- Higher transparency requirements and improved investor protection
- Boost for employee share ownership
(Vienna) The Stock Exchange Act Amendment 2018, which transposes the requirements of MiFID II in national law, was promulgated in the Official Gazette of the Republic of Austria. It is due to enter into force on 3 January 2018. The amendment also updates other capital markets legislation such as the provisions on employee share ownership schemes. The aim of the amendment is to increase transparency and improve investor protection, which concerns mainly investment firms. Vienna SE CEO Christoph Boschan welcomed the Amendment: “When all market participants act in concert, it is possible to move things forward in this country – which in turn boosts the appeal of the capital market. Legislators made an effort to ensure that the European Union requirements passed into Austrian capital market laws are as close to market practices as possible.”
Christoph Boschan added: “However, there is still a lot of room for further improvements, such as opening the SME segment on the Vienna Stock Exchange. The Third Market as the entry segment of the Vienna Stock Exchange for smaller companies is unfortunately unavailable to Austrian issuers and needs to be opened up again as a matter of priority. It is particularly in this area that we need a strong partnership with policymakers and will gladly take part in any constructive dialogue.”
MiFID II, the new EU Directive for Markets in Financial Instruments that will take effect at the beginning 2018, was transposed into the Austrian Stock Exchange Act 2018. It will have a significant impact on pre-trade and post-trade transparency requirements for European financial markets. The Directive covers a much larger number of financial instruments than up to now. Its implementation will also involve higher expenses for staffing and IT requirements. Ludwig Nießen, Vienna SE management board member for IT and operations, said “European capital markets and market participants will be facing an enormous technical challenge until 3 January 2018. We will provide assistance to our trading members to help them comply with the regulatory requirements and will expand our systems landscape in line with the new legal framework.”
Other laws of relevance for the capital market were also revised along with the amendment to the Stock Exchange Act. A new form was created for private company foundations, specifically for foundations established as an employee share ownership scheme (Mitarbeiterbeteiligungs-Stiftung) that serves to transfer company shares to employees. A tax-free allowance of EUR 4,500.00 for employees was introduced for this purpose. The provisions in this context were completely revised and made clearer. Employees’ shares can be managed and held in custody by the employee foundation acting as a trustee. The foundation will facilitate the uniform exercise of voting rights to ensure its position as a core shareholder. “Enabling share ownership for all employees through this type of foundation helps to create a strong Austrian core shareholder with an interest in keeping jobs in Austria and creating new ones. Stocks create jobs and added value for the economy – and employees benefit twice from this,” added Boschan.
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