Download 2016:6 Skanska Financial Services AB Decision

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NASDAQ STOCKHOLM’S
DISCIPLINARY COMMITTEE
DECISION
2016:6
12 May 2016
Nasdaq Stockholm
Skanska Financial Services AB
Since 2007, Skanska Financial Services AB (“SFS” or the “Company”) has had registered bonds on
the regulated main market at Nasdaq Stockholm AB (the “Exchange”). The Company, together with
its parent company, Skanska AB, have undertaken in writing to comply with the Exchange’s rule
book for issuers of interest-bearing instruments (the “Rule Book”). The Company is responsible for
the Skanska Group’s central financing operations and also conducts insurance operations in subsidiaries.
The Exchange has moved that SFS be subject to disciplinary sanctions for violating the Rule Book.
SFS has contested the motion.
An oral hearing was held in the matter on 29 April 2016 at which the Exchange was represented by its
head of surveillance, Joakim Strid, head of market surveillance, Karin Ydén and legal counsel, Andreas Blomquist. SFS was represented by CEO, Therese Tegner, legal counsel, Sebastien Fichtel and
accounting expert, Jenny Douhan, as well as Advokat Anders Ackebo.
---------------Pursuant to Chapter 16, section 13 of the Securities Market Act (2007:528) an exchange shall monitor
that a party which has Sweden as it home member state and which has distributed or issued negotiable
securities which, following application by the issuer, are admitted for trading on a regulated market
operated by the exchange, prepares the prescribed periodic financial information. Chapter 16, section
3 of the same Act however states that the Chapter (subject to certain exceptions) does not govern issues regarding, inter alia, bonds or other negotiable debt instruments where each one has a nominal
value equivalent to not less than EUR 100,000.
SFS is a wholly-owned subsidiary of Skanska AB. In turn, SFS owns 100% of the shares in two companies, specifically SCEM Reinsurance S.A. ("SCEM") and Skanska Försäkrings AB ("Försäkrings
AB") which, together with SFS, constitute a group (the “Skanska Group”).
SFS is the Skanska Group’s Internal bank and constitutes a non-profit-making support function within
the Skanska Group. One of SFS’s tasks from Skanska AB is to be responsible for raising external financing in order to secure the Skanska Group’s capital requirements. This takes place, inter alia,
through SFS taking up loans through the issuance of securities, Medium Term Notes (“MTN”), which
are registered at the Exchange. As part of SFS’s MTN programme, Skanska AB has acted as a guarantor with primary liability for SFS’s obligations within the framework of the program.
On 22 April 2013, SFS registered a bond (loan 187, SE0005497591). According to the Exchange, the
bond’s nominal amount falls below EUR 100,000, while SFS, through the submission of documentation, has maintained that the nominal value of MTN loan 187 is not less than SEK 1,000,000.
In light of the above, there are differences of opinion in the matter regarding the Exchange’s monitoring duty with respect to the Company’s provision of periodic financial information. However, the Disciplinary Committee deems that it can leave this issue aside since the Exchange, in any event, has the
authority to move for sanctions by the Disciplinary Committee for violations by the Company of the
Rule Book.
2(4)
It is uncontested in the matter that SFS’s 2013 annual report has been prepared erroneously. The error
is constituted by the fact that SFS in its capacity as parent company in the SFS Group failed to prepare
group accounts in accordance with the Annual Reports Act (1995:1554) and International Financial
Reporting Standards ("IFRS"). The obligation to prepare group accounts follows, inter alia, from Article 4 of Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July
2002 on the application of international accounting standards (the “IAS Regulation”). Annual reports
have instead been prepared separately for SFS and for the subsidiaries, SCEM and Försäkrings AB. In
addition, the parent company, Skanska AB, prepared 2013 group accounts which include SFS and
both subsidiaries, SCEM and Försäkrings AB. However, no group accounts for the SFS Group have
been prepared. The error was also made in previous years.
SFS has itself pointed out this error to the Exchange and taken rectification measures commencing
with the 2014 annual report, which was prepared in the correct manner.
Section 2.2.4 of the Rule Book states that issuers must, well in advance of registration, establish and
maintain adequate procedures, controls and systems for dissemination of information, including systems and procedures for financial reporting. Pursuant to section 3.2.1 of the Rule Book, inter alia, issuers must prepare and disclose all financial reporting in accordance with applicable legislation and
relevant accounting standards. The Exchange asserts that SFS has breached these sections of the Rule
Book.
The Disciplinary Committee finds that SFS has clearly breached section 3.2.1 of the Rule Book. With
respect to section 2.2.4, the Committee finds, based on the Company’s reports, that the Company
would have had the capacity without any problem to prepare group accounts for 2013 and preceding
years had the Company not misinterpreted the rules. Thus, in the Committee’s opinion, the Company
should not be deemed to have violated the latter section of the Rule Book.
With respect to sanctions for the violation, the fact must be taken into consideration that the violation
relates to a fundamental rule to protect the investors. However, the Committee finds that it has been
shown that the violation in this case had very marginal significance for investors and for the securities
market. It should also be taken into consideration that, according to case law which has been developed based on the Securities Market Act and the Financial Supervisory Authority’s regulations regarding the Exchange’s monitoring of periodic financial information, the sanction normally stops at a
comment or criticism when the matter does not relate to such violations which are judged to result in
loss to the investors or which, in some other manner, undermines confidence in the market (see Swedish Government Official Reports 2015:19, p. 55 et seq.).
Upon an aggregate assessment of the facts in this case, the Disciplinary Committee finds that the violation should reasonably not result in any sanctions for SFS.
In light of the statements above, the Disciplinary Committee will close the matter without action.
On behalf of the Disciplinary Committee
Former Justice of the Supreme Court Johan Munck, former Justice of the Supreme Court Marianne
Lundius, Director Anders Oscarsson, Director Jack Junel, and Justice of the Supreme Court Ann-Christine Lindeblad participated in the Committee's decision.