This week we look at changes to the regime for delaying the disclosure of inside information to the market, as well as a case of a contract that was found to be unenforceable because it was an "agreement to agree".

New FCA guidance on delaying the disclosure of inside information

The Financial Conduct Authority has amended DTR 2.5 of its Disclosure Guidance and Transparency Rules Handbook to clarify when an issuer may delay the disclosure of inside information to the market under the Market Abuse Regulation ("MAR").


Under Article 17 of MAR, an issuer must disclose inside information to the market as soon as possible. This includes both issuers on the Main Market and issuers on AIM. However, Article 17(4) allows an issuer to delay disclosure if (among other things) it has a "legitimate interest" in doing so.

DTR 2.5 sets out when an issuer has a legitimate interest. ESMA has also published guidelines on legitimate interests. As we mentioned in our update on 28 October 2016, DTR 2.5 is more restrictive than the ESMA guidelines, meaning that, to an extent, the two conflicted with each other.

We mentioned in our update on 1 December 2016 that the FCA was proposing to amend DTR 2.5 to bring it in line with the ESMA guidelines. The FCA has now done this.

Acknowledging the ESMA guidelines

DTR 2.5 now contains a direct reference (in DTR 2.5.1BG) to the ESMA guidelines, noting that those guidelines contain a "non-exhaustive indicative list" of legitimate interests in delaying disclosure.

The FCA has also deleted DTR 2.5.3G, which set out only two of the legitimate interests in the ESMA guidelines, and part of DTR 2.5.5G, which suggested that only those interests would be accepted as reasons to delay disclosure.

These changes should clarify concerns over when an issuer on a UK market can delay the disclosure of inside information and give issuers comfort that they can rely on the ESMA guidelines.

Some restrictions still remain

Despite concerns raised by respondents to its consultation, the FCA has chosen to keep DTR 2.5.4G(1). Broadly, this states that an issuer will not be allowed to delay disclosure of the fact that it is in financial difficulty under the guise of keeping a transaction or negotiation secret.

Respondents had suggested this guidance unduly restricted the ESMA guidelines and went beyond the extent to which the FCA is permitted to provide guidance on MAR. The FCA, however, disagrees, although it has agreed to limit the provision to situations where an issuer is proposing to delay disclosure of inside information relating to on-going negotiations.

Practical implications

These changes are welcome and help to resolve the tricky previous inconsistency between European and domestic guidance on delaying disclosure. In particular, the ESMA guidelines provide more latitude for delaying disclosure of inside information than the FCA Handbook did previously.

However, issuers will need to continue to think carefully before delaying the disclosure of inside information relating to a transaction or deal to ensure they do not inadvertently withhold information about their financial condition that the FCA (and the market) will expect them to disclose.

Court finds option agreement is an "agreement to agree"

In Teekay Tankers Ltd v STX Offshore & Shipbuilding Co. Ltd [2017] EWHC 253 (Comm), the High Court found that an option to purchase ships was an agreement to agree and so was unenforceable.


TT and STX had entered into a contract under which STX would build four ships for TT.

They had also entered into an option agreement, under which TT could require STX to build three more sets of four ships and deliver them to TT. The option agreement stated that the delivery date for those ships "shall be mutually agreed upon", and that STX would "make best efforts" to deliver those vessels within certain timeframes.

A dispute arose. STX argued that the option agreement was uncertain and so unenforceable, because it did not specify dates for delivery of the further ships. TT argued that the court should imply a reasonable date for delivery or hold STX to the date that STX offered for delivery.


The court found that the option agreement was an agreement to agree and so was unenforceable. In particular, it refused to imply the terms that TT was seeking, because they ran contrary to the express words of the agreement ("mutually agreed upon") and the concept that STX was required only to "make best efforts" to find a delivery date.

Practical implications

Although the facts of this case are quite specific, the decision highlights an important general principle.

Contracts sometimes contain provisions requiring some essential element is "to be agreed" by the parties. In this case, that element was a delivery date, but it could equally be a price or quantity of assets, or the identity of an expert or mediator. Joint venture or investment documents may contain drag-along and compulsory purchase provisions requiring a shareholder to sell shares "on terms to be agreed" or on the basis of "customary warranties".

It is important always to be as specific as possible when drafting these provisions. Courts always strive to enforce an agreement where they can, but they cannot do so by implying terms that contradict the contract's express terms. There is always a significant risk that "to be agreed" provisions in a contract will be too uncertain to be enforceable.

The most effective way to address this is to include default stipulations in the contract relating to the item to be agreed on. This is not a commercial panacea. When the time comes, this might give one party an advantage over the other if the default provisions are more favourable to it. However, from a legal perspective, it should at least provide the certainty needed to make the contract enforceable.

Prudential Regulation Committee takes over

On 1 March 2017, the Prudential Regulation Authority (PRA), previously a subsidiary of the Bank of England, handed over responsibility for the exercise of its functions to the Bank of England itself. The PRA's functions will remain the same, but supervisory and policy decisions will be made by the Prudential Regulation Committee (PRC), a specific committee of the Bank.

A list of the members of the PRC can be found in the Bank of England's announcement here.