New procedure for securities issuers to disclose information to the market

Following the amendment to the consolidated text of the Spanish Securities Market Act in Royal Decree-Law 19/2018, which came into effect in November 2018, the Spanish regulation on securities issuers disclosing information was adapted to the European regulations. Specifically, articles 226 and 227 of the Spanish Securities Market Act were amended in line with Regulation (EU) 596/2014 on market abuse (“MAR”), distinguishing between “public disclosure of inside information by issuers” and “public disclosure of other relevant information by issuers,” respectively.

To increase market transparency and facilitate the identification of the information received by shareholders and investors, the Spanish Securities and Exchange Commission (CNMV) has developed specific channels for sending, publishing and disclosing information by listed companies, the details of which are included in the press release published on January 29, 2020.

The CNMV has adapted its electronic information transfer platform, and since February 8, 2020, the notices of issuers published as “Relevant Facts” up until then have been divided into two new categories:

• Inside information (II): specific information that has not been made public and refers directly or indirectly to one or several issuers or one or several financial instruments or their derivatives and that, if made public, could significantly influence the prices of those instruments or the derivative instruments related to them.
  
  Under article 17 of the MAR, issuers must disclose II as soon as possible, although they can delay the public disclosure of this information under their own liability if all the conditions of that precept are met.

• Other relevant information (ORI): other financial or corporate information relating to an issuer or a financial instrument that must be disclosed in Spain under any legal or regulatory provision or that issuers consider necessary to disseminate to investors due to its particular interest.

As a result of this communication procedure, issuers will have to make a prior value judgment on the nature of the information. It will, therefore, be the listed companies themselves that must classify information as II or ORI in accordance with the stated distinction in each case.

In its press release of January 29, the CNMV summarized the main differences between the two categories:

• II has the capacity to significantly affect the price. If that is not the case, the ORI channel must be used.

• For II, a list of insiders must be prepared, with the content established in the MAR. On the contrary, ORI does not require that list.

• With II, it is prohibited to trade when in possession of information of that nature. That is not the case with ORI.

• With II, there is an obligation to report it to the CNMV to be published on its website.  ORI will only be reported when, in the issuer’s opinion, it may be of interest to shareholders and investors.

The CNMV has also simplified the subcategories in which issuers must frame the information they transmit to the market. II must now be classified by issuers in one of the 17 subdivisions pre-established by the CNMV (compared to the 65 into which the former “Relevant Facts” were divided). ORI is, in turn, subdivided as follows: regulated information into 13 categories (notably including “Annual financial and audit reports” or “General Meeting call notice”), while unregulated information is subdivided into 11 categories (notably including “Takeover bids” and “Shareholder agreements”). This will facilitate the search for information and shareholders and investors to subscribe to it.

Author: Alejo Ortuño