The Committee of European Securities Regulators has published answers agreed by its members to questions that frequently arise on the Transparency Directive. The Transparency Directive is implemented in the UK by the Disclosure and Transparency Rules. The CESR FAQs aim to aid consistency of practice across the EU and can be helpful in clarifying issuers’ obligations under the DTRs.
In particular, the FAQs deal with the content of interim management statements, which issuers with shares admitted to trading on a regulated market must publish within each half financial year:
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material events for the purposes of an IMS would include any inside information previously announced, and also any other information that may reasonably be expected to affect investment decisions regarding the issuer; for example: material new contracts or transactions, financial performance out of line with expectations, or a change in dividend policy;
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details of the issuer’s financial position in an IMS could include information (either narrative or giving numbers) on the balance sheet, gearing, assets, liabilities, debt ratios, dividend yield etc. It may also be useful to include key performance indicators. Issuers should be careful to ensure that information they include in an IMS is given on a basis consistent with their other reporting so that investors can effectively assess the information;
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there is no requirement to include financial data in numerical form, but if an issuer does so, and cannot provide accurate figures as at the date of publication, it should provide a narrative description of whether the data has materially changed in the period between the date of the information and publication;
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it is not acceptable to delay the announcement of inside information in order for it to be included in a forthcoming IMS, unless the normal conditions for delaying disclosure of inside information are satisfied.
This discussion of IMSs touches on issues on which there has been some lack of clarity in the market. The FSA has been reluctant to be prescriptive about the content of IMSs, but did cover similar ground in LIST! Issue No.21 (May 2009), in which it commented that a number of companies were, in its view, still not adequately describing their financial position in IMSs.
The CESR publication can be found at http://www.cesr.eu/data/document/09_965.pdf.
