Like under the existing Market Abuse Directive (MAD), the new Market Abuse Regulation (MAR), which commences on 3 July 2016, requires issuers to inform the public, as soon as possible, of inside information directly concerning that issuer. For an overview of the definition of “inside information”, please see our article here. In disclosing this inside information, the issuer must:
- Ensure that the information is made public in a manner which enables fast access and complete, correct and timely assessment of the information by the public
- Not combine the disclosure of inside information to the public with the marketing of its activities
- Post and maintain the information on its website for a period of five years
While MAR does not bring about a change in this regard for issuers of securities currently admitted to trading on a regulated market such as the Main Market of the Irish Stock Exchange, by virtue of the extended scope of MAR, the obligation to disclose inside information will apply for the first time to those issuers of securities traded on multilateral trading facilities, including the Irish Stock Exchange’s ESM and GEM and the London Stock Exchange’s AIM.
Can issuers justify delaying the disclosure of inside information?
MAR provides that issuers may legitimately delay disclosure of inside information to the public provided all of the following conditions are met:
- Immediate disclosure is likely to prejudice the issuer’s legitimate interests.
- Delay of disclosure is not likely to mislead the public.
- The issuer is able to ensure the confidentiality of the information.
The European Securities and Markets Authority (ESMA) has proposed draft guidelines relating to the circumstances in which an issuer can delay disclosure of inside information to the public. These include when the issuer is in negotiations (for example, relating to an acquisition) where the outcome of such negotiations would be jeopardised by immediate public disclosure of the information.
The circumstances in which disclosure may be delayed have not changed from the position under MAD. However, for the first time, MAR requires that where disclosure of inside information to the public is delayed, issuers must inform the Central Bank of Ireland (or other relevant competent authority) that disclosure was delayed and provide a written explanation of how the conditions set out at (1) – (3) above were satisfied.
ESMA has also published draft technical standards which, if adopted by the European Commission, will place an onerous requirement on issuers to keep detailed records relating to the decision to delay the disclosure of inside information. Such records would require details on:
- The dates and times when the inside information first came into existence and when the decision to delay disclosure was made.
- The identity of the persons responsible for the decision to delay disclosure.
- Evidence of the initial satisfaction of the conditions permitting delayed disclosure.
Practical tips
Issuers who are currently subject to MAD should undertake a review of their current practices relating to the disclosure of inside information and assess whether they satisfy the provisions set out in MAR. In particular, they should ensure that their current practices on the making of decisions regarding the delay of the disclosure of inside information and their record of keeping such decisions are compliant and enable them to disclose the required details of the decision-making to the Central Bank (or other relevant competent authority).
Issuers who will become subject to MAR for the first time should familiarise themselves with the provisions with regard to disclosure of inside information. They must be able to readily identify inside information, when it needs to be disclosed and when its disclosure may legitimately be delayed. They must ensure adequate records of all such matters are maintained and arrange internal training for relevant executives and employees on the practices.
Contributed by Susanne McMenamin and Niall Keane
