The Market Abuse Regulation (EU) No 596/2014 ("MAR") entered into force on 3 July 2016. As a follow-up to our more comprehensive Market Abuse Regulation Briefing Note of 22 June 2016, we would like to share some tips based on our conversations with the Finnish Financial Supervisory Authority (the "FIN-FSA") and practical experience gained from the MAR regime.
Insider lists and decision to delay disclosure in protracted insider projects
We have consulted the FIN-FSA on the relationship between (i) the establishment and termination of insider lists and (ii) the decision to delay disclosure and related notifications to the FIN-FSA in protracted insider projects, which may involve disclosure of certain parts of the inside information in question at the various stages of the project when such inside information becomes capable of being disclosed by the issuer, while the insider project as such continues.
As provided in MAR, when inside information arises, the issuer must disclose such inside information to the public as soon as possible in accordance with Article 17(1) or decide to delay disclosure as set forth in Article 17(4). However, MAR does not address disclosure of inside information that may become available to the issuer, or may become capable of disclosure, only at different stages of protracted processes, such as tender offers, capital markets transactions, or acquisitions.
The FIN-FSA has taken the view that the decision to delay the disclosure of inside information relating to one and same insider project has to be made only once, even if the issuer would be able to disclose only parts of the inside information relating to the project to the public when the project is first announced. However, if the issuer has delayed the disclosure of inside information relating to an insider project and discloses certain parts of said information, the issuer has to notify the FIN-FSA of the delayed disclosure in accordance with Article 17(4) of MAR every time such partial disclosure is made to the public, i.e. in practice after each stock exchange release relating to the insider project in question. In the notifications of delayed disclosure to the FIN-FSA, it may be recommendable to indicate that the notification concerns partial disclosure of inside information (e.g. by inserting a note to this effect after the heading of the relevant stock exchange release in the notification form).
If the insider project continues after the partial disclosure of inside information, according to the FIN-FSA, the issuer does not need to make a separate decision to delay the disclosure of other inside information relating to the same insider project. However, the issuer must still ensure that the conditions to delay the disclosure of said other inside information are met and, if needed, update its records regarding such conditions. Absent conditions to delay disclosure, the issuer has to disclose promptly any subsequent inside information to the public.
The issuer can also continue to maintain the insider list drawn up in connection with the establishment of said insider project. The issuer is thus not required to terminate the insider list (and then establish new lists where necessary) when certain parts of the inside information relating to the insider project has been disclosed to the public. However, the issuer must naturally review and update the insider list with any changes whenever necessary.
Stock exchange releases regarding managers' transactions. The FIN-FSA has instructed that the stock exchange release regarding managers’ transactions should be headlined "Oyj Company Abp - Managers’ Transactions" or "Oyj Company Abp: Managers’ Transactions" (in Finnish: Oyj Yhtiö Abp - Johdon liiketoimet" or "Oyj Yhtiö Abp: Johdon liiketoimet"). An easy way to create a stock exchange release regarding a manager's transaction is to fill in the FIN-FSA notification form (available at http://www.finanssivalvonta.fi/fi/Saantely/Saantelyhankkeet/mar/19_artikla/Pages/Default.aspx) and select the "Show/Hide XML" button on the first page header of the form. This function creates a summary of the notification, which can then be easily copied to the issuer's stock exchange release template.
Share-based incentive programs. If the issuer has established a share-based incentive program, such as a performance share plan, the obligation to notify the managers' transactions begins once the decision to issue the shares to the eligible managers has been taken. Merely approving the terms and conditions of and/or the allocation of the shares to be received under such program does not trigger the obligation to notify, unless the decision to issue the shares was also made simultaneously. However, options are treated differently as they are securities in their own right, and any receipt of options must thus be notified and disclosed within three business days of the receipt in accordance with Article 19 of MAR.
Remuneration shares of the managers. If the issuer acquires shares on its managers' behalf, for instance as Board remuneration shares, the managers in question must notify this acquisition to the FIN-FSA within three business days from the acquisition and the issuer must subsequently disclose the acquisition to the public. If the issuer acquires the shares on its own behalf and later issues these shares to the managers, the notification obligation commences when the decision to issue the shares to the managers is made.