11.4 Scope of application of the disclosure duty

Chapter 4 is initially concerned with a discussion of three central concepts of securities law, i.e. the concepts of: (i) issuer, (ii) financial instruments and (iii) the admission to trading on a regulated market or multilateral trading facility in the Netherlands. It continues with assembling the jigsaw puzzle of the scope of application of the duty to disclose price-sensitive information.

The duty to disclose price-sensitive information applies to all issuers that have issued financial instruments and approved the admission of those instruments to trading on a regulated market in the Netherlands, for which market a permit was granted as referred to in Article 5:26(1) of the Frft (Article 5:25i(1)(a) of the Frft). The concept 'issue? comprises not only the traditional listed companies but for example also includes cooperatives, investment institutions and the government. The disclosure duty enters into effect when a request approved by the issuer, is made for the admission of its fmancial instruments to trading on a regulated market. If and as soon as the financial instruments issued by that issuer are no longer admitted to trading on such a trading platform, the disclosure duty terminates. The disclosure duty also applies to issuers that have issued financial instruments and approved their admission to trading on a multilateral trading facility for which a permit as referred to in Article 2:96 of the Frft was granted or for which such admission was requested with the approval of the issuer.

It was found that rather than the Financial Supervision Act, the market regulation of Euronext Amsterdam is ultimately decisive for the scope of application of the disclosure duty of issuers. As stated, it is also relevant that the disclosure duty applies only to issuers that have issued financial instruments and approved their admission to trading on Euronext Amsterdam, i.e.: either the regulated market operated by Euronext Amsterdam or the multilateral trading facility. That restriction was introduced because issuers are subject to the disclosure duty only if the financial instruments that they have issued were also admitted to trading on one of the aforementioned trading platforms with their approval. If that is not the case, that issuer is not subject to the disclosure duty. That restriction is relevant because the situation may arise that not only fmancial instruments issued by the issuer have been admitted to trading on any of the above-mentioned trading platforms, but that other financial instruments of which the value is derived from the financial instruments of the issuer have also been admitted to trading on those trading platforms. That is the case, for example, if Euronext Amsterdam allows options on the shares of an issuer to the trade or an investment institution has created a structured product that is admitted to trading and the shares of the issuer are the underlying security (or one of the underlying securities). The scope of application of the issuer's disclosure duty is not affected thereby. Generally, such other issuers (in the examples given: Euronext Amsterdam and the investment institution) will be able to benefit as free riders from compliance with the duty to disclose pricesensitive information by the issuer of the underlying securities, although in my opinion that is not without risk. If the issuer does not (timely) comply with the disclosure duty, Euronext Amsterdam and the investment institution are also in breach and to an equal extent.

Finally, the concept of 'financial instrument' of Article 1:1 of the Wft has undergone a remarkable expansion as a result of the Market Abuse Directive and the Markets in Financial Instruments Directive. The concept 'financial instrument' is now deemed to include various derivative fmancial instruments. Earlier, the problems were identified that could arise if the underlying value(s) of those derivative financial instruments are securities and those financial instruments are issued by issuers other than the institution that issues the underlying securities. Completely different problems may arise when derivative financial instruments are concerned as referred to in Article 1:1 d to j of the Wft. Do these fmancial instruments also fall within the scope of the duty to disclose price-sensitive information and, if so, what party should in such case be regarded as the issuer? Is it perhaps the buyer or the seller at the initiative of whom a purchase contract for a financial instrument (not being a security) was concluded as referred to in Article 5:25i(1)(b) of the Wft? My conclusion is that the duty to disclose price-sensitive information should not be applicable to such derivative fmancial instruments, even though the requirements of Article 6(1) of the Market Abuse Directive and of Article 5:25i(1)(b) of the Wft seem to point in another direction. The reason is that the nature of those derivative financial instruments and, accordingly, the information that is relevant to the price-setting of those instruments, as well as the structure of the market on which those fmancial instruments are traded, are of an essentially different conceptual nature. In my opinion, the disclosure duty of issuers should be restricted to issuers of securities and of derivative fmancial instruments which have securities as underlying value(s) (as defined in the description of 'financial instrument' in Article 1:1(a) and (d) of the Wft).