DTR 2.5 Delaying disclosure of inside information
Delaying disclosure
An issuer may, under its own responsibility, delay the public disclosure of inside information, such as not to prejudice its legitimate interests provided that:
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(1)
such omission would not be likely to mislead the public;
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(2)
any person receiving the information owes the issuer a duty of confidentiality, regardless of whether such duty is based on law, regulations, articles of association or contract; and
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(3)
the issuer is able to ensure the confidentiality of that information. [Note: Article 6(2) and (3) Market Abuse Directive]
Legitimate interests and when delay will not mislead the public
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(1)
Delaying disclosure of inside information will not always mislead the public, although a developing situation should be monitored so that if circumstances change an immediate disclosure can be made.
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(2)
Investors understand that some information must be kept confidential until developments are at a stage when an announcement can be made without prejudicing the legitimate interests of the issuer.
For the purposes of applying DTR 2.5.1 R, legitimate interests may, in particular, relate to the following non-exhaustive circumstances:
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(1)
negotiations in course, or related elements where the outcome or normal pattern of those negotiations would be likely to be affected by public disclosure. In particular, in the event that the financial viability of the issuer is in grave and imminent danger, although not within the scope of the applicable insolvency law, public disclosure of information may be delayed for a limited period where such a public disclosure would seriously jeopardise the interest of existing and potential shareholders by undermining the conclusion of specific negotiations designed to ensure the long term financial recovery of the issuer; or
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(2)
decisions taken or contracts made by the management body of an issuer which need the approval of another body of the issuer in order to become effective, where the organisation of such an issuer requires the separation between these bodies, provided that a public disclosure of the information before such approval together with the simultaneous announcement that this approval is still pending would jeopardise the correct assessment of the information by the public. [Note: Article 3(1) 2003/124/EC]
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(1)
does not envisage that an issuer will:
DTR 2.5.3 R (1) does not allow an issuer to delay public disclosure of the fact that it is in financial difficulty or of its worsening financial condition and is limited to the fact or substance of the negotiations to deal with such a situation. An issuer cannot delay disclosure of inside information on the basis that its position in subsequent negotiations to deal with the situation will be jeopardised by the disclosure of its financial condition.
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(2)
The legitimate interest described in DTR 2.5.3 R (2) refers to an issuer with a dual board structure (e.g. a management board and supervisory if and to the extent that decisions of the management board require ratification by the supervisory board). An issuer with a unitary board structure would be unable to take advantage of DTR 2.5.3 R (2) and, therefore, DTR 2.5.3 R (2) should only be available to a very limited number of issuers in the United Kingdom.
An issuer should not be obliged to disclose impending developments that could be jeopardised by premature disclosure. Whether or not an issuer has a legitimate interest which would be prejudiced by the disclosure of certain inside information is an assessment which must be made by the issuer in the first instance. However, the FCA considers that, other than in relation to impending developments or matters described in DTR 2.5.3 R or DTR 2.5.5A R1, there are unlikely to be other circumstances where delay would be justified.
1An issuer may have a legitimate interest to delay disclosing inside information concerning the provision of liquidity support by the Bank of England or by another central bank to it or to a member of the same group as the issuer.
Selective disclosure
Whenever an issuer or a person acting on his behalf or for his account discloses any inside information to any third party in the normal exercise of his employment, profession or duties, the issuer must make complete and effective public disclosure of that information via a RIS, simultaneously in the case of an intentional disclosure and as soon as possible in the case of a non-intentional disclosure, unless DTR 2.5.1 R applies. [Note: Article 6(3) Market Abuse Directive ]
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(1)
When an issuer is permitted to delay public disclosure of inside information in accordance with DTR 2.5.1 R, it may selectively disclose that information to persons owing it a duty of confidentiality.
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(2)
Such selective disclosure may be made to another person if it is in the normal course of the exercise of his employment, profession or duties. However, selective disclosure cannot be made to any person simply because they owe the issuer a duty of confidentiality. For example, an issuer contemplating a major transaction which requires shareholder support or which could significantly impact its lending arrangements or credit-rating may selectively disclose details of the proposed transaction to major shareholders, its lenders and/or credit-rating agency as long as the recipients are bound by a duty of confidentiality. An issuer may, depending on the circumstances, be justified in disclosing inside information to certain categories of recipient in addition to those employees of the issuer who require the information to perform their functions. The categories of recipient include, but are not limited to, the following:
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the issuer's advisers and advisers of any other persons involved in the matter in question;
- (b)
persons with whom the issuer is negotiating, or intends to negotiate, any commercial financial or investment transaction (including prospective underwriters or placees of the financial instruments of the issuer);
- (c)
employee representatives or trade unions acting on their behalf;
- (d)
any government department, the Bank of England, the Competition Commission or any other statutory or regulatory body or authority;
- (e)
major shareholders of the issuer;
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the issuer's lenders; and
- (g)
credit-rating agencies.
- (a)
Selective disclosure to any or all of the persons referred to in DTR 2.5.7 G may not be justified in every circumstance where an issuer delays disclosure in accordance with DTR 2.5.1 R.
An issuer should bear in mind that the wider the group of recipients of inside information the greater the likelihood of a leak which will trigger full public disclosure of the information via a RIS under DTR 2.6.2 R.