Criteria and requirements applicable to the distribution of inside information on social media

The Securities and Exchange Commission (CNMV) published the criteria applicable to listed companies and companies admitted to trading on multilateral trading facilities (MTFs), such as BME Growth or the Alternative Fixed-Income Market (MARF), when distributing inside information on social media.

Since last July, the Code of Good Governance for listed companies has advised companies to implement a communications policy for information distributed through whichever channels they see fit, including social media.

On October 8, 2020, the CNMV confirmed that listed companies and other issuers of securities or financial instruments traded on Spanish regulated markets, as well as companies with securities only traded on MTFs (e.g., BME Growth or MARF), can distribute inside information on social media, subject to the following criteria:

1. The information disclosed must be comprehensive, objective and clear. Readers should not need additional sources to fully understand the statement. The information must be concise and reader friendly, and it must pass the clarity and objectivity test applicable to inside information under the Market Abuse Regulationand its implementing provisions.

2. The statement must be clearly labelled as “inside information,” and it must be separate from any of the company’s promotional or marketing communications.

3. The statement must clearly identify (i) the issuer concerned by the inside information; (ii) the distributing entity; (iii) the subject; and (iv)  the time and date.

4. Distribution must be on free and far-reaching social media sites, from highly followed accounts. The CNMV highlights some advantages of social media. If used appropriately, social media allow (i) for immediate distribution; and (ii) for the statement to reach its readers as intended the author, without third parties reinterpreting or summarizing it.

5. The information must be formal and precise, with no additional or nuanced information in replies or conversations that may be essential to understanding the statement.

Lastly, according to the CNMV, listed companies can use social media in addition to the legally required channels to communicate inside information, but not instead of them. However, regardless of the communication on the relevant MTF’s website, issuers of securities only traded on MTFs may solely use social media in compliance with all the requirements, because article 226 of the Securities Market Act is not applicable in this case.

Author: Roger Freixes