be initiated and will take approximately five to ten days, and the subsequent listing of the bonds will take one to five days after the issuer has been approved by the exchange.

Repeat standalone issuance

In general, the time required to finalise the tasks set out in the list above can be shortened by half or more in the event that an already established issuer chooses to issue a new standalone bond. The sales process/bookbuilding will be significantly shorter as the investors are most likely already familiar with the issuer and the due diligence work will be much lighter, provided that the repeat issuance takes place relatively close to the original issuance (approximately one to six months). Also, the tasks set out in items (ii) – (iv) above will not need to be carried out as this should already be in place.

If it is only a matter of a tap issue under an already-issued bond (ie with the same ISIN) such process can take just a couple of days to ensure proper clearing and high level due diligence calls with management, which is approximately one to five days of work, – and generally no additional prospectus will be required as the issuer may rely upon the previously approved prospectus for the bond up to 12 months from its date of approval.

Draw-down under a programme

A draw-down under an already established debt programme is normally something that the aarranger(s), together with the iissuer, set up themselves without the involvement of legal counsel. From our experience, this is quite a limited process that will only take between one to five days of work to finalise.

Difference in timing between retail and wholesale offerings

There are no material differences in terms of timing matters.

Debt securities are always cleared and settled through Euroclear Sweden if such instruments are to be listed on the securities exchange. If the offering is a private placement, the instruments do not have to be cleared or settled via a CSD but may be handled directly between each investor and the issuer (with the agent then being responsible for calculating interest and amortisations, etc).

Euroclear Sweden is only able to affiliate, clear and settle debt securities denominated in SEK and EURO. Nasdaq Stockholm, Nordic Derivatives Exchange and Nasdaq First North Bond Market are, however, able to admit debt securities denominated in other currencies to trading on their exchanges but the relevant debt security will need to be affiliated with the relevant CSD for clearing and settlement purposes (ie, NOK-denominated bonds will need to be affiliated with a Norwegian CSD for settling interest payments, and Nasdaq can then accept having the instrument admitted to trading, subject to the satisfaction of customary listing requirements).

For investors that are not resident in Sweden for tax purposes and do not have a permanent establishment in Sweden to which the debt securities are effectively connected, capital income (for example, interest and capital gains on debt securities) is generally not taxable.

For investors resident in Sweden for tax purposes, capital income is generally taxable.

New interest deduction limitation rules for Swedish corporations, where the cap for a deduction of net interest expenses is calculated as 30% of tax EBITDA, will enter into force on 1 January 2019 and are to be applied for the first time in the financial year beginning after 31 December 2018. Net interest expenses of up to MSEK 5 per Group may, however, be deducted without applying the new interest deduction limitation rules.

Withholding tax is not imposed on payments of principal or an amount that is considered to be interest for Swedish tax purposes.

If amounts that are deemed as interest for Swedish tax purposes are paid by a legal entity domiciled in Sweden, including a Swedish branch, or in certain cases a clearing house within the EEA, to private individuals (or estate of deceased individuals) resident in Sweden for tax purposes, Swedish preliminary taxes are normally withheld by the legal entity or clearing house on such payments.

Under Swedish law, no stamp or similar taxes are payable on the issue or transfers of debt securities, or on the establishment of a debt issuance programme. At this stage, there are no plans to introduce the financial transaction tax that is to be introduced in certain EU Member States.

Capital gains on disposals of listed or unlisted debt securities by non-residents are not taxable, provided that the securities are deemed to be taxed as debt securities (not as shares) for Swedish tax purposes.

Suitability

The Exchange may also, in cases where all Listing Requirements are fulfilled, refuse an application for listing if it considers that the listing would be detrimental for the securities market or investor interests.

If an issuer whose fixed income instruments are already registered on the Exchange is considered to damage confidence in the securities market in general because of its operations or organisation, the Exchange may decide to delist the bonds, despite the issuer fulfilling all Listing Requirements.

In exceptional cases, a company applying for registration of fixed-income instruments may be deemed unsuitable, despite the fact that the company and the bonds covered by the application fulfil all of the above listing requirements. This may be the case if, for example, it is believed that registration of the company’s fixed-income instruments could damage confidence in the securities market in general.

De-registration and observation status

An issuer may request that its fixed-income instruments shall be de-registered. The Exchange will approve such request and decide, together with the issuer, on the last day of trading of the instruments.

The Exchange may decide to de-register the fixed-income instruments in circumstances where

  • an application for bankruptcy, winding-up or equivalent motion has been filed by the issuer or a third party to a court or other public authority,
  • the issuer does not fulfil all Listing Requirements, assuming that:

i)       the issuer has not remedied the situation within a time decided by the Exchange;

ii)       there are no other available means to remedy the situation and restore the situation;

iii)       the non-fulfilment is deemed to be significant; and

iv)       the issuer has, after having been reminded, failed to pay any Registration Fee, as set out under section 1.4 above, when due.

The Exchange may decide to give an issuer’s instruments observations status if there is substantial uncertainty in respect of the issuer’s financial position or the pricing of the instruments.

Disclosure of inside information (General provision)

The issuer shall disclose inside information in accordance with Article 17 of the Market Abuse Regulation7 (“MAR”).

Article 17 of MAR sets out the disclosure obligations in respect of inside information. The term “inside information” is defined in Article 7 of MAR. According to Article 17, the issuer may, on its own motion, delay disclosure to the public of inside information provided that all of the conditions set out in MAR are met.

Set out in section 3.1 in the Chapter for Issuers of Shares is guidance on certain circumstances and events that in the Exchange’s view may involve inside information under MAR. The intention of the guidance is to facilitate the Issuer’s compliance with MAR and to provide guidance on the Exchange’s view on the Issuer’s disclosure requirements under MAR.

Website

The issuer shall have its own website on which information disclosed by the issuer on the basis of the disclosure requirements shall be available for at least five years.

However, financial reports should be available for a minimum of ten years from the date of disclosure.

The information should be made available on the website as soon as possible after the information has been disclosed.

Other Disclosure Requirements

The Nasdaq Stockholm Rules also contains certain disclosure requirements that go beyond the requirements in Article 17 of MAR. Consequently, the information set out below should always be disclosed irrespective of whether it constitutes inside information which require disclosure pursuant to MAR. Information to be disclosed in accordance with this section should, regardless of whether it is considered inside information, be disclosed in the same manner as inside information, unless otherwise stated.

  • Financial reports

The issuer shall prepare and disclose all financial reporting pursuant to accounting legislation and regulations applicable to the company.

Issuers whose fixed income instruments are primarily admitted to trading on Nasdaq Stockholm shall disclose an annual financial statement release and a half-year report. This rule is not applicable if the issuer is a county council or a municipality.

  • Timing of financial statement release and interim reports

The financial statement release and the half-year report should be disclosed within two months from the expiry of the reporting period. The half-year report should state whether or not the issuer’s auditors have conducted a review.

  • Content of financial reports

The announcement containing the financial statement release and the half-year report should at least include the information required by IAS 34 “Interim financial reporting”. The financial statement release should state where and which week the annual financial report will be made available to the public. An announcement containing a financial statement release or a half-year report should commence with a summary stating the key figures, including, but not limited to, net turnover and information regarding forecasts, if a forecast is provided in the report.

  • Audit report

The audit report is a part of the annual financial report. However, the issuer should disclose an audit report as soon as possible if the audit report includes a statement which is not in standard format or if the audit report has been modified.

  • Forecasts and forward-looking statements

When the issuer discloses a forecast, it should provide information regarding the assumptions or conditions underlying the forecast provided. To the extent possible, forecasts should be presented in an unambiguous and consistent manner. If the company issues other forward-looking statements, they should also be provided in an unambiguous and consistent manner.

  • General meetings of shareholders

The issuer should disclose resolutions adopted by the general meeting of shareholders unless such resolutions are insignificant.

Differences in regard to retail offerings are practically non-existent, the main difference being the prospectus requirements as set out above.

These obligations all apply to foreign incorporated issuers, but always with a general discussion on suitability and applicability with the Exchange when commencing each process.

Sanctions

In the event of a failure by the issuer to comply with law, other regulations, the Rule book or generally acceptable behaviour in the securities market, the Exchange may, where such violation is serious, resolve to de-register the issuer’s instruments or, in other cases, impose on the issuer a fine of minimum SEK100,000 and maximum SEK5 million. Where the non-compliance is of a less serious nature or is excusable, the Exchange may issue a reprimand to the issuer instead of imposing a fine.

The issue of the determination of sanctions in accordance with this section shall be the responsibility of a Disciplinary Committee appointed by the Board of Directors of the Exchange.

Detailed provisions about the Disciplinary Committee are set forth in the Securities Markets Act (2007:528) and in regulations issued by the Swedish Financial Supervisory Authority, Finansinspektionen (FFFS 2007:17).

Vinge

Stureplan 8
Box 1703
111 87 Stockholm

+46 10 614 30 00

contact@vinge.se www.vinge.se
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Law and Practice

Authors



Advokatfirman Vinge KB was established through a merger between a number of leading Swedish firms in 1983, Vinge is one of the largest firms in Scandinavia today, with some 300 lawyers in seven Swedish and overseas offices. Vinge is a full-service law firm, with a substantial international practice, which has acted in most of the major M&A in Sweden in recent years and has consistently achieved top positions on Mergermarket’s list of M&A advisers in the Nordic market as well as Tier 1 rankings with the leading ranking institutes. The firm regularly represents clients in connection with large international financing transactions, including project financing and structured finance arrangements. Vinge also advises domestic and international clients within a number of specialist areas, such as competition law and compliance, employment, IT, insolvency, insurance, IP, litigation and arbitration, marketing, private equity, property, public procurement, tax, telecommunications, and transport. In addition to four offices in Sweden, the firm has a presence in Brussels.

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