In our November 2018 update, we commented on the FCA’s revised draft technical note (TN/506.2). In April 2019, the FCA published the final version and gave feedback on the consultation in the accompanying Primary Market Bulletin (PMB) 23.
The only one change to the draft consulted on is an additional sentence reminding issuers of the third condition for delaying disclosure, which is that the issuer is able to ensure the confidentiality of the inside information.
The feedback in PMB No.23 has some pointers to the FCA’s thinking:
- There is no prescription as to who in a firm should conduct the required ongoing assessment as to whether information arising in the course of preparing accounts is “inside information” as defined in MAR. The FCA say that a board or disclosure committee is not necessarily the best or only body which can take these decisions. “We would expect individuals at other levels in the firm, including the first line, to be well-trained enough to recognise when information may become inside information, and to be able to act accordingly”.
- The FCA say they are clear that “financial results “could” constitute inside information – but equally, they could not.” It is for issuers to assess whether this is the case, on an ongoing and case-by-case basis.
- “Delaying disclosure of inside information should be the exception rather than the rule”. On this basis, the FCA have made no changes to the wording that “in many cases, an issuer will be able to carefully and appropriately draft an announcement that will enable the correct assessment of information by the public”. The FCA refer to the Upper Tribunal’s decision in “Hannam” and state that “there will be circumstances where, practically, it would be very difficult for an issuer to formulate an announcement that does not risk misleading the market. In these circumstances an issuer would be justified in delaying disclosure of the information”. But the FCA go on to say that “such a situation should not be regarded as the default, or even a common situation. In most cases, if an announcement is skilfully drafted with appropriate care and attention, it is unlikely to result in the incorrect assessment of the information by the public”.
If inside information has been identified during the course of preparation of the financial results, and the conditions for delayed disclosure have been met, the announcement should note that the results include inside information and the issuer is required to notify the FCA that disclosure was delayed. It is interesting to note that the financial results containing inside information remains the exception rather than the rule.