Amendments to Securities Market Act

18.01.2000 TLN

Tallinn Stock Exchange Press Release
January 18, 2000

Tallinn Stock Exchange (TSE) welcomes the amendments to the Securities Market Act adopted by the Parliament on January 18, and considers them a significant positive development for the Estonian securities market.

"These amendments mark a major step towards increasing the transparency, trustworthiness and efficiency of the Estonian securities market, and facilitate our integration with world markets," said Gert Tiivas, the Chairman of the Management Board of the TSE.

The amendments to the Securities Market Act regulate take-overs of public companies. "The lack of such regulation has been one of the most critical shortcomings in securities market regulation so far, reducing investor confidence," Tiivas said.

The law stipulates that a person obtaining a controlling interest in a listed company has an obligation to make a take-over bid to all remaining shareholders. The offeror must ensure equal treatment for all shareholders, and is obliged to follow the take-over rules of the TSE.

According to the law, the detailed regulation of take-over bids will be stipulated by the Exchange and approved by the Securities Inspectorate, the securities market supervisor. The Exchange may block a take-over bid, which is not made in accordance with the Securities Market Act or the TSE Rules and Regulations.

Tallinn Stock Exchange has in principle approved the take-over rules in December 1999. The TSE Supervisory Board will decide when those rules will be effected once approval from the Securities Inspectorate is secured.

The second substantial change in the Act will allow licensed securities intermediaries from the European Union member states to obtain Estonian licenses in simplified manner. From now on the European brokerages no longer need to open a local branch office in order to operate on the Estonian market, thus enabling them to become remote members of the Tallinn Stock Exchange.

"Significantly simplifying the procedure for licensing European investment firms is an important step towards implementation of the principle of free movement of services in Estonia. Removing the barriers of entry for foreign brokers should boost market activity and contribute to Estonia�s reputation of an open economy," said Tiivas.

The third major change in the Act clarifies the definitions for public issue and offering of securities, and also defines the program issue. According to the current law, all individual issues of securities conducted under a program were to be separately registered with the Securities Inspectorate. This was regarded as a major obstacle for development of the market, as the issuers had to go through expensive and time-consuming bureaucratic procedures.

"These amendments are significant for development of a transparent and efficient bond market. They should activate the bond market, giving investors more choices as they can invest in high quality fixed income instruments," Tiivas commented.

The amendments also contain provisions which should increase the effectiveness of the Securities Inspectorate in dealing with insider dealing cases. The amendments to the Act prohibit the use of inside information, and transactions conducted based on such information, and expand the Securities Inspectorate�s rights to obtain necessary information in order to carry out its functions. "Until now the inspectorate has often had to overcome numerous obstacles to gather information it needs to perform its tasks. A qualitative leap towards improving the market supervision would definitely contribute to investor confidence in the market," said Gert Tiivas.

Tallinn Stock Exchange hopes that in addition to the adoption of the current amendments to the law, swift progress will be made on drafting the new Securities Market Act, which is long overdue. The new Act should bring Estonian regulation fully in line with the requirements of the European Union, and meet the needs of the Estonian securities market.

Additional information:

Eva Palu
Head of Investor Relations Dpt
Tallinn Stock Exchange
Tel: +372 64 08 840
e-mail:

Ilze Nagla
Manager of Public Relations Dpt
Riga Stock Exchange
Tel: +371 7212 431

Diana Sokolova
Public Relations Manager
National Stock Exchange of Lithuania
Tel: +370 2 72 38 71