Questions & answers about owner-registered accounts
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The Swedish National Debt Office (Riksgäldskontoret)
Owner-registered account
1) What is the difference between having securities in a custody account or in an owner-registered account?
In Sweden there are two ways in which investors may deposit their securities:
- by registration as an individual holder of an owner-registered account, which means that the securities account is in the name of the account holder, or
- by placing them in a custody account with a nominee (a bank or broker) who in turn is affiliated to Euroclear Sweden. Nominees can choose how to register the investor's securities in the vpc system. They can collect all their clients' holdings in an account at Euroclear Sweden in the name of the nominee and then maintain a register of their individual clients in their own custody account system. Alternatively, they may choose to register their clients in the vpc system as owner of an account known as a service account.
No matter whether the investor has an owner-registered account or a custody account, it is always the bank or broker who handles changes and updates in the holdings or other information.
2) What securities can be registered in an owner-registered account?
The most common securities in owner-registered accounts are shares, warrants and various types of bonds.
3) What is the fee for holding an owner-registered account?
One owner-registered account can be held free of charge; however, Euroclear Sweden charges an annual administration fee for each additional account. The fee is charged for additional accounts with a holding on 31st December each year. Euroclear Sweden does not charge anything for collateral accounts or "non-cash accounts" that are opened as a result of corporate actions.
The administration fee is charged due to the extra work involved in administrating more than one owner-registered account. An example of this is that Euroclear Sweden sends an annual statement for each owner-registered account.
Owner-registered account holders who would like to consolidate all of their holdings into one owner-registered account should contact the account operator, i.e. the bank or securities broker with whom their owner-registered account is registered.
4) What transactions are used to open an owner-registered account?
When a new owner-registered account is to be opened there are two different transactions to choose between.
KKON - Register a new account for a private individual.
KKJN - Register a new account for a legal entity.
5) What is an income account?
When an account operator, i.e. a bank or a broker, opens an owner-registered account it is mandatory to indicate a bank account or plusgiro account into which dividends, interest, and premium bond winnings will be paid. This account is called an income account.
6) What is a conversion account?
In October 1990, printed share certificates where replaced by a book-entry system at Euroclear Sweden. Today, shares are registered in owner-registered accounts. During the conversion, Euroclear Sweden did not know what account operator, i.e. a bank or a broker, the investor wished to retain. Therefore, their shares were placed in a temporary owner-registered account, known as a "conversion account".
As long as the shares are in the conversion account, the investor does not have access to them and cannot sell them. Dividends are paid out via a bankgiro check.
In order to transform the conversion account into a normal owner-registered account, the investor must select an account operator to handle the account on his/her behalf. The account operator can then facilitate and ensure payment directly into the investor's income account. In order to transform the conversion account into a normal owner-registered account the account operator should use the transaction KKBU.
7) Who handles registrations in the VPC system?
The account operator, i.e. a bank or broker, is the institute which is retained to handle the investor's owner-registered account. It is the account operator which registers all information on the owner-registered account.
For information regarding the owner-registered account, the investor should contact his/her account operator.
8) Is it possible to hold an owner-registered account together with someone else?
Several people can jointly own the holding on an owner-registered account, known as a Joint Owner Account. A joint owner account is opened and closed by the account operator, i.e. the bank or broker. A list of all joint owners shall be given to the account operator when the account is opened and will be filed by them. Euroclear Sweden does not receive this information when the account is opened.
The representative of the joint owner account will receive all notices of changes on the account. In January each year, Euroclear Sweden sends an annual statement to the representative.
In cases where Euroclear Sweden has not received information about the joint owners, the representative will receive a form where he/she can register three joint owners. If the number is larger it is possible to copy the form. Please notice that if the requested information is not delivered or is inadequate, the representative will be reported as the single owner to the Swedish Tax Authority.
In cases where Euroclear Sweden has received information about the joint owners, the representative will receive a printed statement. If the statement is correct and still valid, there is no need for the representative to send the form to Euroclear Sweden. If the statement is incorrect and the representative wants to change something (e.g. an address, percentage shares), to register new joint owners and/or remove no longer current joint owners, he/she needs to send the correct information before the given deadline.
When Euroclear Sweden has registered the distribution of the holding, the information will be reported to the Swedish tax authority for each joint owner. In March, each joint owner will receive an annual statement and a statement about their share of the holding.
Euroclear Sweden assesses an annual administration fee for Joint Owner Accounts, the fee is charged due to the extra work of registering the joint owners and reporting it to the Swedish tax authority.
Change in holding
9) How does the owner-registered account holder buy and sell securities?
If an owner-registered account holder wishes to buy and sell securities, the easiest way to do so is via the bank or broker which is the account operator for the investor's owner-registered account. The owner-registered account holder can also provide a different bank with a power of attorney to sell for him/her. A sell/buy order is submitted to the account operator which the owner-registered account holder wishes to retain.
Euroclear Sweden does not transact any purchases or sales of securities. Neither does Euroclear Sweden have any information regarding buy or sell payments. Only the account operator has this information.
10) What is a contract note?
The owner-registered account holder will receive a contract note from his/her account operator, i.e. a bank or broker, the day after a transaction. The contract note shows, among other things, at what bid/ask price the transaction was made, and payment date. Information regarding the amount paid is not registered in the owner-registered account. Only the account operator has this information.
11) What does payment date mean?
The payment date is the day on which the change in holdings is registered in the owner-registered account and the owner-registered account holder makes or receives payment. The payment date is therefore sometimes called the book entry day. Euroclear Sweden sends out a receipt to confirm the change the day after the payment date.
12) How does an owner-registered account holder sell securities privately?
If the owner-registered account holder wishes to sell securities on his/her own, the seller and the buyer should reach an agreement. This agreement will state the price for the transaction and the payment date. The agreement and a transfer request are presented to the account operator, i.e. a bank or a broker, which registers the securities transfer from the seller's owner-registered account to the buyer's.
Share issues
13) How does the owner-registered account holder subscribe for shares in a new share issue?
In order to participate in a new share issue the owner-registered account holder must be registered as an owner on the record day. The record day is stated in the public announcement of the new share issue from the company. The owner receives a prospectus and an accounting report with a payment slip and a notice which confirms subscription rights ("TR" in Swedish) registered in the owner-registered account.
Owner-registered account holders, who wishes to exercise their subscription rights and purchase more shares in the company, must pay for the new shares using the payment slip. Owner-registered account holders, who only wish to exercise some of the subscription rights, must contact one of the issuing banks stated in the prospectus. Sometimes, an application form is enclosed on which the owner-registered account holder can fill in how many of the subscription rights he/she wishes to exercise. The owner-registered account holder then only pays for the rights exercised.
The issuing bank deducts the subscription rights from the owner-registered account and instead books paid-up subscribed shares ("BTA" in Swedish) in the owner-registered account. When the issue is completed the paid-up subscription shares are replaced in the owner-registered account with the shares ("AK" in Swedish).
The owner-registered account holder can sell his/her rights instead of exercising them. The account operator, i.e. a bank or a broker, helps the owner-registered account holder to sell the rights.
If the owner-registered account holder does not exercise or sell the subscription rights during the subscription period, normally the subscription rights are removed from the owner-registered account without the owner-registered account holder receiving any compensation.
14) What does the owner-registered account holder need to think about in the event of a bonus issue or split?
In the event of a bonus issue or split the owner-registered account holder does not need to do anything. The owner-registered account holder will receive a notice that confirms that he/she has received the new shares or any fractional scrip certificate ("DR" in Swedish) in the owner-registered account.
15) What happens when a company wishes to purchase a company in which the owner-registered account holder hold shares?
In the event of a takeover bid the owner-registered account holder will receive a prospectus, application form, and often a report showing what shares are covered by the offer and how many of these he/she holds. The prospectus contains the price which the owner-registered account holder will receive for his/her shares. If the owner-registered account holder decides to accept the offer, he/she should return the application form to the issuing bank that is handling the takeover. The issuing bank reserves the owner-registered account holder's shares in a special "non-cash account" during the takeover period. The owner-registered account holder will receive notice showing this registration in the non-cash account. At the end of the application period the owner-registered account holder will receive a receipt showing the withdrawal from his/her non-cash account. The issuing bank handles the payment.
If the owner-registered account holder rejects the offer and the acquiring company acquires 90% of the shares, it can in certain case in accordance with a special procedure, buy out the owner-registered account holder's shares. In other words, when the acquiring company holds more than 90% of the shares they can acquire the other 10%. This is usually called a compulsory redemption. The value of the shares is determined by arbitration or a court.
If the acquiring company decides not to complete the purchase, the owner-registered account holder's shares are restored to their original owner-registered account by Euroclear Sweden.
Dividends
16) Dividends, who gets them and when?
As a shareholder in a Swedish company one normally receives dividends once a year. The amount of the dividend is determined at the shareholders meeting.
If the owner-registered account holder is registered as a shareholder on the record date he/she is entitled to the dividend. The record day for dividends occurs three bank days after the shareholders meeting. Dividends are paid out three bank days after the record day if the dividend is in Swedish crowns. If the dividend is in euros, the disbursement day is the fifth banking day after the record day.
17) What about interest payments?
Most interest-bearing securities, for example debentures and subordinated debenture, have interest payments during the term of the security.
The person registered as the owner of interest-bearing securities on the record day is entitled to interest.
Often, the interest is determined in advance and paid out 1-4 times per year. The record day for interest occurs on the fifth bank day prior to the disbursement date.
Securities known as "zero coupons" pay no interest during the term. The accumulated interest is part of the amount paid back upon maturity.
18) How can the owner-registered account holder monitor winnings on premium bonds, registered in an owner-registered account?
Premium bonds are registered in Euroclear Sweden, commencing with bond no. 1, 1996.
It is no longer necessary for the owner-registered account holder to monitor winnings on these premium bonds since the winnings are automatically paid into the income account connected to the owner-registered account. Winnings are paid out four bank days after the lottery draw.
Owner-registered account holders who have won a prize, will receive a winnings receipt showing the winning number.
First the owner-registered account holder should check which series and serial number he/she holds and can then, using the link to the Swedish National Debt Office (see "Links"), receive information on the same day whether or not the bond has won.
Shareholders meeting
19) What should an owner-registered account holder do who wants to participate in a company's shareholders meeting?
In order to participate in a shareholders meeting one must be listed in the register of shareholders which is compiled ten days prior to the shareholders meeting.
Investors who have shares registered in an owner-registered account will automatically be listed in the register of shareholders. Anyone whose securities are held in a custody account must, in due time prior to the shareholders meeting, notify the account operator, i.e. a bank or a broker that he/she wishes to participate in the meeting. Everyone must also notify the company that they will be attending the meeting. How to provide notification is set forth in announcements or notices from the company.
20) How many days prior to the record date must the owner-registered account holder purchase shares in order, for example, to be listed as the owner on the date of the shareholders meeting?
The number of days between the trade dates, in other words, the date when the transaction takes place on the Stockholm Stock Exchange, and the record date is determined by the trading time schedule for the executing of trades. At present, this is three bank days between the trade date and the record date. The owner-registered account holder must therefore buy the shares three days before he/she will be formally listed as the owner in Euroclear Sweden's register.
Notifications and annual statement
21) Who sends out notifications and when does the owner-registered account holder receive them?
Euroclear Sweden sends out notifications to the owner-registered account holder as soon as any changes occur in the owner-registered account. Notifications are sent by Euroclear Sweden but the account operator, i.e. a bank or a broker, is listed as the sender.
Any questions concerning the notifications should be addressed to the account operator.
22) Will the owner-registered account holders receive an annual statement of securities holdings prior to filing the tax return?
In January each year Euroclear Sweden sends out an annual statement to all owner-registered account holders who had securities holdings registered in their owner-registered account on 31 December and/or received dividend/interest in the previous year. The annual statement is sent out well in advance of the filing date.
The annual statement shows the holdings recorded as of 31 December, payments made during the year, as well as the year-end value (assuming that Euroclear Sweden has received this information). The annual statements are sent by Euroclear Sweden but the account operator, i.e. a bank or a broker, is listed as the sender. The annual statement shows the telephone number and the address of the account operator. Via the transaction KKKU it is possible for the account operator to update information concerning address and telephone number to the account operator.
Euroclear Sweden also submits a statement of earnings and deductions to the Swedish tax authority. The statement of earnings and deductions sets forth the securities holdings as of 31 December. Dividends received, interest, certain redemption amounts, and withheld preliminary tax during the year are also reported. In many cases, the owner-registered account holder can thus use a simplified tax return. It is generally only when the owner-registered account holder has bought or sold securities during the year that this must be specified on a separate appendix to the tax return.
