Do you agree with the definition of protracted processes provided?
Finland Chamber of Commerce agrees with the definition, but notes that it may still be difficult to interpret whether the definition applies to certain circumstances, such as a profit warning or internal strategy review.
We also note that the even in one-off events it may be necessary to confirm facts relating to a piece of information which comes into the attention of an issuer. Such piece of information may be of such nature that the conditions for delaying disclosure are not applicable (e.g. if the information is correct, delaying of such information would likely be misleading). On the other hand, if the facts were not checked before disclosing the information, disclosure of incorrect information as inside information would also mislead the public. To our understanding such fact-checking therefore currently needs to be assessed against the requirement to disclose information “as soon as possible” or against the definition of inside information (“information of a precise nature”). We propose that the possibility for fact-checking in one-off events would be clarified in the recitals to the draft delegated regulation.
Do you agree with the identified categories of processes and general principles?
Finland Chamber of Commerce agrees with the identified categories of processes and general principles, but notes that depending on the case a protracted process may fall under different category. For example, preparation of capital raising may in some cases be entirely internal to the issuer whereas in some cases it may require involvement of external counterparties (e.g. through market sounding).
Do you agree that for protracted processes that are entirely internal to the issuer the moment of disclosure should be the moment when the corporate body having the decision power has taken the decision to commit to the outcome of the process?
Finland Chamber of Commerce agrees with the general principle but notes that it seems that the principle is not fully reflected in Annex I to the draft delegated regulation (please see our response to Q11). Moreover, the principle may create some interpretation issues in cases the competent corporate body decides to delegate the final decision to another person/body. In our view, in such cases the moment of disclosure should be when the final decision has been made.
Do you agree that in presence of a governance structure that foresees the approval of another body further to the management body’s decision, the disclosure obligation should take place as soon as possible after the decision of the first body?
Finland Chamber of Commerce agrees with the general principle that when a decision by a management body is subject to the approval of the general meeting of shareholder or the supervisory board, the disclosure obligation should take place as soon as possible after the decision of the first body. However, as stated in our response to Q3, in cases the competent corporate body decides to delegate the final decision to another person/body, in the moment of disclosure should be when the final decision has been made.
Do you agree that for protracted processes involving the issuer and another party different from a public authority, the moment of disclosure should be when the competent bodies/persons of all parties involved, having the decision power under national law or bylaws, have taken the decision to sign off to the agreement?
Finland Chamber of Commerce disagrees with the proposal. In our view, it is not always clear to the issuer when the counterparty or counterparties have taken the decision to sign off to the agreement. Such a requirement would likely lead to a situation where an issuer would, in order to ensure compliance with MAR, need to make a decision to delay the disclosure until all the parties have signed the agreement and become bound by the agreement. This would be against the objective of the amending Regulation to alleviate the administrative burden of issuers.
We would therefore prefer linking the moment of disclosure with the signing of the agreement.
Do you agree that for protracted processes that are driven by a public authority with the involvement of the issuer, the moment of disclosure should be when the issuer has received the final decision from the public authority, even where the issuer and the public authority previously exchanged preliminary information that may on its own amount to inside information?
Finland Chamber of Commerce agrees with the proposal.
Do you agree that for protracted processes that are triggered by the issuer and whose final outcome is decided by a public authority, two separate processes should be identified, and the moment of disclosure should occur upon completion of each of them as above outlined?
Finland Chamber of Commerce agrees with the proposal but notes that there may be cases where the legitimate interests of the issuer would require that the issuer makes a decision to delay the disclosure of the first process (i.e. the issuer’s decision to submit the request to the authority). Naturally, all the conditions of MAR Article 17(4) or (5) would need to be met in such cases.
Do you agree that a hostile takeover can be considered a one-off event? Do you agree with the moment for disclosure identified for takeover processes?
Finland Chamber of Commerce is of the view that a non-solicitated takeover can be considered a one-off event. However, this should only apply to takeover bids where the offeror has made the bid or intended bid public in accordance with applicable rules on takeover bids (cf. also Article 6(1) of the Takeover Bids Directive).
With regard to the moment of disclosure identified for takeover processes, it seems to us that proposal is not fully in line with the Takeover Bids Directive.
In cases where the issuer is the offeror, we agree that the decision to make the bid would trigger the disclosure requirement. Such a requirement would be also the same as in Article 6(1) of the Takeover Bids Directive.
Where the issuer is the offeree (target) company, the initial disclosure would, pursuant to Article 6(1) of the Takeover Bids Directive, need to be made by the offeror. In our view, the moment of disclosure by the offeree company should therefore be the moment when the offeror has made the bid public.
Moreover, we note that pursuant to Article 9(5) of the Takeover Bids Directive, the formal opinion on the bid issued by the offeree’s board of directors may be published at a later stage. Such an opinion would need to be disclosed once it has been adopted.
Do you agree with the proposed approach in relation to financial reports, profit warnings, earning surprises and forecasts? In particular, do you agree that profit warnings and earning surprises are to be considered as one-off events and as such should not be included in the list of protracted processes?
Finland Chamber of Commerce has concerns that the proposal may create an expectation that information gathered in the preparation of a periodic financial report would always have to be considered as inside information. This would trigger the requirement to draw up insider lists and thus add administrative burden for issuers. Moreover, the fact that there are specific rules on closed periods (MAR Article 19), supports the interpretation that in general periodic financial reports are not considered to contain inside information.
We therefore strongly suggest that it should be clarified either in the Annex I or in the recitals to the draft delegated regulation that it would always need to be assessed separately whether preparation of financial report includes inside information and that the rules in Annex I only apply where financial report contains inside information. Ambiguity in this regard would likely lead to different interpretations across the EU, which would be contrary to the objectives of the CMU and the single rulebook.
In cases where financial report contains inside information, we agree with the proposal.
Do you agree with the proposed approach in relation to recovery and resolution protracted process?
Finland Chamber of Commerce agrees with the proposal.
Do you consider the list of protracted processes sufficiently comprehensive? Do you agree with the proposed moment of disclosure? Would you add or remove any process?
Finland Chamber of Commerce proposes the following changes to Annex I:
Item 1: Pursuant to Article 91 of Directive (EU) 2017/1132 [codified Company Law Directive], the administrative or management bodies of the merging companies shall draw up draft terms of merger in writing. We suggest aligning the wording with the Directive or making a direct reference to the Directive. We would also suggest linking the moment of disclosure with the signing of the draft terms of merger (please see our response to Q5 for reasoning of our proposal).
Item 3: It seems to us that proposal is not fully in line with the Takeover Bids Directive. Where the issuer is the offeree (target) company, the initial disclosure would, pursuant to Article 6(1) of the Takeover Bids Directive, need to be made by the offeror. In our view, the moment of disclosure by the offeree company should therefore be the moment when the offeror has made the bid public. Moreover, we note that pursuant to Article 9(5) of the Takeover Bids Directive, the formal opinion on the bid issued by the offeree’s board of directors may be published at a later stage. Such an opinion would need to be disclosed once it has been adopted.
Items 4–7: We would suggest linking the moment of disclosure with the signing of the draft terms of merger (please see our response to Q5 for reasoning of our proposal).
Item 8: There may be cases where the final decision is delegated by the Board of Directors to e.g. the CEO. It should be made clear that the disclosure requirement only arises once the final decision has been made. Otherwise the issuers would be required to make a decision to delay the disclosure, which would add administrative burden for issuers.
Item 11: Please see our response to Q9. We strongly suggest that it should be clarified either in the Annex I or in the recitals to the draft delegated regulation that it would always need to be assessed separately whether preparation of financial report includes inside information and that the rules in Annex I only apply where financial report contains inside information.
Item 34: It seems unclear whether the initiation of legal proceedings is also included in the protracted process or whether the item only applies to events during the legal proceedings. Due to the fact material legal claims may need to be disclosed also in the annual financial report, initiation of legal proceedings should be disclosed separately when such information constitutes inside information. When the legal proceedings are initiated by the issuer, preparation for such proceedings may constitute protracted process. In such cases, disclosure should be made once the legal proceedings have formally been initiated.
Do you agree that the inside information to be delayed may in some cases be assessed against more than one announcement, whenever a clear conclusion about the issuer’s position on the subject matter cannot be drawn exclusively on the basis of the very latest communication?
Finland Chamber of Commerce advocates for a provision which provides as much clarity and legal certainty as possible. For us, it seems uncertain whether the MAR provision can be extended to more than one announcement through Level 2 legislation. If that would be possible, such an extension should only be applied to clearly specified cases.
Do you agree with the list of communications presented in Article 4 of the draft delegated act? Do you consider it sufficiently comprehensive, or do you deem that any other cases should be added?
Finland Chamber of Commerce notes that the expression “any person perceived as representing the issuer” is ambiguous. We would prefer limiting the circle of persons to those authorised by the issuer to represent the issuer or to communicate with investors.
Do you agree with the list of situations where there is a contrast between the inside information to be delayed and the latest announcement or communication as presented by ESMA in [Annex II] of the proposed Delegated Act (Annex IV of this CP)? Do you consider it sufficiently comprehensive, or do you deem that any other situations should be added?
Finland Chamber of Commerce notes that the examples presented in Annex II do not always constitute inside information. When such information constitutes inside information, we agree with the list presented in Annex II.
