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(1 version)
 
Jul 5 2012 onwards

MKT 6.5.1 Guidance



Whole Section PDF

The definitive version of DFSA handbook text is the PDF version as that is the text of the instrument as made and published by the DFSA.

To view past versions of this module in PDF format, please visit the Archive.

1. A Reporting EntityG of a Listed FundG is required to disclose Inside InformationG relating to the Listed FundG to the market as soon as possible in accordance with the requirements in Section 6.9. In practice, a short period before announcing Inside InformationG is permitted where a Reporting EntityG is affected by an unexpected event and the Reporting EntityG needs to clarify the situation or take legal advice so that any information released is accurate and not misleading. Any delay should be limited to a period no longer than is reasonably necessary in the circumstances. Where there is a danger of the information leaking out in the meantime, the Reporting EntityG should make a holding announcement giving an outline of the subject matter of the announcement, the reasons why a full announcement cannot yet be made and undertaking to make a full announcement as soon as possible.
2. For the disclosure to be not misleading, false or deceptive, a Reporting EntityG of a Listed FundG should provide information that is accurate, factual and complete. Any incomplete or inaccurate information, such as omission of relevant information, would be misleading or deceptive. Information should be provided in an easy to understand manner and not for promotional purposes. The use of imprecise and confusing language such as 'double digit' or 'in excess of last year' should be avoided as it does not allow investors to properly assess the information for the purpose of making an informed decision relating to the relevant SecuritiesG
3. A confidentiality agreement should not prevent a Reporting EntityG from complying with its obligations relating to the disclosure of Inside InformationG .
4. If, for any reason, a Reporting EntityG of a Listed FundG is unable, or unwilling to make a holding announcement it may be appropriate for the Reporting EntityG to file a report pursuant to Rule 6.5.4(2) and for the trading of UnitsG to be suspended until the Reporting EntityG of the Listed FundG is in a position to make an announcement.

Identifying Inside InformationG relating to a Listed FundG

5. Inside InformationG is defined in Article 63(1)(a) of the Law as:
"information in relation to InvestmentsG of a precise nature which:
(i) is not generally available;
(ii) relates, directly or indirectly, to one or more Reporting EntitiesG or the issuer of the InvestmentsG concerned or to one or more of the Investments; and
(iii) would, if generally available, be likely to have a significant effect on the price of the InvestmentsG or on the price of related investments."
6. For the purposes of Article 63(1)(a) of the Law, information is considered "precise" if it:
a. indicates circumstances that exist or may reasonably be expected to come into existence or an event that has occurred or may reasonably be expected to occur; and
b. is specific enough to enable a conclusion to be drawn as to the possible effect of those circumstances or that event on the price of InvestmentsG or related investments.
7. Similarly, information would be likely to have a "significant effect on price" if and only if it is information of that kind which a reasonable investor would be likely to use as part of the basis of his investment decisions.
8. The Reporting EntityG of a Listed FundG is itself best placed to determine whether information, if made public, is likely to have a significant effect on the price of the relevant UnitsG , as what constitutes Inside InformationG will vary widely according to circumstances.

Financial forecasts and expectations

9. Where a Reporting EntityG of a Listed FundG has made a market announcement such as a profit forecast, such forecasts become, as soon as made, factored into the market pricing of the relevant UnitsG . If the Reporting EntityG becomes aware that there is likely to be a material difference between the forecast and the true outcome, the Reporting EntityG should make an announcement correcting the forecast as soon as possible to ensure that the market pricing reflects accurate information.
10. In relation to financial forecasts published by a Reporting EntityG of a Listed FundG , the DFSAG considers that circumstances giving rise to a variation from the previous one should generally be considered Inside InformationG and should be disclosed by the Reporting EntityG as soon as possible. Even where a Reporting EntityG has not made a previous forecast, circumstances giving rise to a variation of profit or revenue from the previous corresponding reporting period should be disclosed where such circumstances would have a significant effect on the price of relevant SecuritiesG . Generally, a change of 10% or more is a material change, but in some circumstances, a smaller variation may also be disclosable if it would reasonably be considered to have a significant effect on the price of the relevant SecuritiesG
11. In making such disclosure, the Reporting EntityG of a Listed FundG should provide clear details of the extent of the variation. For example, a Reporting EntityG may indicate that, based on management accounts, its expected net profit will be an approximate amount (e.g. approximately $15 million) or alternatively within a stated range (e.g. between $14m and $16m). Alternatively, a Reporting EntityG may indicate an approximate percentage movement (e.g. up or down by 35%).

Relationship between continuous disclosure and periodic disclosures

12. Periodic disclosures by Reporting EntitiesG of Listed FundsG are required in a number of circumstances, and examples can include interim and annual financial reports and accounts and Prospectuses.
13. In the course of preparing these disclosure documents, a Reporting EntityG of a Listed FundG may become aware of Inside InformationG previously unknown to it, or information which was previously insufficiently precise to warrant disclosure. In such circumstances a Reporting EntityG of a Listed FundG should not defer releasing that information until the periodic disclosure or other documents is finalised. In such circumstances, a Reporting EntityG should make an announcement containing the Inside InformationG as soon as possible.

UnitsG of the same class admitted to trading in more than one jurisdiction

14. A Reporting EntityG of a Listed FundG with UnitsG of the same class admitted to trading in more than one jurisdiction should ensure that the release of announcements containing Inside InformationG is co-ordinated across jurisdictions. If the requirements for disclosure are stricter in another jurisdiction than in the DIFCG , the Reporting EntityG must ensure that the same information is released in the DIFCG as in that other jurisdiction.
15. A Reporting EntityG of a Listed FundG should not delay an announcement in the DIFCG in order to wait for a market to open in another jurisdiction
Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]