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INSIDER RULES
I. GENERAL
1. INTRODUCTION
Credibility is of utmost importance for a listed company, and has an impact, among other things, on the company's share price and its ability to obtain financing. A central factor affecting Aspocomp Group Plc's (the "Company") credibility is the ability of the Company and its employees to observe the provisions governing the operations of listed companies, especially insider regulation. A mere suspicion as to non-public information having been misused in securities trading jeopardises confidence in the operation of securities markets. The weakening of credibility often also harms the company, whose insider is being suspected.
Due to the above, the Company's Board of Directors has approved these insider rules (the "Insider Rules"). These Insider Rules apply to all personnel of the Company and its group, including employees, the Managing Director, the Board of Directors and other management. These Insider Rules must be observed by everyone.
2. REGULATORY FRAMEWORK
The Insider Rules are based on the following laws and regulations:
(a) the Finnish Securities Market Act ("SMA");
(b) various guidance issued by the Finnish Financial Supervision Authority;
(c) the Finnish Penal Code;
(d) European Union Directive 2003/6/EC, Directive 2003/124/EC and the Commission Regulation 2273/2003.
These Insider Rules have been drawn up observing the above laws and regulations. In the event there is any discrepancy between these Insider Rules and the applicable law, the law shall prevail. Note that each employee is personally responsible for following all applicable laws and regulations.
3. ENTRY INTO FORCE
These Insider Rules will enter into force on 1 October 2005. Insofar as insider registers and the information to be registered therein is concerned, these Insider Rules will take effect as of 1 January 2006.
II. RULES TO BE OBSERVED
4. APPLICABLE LAWS AND REGULATIONS
4.1 Purpose of regulation
By way of a principal rule in securities market regulation, all investors must have an equal access to information relating to securities. The purpose of insider regulation is to ensure that no-one benefits from information that is not available to others in the market.
4.2 Definition of inside information
Inside information refers to information concerning the Company, its group of companies or its share (or other securities). The definition of inside information is set out in Chapter 5, Section 1 of the SMA, according to which inside information means information of a precise nature pertaining to the relevant securities that has not been released (or otherwise been made available in the market) and that, if published, would be likely to have a material impact on the value of the relevant security.
The reference to the precise nature of the information indicates a set of circumstances that exist (or may reasonably be expected to come into existence) or an event that has occurred (or may reasonably be expected to occur). A mere uncertainty factor does not necessarily affect the precise nature of the information in question, if the event or circumstance in question may reasonably be expected to materialise. Furthermore, the information in question must be specific enough to enable a conclusion to be drawn as to the possible effect of that set of circumstances on the price of the relevant securities (a forecast as to the direction of price change being, however, not required).
The requirement of potential material impact presupposes that the relevant information is capable of having a material impact on the price of the relevant securities. The materiality requirement is to be assessed on the basis of objective criteria and taking into account whether a reasonable investor would have used the relevant information as a basis for an investment decision, and observing the business operations of the relevant company as a whole, the reliability of the source of the relevant information as well as all other market factors prevailing at the time. To summarise, the materiality requirement presupposes that a reasonable investor would have expected the relevant information to have an impact on share price and would have taken the information into account when forming an investment decision.
Inside information includes information pertaining to the Company, its group companies as well as its securities. Inside information may include, for example:
(a) The contents of the Company's annual report or interim report before publication thereof;
(b) Significant investments by the Company or its group companies;
(c) Upcoming share issuance by the Company or its group company;
(d) Upcoming public tender offer concerning the Company's shares or a public tender offer to be launched by the Company or its group company;
(e) Information on mergers or acquisitions involving the Company or its group companies;
(f) Material information relating to new products or services developed by the Company or its group companies; and
(g) A material piece of information relating to the Company's competitors.
Inside information may have a positive or negative impact on the value of securities. Whether or not an expected price change finally materialises, is irrelevant - a reasonable expectation suffices.
Information ceases to constitute inside information when it is published. Publication takes place by way of issuance of a stock exchange release. Information is also deemed to have become public, if it is generally available in the media.
4.3 Field of application
4.3.1 General
The prohibition against misuse of inside information applies to trading in the following securities:
1) publicly-traded securities, as defined by the SMA (i.e., listed securities);
2) securities subject to trading in accordance with Chapter 3, Section 16 of the SMA ("other professionally arranged trading");
3) securities that are publicly traded in another EEA member state;
4) securities whose admission for public trading has been sought in Finland or in another EEA member state; and
5) securities the value of which is dependant on securities referred to under items 1 - 4, above (e.g. warrants, convertible bonds and options).
4.3.2 What are "securities"?
Securities comprise, for instance, the following instruments:
- shares, and securities entitling their holder to subscribe for shares (e.g. option rights and subscription rights)
- bonds
- convertible bonds
- units in a mutual fund
- warrants
- certain derivatives.
4.3.3 Derivatives
Insider regulation applies to standardised options and futures (Chapter 10, Section 1 of the SMA), corresponding derivative contracts insofar as their underlying asset consists of publicly-traded securities, raw materials or other commodities (Chapter 10, Section 1 a of the SMA) and other such derivative contracts (Chapter 10, Section 1 b of the SMA).
4.4 Prohibition to use and disclose inside information
4.4.1 Prohibitions
According to Chapter 5, Section 2 of the SMA, the prohibition to use inside information means that a person possessing inside information may not:
- use that information, for his or her own benefit or for the benefit of a third party, for the purpose of acquiring or disposing of the relevant securities;
- advise, directly or indirectly, a third party in connection with a trade involving the securities in question;
- disclose the information to a third party, unless such disclosure takes place in the normal course of the exercise of the professional duties of the person making the disclosure. The prohibition applies to fellow workers as well as to business partners and other third parties.
4.4.2 Preconditions for disclosure
Disclosing inside information is permitted only in the normal course of the exercise of the work or professional duties of the person making the disclosure. In addition, the disclosure needs to be justified in the view of the Company's operations. It is also required that the recipient of the information is (made) aware of the confidential nature of the information; if necessary, one should point out that the information in question constitutes inside information and needs to be kept confidential. It is further required that the recipient is under a confidentiality obligation. The confidentiality obligation may, for instance, be based on, the law or an agreement (such as an employment or service agreement). Finally, it is required that the recipient be entered into the relevant insider register.
4.5 To whom does insider regulation apply?
4.5.1 Primary insiders
The SMA divides all persons into two groups with respect to inside information. The so-called primary insiders are those who as shareholders or on the basis of their position, work or duties have received inside information. Primary insiders are automatically presumed to know of the restricted nature of inside information.
4.5.2 Secondary insiders
The concept of so-called secondary insiders refers to any other person in receipt of inside information. The culpability of secondary insiders depends on whether the person in question knew or ought to have known of the confidential nature of the information, considering what a reasonable ordinary man would or should have understood under the circumstances.
4.6 Special situations
4.6.1 Individual Share Purchase Programmes
According to Chapter 5, Section 2, subsection 5 of the SMA, insider regulation does not restrict securities trading, where the purchase or disposal of securities is based on a contract that has been concluded before the person in question received the inside information. In these cases, the legally relevant moment is the time of concluding the relevant contract, not the time of purchase or disposal, whereby such contract is merely being implemented. An insider may, for example, draw up in writing a binding document to reflect his intention to systematically purchase shares in his employer company (an " Individual Share Purchase Programme"). In order to avoid any allegation as to misuse of inside information, an insider should document the contents of the Individual Share Purchase Programme and instruct his or her broker-dealer at such point of time when he or she does not possess inside information. The same principle applies to any amendment to the programme (and to any instructions to be given to the broker-dealer): any subsequent amendments to the programme should only be made at such point of time when the insider in question does not posses inside information.
The Insider Officer will be pleased to provide further information on the putting into place of an Individual Share Purchase Programme.
4.6.2 Share buy-back (treasury shares)
Insider regulation does not apply to the purchase by the Company of its own shares in accordance with a share buy-back programme, provided that the programme in question meets the so-called Safe Harbour requirements that are set out in Commission Regulation 2273/2003 or in the guidance issued by the Helsinki Stock Exchange. If the requirements in question are, however, not met, trading is assessed as any other transaction, and it may be deemed either permitted or forbidden.
4.6.3 Mere exercise of derivatives
Insider regulation is not applicable in connection with a mere exercise of a derivatives contract, even if an insider has come to posses inside information by the time of such exercise. The date of entering into a derivative contract being decisive, an insider must, in order to avoid insider allegations, avoid entering into a derivative contract whenever he or she possesses inside information.
4.6.4 Option schemes
Insider regulation is not applicable in connection with subscription for shares using employee stock options in accordance with the terms and conditions of the relevant opinion scheme. However, the sale of option rights to the market and the so-called sell and subscribe -arrangements do fall within the scope of insider regulation, and when a person sells option rights, he or she should ascertain that he or she does not possess inside information at the time of sale.
5. PUBLIC INSIDER REGISTER
5.1 Public Insiders
In order to maintain confidence in the securities markets, the Company is obliged to maintain a so-called public insider register, whereby the holdings and trading data of certain individuals, to the extent it involves the Company's securities, is made public. These individuals comprise:
(i) the members of the Board of Directors;
(ii) the Managing Director and his deputy;
(iii) the auditors and deputy auditors, or the officer of the auditing entity who has main responsibility for the Company; and
(iv) the members of the Executive Committee.
In the following, the above individuals will be referred to as "Public Insiders".
5.2 Holdings to be declared
Holdings in the following securities held by a Public Insider, will be registered into the public insider register:
- listed shares of the Company;
- securities entitling to such shares (such as convertible bonds, option rights and subscription rights);
- other securities entitling to such securities; and
- securities, the value of which is based on the aforementioned securities (such as derivatives, warrants and unlisted share series)
The obligation to declare holdings only applies to securities issued by the Company (or other securities that entitle such securities, as well as securities, the value of which depends on such securities). If a member of the Board of Director owns warrants, the underlying asset of which consists of the shares of the Company, these warrants need to be declared even though their issuer is a third party. Derivatives must be declared to the extent their underlying asset consists of the Company's shares or other securities.
Also the holdings in, and trading with, the above-mentioned securities by a spouse or a minor, whose guardian the Public Insider is, as well as a Family Member (as will be defined below) or any Controlled Entity must be declared.
5.3 Basic declaration
When a Public Insider commences work to assume his or her duties, he or she must declare to and notify the Company's Registrar within fourteen (14) days of the following:
(i) certain personal information pertaining to the Public Insider in question;
(ii) information on his or her spouse;
(iii) information on all minors (or those incompetent) whose guardian the Public Insider is;
(iv) information on other family members who have lived in the same household with the Public Insider since at least one year (i.e., relatives closer than cousins; such as children, grand-children, siblings and parents; the concept of "Family Member", however, not including an unmarried partner of the Public Insider)
(v) a company or foundation which the Public Insider, his or her spouse, a minor whose guardian the Public Insider is and/or a Family Member (each either alone or together with another Public Insider or his or her family members) controls either directly or indirectly;
A shareholder shall be deemed to have "control" in an entity (a "Controlled Entity") whenever he or she has (or, based on a contractual arrangement, is entitled to, in his or her sole discretion, exercise) more than half of the voting rights or the right to appoint or dismiss the majority of the members of an Administrative Board, a Board of Directors or a corresponding body. The same applies where a shareholder, together with any entity controlled by him or her or any such entities jointly, have the majority of the voting rights or the right to appoint or dismiss (as explained above). A mere possibility to exercise control in an entity suffices to constitute "control".
(vi) a company or foundation in which the Public Insider, his or her spouse and/or a Family Member (each alone or together with others) has a significant influence;
A person is deemed to have "significant influence" in an entity if he or she is in a position equivalent to a Public Insider therein (such as a member or a deputy member of the Board of Directors or of an Administrative Board, a Managing Director or a Deputy Managing Director, or an auditor, deputy auditor or equivalent, or another person belonging to the upper management) or if he or she is partner in a partnership or an active partner in a limited partnership. Also foreign entities and arrangements (such as trusts) are included.
(vii) all securities relating to the Company, as enumerated in Section 5.2 above and held by the Public Insider, his or her spouse, a minor or another Family Member residing in the same household and/or a Controlled Entity referred to in item (v) above.
A Public Insider does not need to include any of the Company's subsidiaries among his or her Controlled Entities. Furthermore, the obligation to declare does not apply to the holdings of housing companies, real estate companies, non-profit making organisations or economic combines, unless the aforementioned is involved in regular securities trading (in which case information concerning them should be declared).
5.4 Amendment declaration
When there is a change in any of the information described above, the Public Insider must (by way of completing a specific form) inform the Registrar of such change within seven (7) days of the date when the change took place. The Public Insider is under an obligation to provide the amendment information even if the management of his or her holdings has been outsourced to a third party.
As for newborn children, the obligation to declare begins once a child has been registered with the population register, and as for any Controlled Entities, once such entity has been registered with the Trade Register (or other corresponding register).
Where the change results from the actions of the Company (e.g. a share split), no declaration is required.
5.4.1 Book-entry securities
The Company has an agreement in place with the Finnish Central Securities Depository, according to which the insider register of the Company will be maintained within the so-called SIRE-system. Due to this, all trades in the Company's book-entry securities will automatically be recorded into the insider register maintained by the Central Securities Depository. When a person becomes a Public Insider, there will be no need to disclose holdings in book-entry securities. When a trade in book-entry securities is made on the Helsinki Stock Exchange, it is automatically registered into the SIRE-system. There will, accordingly, be no need to declare such trade.
However, in the event the change in holdings concerns securities belonging to the book-entry system, but a trade or another form of transfer is made outside the Helsinki Stock Exchange, the change will not be recorded automatically. Therefore, the insider should declare such transfer to the Company's Registrar.
5.4.2 Other than book-entry securities
Where a transfer concerns other than book-entry securities (such as derivative agreements, employee stock options, foreign depositary receipts or other securities), the insider must declare such transfer to the Company's Registrar.
For the avoidance of doubt, all transfers must be notified regardless of their value.
5.5 Termination of the obligation to declare
The obligation to declare ends once the obligation to perform work (or other circumstance on the basis of which the person in question became an insider, such as Board membership) ends.
The obligation to declare may, upon request to the Company's Insider Officer, be temporarily terminated due to a maternity leave or other corresponding circumstance, provided the insider in question will not have the possibility to receive inside information while he or she is off duty.
5.6 Transparency of the public insider register
Anyone has the right to, without undue difficulty, obtain information from the public insider register, and to receive copies or extracts therefrom. The social security numbers and the addresses of natural persons are, however, not in the public domain; the same applies to the names of those natural persons who are not insiders themselves. A listed company must also make the information contained in the public insider register publicly available via its homepage. Changes in holdings must be kept available on the Internet for 12 months from the date of change. The aforementioned concerns also changes in an insider's family relations or controlling positions. The Company must in each case update the information accessible on the Internet without undue delay, in any case within seven (7) days from the date the Company received the relevant amendment declaration.
Information contained in the public insider register will be stored for at least for five (5) years from each entry. Accordingly, the basic information pertaining to each insider will remain public throughout the period of his or her insider status and for five (5) years from the termination of such insider status. Also any amendment information remains public for at least five (5) years from the date of the relevant amendment information.
6. COMPANY-SPECIFIC INSIDER REGISTER
The company-specific insider register is a non-public register maintained by the Company. A company-specific insider register contains details pertaining to those persons employed by the Company who, on the basis of their employment or other contractual arrangement, receive inside information. The Company has chosen to implement the system by way of maintaining both a permanent company-specific register as well as a number of project-specific registers.
6.1 Permanent company-specific insider register
The permanent company-specific insider register will contain information on those persons who, on the basis of their work or duties regularly receive inside information. The following persons will be entered into the permanent company-specific register at the Company:
(i) the Managing Directors of the Company's subsidiaries;
(ii) the management of the factories in Finland; and
(iii) in the Finance Unit: the Financial Controller, Controller, Assistant Controller
(iv) Communications Manager
(v) Management's assistants
(vi) The other employees in the administration of the Company nominated by the CEO
(the "Permanent Insiders").
The Company's Registrar, who operates under the supervision of the Company's Insider Officer, maintains the register.
According to the law, a person who has been entered into the company-specific insider register, must be informed in writing or otherwise in a reliable manner of the register entry and of his obligations following such entry. In the Company, each company-specific insider will be notified by way of a copy of the completed and signed insider form.
According to the law, the information in the company-specific register must be stored for at least for five (5) years from the date when the basis for the record entry regarding the person in question ceased to exists.
6.2 Project-specific insider registers
A project-specific insider register must always be maintained for a project which, when completed, can have an impact on the value of the Company's share price. The Managing Director of the Company, who will inform the project leader and the Company's Insider Officer of his decision, will establish the need for a project-specific register in each case. The project leader will then notify the Insider Officer of the names of the persons to be registered into the project-specific register in question. Each project-specific insider register is, in fact, a sub-register of the so-called company-specific insider register. The Company may have several sub-registers from time to time.
The Insider Officer must ascertain that the registered persons (including external advisers) are informed of having become project-specific insiders or whenever they have ceased to be project-specific insiders. The Insider Officer must also ensure that all persons who participate in the project, sign an acknowledgement as to their entry into the project-specific insider register.
A project-specific insider ceases to be one when the project is published by way of a stock exchange release or when the project is cancelled.
6.3 Use of external advisers
External advisers working for, or on behalf of, the Company have an independent obligation to maintain an insider register. Such advisers may include, for example, legal advisers, investment bankers and consultants. Despite the independent obligation set for the agents, the Company needs to have an entry in its own register regarding such advisers. However, the Company only needs to identify the legal person acting on its behalf (for instance, the full name of the relevant law firm) and the person in charge (for instance, the name of the partner in charge of the project at the law firm) and then refer back to the insider register maintained by such law firm itself.
The Finnish Financial Supervision Authority considers that listed companies should, where necessary, inform their advisers of the new requirement to independently maintain an insider register. Furthermore, a listed company may, at its discretion and especially in connection with a significant transaction (such as an acquisition), recommend to its counterparty the setting up of a project-specifi insider register of its own.
7. TRADING IN SECURITIES OF THE COMPANY
In order to ascertain the credibility of the securities markets and of the Company in particular, the insiders of the Company must observe the following restrictions. Any question of interpretation concerning these Insider Rules must be addressed with the Insider Officer before instructing any trade to take place. Despite any such interpretation that may be obtained from the Insider Officer from time to time, an insider remains personally responsible for following any applicable laws and regulations.
7.1 Public Insiders and Permanent Insiders
Securities issued by the Company should be acquired as long-term investments only. It is further recommended that shares and other securities of the Company should be acquired through Individual Share Purchase Programmes (further information on documenting an Individual Share Purchase Programme may be obtained from the Insider Officer).
Trading in securities of the Company shall always take place according to the following rules. An insider should note that he or she is personally liable for adhering to these rules even in cases where he or she has outsourced any asset management to a third party. These restrictions also apply to the any minor whose guarding the insider in question is, and to any Controlled Entities.
It is recommended that trading be restricted to those points of time where the markets have as comprehensive information on the factors affecting the value of the relevant securities as possible, i.e., mainly to the period following the publication of financial results. By way of recommendation, the shares and other securities of the Company may be traded during the period of three (3) weeks following the date of publication of the results of the financial year or of an interim report (the so-called "open window"), provided that the person in question does not possess other unpublished inside information and that the person in question is not registered with a project-specific insider register at the time. Outside this open window, a prior authorisation for trading from the Insider Officer is required.
Trading is strictly forbidden during the period of three (3) weeks preceding the publication of annual results by way of a financial communique and two (2) weeks preceding the publication of an interim report (the so-called "closed window").
According to a recommendation by the Finnish Financial Supervision Authority, a Public Insider and a Permanent Insider should not authorise so-called discretionary asset managers to, on their behalf, trade in securities of the Company. Accordingly, it is recommended that securities of the Company should be explicitly excluded from any such asset management contract. It is recommendable to arrange any trading in the securities of the Company through Individual Share Purchase Programmes (see section 4.6.1 above) or, where necessary, by giving separate instructions for selling or purchasing such securities. Any asset management agreement should take into account the above recommendations and acknowledge the position of the person in question as either a Public Insider or Permanent Insider at the Company. An asset manager should also be informed of any changes accordingly.
7.2 Project-specific insiders
A project-specific insider may not trade in securities or derivatives relating to the Company for as long as that person remains a project-specific insider. If the project in question involves another listed company, trading in securities issued by that other company is also forbidden.
According to a Finnish Financial Supervision Authority recommendation, a project-specific insider may, in principle, use discretionary asset management services. The project specific insider should not inform the asset manager of his or her status as a project-specific insider. If the insider in question, nonetheless, forbids his or her asset manager from trading in the Company's securities, such insider must exercise care so as not to disclose the contents of the relevant inside information to the asset manager. A prohibition to trade in particular securities should be given in a way that will not enable the asset manager to form an opinion as to any inside information or its impact on share price. If a project-specific insider has in place a so-called consultative asset management agreement, whereby the insider takes the final investment decisions, he or she must be particularly careful so as not to disclose project-specific inside information to the asset manager.
8. SANCTIONS
8.1 Administrative sanctions
Pursuant to the Finnish Act on the Financial Supervision Authority, acting in violation of insider legislation may entail sanctions of an administrative nature. These sanctions comprise a public objection and a public warning. In addition, one may incur administrative fines, whenever a public warning is not deemed to constitute an adequate sanction. For a legal person, the amount of a set of administrative fines ranges from EUR 500 to EUR 200,000 (however, not exceeding 10 per cent of that legal person's annual revenue, as evidenced in its latest approved annual accounts). For a natural person, a set of administrative fines ranges from EUR 100 to EUR 10,000. Such administrative fines are imposed by the Market Court, upon application to such effect by the Finnish Financial Supervision Authority.
Neglecting the obligation of a Public Insider to declare holdings may entail an administrative fixed penalty. For a legal person, the amount of an administrative fixed penalty ranges from EUR 500 to EUR 10,000 and for a natural person, from EUR 100 to EUR 1,000. Such penalties are imposed by the Finnish Financial Supervision Authority.
8.2 Criminal sanctions
Furthermore, misuse of inside information is sanctioned by virtue of the Finnish Penal Code (Chapter 51, Section 1 thereof), whenever the person in question has sought economic gain for himself or for a third party, provided further that wilfulness or gross negligence was involved.
In more serious cases (Chapter 51, Section 2 of the Penal Code), a person may be punished for gross misuse of inside information whenever he or she seeks to gain significant economic or personal benefit, one is taking advantage of his or her position in the organisation of the Company or its group companies, or the act is carried out intentionally and is deemed to be of a serious nature.
According to the law, even an attempt to misuse inside information is punishable.
The sanctions under the Penal Code include a fine or imprisonment for up to two (2) years or, if the act is gross, imprisonment for no less than four (4) months and no more than four (4) years.
8.3 Other consequences
In addition to the above-mentioned sanctions, note that a breach of insider regulations and/or these Insider Rules may also constitute a breach of an employment contract or another offence.
9. ADMINISTRATION OF INSIDE MATTERS
The Insider Officer at the Company is Maire Laitinen. It is her duty to provide internal instructions and training in insider matters and to supervise the level of insider management in general.
Currently, the Registrar who will receive the Basic Declarations and the Amendment Declarations from insiders, is Maire Laitinen.
The Insider Officer will be pleased to provide further information.
Attachments: Forms of declaration, as approved by the Finnish Financial Supervision Authority (www.rahoitustarkastus.fi)
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