FCA reviews delayed disclosure of inside information


At a glance

A recurring question, for both banks and issuers alike and whether listed on AIM or the Main Market is when can ‘inside’ information be delayed.

The FCA has recently reviewed companies’ compliance under the Market Abuse Regulation (MAR) when they delay notification of inside information and in light of perceived failures is threatening enforcement against issuers. The results, together with further guidelines can be found here. Partner Kieran Stone provides a summary below.

The FCA is increasing its oversight of issuers’ delayed disclosure of inside information (DDII) notifications with a threat of further action for serious or repeated failures. The FCA has highlighted that issuers should consider, in particular:

  • Are they seeking and getting adequate advice regarding disclosure of inside information?
  • Are staff involved in the process suitably trained?
  • Are appropriate information and governance provisions in place?
  • Are the conditions that justify a delay being monitored on an ongoing basis?

In particular the FCA has highlighted concerns around DDII notifications relating to the preparation of both periodic and unscheduled financial information and notification of changes to an issuer’s board.

Overall the FCA has stated its belief that, given the low number of DDII notifications made in the period under review, issuers may not be aware of the requirement to submit a DDII and, given the explicit threat to both monitor and action serious/persistent breaches, this is an area all UK listed companies should have at the top of their agendas.

How does the DDII notification process work?

Under MAR an issuer must inform the public as soon as possible of inside information which directly concerns the company, except in certain very limited circumstances that justify a delay in making that disclosure.

The issuer may, on its own responsibility, delay disclosure to the public of inside information provided that all of the following conditions are met:

  • Legitimate interest: immediate disclosure is likely to prejudice the legitimate interests of the issuer.
  • Not misleading: delay of disclosure is not likely to mislead the public
  • Confidentiality: the issuer is able to ensure the confidentiality of that information.

Provided the conditions above are and continue to be met, disclosure of a protracted process that occurs in stages and that is intended to bring about, or that results in, a particular circumstance or a particular event, may be delayed in this way.

Where the issuer has delayed the disclosure of inside information, it must:

  • Keep an internal record of specified information.
  • As soon as it announces the information following the period of delay, make a DDII notification.
  • If requested by the FCA, provide the FCA with a written explanation of how the conditions for delay were met.

The notification should be made through the FCA’s electronic submission system.  The arrangements will continue to apply once MAR is onshored following the UK’s exit from the EU in 2021.

Learn more

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