Updated UK Rules on Short Positions in Certain Derivatives

In June of this year, the UK Financial Services Authority (FSA) amended its Code of Market Conduct to require holders to disclose short positions of 0.25% or more of an issuer’s share capital where the issuer’s securities are listed on an exchange (except AIM) and where the issuer is undertaking a rights issue. In addition, in July, the FSA released the result of a study on current disclosure of derivative holdings, concluding that certain derivative long positions must be reported at a 3% holding. Final rules are expected early in 2009.

A few highlights on the UK rules:

-- 3% holdings in voting rights must be disclosed;

-- transactions in securities, where the issuer is under a takeover offer, by any person who holds gross long derivatives on 1% of those securities must be disclosed;

-- open net short positions of 0.25% or more of a listed company (excluding AIM-listed companies) which is undertaking a rights issue must be disclosed.

New Limits on International Securities Offerings by Russian Issuers

The Russian securities regulatory body (a/k/a FSFR, Russian: Федеральная служба по финансовым рынкам) issued an executive order on June 5th, 2008 updating the existing restrictions for Russian issuers regarding placement of equity securities outside of Russia. The rules also apply to offerings of depositary receipts. They are effective as of July 24, 2008.

Per the updated rules, any Russian issuer can have no more than 30% of its equity securities offered on non-Russian markets. More importantly, certain industries are deemed "strategic" and issuers operating in such industries are subject to even stricter limitations. Companies that develop natural resources of national significance (which would presumably include all oil & natural gas producers) can have no more than 5% of their authorized capital offered overseas. Issuers in other strategic industries are subject to a higher, but nonetheless restrictive limitation of 25%. The definition of "strategic" given by FSFR is rather expansive and could be interpreted to cover a number of less important businesses.

Time will show how the FSFR will approach the enforcement of its new rules.

For the complete text of the amended rules (in Russian), search under “Положение о порядке выдачи ФСФР разрешения на размещение и (или) обращение эмиссионных ценных бумаг российских эмитентов за пределами Российской Федерации” .

SEC Proposed Revisions to Cross-Border Tender Offer and Business Combination Rules

The U.S. Securities and Exchange Commission has recently proposed revisions to the rules governing cross-border tender offers, business combinations and rights offerings involving foreign private issuers. The purpose of the proposed rules is to codify existing no-action letter relief and to reduce the regulatory conflict between the U.S. and non-U.S. securities regimes governing cross-border transactions. The full text of the proposed rules is available at:

http://sec.gov/rules/proposed/2008/33-8917.pdf