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Essential Corporate News – Week ending April 8, 2016
Publication | April 8, 2016
- Introduction
- European Union: Commission Delegated Regulation and Commission Implementing Regulation supplementing MAR published
- ESMA: Updated Q&A on common operation of Market Abuse Directive
- ESMA: Updated Q&A on prospectuses
- Companies House: Guidance for companies, unregistered companies and Societates Europaeae on restricting the disclosure of PSC information
- Companies House: Guidance for LLPs on restricting the disclosure of PSC information
Introduction
Welcome to Essential Corporate News, our weekly news service covering the latest developments in the UK corporate world.
European Union: Commission Delegated Regulation and Commission Implementing Regulation supplementing MAR published
On April 5, 2016 European Commission Delegated Regulation (EU) 2016/522 supplementing the Market Abuse Regulation (MAR) and European Commission Implementing Regulation (EU) 2016/523 were published in the Official Journal of the European Union.
The Delegated Regulation is in substantially the same form as that published in ESMA’s final report published in February 2015 containing technical advice on possible delegated acts concerning MAR. The Delegated Regulation lays down detailed rules with regard to:
- The indicators of market manipulation laid down in Annex I to MAR - Annex II of the Delegated Regulation sets out additional indicators of manipulative behaviour relating to false or misleading signals and to price securing, including examples of practices and in relation to the employment of a fictitious device or any other form of deception or contrivance, as referred to in Annex I of MAR.
- The competent authority for the notifications of delays of public disclosure of inside information - If the issuer has equity securities which are admitted to trading or are traded with its consent, or for which the issuer has requested admission to trading, on a trading venue in the Member State where the issuer is registered, the competent authority will be that of the Member State where the issuer is registered.
- The circumstances under which trading during a closed period may be permitted by the issuer - A person discharging managerial responsibilities (PDMR) within an issuer will have the right to conduct trading during a closed period as defined under Article 19(11) of MAR providing one of the circumstances referred to in Article 19(12) of MAR is met and the PDMR is able to demonstrate that the particular transaction cannot be executed at another moment in time other than during the closed period. In the circumstances set out in Article 19(12)(a) (exceptional circumstances requiring immediate sale of shares), prior to any trading during the closed period, a PDMR must provide a reasoned written request to the issuer, requesting the issuer's permission to proceed with the immediate sale of the issuer’s shares during a closed period. The written request must describe the envisaged transaction and provide an explanation of why the sale is the only reasonable alternative to obtain the necessary financing. Circumstances will be considered exceptional when they are extremely urgent, unforeseen and compelling, their cause is external to the PDMR and the PDMR has no control over them.
- Types of transactions triggering the duty to notify managers' transactions - The Delegated Regulation sets out a non-exhaustive list of types of managers' transactions that should be notified, including acquisitions, disposals, short sales, subscriptions or exchanges; transactions in or related to derivatives, including cash-settled transactions; gifts and donations made or received, and inheritances received; and borrowing or lending of shares or debt instruments of the issuer or derivatives or other financial instruments linked to such instruments.
The Implementing Regulation is in substantially the same form as the draft published by ESMA in September 2015 and sets out the template for notification and public disclosure of managers' transactions.
Both the Delegated Regulation and the Implementing Regulation will enter into force on April 25, 2016 and will apply from July 3, 2016.
ESMA: Updated Q&A on common operation of Market Abuse Directive
On April 1, 2016 the European Securities and Markets Authority (ESMA) published an updated version of its questions and answers on the common operation of the Market Abuse Directive (MAD). These were previously updated in November 2015.
The updated questions and answers include a new question on whether material intended for distribution channels or for the public concerning financial instruments that contain statements indicating that the relevant financial instruments are “undervalued”, “fairly valued” or “overvalued” will fall within the definition of “recommendation” contained in Article 1(3) of Commission Directive 2003/125/EC (the Commission Directive).
ESMA states that such material, insofar as it contains a valuation statement as to the price of the relevant financial instruments, is considered an implicit recommendation or a research or other information which implicitly suggests an investment strategy pursuant to Articles 1(3) and (4) of the Commission Directive implementing MAD, as will material containing an estimated value such as a “quantitative fair value estimate” that is providing a projected price level or “price target”, or any other elements of opinion on the value of the financial instruments.
As these materials are considered recommendations pursuant to Articles 1(3) and (4) of the Commission Directive, they need to comply with the relevant obligations and standards set out in the Commission Directive concerning the fair presentation of recommendations and the disclosure of interests and conflicts of interest by producers of recommendations.
(ESMA, Questions and Answers: On the common operation of the Market Abuse Directive, 01.04.16)
The updated questions and answers include a new question on whether material intended for distribution channels or for the public concerning financial instruments that contain statements indicating that the relevant financial instruments are “undervalued”, “fairly valued” or “overvalued” will fall within the definition of “recommendation” contained in Article 1(3) of Commission Directive 2003/125/EC (the Commission Directive).
ESMA states that such material, insofar as it contains a valuation statement as to the price of the relevant financial instruments, is considered an implicit recommendation or a research or other information which implicitly suggests an investment strategy pursuant to Articles 1(3) and (4) of the Commission Directive implementing MAD, as will material containing an estimated value such as a “quantitative fair value estimate” that is providing a projected price level or “price target”, or any other elements of opinion on the value of the financial instruments.
As these materials are considered recommendations pursuant to Articles 1(3) and (4) of the Commission Directive, they need to comply with the relevant obligations and standards set out in the Commission Directive concerning the fair presentation of recommendations and the disclosure of interests and conflicts of interest by producers of recommendations.
(ESMA, Questions and Answers: On the common operation of the Market Abuse Directive, 01.04.16)
ESMA: Updated Q&A on prospectuses
On April 6, 2016 the European Securities and Markets Authority (ESMA) published version 24 of its questions and answers on prospectuses. These were previously updated in December 2015.
The new questions relate to additional columns in capitalisation and indebtedness statements and offers going beyond the validity of a base prospectus and include:
- Whether a prospectus can include an additional column to reflect recent or future material changes to the capitalisation and indebtedness statements required pursuant to Item 3.2 of Annex III and Annex XXIV of the Prospectus Regulation. ESMA states that where a recent change has triggered the requirement to disclose pro forma financial information, an additional column illustrating pro forma capitalisation and indebtedness can be presented and should be consistent with the pro forma financial information presented elsewhere in the prospectus. Where a future material change has triggered the requirement to disclose pro forma financial information, an additional column illustrating pro forma capitalisation and indebtedness may be included which should be consistent with, and adjustments may be explained by referring to, the pro forma financial information elsewhere in the prospectus.
- Whether it is possible for an issuer to continue an offer beyond the validity of a base prospectus, e.g. when the issuer files final terms prior to the end of the base prospectus validity and the offer period extends beyond the base prospectus validity. ESMA confirms that the prospectus regime does not outlaw certain offer periods as the term of the offer period and the term of validity of the base prospectus are distinct.
- Which conditions apply to continuing an offer beyond the validity of the base prospectus? ESMA sets out the conditions that should be fulfilled in order for the issuer to continue the offer beyond the validity of the initial base prospectus. For the base prospectus the issuer is required to have complete and up-to-date prospectus documentation in place at any point in time during the offer period and, as regards the final terms, where the issuer wishes to continue using the final terms related to the initial base prospectus, the new base prospectus should include or incorporate by reference the form of the final terms from the initial base prospectus, even though the issuer may decide to publish and file a new set of final terms referring to the new base prospectus.
Companies House: Guidance for companies, unregistered companies and Societates Europaeae on restricting the disclosure of PSC information
On April 6, 2016 Companies House published guidance for companies, unregistered companies and Societates Europaeae (SEs) on restricting the disclosure of certain information from the public register maintained at Companies House. The guidance applies to directors, people with significant control (PSCs), and advisers of companies that are entitled to apply to restrict the disclosure of their residential addresses, all of their PSC information or other specified addresses from being published (or continuing to be published) on the public register.
The guidance covers:
- applications for protection and the types of protection available;
- applications to make an address unavailable for public inspection;
- protection across different entities;
- how to protect certain information;
- relevant legislation;
- a list of application forms; and
- an overview of required information in an application for protection.
(Companies House, Restricting the disclosure of your information - Companies, 06.04.16)
Companies House: Guidance for LLPs on restricting the disclosure of PSC information
On April 6, 2016 Companies House published guidance for limited liability partnerships (LLPs) on restricting the disclosure of certain information from the public register maintained at Companies House. The guidance applies to members, people with significant control (PSCs), and advisers of LLPs that are entitled to apply to restrict the disclosure of their residential addresses, all of their PSC information or other specified addresses from being published (or continuing to be published) on the public register.
The guidance covers:
- applications for protection and the types of protection available;
- applications to make an address unavailable for public inspection;
- protection across different entities;
- how to protect certain information;
- relevant legislation;
- a list of application forms; and
- an overview of required information in an application for protection.
(Companies House, Restricting the disclosure of your information - LLPs, 06.04.16)
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