Topic Market manipulation Transparency requirements
The European Market Abuse Regulation (MAR). and the German Securities Trading Act (Wertpapierhandelsgesetz – WpHG) impose a large number of publication requirements on issuers of financial instruments. These are designed to enable capital market participants to receive timely, material information about companies whose securities they hold or are interested in acquiring. A particular objective is to ensure that data that is of material importance for either the short-term or long-term performance of the investment in question is made generally available.
These transparency requirements apply not only to issuers whose financial instruments have been admitted to an organised market but also in some cases – for example, in the case of the ad hoc disclosure and managers’ transactions provisions – to issuers which only trade on a multilateral trading facility (MTF), such as the regulated unofficial market. This is subject to the issuer having expressly consented to its inclusion in trading, by having applied for this either itself or through a third party or having consented to its inclusion.
The relevant requirements are outlined below. Details are provided under the relevant subheadings.
Ad hoc disclosure
As a general principle, Article 17(1) of the MAR requires issuers of financial instruments to publish without undue delay all inside information that might significantly affect the price of the instrument in question. The objective of this “ad hoc disclosure requirement” is to ensure that all capital market participants have access to key information about the companies in question as quickly as possible, and thus prevent insider dealing due to any information asymmetry.
Under Article 19(1) of the MAR, persons discharging managerial responsibilities at an issuer of financial instruments, for example members of executive or supervisory boards, must disclose their own transactions (managers’ transactions) without undue delay. This obligation also applies to natural and legal persons closely associated with persons discharging managerial responsibilities. All transactions above a de minimis threshold in shares or debt instruments of the company at which the person is employed, including derivatives linked thereto, must be notified. This disclosure requirement prevents insider dealing and can provide capital market participants with valuable insights into judgements reached by “corporate insiders”.
Percentages of voting rights in companies
The purpose of notifications under section 33 et seq. of the WpHG is to disclose major holdings of voting rights in listed companies. They require shareholdings that reach, exceed, or fall below certain voting rights thresholds to be disclosed without undue delay, starting with 3% and with a sliding scale up to 75%. This information about investments or exits of major investors is of considerable importance for the capital markets, in particular because it can provide indications to the general public about the future performance of the company and about preparations for a possible takeover.
Information and publication requirements
The information and publication requirements under section 48 et seq. of the WpHG are designed to enable or make it easier for holders of securities to exercise their rights. For example, this includes information about the convening of and the agenda for a shareholders’ meeting, as well as material changes in the rights attached to the securities.
The obligations to publish financial reports under sections 114 et seq. of the WpHG require listed companies to publish annual and half-yearly financial reports, as well where applicable payments reports. These are designed to provide the investors with regular information about the company’s business performance, for example using financial statements as well as management reports (mandatory components of financial reporting).