The FCA Primary Market Bulletin 52 (PMB 52) provides guidance for listed companies on the
application of the UK Market Abuse Regulations (MAR).

PMB 52 highlights recent observations from the FCA’s live market monitoring and considers:

1. Issuers’ ability to identify and make public information that is inside information under MAR;
2. Dissemination of information during shareholder calls and meetings; and
3.  Dissemination of regulatory information during interruptions to Primary Information Provider
   (PIP) services.

 

1) Identifying Inside Information

The FCA has noticed differing approaches by issuers in identifying when information may constitute
inside information, and has specifically identified the following circumstances:

• Offer processes: The FCA emphasises the importance of identifying price-sensitive
  information during an offer process and ensuring timely disclosure. This includes information
  on the terms of the offer, the financial forecasts of the target company, and any material
  changes to the offer. Under MAR and related case law, information is considered “precise” if it
  indicates a specific event or circumstance that may or may not happen in the future, but is more
  likely than a “fanciful chance”. The FCA suggests that information about a potential takeover
  offer may be considered inside information even before it is formally considered by the board.
  It should also be noted that disclosure obligations pursuant to MAR may arise even if a matter
  is not required to be disclosed under the UK Takeover Code.

 

• Preparation of periodic financial information: The FCA highlights that information may
  become inside information during the preparation of periodic financial information. This includes
  preliminary results, material changes to the financial position, and any significant events that
  could impact the financial performance. The FCA refers back its guidance in Technical Note
  506.2 on the classification of periodic financial information, in which it emphasised that issuers
  should assess this, on an ongoing and case-by-case basis, commencing with the assumption
  that information relating to financial results could constitute inside information. Where the
  information could be of a precise nature such that it constitutes inside information at an early
  stage, the information should be disclosed in scheduled results announcements as soon as
  possible. Delayed disclosure of inside information is permitted under Article 17(4) of MAR, but
  only applies in specific limited circumstances. Non-disclosure of information by offsetting
  negative and positive news is not acceptable.

 

• CEO resignations and appointments: The FCA notes that information about CEO
  resignations and appointments can be considered inside information, especially if it is
  unexpected or involves a significant change in the company’s strategy or direction. In addition,
  if there is continuous press speculation on succession, the issuer may need to carefully
  consider whether this constitutes a leak. The FCA notes that issuers should carefully and
  continually assess the point at which developments concerning the succession process
  constitute inside information on a case-by-case basis.

The FCA sets out a number of actions issuers can take to help them to identify inside information,
including:

• Establishing a disclosure committee tasked to determine and advise when information meets
  the threshold for inside information, and to determine the timing and content of announcements;

 

• ensuring that key personnel can make announcements outside of normal reporting timetables
  and absent a formal disclosure committee;• training relevant employees, including those in the finance function to enable them to recognise
  when inside information meets the threshold;

 

• ensuring that information classified as inside information is promptly controlled and managed,
  through the maintenance of insider lists; and

 

• documenting reasons why information was classified as inside information or, where there was
  consideration and conclusion that it was not, documenting those reasons.

2) Dissemination of Information During Shareholder Calls and Meetings

The FCA highlights that while communication applications and calls allow smaller shareholders to
engage with management, they also pose risks of sharing confidential, non-public, or price-sensitive
information.

The following are steps that issuers can take to limit the risk of unlawful disclosure:

• ensure that individuals participating in calls and meetings are aware of their obligations under
  MAR and avoid discussing price-sensitive information with unauthorised individuals;

 

• during calls and meetings, issuers should avoid making statements that could be interpreted
  as price-sensitive or misleading. They should also be cautious about answering questions that
  may require the disclosure of inside information;

 

• after calls and meetings, issuers should review any materials distributed or discussions held to
  ensure that they comply with MAR; and

   

• avoid scheduling calls or communicating during closed periods where information involved with
  the preparation of financial reports could potentially constitute inside information.

3) Dissemination of Regulatory Information During Interruptions to PIP Services

The FCA addresses situations where issuers publish regulated information on their respective websites
despite the corresponding regulated information not being released via the PIP as a result of an outage.
PMB 52 refers to PMB 37, in which it was stated that it was a risk for an issuer to itself disclose
information on its website, on the assumption that it had been disseminated to the market by its PIP.
Such action can inadvertently be unlawful disclosure.

The FCA provides actions for issuers to consider so they can be prepared in the event of a PIP outage,
as follows:

• Have alternative channels in place to disseminate regulatory information in case of a PIP
  outage. This could include their own website or social media channels;

 

• Consider setting up a second PIP account which can be used when the first PIP account service
  is interrupted;

 

• Ensure that any regulatory information disseminated through alternative channels is done so
  promptly and in a clear and concise manner; and

 

• Confirm that regulatory information has been successfully disseminated through alternative
  channels and be prepared to provide evidence of this to the FCA, if necessary.

For any advice on MAR and/or other continuing obligations of listed companies, contact the
Druces’ Capital Markets team or complete the form below to connect with our specialists