Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Thursday, March 20, 2008

Disclosure regime change – again.

Here we go again.

Just when you thought that disclosure rules – and their implications for listed companies – were settling down, along comes another review.

Following its meeting of 5 March, the European Securities Markets Expert Group (ESME) released a report on “competent authority pertaining to issuers publication of regulated information”.

The report analyses the different approach to EU issuers’ disclosure obligations contained in the Market Abuse Directive, the Prospectus Directive and the Transparency Directive.

It notes that as a result of a differing implementation of regulations in different EU countries: “…a particular issuer becomes subject to more than one set of rules and/or to supervision from more than one supervisory authority in respect of essentially one and the same disclosure obligation.”

In other words: if your equity is listed in another EU regime different – and potential contradictory - rules may apply. It has long been a concern of investor relations professionals as to how to reconcile these competing sets of rules.

ESME calls for a mutual recognition regime to all obligations imposed on issuers prepared according to the requirements of the member state where the issuer has its registered office.

This would be a step further towards one of the original objectives of the European legislation – making it easier for issuers to raise capital across the EU without significant additional regulatory burdens.

However, to do this, ESME recommends an alignment of MAD, TOD and PD so that one single regime applies to all of them.

This is a first salvo in the upcoming review of bits of the FSAP. The review of the Market Abuse Directive is scheduled in 2008 and the Commission will release a draft report in autumn this year. The review of MAD has assumed a particular importance given the continuing financial market turmoil. The Transparency Directive will be subjected to a complete review by mid-2009.

So watch this space as the battle lines on still further revisions to the disclosure rules are drawn.


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