Introduction
MAR mandates that issuers disclose inside information promptly. According to the European Securities and Markets Authority (ESMA), "promptly" means without undue delay once the information becomes known to the issuer. This ensures market transparency, prevents insider trading, and maintains investor confidence.
However, Article 17(4) of MAR allows issuers to delay disclosure under specific conditions. These conditions are designed to balance the need for market transparency with the issuer's legitimate interests. Here’s a closer look at these requirements:
Conditions for Delaying Disclosure
Legitimate Interest
Immediate disclosure can be delayed if it could harm the issuer's legitimate interests. Situations where this might apply include:
- Ongoing negotiations or significant transactions.
- Ongoing research or development projects.
- Pending regulatory approval, such as for new products or capital measures.
- Supervisory Review and Evaluation Process (SREP) decisions or preliminary regulatory information.
Non-Misleading Nature
A delay must not mislead the public. The withheld information should not create a false market scenario or provide an inaccurate representation of the issuer's financial health or prospects.
Confidentiality
An issuer must ensure the inside information remains confidential. This involves strict control measures to prevent leaks, limiting access to only those who need to know.
Expanded Considerations
Market Stabilisation Measures
Actions aimed at market stabilisation could be compromised by premature disclosure. Delaying disclosure can be justified if it supports broader market stability.
Financial Stability
In cases where disclosure might threaten the issuer's financial stability or that of the market, delaying the announcement can be critical.
Public and Economic Interest
Recital 52 of MAR acknowledges that delaying disclosure is justifiable when it serves the wider public and economic interest, outweighing the market's need for immediate information. This provision ensures the regulatory framework supports both market integrity and the issuer's operational considerations.
Compliance and Documentation
When inside information loses its price sensitivity, it no longer falls under the scope of Article 17(4). However, issuers must still comply with MAR obligations, including maintaining insider lists and documenting the reasons for disclosure delays. Detailed records of the decision-making process for the delay must be kept, ensuring transparency and accountability.
Issuers are required to disclose the information once the reasons for delay cease to exist. Adhering to these conditions ensures a balance between regulatory obligations and the issuer's strategic interests, promoting both transparency and practical business considerations.
Conclusion
The procedures and requirements for delaying disclosure under Article 17(4) of MAR highlight the importance of maintaining market integrity while accommodating the issuer's legitimate interests. A clear understanding of these regulations is crucial for compliance and effective information management within financial markets. By meticulously documenting the reasons for any disclosure delay and adhering to ESMA guidelines, issuers can navigate the complexities of MAR effectively, ensuring they meet their regulatory responsibilities without compromising their strategic goals.
Sources:
- European Securities and Markets Authority (ESMA) Guidelines.
- Chambers and Partners analysis on MAR disclosure regulations.
