ESMA proposes changes to listed companies' duty of disclosure

The Listing Act is a regulatory package that amends the Prospectus Regulation, MiFIR, MiFID II and MAR, including the rules on disclosure in connection with a protracted process and delayed disclosure of inside information. The changes to the rules regarding disclosure in connection with a protracted process and delayed disclosure of inside information will enter into force in the EU from 5 June 2026. It remains to be seen whether the rules will come into force in Norway, as non-EU member, from the same date. 

In Sweden, the rules will apply to companies listed on Nasdaq Stockholm, NGM Main Regulated, Nasdaq First North, Nordic MTF and Spotlight Stock Market. In Norway, the rules will apply to companies listed on the Oslo Stock Exchange, Euronext Expand and Euronext Growth. 

According to the current version of MAR, in protracted processes, it is not only the final event of a process that can constitute inside information, but also intermediate steps in a protracted process, provided that such intermediate steps meet the conditions for inside information. Consequently, such intermediate steps must either be published immediately, or – more practically – be subject to delayed disclosure until the final event has occurred, provided that the conditions for such delayed disclosure are met. 

The Listing Act introduces a new exception in MAR stating that in protracted processes only the final event must be disclosed. However, an assessment whether such intermediate steps constitute inside information is still required, and if so, the rules regarding insider lists, duty of confidentiality, prohibition on trading, etc. apply as before. Should leaks occur, the disclosure obligation will be triggered as usual. In other words, the amendments to MAR consists in a simplification for listed companies to no longer be required to assess whether the conditions for delayed disclosure in protracted processes are met and prepare a report on this. 

ESMA's proposal contains a wide range of examples of protracted processes, as well as indications of the time at which the final event is deemed to have occurred, and the duty of disclosure thus is triggered (unless the conditions for delayed disclosure are met). Among these are: 

• Agreements: Signing of the agreement or any other equivalent act with binding effects.
   
• Mergers: When the governing bodies of the merging companies have approved the draft terms of the merger.
   
• Acquisition or disposal of assets/companies: Signing of the agreement or any other equivalent act with binding effects.
   
• Major corporate reorganisations: The issuer’s governing body has taken the decision to proceed with a corporate reorganisation, whose core elements have been defined. 
   
• Voluntary termination of a material agreement: The issuer’s governing body has taken the decision to terminate the agreement.
   
• Capital increase (issuance of additional shares): The issuer’s governing body has taken the decision to issue new capital instruments and on the relevant core conditions.
   
• Share buyback: The issuer’s governing body has taken the decision to carry out a buy back and on its core elements.
   
• Dividends: The issuer’s governing body has taken the decision to propose a dividend distribution or a change in the dividend policy to the shareholders.
   
• Postponement or cancellation of interest payments or redemptions payments: The issuer’s governing body has taken the decision to postpone or cancel the payments.
   
• Financial reports or interim financial reports: The financial results have been acknowledged or approved by the issuer’s governing body.
   
• Forecasts: The forecasts have been acknowledged or approved by the issuer's governing body.
   
• Change of management: The issuer’s governing body has taken the decision to appoint/remove a member of the governing body or a manager holding a key role for which the governing body’s decision is needed.
   
• Application for a licence or authorisation: The issuer submitted the application to the relevant public authority.
   
• Granting or withdrawal of licence or authorisation: The issuer has received the formal notification granting or withdrawing a licence or an authorisation.
   
• Supervisory review and evaluation process (SREP) (for credit institutions): The credit institution has received the final SREP decision from the Prudential Competent Authority.
   
• Reduction of own funds (for credit institutions): The credit institution is notified that the reduction of funds has been authorised by the Prudential Competent Authority.
   
• Judicial proceedings: The issuer has received the notification of the decision (even if the decision is subject to appeal).
   

Whether a relevant protracted process constitutes inside information must still be determined on a case-by-case basis. Events in a protracted processes may be covered by the exemption to disclose inside information even if they do not appear on ESMA's list – this must also be determined from case-by-case. 

Under the current version of MAR, delayed disclosure of inside information requires that the following conditions are met: (i) the immediate disclosure is likely to prejudice the legitimate interest of the issuer, (ii) delay of disclosure is not likely to mislead the public, and (iii) the issuer is able to ensure the confidentiality of the information. The interpretation of the second condition has raised difficulties, as any delayed disclosure in principle entails misleading the public. The Listing Act removes this condition and replaces it with a condition that the inside information is not 

"in contrast with the latest public announcement or other type of communication by the issuer [...] on the same matter to which the inside information refers". 

ESMA proposes a non-exhaustive list of cases where relevant inside information is considered to be in contrast with previously disclosed information as mentioned. Among these are: 
 

• A material change to forecasted financial results or business objectives previously announced by the issuer (e.g. profit warnings or earnings surprises).
   
• The financial viability of an issuer where materially different information regarding its financial strength was publicly announced by the issuer (e.g. need for capital increase or extraordinary bonds issuance).
   
• A material change in a business strategy previously publicly announced by the issuer (e.g. decision to enter a new geographical market segment).
   
• A material change to fundamental elements of a contract or deal previously publicly announced by the issuer (e.g. termination of a commercial partnership or different target company of an acquisition).
   
• A material change in the previously publicly announced issuer’s governance, including management structure and codes of conduct (e.g. decision to cancel a planned increase in the number of independent Board members).
   

It is worth noting that on the issuer's financial viability (bullet point 2 above), ESMA assumes that the issuer's need for a capital increase may constitute inside information where disclosure cannot be postponed if contrasting information about the issuer's financial strength has previously been made public. Even though a share issue is a protracted process that will not have to be published until a decision has been made, cf. above, and the rules on delayed disclosure therefore do not apply, this does not appear to cover information about the issuer's need for a capital increase in cases as mentioned.