Investor Relations - A Practical Guide - Investis

Company Announcements
Charles Bond, Partner, Cobbetts LLP
Transparency
In order to maintain fair and transparent markets, it
is of fundamental importance that quoted
companies keep investors regularly informed about
their affairs. The various provisions set out both in
statute and regulation relating to company
announcements help to create such transparency
and protection for market participants.
What to announce
The need to provide investors with regular news
flow means that companies will need to have in
place an annual reporting calendar to enable them
to announce certain planned events throughout the
year, such as the publication of annual and halfyearly
reports. In addition to this, companies may
hold regular investor or analyst briefings and will
also communicate with their shareholders at the
Annual General Meeting. The periodic publication
of news helps to create a balanced and orderly
market in a company’s securities.
However, companies must also operate on an ad
hoc basis to ensure that any new developments
are also disclosed to the market without delay.
This will normally involve consideration of whether
there is any ‘inside information’ which requires
disclosure to the market.
The concept of disclosing inside information is set
out in the UK Listing Authority’s (UKLA) Listing
Rules. Listing Principle 4 states that a “listed
company must communicate information to holders
and potential holders of its listed equity securities in
such a way as to avoid the creation or continuation
of a false market in such listed equity securities.”
What is inside information
The principal provisions relating to disclosure of
inside information are set out in the Disclosure and
Transparency Rules (“DTRs”) which implement
certain European Directives on disclosure and
transparency. These apply to all companies on a
regulated market, such as the London Stock
Exchange’s Main Market. However, companies
quoted on AIM are subject to their own rules
relating to the disclosure of price sensitive
information, although the principles are very similar.
When determining whether a company has inside
information, the flowchart on page 54 can be
followed. The initial assessment of whether
particular information amounts to inside information
must be made by the company, with help from its
advisers. In reality, unless the case is obvious,
input from the company’s advisers will be vital, as
there will be a number of different factors which
will need to be taken into account when assessing
the significance of the information, such as the
company’s size, recent developments and market
sentiment about the company and its sector, the
swing in share price, including other market
variables affecting price, the source of the
information, the company’s financial condition and
information previously disclosed by the company
to the market.
52
Building the Investor Relations Programme