FCA issues reminders about MAR – Five Key Takeaways

PMB 52 discusses the point at which a takeover offer becomes inside information and confirms that it will depend on the facts, including the identity of the bidder, the nature and quantum of the offer and the likelihood that it will be recommended by the board of directors of the listed company. The FCA reminds issuers that whether information is "precise" (in accordance with the definition of inside information under MAR) means there must be a more than fanciful chance of the future event occurring, but that the threshold is lower than "more likely than not". Therefore, it is possible that a takeover offer could be inside information before it has been formally considered and recommended by the board.

As a reminder, if a UK listed company receives a takeover approach, it should immediately seek legal advice as, in addition to MAR, there will likely be Takeover Code obligations and it will be important for the target to fully understand the legal implications of the steps it can, or needs to, take.  

The FCA has published previous guidance on MAR and financial results, but in PMB 52 the FCA reminds issuers that financial information may be inside information and that it may not be possible to delay the disclosure of such information as this is only permitted where immediate disclosure is likely to prejudice the legitimate interests of the issuer and it is not likely to mislead the public. The FCA has also taken the opportunity to remind issuers that the opportunity to offset good and bad news is not a justification for delaying the disclosure of inside information.

The FCA notes in PMB 52 that the appointment and resignation of a CEO are two separate pieces of news and each should be assessed in its own right as each may, on its own, constitute inside information at a different point in time to the other. The FCA notes that a potential CEO resignation could be inside information before the formal resignation and/or appointment of a successor, e.g. when a CEO has signalled their intention to resign and/or the board has started discussions to appoint a successor. 

The FCA has noted some suggested actions for issuers to consider when holding investor calls or meetings:

• avoid scheduling calls or making other communications during closed periods where information involved with the preparation of financial reports could constitute inside information;
  
  
• arrange for communications to take place after financial reports have been published or other updates made to the market so that the messaging can be aligned with those;
  
  
• ensure all inside information has been published prior to the shareholder communications;
  
  
• on the shareholder calls, specifically note that no inside information will be disclosed;
  
  
• prepare a script or speaking notes to ensure the communications align with previously disclosed information;
  
  
• if the meeting is not recorded, consider making a contemporaneous note of what was discussed; and
  
  
• consider publishing an announcement following the meeting setting out any information that was shared, noting that it is not considered to be inside information.

As a reminder, if any inside information is inadvertently disclosed during a shareholder call, this should be released to the market as a whole as soon as possible. 

Following the Crowdstrike-related IT disruption on 19 July 2024, which affected a number of PIP services and resulted in regulated information not being released via a PIP before being published on issuers' websites, the FCA suggests that issuers should consider having accounts with two PIPs so that there is potentially a back-up provider available in the event of another outage.  The FCA also reminds issuers that it is their responsibility to confirm that the inside information has been released, and they should ensure that it has actually been released via a PIP before publishing it on their own website or via any other media channels.