FCA consultation on amending guidelines on delay in the disclosure of inside information
Joint response by the Law Society and the City of London Law Society
In November 2016 the Financial Conduct Authority (FCA) consulted on implementing the European Securities and Market Authority's (ESMA) Market Abuse Regulation (MAR) guidelines on delay in the disclosure of inside information.
Inside information is information that’s known within a company, or among the partners in a particular transaction, but hasn’t been made public. Under the MAR, entities must disclose this information as soon as possible so that investors can make informed decisions.
Issuers are allowed to delay disclosing inside information in certain circumstances, for example:
- if the disclosure would jeopardise any negotiations the issuer is conducting
- where the financial viability of the issuer is in serious danger and disclosure could jeopardise its recovery.
We disagreed with the FCA's interpretation of the guidelines where it doesn’t allow issuers to delay disclosure of inside information when the issuer is in financial difficulty but allows them to delay disclosure of the details of its negotiations to deal with the financial difficulty.
We noted that in practice, disclosing financial difficulty is generally going to be more likely to jeopardise any negotiations to ensure the issuer's financial recovery than disclosing the fact that those negotiations are underway.