The management of a company admitted to trading on a regulated market is often in a position to decide to what extent the legal conditions for reporting certain disputes are met. The information to be reported may be particularly sensitive and may significantly affect the price of financial instruments issued by the company.

This article presents main rules what must be taken into account in such a situation and under what conditions reporting can be delayed. however, analysis must be carried out on a case-by-case basisdepending on the specific circumstances of the litigation and taking into account the instructions of ESMA (European Securities and Markets Authority) and ASF (Romanian Financial Supervisory Authority).

1. What disputes must be reported?

In essence, disputes in which the issuer is involved must be reported on the condition that the specified information belongs to the category of confidential information. The concept of preferential information is described in Art. 7 of Regulation (EU) No. 596/2014.

Regarding issuers, confidential information represents the information that meets the following aggregate conditions:

• have a precise character;
• were not made public;
• directly or indirectly relates to one or more issuers or one or more financial instruments; and
• if they were made public, they could significantly affect the price of the relevant financial instruments or related derivative financial instruments.

Article 7 par. (2) from Regulation (EU) No. 596/2014 describes the type of information you may be considered to be accurate character.

Article 7 par. (4) from Regulation (EU) No. 596/2014 describes the concept of “information that, if made public, could significantly affect the price of financial instruments.” The scope of this concept includes information that a reasonable investor is likely to use to make investment decisions.

2. In what form and when should the report be drawn up?

The content of the publication must refer to all relevant elements regarding the relevant dispute, according to Appendix no. 12 of the ASF Regulation no. 5/2018.

Reporting is carried out by publishing information on the website of the issuer, which is obliged to store information for at least 5 years, in accordance with Art. 17 of Regulation (EU) No. 596/2014. The regulations applicable to the market in which the issued securities are traded may require the publication of the report on the official website of the relevant market (e.g. BVB).

Reporting is carried out as soon as possible, but no later than 24 hours after the occurrence of the event or from the date when the issuer became aware of the dispute. The conditions for deferring reporting will be briefly described below.

3. What are the conditions for postponing the notification of a dispute?

The Issuer may delay the publication of inside information at its own risk only if all the following conditions are met:

• immediate publication may harm the legitimate interests of the issuer;
• the delay in publication is unlikely to mislead the public;
• the issuer can ensure the confidentiality of this information.

With regard to ensuring the confidentiality of information, it should be borne in mind that in Romania a series of information on court proceedings is published on the official portal of the courts. Also, after drafting court decisions, they can be identified by number and date (in a confidential format) in certain case law databases. Under these conditions, the confidentiality of information cannot be ensured by the issuer after the court makes a decision (and it will be uploaded to the judicial practice database).

However, given that the information provided by the official court portal is quite limited (mainly data on the parties and the subject of the litigation), the company may analyze the fulfillment of the conditions related to the postponement of reporting, as there is a possibility that , in particular, the limited data that appears on the portal should not affect the confidential nature of information related to the relevant legal process.

Regarding the deferral of reporting, it should be noted that there are special rules for SMEs and the need to inform the competent authority (in Romania, ASF).

In 2022, ESMA issued updated guidance on delaying the publication of inside information and interactions subject to prudential supervision (https://www.esma.europa.eu/sites/default/files/library/esma70-156-4966_mar_gls-delay_in_the_disclosure_of_inside_information_ro). pdf). The relevant guidance was transposed by ASF norm no. 23/2022 and details: (i) what the legitimate interests of the issuer mean, as well as (ii) what are the situations in which delaying the publication of confidential information may mislead the public.

4. Conclusions

The possibility of interpretation of concepts such as “accurate information” or “significant influence on the prices of financial instruments” will always give rise to debate regarding compliance with reporting requirements in a dispute involving an issuer. Thus, the analysis must be carried out in each individual case, depending on the specific circumstances of the dispute and taking into account one of the goals of the legislation in this matter: to ensure the integrity of financial markets in European countries. Union and strengthen investor protection and confidence in these markets.

Article signed by Adrian Cristea (Senior Associate) and Eduard Morario (Associate)