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Disclosure of inside information - Coggle Diagram
Disclosure of inside information
MAR implemented a common EU approach for preventing and detecting market abuse and ensuring a proper flow of information to the market and introduced a significant increase in record keeping and reporting requirements
As part of the BREXIT arrangements, MAR was onshore, amended and referred to as UK MAR
The primary obligation of companies under UK MAR continues to be the control and disclosure of inside information and dealing by PDMRs
Investment firms have additional responsibilities to monitor and report investment transactions and suspicious activities for the prevention of market manipulation and other fraudulent activity
UK MAR works in tandem with UK DTR and these have been update to reflect changes introduced by UK MAR
DTR 4 an 6 apply to listed shares on a RIE while DTR 5 applies to companies with shares listed on a RIE or on a prescribed market
The ability to share inside information with those owing a duty of confidetnatility can only be relied on where the recipient needs that information to provide services or advice to the company
Where a selective disclosure has been made, a holding announcement should be prepared for release as soon as possible in the event of a leak
Any holding announcement should contain as much detail on the subject matter as possible, the reasons why a fuller announcement cannot be given and an undertaking to announce further details as soon as possible
Under MAR 17
Companies must publish inside information via an RIS that directly concerns them as soon as possible and must post and keep on its website for five years copies of all inside information publicly disclosed
Disclosure of inside information may be delayed if
Immediate disclosure is likely to prejudice the company's legitimate interests
Delayed disclosure is unlikely to mislead the public
The company can ensure the information remains confidential until it is disclosed
Where a disclosure has been delayed the company must notify the FCA of that fact immediately after the information has been disclosed and provide an explanation is requested
Inside information is information that is precise, has not been made public, relates directly or indirectly to the company and if made public is likely to have a signficiant effect on the price of the company's shares or securities (that is information that a reasonable investor would be likely to use as part of the basis of their investment decisions)
Other than in situations where the recipient owes a duty of confidentiality, where a company or a person acting on its behalf discloses inside information to a third party, in the normal course of employment or profession there must also be a complete public disclosure of that information, simultaneously in the case of a planned decision or as soon as possible in the case of non intentional disclosure
Companies should have a framework for the control of inside information and establish effective arrangements to restrict access to inside information to those persons who require access to perform their job. A company should maintain insider lists in relation to employee and advisers with access to inside information
Companies must have a deal specific or event based lists and may have a permanent insider list
To be entered on a permanent insider list the individual will be assumed to have access to all inside information at all times. As a result, any permanent insider list is likely to be very short
Deal specific or event based insider lists must be kept in electronic form, must adhere to the format laid down by the regulations, must be retained for five years and must be capable of being produced to the FCA as soon as possible on request
The minimum content for the insider lists is
Identity of each person with access to the information
Reason why the person is on the insider list
Date and time that person obtained access to the information
Date on which the insider list was drawn up
Date and time of any change in the reason for inclusion on the insider list
Date and time any new person is added to the insider list
Date and time when a person ceases to have access to inside information
All insiders must acknowledge in writing their legal and regulatory duties and that they are aware of the sanctions applicable to insider dealing and unlawful disclosure of inside information
Disclosure committee
Although not mandatory, companies are recommended to establish a disclosure committee in particular to manage the process where disclosure is being delayed
The establishment of a disclosure committee is increasing
There must be a formal internal process and clarity on who is responsible for taking decisions on disclosure or delaying disclosure of inside information
Companies are expected to have in place appropriate procedures and arrangements ensuring the process for delaying disclosure of inside information is managed effectively and documented
This includes an effective level of organisation and process to assess whether information is inside information and whether disclosure is permitted to be delayed, including appointing persons within the issuer responsible for taking relevant decisions
Ongoing monitoring is essential during the period of delay to ensure that the conditions for permitting the delay and assessing the continuing confidentiality of the information are being fufilled