DTR 2.5 Delaying disclosure of inside information

1. (1)

   Delaying disclosure of inside information will not always mislead the public, although a developing situation should be monitored so that if circumstances change an immediate disclosure can be made.

2. (2)

   Investors understand that some information must be kept confidential until developments are at a stage when an announcement can be made without prejudicing the legitimate interests of the issuer.

2For the purposes of article 17 of the Market Abuse Regulation, legitimate interests may, in particular, relate to the following non-exhaustive circumstances:

1. (1)

   negotiations in course, or related elements where the outcome or normal pattern of those negotiations would be likely to be affected by public disclosure. In particular, in the event that the financial viability of the issuer is in grave and imminent danger, although not within the scope of the applicable insolvency law, public disclosure of information may be delayed for a limited period where such a public disclosure would seriously jeopardise the interest of existing and potential shareholders by undermining the conclusion of specific negotiations designed to ensure the long term financial recovery of the issuer; or

2. (2)

   decisions taken or contracts made by the management body of an issuer which need the approval of another body of the issuer in order to become effective, where the organisation of such an issuer requires the separation between these bodies, provided that a public disclosure of the information before such approval together with the simultaneous announcement that this approval is still pending would jeopardise the correct assessment of the information by the public.

1. (1)

   DTR 2.5.3G(1) does not envisage that an issuer will: 2

   1. (a)

      delay public disclosure of the fact that it is in financial difficulty or of its worsening financial condition and is limited to the fact or substance of the negotiations to deal with such a situation; or2

   2. (b)

      delay disclosure of inside information on the basis that its position in subsequent negotiations to deal with the situation will be jeopardised by the disclosure of its financial condition.2

2. (2)

   The legitimate interest described in DTR 2.5.3G(2)2 refers to an issuer with a dual board structure (e.g. a management board and supervisory if and to the extent that decisions of the management board require ratification by the supervisory board). An issuer with a unitary board structure would be unable to take advantage of DTR 2.5.3G(2)2 and, therefore, DTR 2.5.3G(2)2 should only be available to a very limited number of issuers in the United Kingdom.

An issuer should not be obliged to disclose impending developments that could be jeopardised by premature disclosure. Whether or not an issuer has a legitimate interest which would be prejudiced by the disclosure of certain inside information is an assessment which must be made by the issuer in the first instance. However, the FCA considers that, other than in relation to impending developments or matters described in DTR 2.5.3G2 or article 17(5) of the Market Abuse Regulation2, there are unlikely to be other circumstances where delay would be justified.

1. (1)

   [deleted]2

2. (2)

   Selective2 disclosure cannot be made to any person simply because they owe the issuer a duty of confidentiality. For example, an issuer contemplating a major transaction which requires shareholder support or which could significantly impact its lending arrangements or credit-rating may selectively disclose details of the proposed transaction to major shareholders , its lenders and/or credit-rating agency as long as the recipients are bound by a duty of confidentiality. An issuer may, depending on the circumstances, be justified in disclosing inside information to certain categories of recipient in addition to those employees of the issuer who require the information to perform their functions. The categories of recipient may2 include, but are not limited to, the following:

   1. (a)

      the issuer's advisers and advisers of any other persons involved in the matter in question;

   2. (b)

      persons with whom the issuer is negotiating, or intends to negotiate, any commercial financial or investment transaction (including prospective underwriters or placees of the financial instruments of the issuer);

   3. (c)

      employee representatives or trade unions acting on their behalf;

   4. (d)

      any government department, the Bank of England, the Competition Commission or any other statutory or regulatory body or authority;

   5. (e)

      major shareholders of the issuer;

   6. (f)

      the issuer's lenders; and

   7. (g)

      credit-rating agencies.

Selective disclosure to any or all of the persons referred to in DTR 2.5.7 G may not be justified in every circumstance where an issuer delays disclosure in accordance with article 17(4) and (5) of the Market Abuse Regulation2.

An issuer should bear in mind that the wider the group of recipients of inside information the greater the likelihood of a leak which will trigger full public disclosure of the information2 under article 17(8) of the Market Abuse Regulation2.