Listing of a company’s securities brings additional ongoing responsibilities to the company’s management, particularly information disclosure and market expectations.
Inside information is any price-sensitive information related to the issuer or its securities which has not been made public yet. TSE Rules regard the following persons as company insiders:
- Members of the management and supervisory boards of the issuer or its subsidiary and the persons connected to them;
- A person having a substantial shareholding in the issuer or belonging to same group as the issuer;
- A person having access to inside information due to his/her job duties.
The issuer is required to ensure that inside information is available only to persons who need it in their job duties and that such information is not disclosed to third parties. No person in possession of confidential information is allowed to make transactions or give recommendations based on confidential information as set down in the Securities Market Act.
The members of management, auditors, procurators, and the people connected to them are not allowed to trade in the listed company’s securities to make short-term profits, i.e. buying and selling a comparable quantity within one month. These persons are also not allowed to make transactions in the listed company’s securities from one week before the end of a relevant accounting period to one day after disclosure of the financial reports.
Members of the management board are required to report on transactions made in the listed company’s securities by themselves or persons connected with them.
Information disclosure requirements
The TSE Rules set strict requirements for information disclosure for issuers of listed securities in order to guarantee transparency and confidence in the listed company. All listed companies must submit all price-sensitive information first to the exchange, which will immediately publish it electronically in the trading system and on the Exchange’s Internet site.
The management of the issuer is required to assess all changes in the company to determine which information is to be disclosed immediately.
The issuer is required to ensure that no price-sensitive information is disclosed to unauthorized parties before it is disclosed through the Exchange information system. Undisclosed information should not be published in interviews, statements, or commentaries. An issuer whose securities are listed on some other exchange is required to ensure that the same information is given to all exchanges simultaneously. In case the issuer learns that undisclosed information has become known to unauthorized persons before its planned publication, it is required to disclose that information immediately.
All listed company is required to disclose to the Exchange quarterly semi-annual reports, preliminary annual reports and audited annual reports, drawn up in accordance with the IAS and Exchange requirements. A listed company is required to inform the Exchange about:
- Significant transactions with fixed assets;
- Significant changes in the prices of its goods or services;
- Major contracts signed;
- Gain or loss of markets for its products;
- Investments outside the regular business activity of the issuer;
- Planned mergers, acquisitions, separations, reorganizations;
- Planned joint ventures or new projects with other companies;
- Significant changes in the sphere of business activity of the issuer;
- Changes in the issuer’s statutes;
- Changes in the members of supervisory and management boards;
- Changes in the structure of its share capital and the securities issued;
- Changes in the rights of the holders of the listed securities, including changes in the interest rates of listed bonds;
- Major legal proceedings;
- Initiation of bankruptcy proceedings;
- A decision to present at the general meeting of stockholders a proposal to terminate the activities of the issuer;
- Application to list the securities on some other stock exchange.
An issuer of shares is required to inform the Exchange immediately of
- General meetings of shareholders;
- Dividends proposed at the general meeting;
- Proposed increases or decreases of share capital;
- Acquisitions of its own shares and the reasons therefor;
- An issue of bonds;
- Business transactions between the issuer and a substantial shareholder or a member of the supervisory or management board and the people connected with them or the companies controlled by them;
- Decisions to acquire a holding in another company.
- If the issuer becomes aware that a shareholder has acquired or disposed of shares and the holdings of that shareholder as a result exceed or fall below the following thresholds: 5%,10%, 20%, 33%, 50% or 66%, the issuer is required to inform the Exchange immediately of the fact.
An issuer of bonds is required to inform the Exchange immediately of
- A decision not to pay or pay only partially interest on the listed bonds;
- A decision to redeem the listed bonds before the redemption date;
- Any new issue of bonds and any guarantees given on the bonds;
- An intention to decrease share capital.
Sanctions for non-compliance
It is important that these rules are carefully followed in order to build investor confidence in the issuer companies and guarantee the credibility of the securities market. The Exchange has a number of sanctions it can impose if an issuer does not comply with these rules. The Listing and Surveillance Committee may issue a warning, fine, suspension of trading, or termination of listing.