Once a company is listed, it needs to communicate effectively with its shareholders and the wider public. This helps investors to understand the company, which can support its share price. The company and its Directors are also required by regulation to make certain types of public disclosure. This process is typically managed by the company’s Investor Relations Officer.
A number of high-level principles sit behind these requirements, including a desire to ensure a level playing field for all investors and equality of information.
A company must disclose financial information that is liable to lead to a substantial movement in the price of its securities.
This includes disclosing it annual report as soon as possible after the financial statements have been approved, and no later than 120 days after year end. The annual report must include:
A review of operations during the year;
Details of any significant changes in the company’s state of affairs during the year;
The company’s principal activities during the year and any significant changes in the nature of those activities during the year;
Details of any matters or circumstance that have arisen since the end of the year that may have a significant impact in the future operations, results or trading of the company;
Likely developments in the company’s operations in future years and expected results of those operations;
A statement by the auditors that the financial statements of the company give a true and fair view of the affairs, profit and loss and additional information as may be required.
The issuer must disclose the annual financial statements and the auditor’s report separately or with the annual report. The financial statements should be prepared on a comprehensive accounting basis such as IFRS.
Preliminary financial results must be published without delay and no later than 30 minutes before the market opens on the day after those results have been approved.
A company must publish semi-annual financial statements for the first six months of the financial year. They must be published without delay, and no later than 60 days after the period end to which a financial statement relates.
The DFSA’s Markets Rules aim to ensure the prompt disclosure to the market of material inside information regarding an issuer, to avoid a market in which some participants are able to trade with the benefit of material price sensitive information that is not available to other investors. Issuers must make their disclosures through the exchange’s CANDI software system. This puts the disclosures on to the exchange’s website and may also disseminate them directly to market participants.
Inside Information is defined as including information relating to investments of a precise nature that:
Is not generally available.
Relates, directly or indirectly, to the issuer of the investments concerned, or to one or more of the investments.
Would, if generally available, be likely to have a significant effect on the price of the investments or on the price of related investments.
Examples of Inside Information can include the purchase of another company, winning a large contract, a change in the composition of the Board, or facing a significant lawsuit.
Directors and other persons connected to the company are required to inform the DFSA and the company about certain events. These include their becoming or ceasing to be a Director or the increase or decrease of their percentage holding in the company’s voting rights by 1% or more. The rule requires disclosure to the market of transactions with parties who hold 5% or more of the voting rights of the company or its holding companies.
In addition, any interest at all held by a Director in a listed company must be disclosed to the company.