11.7 Manner of disclosing price-sensitive information

The primary argument of Chapter 7 was that the manner in which the disclosure of price-sensitive information is organised is in part decisive for the degree to which the objectives of the disclosure duty are achieved. With a view to those objectives, it might even be possible to promulgate material and formal requirements in abstract terms for the manner of disclosure of such information, which is so important to investors. Because the information to be disclosed by the issuer must be complete and accurate and must be understandable to investors, the imposition of material requirements may be considered, for example, with regard to the wording of a press release, the manner in which a message is presented in a press release and the language or languages in which a press release must be issued. In addition, the manner of disclosure could be subject to formal requirements, for example, that the issuer must make price-sensitive information available to the investors as soon as possible and that as many investors as possible should simultaneously have access to the same information from the issuer. It is against that background that the various instruments that are part of the disclosure regime of Article 5:25i of the Wij? should be reviewed.

The actual disclosure of price-sensitive information should first of all be preceded by an internal process in which the issuer decides whether certain information is or is not price-sensitive, and if it is, when that information will be disclosed. In order to answer those questions, it will be necessary to establish the facts that are relevant for the issuer's conduct of business, to collect those facts and to interpret them so that conclusions can be drawn from them. This intern& process consists of various stages and will have to be organised by the issuer. To that end, the issuer will have to formalise that process, to the extent possible of course, so that nothing is lelt to chance. It has been examined how issuers can put that into practice.

The starting principle is that the executive board of the issuer should be responsible for compliance with the duty to disclose price-sensitive information. It is also noted, however, that the supervisory board (or its audit committee) and the external auditor also carry a special responsibility for press releases containing financial information under the Corporate Governance Code. In order to be true to the responsibility for compliance with the disclosure duty, the board is obliged to adopt and enforce intern& procedures to ensure that the executive board is made aware of information relevant for the disclosure duty as soon as possible. Creating a disclosure committee — following in the footsteps of the Sarbanes-Oxley Act — would be instrumental in that regard. The duties of the disclosure committee include the collection and appraisal of information that may be considered for disclosure by the issuer. On the basis of the outcome, the issuer's executive board should be advised on the compliance with the disclosure duty. In addition, the disclosure committee should review earlier publications by the issuer at regular intervals in order to determine whether the information they contain should be updated or corrected. With a view to promoting compliance with the duty to disclose pricesensitive information, other measures could also be adopted. In this context, the following may be mentioned: the right tone at the top, a visible involvement of the board in the work of the disclosure committee, a written record of the procedures mentioned above, centralised coordination of the duties associated with compliance with the disclosure duty and the formulation and, if necessary, publication of a disclosure policy by the issuer.

The point of departure is that the issuer's disclosure duty on the basis of Article 5:25i(2) in conjunction with Article 5:53(1) of the Frft arises only if it is aware of the price-sensitive information to be disclosed. In my view, the board should not readily rely on being unaware of certain price-sensitive information in exculpation of noncompliance with the disclosure obligation. Reference was made to the possibility of construing the knowledge of the issuer of certain information either by assuming fictitious awareness of the issuer, or by attributing the knowledge of certain officers to the issuer as such.

Issuers are legally obliged to adopt certain measures that may contribute to protecting the confidentiality of price-sensitive information until the moment that the issuer makes that information public. Those measures include the insider list and, in a slightly more remote connection, the insider regulations. The insider list is a list drawn up by the issuer which contains personal details of staff members who may have knowledge of price-sensitive information on a regular or occasional basis. The list can be useful to keep the flow of information which is to be identified as price-sensitive under control. The insider regulations for which, incidentally, it seems impossible to indicate an express basis in the Market Abuse Directive, must set rules for managing and supervisory directors and employees regarding the possession of and transactions in shares that are issued by the issuer and related derivative fmancial instruments.

Secondly, what is important is that price-sensitive information is made accessible by the issuer as quickly as possible to anyone who wishes to take note of that information. The law provides for a general framework regarding the way in which `regulated information' (as defined in Article 1:1 of the Frft), of which pricesensitive information is deemed to be a part, must be made generally available (in this study referred to below as `disclosure') and must be filed with an agency responsible for its centralised storage. The scope of application of that general framework for the disclosure of price-sensitive information is limited to issuers that have the Netherlands as their Member State of origin and of which the fmancial instruments have been admitted to trading on a regulated market or a multilateral trading facility in the Netherlands. The Netherlands is the Member State of origin for issuers having their registered office in the Netherlands that have issued shares or have issued bonds with a par value per bond of less than EUR 1,000.

In order to disclose price-sensitive information, the issuer must employ various instruments. First, the issuer must promptly issue a press release, which must be issued simultaneously in the Netherlands and in any other Member State in which the issuer's financial instruments have been admitted with its approval to trading on a regulated market (Article 5:25m(2) of the Frft). This legal requirement was found to be part of an obsolete disclosure regime that is no longer valid and predates the adoption of the Transparency Directive. In my view, the Transparency Directive requires that an issuer issues a press release by making it available to media which may reasonably be assumed to ensure a rapid and effective distribution of that release within the European Union and, fmally, that the release must simultaneously be accessible to investors within the European Union as much as possible.

Secondly, the issuer must publish the release with price-sensitive information on its corporate web site at the same time as it issues the press release. The issuer must allow access to that information on its web site for at least one year following publication. The limitations inherent in the use of a press release will be largely compensated by the release being posted on the issuer's web site. The release posted on the web site will enable investors to take note of the integral press release without any intervention of an intermediary being required. This brings one of the objectives pursued with the disclosure duty, i.e. prompt accessibility of the release to all investors, a step closer. In order to alert investors to the availability of new information, the issuer could additionally equip its web site with an investor alert.

In third place, the issuer must inform the AFM of that information simultaneously with its disclosure by means of issuing a press release. As an Officially Appointed Mechanism (OAM) the AFM will thus be able to ensure that the notification of price-sensitive information is entered without delay into the public register that it keeps. The information should subsequently remain available for inspection for at least five years. The rationale of including price-sensitive information in a public register is related to the preservation of that information rather than to a certain manner of disclosure. The reason is that the AFM will not include the notification in a public register until it has verified that the press release was made public by the issuer and, in accordance with the implementation regulations included in a general order in council, ultimately five business days after receipt of the notification by the issuer of the price-sensitive information. This timing incidentally is at odds with the statutory obligation of the AFM to promptly enter any notification received from the issuer in the public register. The ultimate objective within the European context is to develop an electronic network 'inking the various national storage mechanisme with one another so that investors have simple access to information on all issuers throughout the European Union in one centralised location. That situation is still a long way off. For the time being, investors still need to consult different national registers that store price-sensitive information of issuers.