Disclosure obligations

The Listing Act amended the Market Abuse Regulation and with it the disclosure architecture for protracted processes. An issuer no longer discloses each intermediate step of a drawn-out process. Disclosure is required at the final event or circumstance, for example the signing of a binding M&A agreement or the formal approval of financial results by the competent body.

The relief from the disclosure obligation is limited. Information that qualifies as inside information remains subject to the prohibitions on insider dealing and unlawful disclosure, and insider-list obligations continue to apply. In a live negotiation, the issuer should assess its disclosure position, preserve confidentiality and maintain disciplined insider-list procedures throughout the process.

Most disclosure failures arise from process rather than from judgement. A disclosure incident begins well before the disclosure question is asked, which is why insider lists, project codenames, communications discipline, board reporting and the disclosure committee are best in operation before the relevant event occurs rather than assembled in response to it.

The controls that work are a written disclosure policy identifying who assesses whether information is inside information and who authorises release; a standing disclosure committee that can convene at short notice, because the assessment is often needed within hours; insider lists that are created at the moment information arises rather than reconstructed afterwards; closed period discipline and a clearance procedure for persons discharging managerial responsibilities and persons closely associated with them; and a leak-response protocol with a holding statement already drafted.

Alongside MAR, the substantial holdings regime in the Financial Supervision Act requires notification to the AFM when a holding in the capital or voting rights of a Dutch listed issuer reaches, exceeds or falls below a statutory threshold. The Act sets a series of thresholds, from 3 to 95 per cent. Notification is therefore required in both directions, and the notifications are published in the AFM register.

Each crossing of a threshold becomes public. When a holding is being built up, the thresholds shape the timetable and the confidentiality strategy as much as MAR does, because each notification is a public signal about intention as well as about position, and they need to be modelled before the first share is bought.

The insider list records persons who have access to inside information and work for the issuer under a contract of employment, or otherwise perform tasks through which they have access to that information, including directors, the transaction team and relevant external advisors. It is drawn up promptly when the information arises, kept current as people are added and removed, and retained for five years. Each person on the list is informed in writing of the obligations that attach to the information and acknowledges those obligations in writing.

Persons discharging managerial responsibilities and persons closely associated with them are subject to a separate notification regime for their transactions in the issuer's instruments. Persons discharging managerial responsibilities are also prohibited from dealing during closed periods. A clearance procedure operated by the company secretary or general counsel, with a record of each clearance given or refused, helps keep that regime workable, since assessing whether a transaction can proceed requires a coordinated view of the issuer's information position.

A listed issuer's disclosure obligations extend beyond MAR and the substantial holdings regime. The corporate governance statement and remuneration disclosure are made in the annual reporting cycle, and they are read alongside the market disclosures made during the year.

Beneficial ownership registration at the trade register is a separate transparency regime for Dutch legal entities, which notaries and financial institutions consult in their own customer due diligence. The various regimes are administered by different functions inside most companies, which is the reason a single view of what has been disclosed, to whom and when is worth maintaining. Inconsistency between a market announcement, an annual report and a regulatory filing increases the risk of questions from regulators.