The Market Abuse Regulation (MAR) requires an issuer to inform the public as soon as possible of inside information which directly concerns that issuer (Article 17(1)). An issuer, may, on its own responsibility, delay disclosure to the public of inside information provided that all of the following conditions are met:
- immediate disclosure is likely to prejudice the legitimate interests of the issuer;
- delay of disclosure is not likely to mislead the public; and
- the issuer is able to ensure the confidentiality of that information.
ESMA has published guidelines to establish a non-exhaustive indicative list of legitimate interests of issuers that are likely to be prejudiced by immediate disclosure of inside information and situations in which delay of disclosure is likely to mislead the public.
Periodic financial information
An area of considerable debate since MAR came into force is whether periodic financial information is inside information. The draft guidance notes the following:
- when preparing periodic financial reports, issuers should exercise judgement and conduct, in good faith, an assessment, on an ongoing and case-by-case basis on whether the information they hold is inside information;
- they should start from the premise that the information relating to financial results could constitute inside information and they should not always assume that the information will always or never constitute inside information;
- a further example, in addition to the ESMA guidelines, on when immediate disclosure would be likely to prejudice the legitimate interests of an issuer is “if an issuer is in the process of preparing a periodic financial report and immediate public disclosure of information to be included in the report would impact on the orderly production and release of the report and could result in the incorrect assessment of the information by the public”;
- issuers should assess on an ongoing and case-by-case basis the extent to which the delay of disclosure is likely to mislead the public and if it will, disclosure cannot be delayed. Issuers should refer to the ESMA guidelines; and
- issuers should maintain written records when delaying disclosure and be able to provide the FCA, upon request, with a written explanation of how the conditions referred to above were met.
Whilst not revolutionary, it is a reminder that periodic financial information falls within the inside information regime, that information in periodic financial information needs to be assessed as to whether it is inside information and that any delay in publishing any inside information needs to fall within the safe harbours.