The new EU Market Abuse Regulation (MAR) will take direct effect across EU member states from 3 July 2016 onwards. It will not only extend the market abuse regime to issuers of securities traded on multilateral and organised trading facilities (ie non EU regulated markets), but will also have an impact on disclosure and record keeping obligations of issuers of securities currently listed on EU regulated markets.
1. Disclosure of inside information – Key Changes
As under the current market abuse framework, issuers will be obliged to inform the public as soon as possible, of inside information which directly concerns that issuer ("ad hoc notice"). Key changes / clarifications under MAR include:
- Disclosure obligations will be extended to issuers of securities traded on multilateral and organised trading facilities (ie non EU regulated markets). In Austria, this will affect issuers of securities listed on the Third Market (Dritter Markt) of the Vienna Stock Exchange;
- Ad hoc notices need to be posted in an easily identifiable section of an issuer's website for at least five years;
- The disclosed inside information needs to clearly indicate date and time of disclosure and must be organised in chronological order;
- Ad hoc notices may not be combined with the marketing of activities.
2. Delay of announcement of inside information – Key Changes
Issuers will still be permitted to delay disclosure of inside information to protect their legitimate interests, as long as the public is not mislead and confidentiality can be maintained. Key changes / clarifications under MAR include:
- Ex post notification to the regulator: when publishing ad hoc notices, issuers must notify the regulator immediately thereafter that disclosure of the information was delayed, rather than ex ante, as per the current framework;
- Written explanation of delay: issuers must be prepared to explain to the regulator how the conditions for delaying publication were met (either automatically, or if national legislation so provides, only upon the regulator's request);
- Internal records: appropriate record keeping of the decision making process that led to the delay of disclosure will be of critical importance. ESMA has published draft technical standards (yet to be adopted by the European Commission) setting out details of the internal records that issuers are expected to maintain where an announcement of inside information has been delayed. Records are expected to be accessible, readable and must be maintained in a durable medium. The prescribed content includes:
- the dates and times when (i) the inside information first existed within the issuer, (ii) the decision to delay announcement was made and (iii) the issuer is likely to disclose such information;
- the identity of the persons responsible for (i) deciding about the start of the delay and its likely end, (ii) ensuring the ongoing monitoring of the conditions for delay, (iii) deciding when public disclosure should be made, and (iv) providing the requested information about the delay and a written explanation to the regulator;
- evidence of the initial fulfilment of the conditions permitting delay. This will include information about any information barriers put in place internally to prevent access to inside information by those persons not entitled to receive it, and the arrangements put in place in cases where confidentiality is no longer ensured.
3. Insider lists – Key Changes
As under the current regime, issuers will be obliged to maintain insider lists documenting details of persons with access to inside information. As of 3 July 2016, insider lists will
- generally also need to be maintained by issuers of securities traded on multilateral and organised trading facilities (ie non EU regulated markets). In Austria, this will affect issuers of securities listed on the Third Market (Dritter Markt) of the Vienna Stock Exchange. However, there are certain alleviating factors for issuers with financial instruments admitted to trading on an SME growth market;
- become more elaborate, as more detailed personal information of insiders will need to be included. This creates an additional burden for issuers when collating such information. The following additional information will need to be documented:
- time (and not only the date) at which a person obtained, respectively, ceased to have, access to inside information;
- birth name of insider (if different to current name);
- professional telephone numbers (direct dial and mobile);
- national identification number (if applicable); and
- personal telephone numbers (home and mobile);
- need to follow the mandatory insider list template prescribed by the European Commission (here). In line with current market practice, insider lists will be split into a "permanent insiders" and a "temporary insiders" section.
With less than two months to go, companies should make sure that adequate processes and policies for identifying, controlling, announcing and delaying inside information, as well as proper record keeping procedures are in place. We will be delighted to guide you through the new framework and related implications for your organisation. Please contact us for further details.
By Ursula Rath, Partner, Schoenherr
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