Updates on SRDII

UniCredit Bank Slovenija d.d.
Disclosure of important SRDII details were made available during the workshop organised by the KDD
Tue, 06/04/2021

On 31 March, the Slovene CSD (KDD) organised a workshop to present the functionalities for the implementation of the SRDII requirements to KDD members. The provided information on SRDII is not yet final due to the fact that KDD Rules and Instructions have not yet been approved.
The KDD provided updates on SRD II developments, including the timeline of market testing and implementation. During the Q&A session, participants had the possibility to further discuss technical and market practice topics. 

The main difference between the EU directive and the implementation in Slovenia is that the latter applies to all issuers and not only the ones listed on the stock exchange.
On the technical side, KDD confirmed it will communicate with its members both via SWIFT ISO 20022 and the proprietary CRVP system.
Another important change in the implementation of SRDII into the local legislation is the clear definition of both “shareholders” and “owners of shares”, shareholders are the final beneficial owners while the owners of shares are financial intermediaries who hold the securities on behalf of undisclosed third parties.
The following represents the main points discussed during the workshop:

       1. General Meetings:

    • Issuers shall provide the required information in the Meeting notice to the KDD in a timely manner and not later than the day of the event announcement, including all cancellations or updates.
    • The meeting notice which is passed down the intermediary chain must contain a link to the issuer’s website with additional information (eg. Agenda, in English text in case of international clients)
    • According to the KDD, the Swift message “Confirmation of Entitlement” is not planned for development. The “Notice of Participation” will be used instead.
    • The KDD will collect the Notice of Participation sent by intermediaries along the intermediary chain and will forward it to the issuer; the deadline for instructing participation will be in line with each specific General Meeting announcement.
    • If the Notice of Participation also includes votes for each resolution separately, the last intermediary in the chain will need to verify that the number of shares for which the notice has been prepared is in accordance with the holdings.
    • The Notice of Participation serves as the confirmation that the shareholder is eligible to participate in the General meeting.
    • The KDD confirmed that Notice of Participation will contain all required information in line with SRDII, including the data on the ultimate beneficial owner (Rights Holder). The KDD will confirm the receipt of messages regarding the transmitted electronic votes immediately via Swift.
    • The issuer does not require entitlement confirmation from the final intermediary in the chain if the entitlement is seen in the share register.

       2. Shareholder identification:

    • Minimum threshold for Shareholders’ identification: not determined by the Companies Act, therefore it is not expected that issuers will define it in their requests.
    • Issuer requests: sent only on the explicit request of the issuer, answers are collected by the KDD with authorization from the issuer. There will be 3 levels of queries:

                  -  For individual fiduciary accounts

                  -  For all member fiduciary accounts

                  -  For all fiduciary accounts in the KDD system (CRVP)

         In line with SRDII, the issuer can also request the information on the continuous holding period of shares (LIFO method).

    • Each intermediary in the chain is responsible for the responsiveness to the requests and for the accuracy of the data.
    • Each intermediary shall forward the response to the KDD without delay, at the latest on  the first working day following the record date or on the day of the receipt of the request.
    • Types of ownership: Each intermediary in the chain responds directly to the KDD (seev.047 or seev.048) with information on the identity of each holder and the number of shares according to the following types of ownership: holding on own account, fiduciary ownership, beneficial holding, or unidentified.
    • The KDD will also be able to collect the responses via the chain of intermediaries. This option only applies in case the foreign intermediary is non-SWIFT capable, thereby resulting in the requested data being transmitted via SWIFT by the next intermediary in the chain.
    • A Shareholder’s identification disclosure request for fiduciary accounts is sent by the KDD on the following dates:

                  a. Before the record date: received by all members
                  b. After the record date: received by members with ISIN holdings on RD 

      3. General:  

    • The KDD is still developing the required functionalities for SRDII implementation.
    • The KDD plans to charge for the provision of SRDII services. Details on the fees to be applied were not yet disclosed at the workshop.
    • Members have asked additional questions and are now waiting for replies from the KDD.  

      4. Timeline:
The new timeline confirmed by the KDD is as follows:

    • Transition to live environment: planned in August 2021 as part of the regular upgrade of the CRVP system.
    • Technical documentation: will be available to KDD members during the second half of June 2021.
    • Testing with members: planned during the second half of June 2021.
    • Draft of updated legal documents (Rules, Regulations and CSD Tariff): planned to be made available to KDD members by the end of May 2021.
    • Effectiveness of updated legal documents is planned following the implementation of SRDII in the live environment in August 2021.
    • Second Workshop for members: to be held at the end of June 2021

Impact on investors: Clients should take note of the additional information provided by the CSD relating to the SRDII implementation.