1An issuer should be aware that matters that fall within the scope of this chapter may also fall within the scope of:

1. (1)

   the market abuse regime set out in section 118 of the Act;

2. (2)

   section 397 of the Act relating to misleading statements and practices;

3. (3)

   Part V of the Criminal Justice Act 1993 relating to insider dealing; and

4. (4)

   the Takeover Code.

The purpose of this chapter is to:

1. (1)

   promote prompt and fair disclosure of relevant information to the market; and [Note: Recital 24 Market Abuse Directive]

2. (2)

   set out specific circumstances when an issuer can delay public disclosure of inside information and requirements to ensure that such information is kept confidential in order to protect investors and prevent insider dealing. [Note: Recital 5 2003/124/EC]

Information is inside information if each of the criteria in the definition of inside information is met.

1. (1)

   In determining the likely price significance of the information an issuer should assess whether the information in question would be likely to be used by a reasonable investor as part of the basis of his investment decisions and would therefore be likely to have a significant effect on the price of the issuer'sfinancial instruments (the reasonable investor test). [Note: Article 1(2) 2003/124/EC]

2. (2)

   In determining whether information would be likely to have a significant effect on the price of financial instruments, an issuer should be mindful that there is no figure (percentage change or otherwise) that can be set for any issuer when determining what constitutes a significant effect on the price of the financial instruments as this will vary from issuer to issuer.

The reasonable investor test requires an issuer:

1. (1)

   to take into account that the significance of the information in question will vary widely from issuer to issuer, depending on a variety of factors such as the issuer's size, recent developments and the market sentiment about the issuer and the sector in which it operates; and

2. (2)

   to assume that a reasonable investor will make investment decisions relating to the relevant financial instrument to maximise his economic self interest.

It is not possible to prescribe how the reasonable investor test will apply in all possible situations. Any assessment should take into consideration the anticipated impact of the information in light of the totality of the issuer's activities, the reliability of the source of the information and other market variables likely to affect the relevant financial instrument in the given circumstances. However, information which is likely to be considered relevant to a reasonable investor's decision includes information which affects:

1. (1)

   the assets and liabilities of the issuer;

2. (2)

   the performance, or the expectation of the performance, of the issuer's business;

3. (3)

   the financial condition of the issuer;

4. (4)

   the course of the issuer's business;

5. (5)

   major new developments in the business of the issuer; or

6. (6)

   information previously disclosed to the market. [Note: Recital 1 2003/124/EC]

An issuer and its advisers are best placed to make an initial assessment of whether particular information amounts to inside information. The decision as to whether a piece of information is inside information may be finely balanced and the issuer (with the help of its advisers) will need to exercise its judgement.

The directors of the issuer should carefully and continuously monitor whether changes in the circumstances of the issuer are such that an announcement obligation has arisen under this chapter.

1. (1)

   Subject to the limited ability to delay release of inside information to the public provided by DTR 2.5.1 R, an issuer is required to notify, via a RIS, all inside information in its possession as soon as possible.

2. (2)

   If an issuer is faced with an unexpected and significant event, a short delay may be acceptable if it is necessary to clarify the situation. In such situations a holding announcement should be used where an issuer believes that there is a danger of inside information leaking before the facts and their impact can be confirmed. The holding announcement should:

   1. (a)

      detail as much of the subject matter as possible;

   2. (b)

      set out the reasons why a fuller announcement cannot be made; and

   3. (c)

      include an undertaking to announce further details as soon as possible.

3. (3)

   If an issuer is unable, or unwilling to make a holding announcement it may be appropriate for the trading of its financial instruments to be suspended until the issuer is in a position to make an announcement.

4. (4)

   An issuer that is in any doubt as to the timing of announcements required by this chapter should consult the FSA at the earliest opportunity.

The FSA is aware that many issuers provide unpublished information to third parties such as analysts, employees, credit rating agencies, finance providers and major shareholders, often in response to queries from such parties. The fact that information is unpublished does not in itself make it inside information. However, unpublished information which amounts to inside information is only permitted to be disclosed in accordance with the disclosure rules and an issuer must ensure that at all times it acts in compliance with this chapter.

To ensure fast access and correct and timely assessment of the information by the public, an issuer should not publish inside information on its internet site as an alternative to its disclosure via a RIS.

1. (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.

2. (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.

1. (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.

2. (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 FSA 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.

1. (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.

2. (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:

   1. (a)

      the issuer's advisers and advisers of any other persons involved in the matter in question;

   2. (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);

   3. (c)

      employee representatives or trade unions acting on their behalf;

   4. (d)

      any government department, the Bank of England, the Competition Commission or any other statutory or regulatory body or authority;

   5. (e)

      major shareholders of the issuer;

   6. (f)

      the issuer's lenders; and

   7. (g)

      credit-rating agencies.

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.

If an issuer is relying on DTR 2.5.1 R to delay the disclosure of inside information it should prepare a holding announcement to be disclosed in the event of an actual or likely breach of confidence. Such a holding announcement should include the details set out in DTR 2.2.9 G (2).

We recognise that an issuer may not be responsible for breach of DTR 2.5.1 R if a recipient of inside information under DTR 2.5.1 R breaches his duty of confidentiality.

Where there is press speculation or market rumour regarding an issuer, the issuer should assess whether a disclosure obligation arises under DTR 2.2.1 R. To do this an issuer will need to carefully assess whether the speculation or rumour has given rise to a situation where the issuer has inside information.

1. (1)

   Where press speculation or a market rumour is largely accurate and the information underlying the rumour is inside information then it is likely that the issuer can no longer delay disclosure in accordance with DTR 2.5.1 R as it is no longer able to ensure the confidentiality of the inside information.

2. (2)

   An issuer that finds itself in the circumstances described in paragraph (1) should disclose the inside information in accordance with DTR 2.6.2 R as soon as possible.

The knowledge that press speculation or market rumour is false is not likely to amount to inside information. Even if it does amount to inside information, the FSA expects that in most of those cases an issuer would be able to delay disclosure (often indefinitely) in accordance with DTR 2.5.1 R.

An issuer and not its advisers or agents is ultimately responsible for the maintenance of insider lists.

For the purposes of DTR 2.8.1 R an issuer should maintain a list of:

1. (1)

   its own employees that have access to inside information;

2. (2)

   its principal contacts at any other firm or company acting on its behalf or on its account with whom it has had direct contact and who also have access to inside information about it.

For the purposes of DTR 2.8.1 R it is not necessary for an issuer to maintain a list of all the individuals working for another firm or company acting on its behalf or its account where it has:

1. (1)

   recorded the name of the principal contact(s) at that firm or company;

2. (2)

   made effective arrangements, which are likely to be based in contract, for that firm or company to maintain (as set out in DTR 2.8.1 R, DTR 2.8.3 R - DTR 2.8.5 R and DTR 2.8.10 R) its own list of persons both acting on behalf of the issuer and with access to inside information on the issuer; and

3. (3)

   made effective arrangements for that firm or company to provide a copy of its list to the issuer as soon as possible upon request.