11.6 Sample sheet of price-sensitive information

Without any pretence of exhaustiveness, Chapter 6 presented a sample sheet of price-sensitive information. It was evident from the overview that there is no simple formula to capture the concept of `price-sensitive information'. With the help of facts and circumstances of each individual case, an attempt will have to be made to answer tricky questions such as the question what information is price-sensitive and when that information has to be disclosed. The standard for answering those questions will be the opinion of a reasonably acting investor. Information that is likely to be found relevant by such investor in taking investment decisions, in the jargon: to buy, to hold or to sell, is price-sensitive and will have to be disclosed without delay by the issuer by means of a press release, among other means. This concerns information which was until then undisclosed by the issuer and which offers investors a view or an understanding of the performance and prospects of the issuer or of important facts or events concerning the issuer that are related to that performance and/or those prospects or may have an effect upon it or them.

On the basis of the series of examples given in the sample sheet, it has not appeared that issuers will find that standard unworkable. Some examples are simple and can readily be recognized. This is the case, for example, for facts and events that are a direct result of decisions adopted by issuers themselves, such as a change in the composition of the executive and/or the supervisory board, a restructuring or a change in the company's funding structure. It was shown with respect to a number of more difficult examples, such as profit warnings or rumours, that a number of viewpoints can be formulated that are generally applicable. In yet other fields, such as mergers, acquisitions and cooperation agreements, there appear to be no or almost no problems in the application of the concept of `price-sensitive information' because issuers can usually rely on the delay rule until the deal has been closed or almost closed.

It is also noteworthy that issuers may be expected to issue an early warning in special situations. It can be inferred from various recommendations from the former Advisory Committee on Listing and Issuing Rules of Euronext Amsterdam, which recommendations retained their significance under the new framework, that issuers are obliged to issue a statement in general terms in the event of, for example, a sudden setback (or windfall). It is not allowed to withhold such statement on the ground that not all the facts are known in detail or that the issuer does not know what remedies may be considered to stem the unfavourable tide. If, for example, it is sufficiently clear to the issuer that the development in performance lags significantly behind (or is significantly better) than a prognosis published earlier or its performance achieved in the past, or if an extraordinary incident occurs which has a significant effect on the performance and/or equity of the issuer, the issuer will have to issue a press release without delay. Likewise an early warning will have to be issued if an extensive (or probably extensive) fraud is discovered. In addition, the issuer should not be allowed to hide behind the argument that the extent of the fraud is not yet fully known.

It was further noted that press releases offer a limited understanding of the reasons why an issuer believes that certain information is price-sensitive, what relevance standard was applied within that context and how the issuer handled the timing of the press release. In that sense, the examples that I have examined and described are of limited practical value. However, every disadvantage has its advantage, which is also true in the case here. The investigated cases demonstrated that issuers make a clear choice in favour of issuing press releases when there is a coherent message regarding a certain situation or event concerning the issuer. For that reason, the disclosure obligations should in my view in principle also apply to material facts and events (more precisely: major new developments) on which an unequivocal message can be issued with a certain degree of precision. In keeping with the conclusion of Chapter 5, in which, after an analysis of the component parts of the concept 'inside information' as referred to in Article 5:53(1) of the Wft, it was concluded that that concept is unusable for the purpose of the compliance of issuers with the duty to disclose price-sensitive information, it can now be established that the issuers have put that conclusion into practice.

Finally, it is evident from the sample sheet presented that requirements aimed at increasing transparency are being issued in more and more areas. Such requirements are imposed not only on the issuers but are increasingly imposed on the holders of a substantial interest in issuers as well. The regulations aiming to promote transparency are by no means always driven by the disclosure of price-sensitive information. Contemporary standards of sound corporate governance also cause that regulations to promote transparency are being imposed on various market parties.