Malta: ESMA Guidelines for Issuers’ Pre-Close Call Sessions with Financial Analysts
The European Securities and Markets Authority (ESMA) has issued guidelines for issuers to consider when engaging in pre-close call sessions with financial analysts. The guidelines aim to ensure that public disclosure of inside information takes place in line with Article 17 of the Market Abuse Regulation (MAR).
Pre-Close Calls: An Overview
Pre-close calls refer to communication and information sessions between representatives of an issuer and financial analysts who prepare research notes and projections on the issuer’s financial instruments. These sessions take place prior to the issuance of an interim report or financial year-end report, during which issuers avoid divulging any price-sensitive information.
Risks Relating to Disclosures of Inside Information
Share prices have been linked to fluctuations following pre-close call sessions, with ESMA recommending that issuers follow good practices to mitigate risks relating to disclosures of inside information. Issuers are advised to apply the following best practices when involved in pre-close call sessions:
- Thorough Analysis and Assessments: Undertake thorough analysis and assessments on the information to be disclosed during pre-close call sessions to ensure that this does not include elements of price-sensitive information.
- Public Disclosure: Disclose publicly (for example, on the issuer’s website) information on the upcoming pre-close call sessions with sufficient notice, including details, date, place, and topics to be discussed during the sessions, as well as the intended participants.
- Publication of Materials: Publish and make available on the issuer’s website (i) material and documentation used during the pre-close call sessions (for example, slides and notes, including macroeconomic data shared with participants), and (ii) information discussed during sessions, to enable such information to be available to the public at large.
- Record Retention: Retain on record information disclosed during the pre-close call sessions; minutes relating to meetings (if held in person); and other online meeting recordings (if held remotely), all relating to pre-close call sessions to make them available to national competent authorities upon request.
Ensuring Information Parity
Issuers should ensure that discussions during pre-close call sessions only include information that is not price-sensitive, not to influence markets and investors’ expectations and ultimately prices of financial instruments. In cases where inside information is accidentally provided throughout a pre-close call session, issuers should promptly restore the information parity by immediately publishing that inside information (in line with Article 17(8) of MAR and Chapter II of Commission Implementing Regulation (EU) 2016/1055).
Conclusion
The guidelines aim to ensure that public disclosure of inside information takes place in line with Article 17 of MAR, thereby mitigating risks relating to disclosures of inside information. Issuers should ensure that discussions during pre-close call sessions only include information that is not price-sensitive, not to influence markets and investors’ expectations and ultimately prices of financial instruments.
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