- Disclosure obligations of bond issuers


Due to the decisions of a number of issuers of bonds admitted to trading on
NASDAQ OMX Iceland hf. (“the Exchange”) not to publish their annual financial
statements, the Exchange would like to reiterate the following: 

Chapter VII of the Act on Securities Transactions No. 108/2007 stipulates
periodic information requirements for issuers. Article 56 of the Act sets out
exemptions from the Chapter's provisions. Under paragraph 2 of Article 56, the
provisions of this Chapter do not apply to an issuer exclusively of debt
securities admitted to trading on a regulated market, the denomination per unit
of which is at least ISK 4.6 million. Amounts under this provision are base
amounts using the exchange rate of the euro (EUR) on 3 January 2007 (92.37).
Assessment of whether the exemption applies must consider whether the
denomination per unit was equivalent to at least EUR 50,000 on the date of the
issue. If this is the case, then the provisions of Chapter VII on periodic
information do not apply. This clarification is based on sub-paragraph (b) of
paragraph 1 of Article 8 of the Transparency Directive (2004/109/EC), on which
paragraph 2 of Article 56 is based. 

Despite the exemption of issuers from periodic information requirements where
the denomination per unit was equivalent to at least EUR 50,000 on the date of
the issue, issuers must nonetheless comply with disclosure requirements under
other provisions of the Act on Securities Transactions No. 108/2007, in
particular Chapter XIII. 

Under Article 122 of the Act on Securities Transactions No. 108/2007, an issuer
shall make public in the European Economic Area all insider information
regarding the issuer as soon as possible and on a non-discriminatory basis.
Under Article 120 of the Act, insider information shall mean (1) sufficiently
precise information that has not been made public, (2) relating directly or
indirectly to issuers of financial instruments, the financial instruments
themselves or other aspects, and (3) which would be likely to have a
significant impact on the market price of the financial instruments (4) if it
were made public, as provided for in further detail in a regulation made
pursuant to Article 131 of the Act. 

An issuer of bonds is under a strict disclosure obligation as regards insider
information. Exemption from the obligation to publish periodic information is
immaterial in this respect. Even when an issuer is not required to make public
its annual financial statements, these could contain insider information that
should be made public. It should be reiterated that payment difficulties do not
exempt an issuer from its disclosure obligations. 

In addition to the provisions of Chapter XIII of the Act on Securities
Transactions No. 108/2007, reference is made to the Rules for Issuers of
Financial Instruments Listed on NASDAQ OMX Iceland (version issued on 1 July
2008), with which issuers have undertaken to comply under an agreement with the
Exchange, in particular the provisions of Section 4 on the disclosure
requirements of bond issuers. 

The objective of these disclosure requirements is to ensure that investors
have, at all times, access to the latest information necessary to form an
opinion of the investment choices offered, cf. Article 4.1.2. 

An issuer must ensure equal treatment of investors as regards access to
information covered by these Rules, cf. Article 4.1.3. This Article is
obviously of major significance in the current circumstances. 

Furthermore, the Rules contain important provisions on on-going disclosure
requirements, particularly on important decisions and events, cf. Article
4.2.1, as well as on information relating to the rights of bond owners, cf.
Article 4.2.2, under which notification must be given of all decisions or
events concerning the rights of bondholders, such as delayed payment of
principal and/or interest. 

From the foregoing, it is clear that the said Article referred to by bond
issuers to justify their non-disclosure of annual financial statements provides
limited scope to postpone or cancel information disclosure on the issuer's
financial performance. 

In light thereof, the Exchange will in the next few days examine and deliberate
on each and every such decision of an issuer in accordance with the Exchange's
procedures for such cases. Subsequently, appropriate measures will be taken as
applicable.