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Dubai Financial Services Authority (DFSA): Contents

Dubai Financial Services Authority (DFSA)
Recognised Jurisdictions and Funds
Declaration Notices
Financial Markets Tribunal
Rulebook Modules
Markets Rules (MKT) [VER15/07-19]
Sourcebook Modules
Consultation Papers
Policy Statements
DFSA Codes of Practice
Amendments to Legislation
Media Releases

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  • MKT 4.2 Disclosure of Inside Information

    • Timely Disclosure

      • MKT 4.2.1

        (1) A Reporting EntityG must make timely disclosure of Inside InformationG in accordance with the requirements in this section.
        (2) A Reporting EntityG must ensure that the disclosure it makes pursuant to (1) is not misleading, false or deceptive and does not omit anything likely to affect the import of the information.
        (3) For the purposes of complying with the requirement in (1), the Reporting EntityG must, subject to Rule 4.2.3 and 4.2.4, make disclosure as soon as possible and in the manner specified in Rule 4.7.1.
        Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

        • MKT 4.2.1 Guidance

          1. A Reporting EntityG is required to disclose Inside InformationG as soon as possible. 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 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. Where a Reporting EntityG realises that it has or may have breached its continuous disclosure obligations, it should contact the DFSAG to discuss the matter and seek guidance on remedying the situation and on taking steps to ensure that similar breaches are prevented from recurring.
          4. A confidentiality agreement should not prevent an entity from complying with its obligations relating to the disclosure of Inside InformationG .
          5. If, for any reason, a Reporting EntityG is unable, or unwilling to make a holding announcement it may be appropriate for the Reporting EntityG to file a report pursuant to Rule 4.2.5 and for the trading of its SecuritiesG to be suspended until the IssuerG is in a position to make an announcement.

          Identifying Inside InformationG

          6. 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."
          7. For the purposes of Article 63(1)(a), 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.
          8. 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.
          9. The Reporting EntityG is itself best placed to determine whether information, if made public, is likely to have a significant effect on the price of the relevant SecuritiesG , as what constitutes Inside InformationG will vary widely according to circumstances.

          Financial forecasts and expectations

          10. Where a Reporting EntityG makes a market announcement which includes a profit or revenue forecast, such forecasts become, as soon as made, factored into the market pricing of the relevant SecuritiesG . 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 so that the market pricing reflects the accurate position.
          11. In relation to financial forecasts published by a Reporting EntityG , 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 .
          12. In making such disclosure, the Reporting EntityG 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

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

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

          15. Reporting EntitiesG with SecuritiesG 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.
          16. Reporting EntitiesG 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]
          [Amended] DFSA RM120/2013 (Made 14th July 2013). [VER4/07-13]

    • Delaying Disclosure

      • MKT 4.2.2

        A Reporting EntityG may delay market disclosure of Inside InformationG so as not to prejudice its legitimate interests provided that:

        (a) the delay is not likely to mislead the markets; and
        (b) if the information is to be selectively disclosed to a PersonG prior to market disclosure, it is made in accordance with the requirements in Rule 4.2.3.
        Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

    • Selective Disclosure

      • MKT 4.2.3

        (1) For the purposes of Rule 4.2.2(b), a Reporting EntityG may selectively disclose Inside InformationG to a PersonG prior to making market disclosure of such information only if:
        (a) it is for the purposes of the exercise by such a PersonG of his employment, profession or duties;
        (b) that PersonG owes to the Reporting EntityG a duty of confidentiality, whether based on law, contract or otherwise; and
        (c) the Reporting EntityG has provided to that PersonG , except where that PersonG is the DFSAG , a written notice as specified in (3).
        (2) For the purposes of (1)(a), the PersonsG whose exercise of employment, profession or duties may warrant selective disclosure are as follows:
        (a) any adviser, underwriter, sponsor or compliance adviser;
        (b) an agent employed by the Reporting EntityG to release the information;
        (c) PersonsG with whom the Reporting EntityG is negotiating with a view to effecting a transaction or raising finance, including prospective underwriters or sponsors of an issue of SecuritiesG , providers of finance or loans or the placement of the balance of a rights issue not taken up by shareholders;
        (d) the DFSAG or another Financial Services RegulatorG where such disclosure is necessary or desirable for the regulator to perform its functions;
        (e) a PersonG to whom the Reporting EntityG discloses information in accordance with a lawful requirement;
        (f) a major shareholder of the Reporting EntityG ; or
        (g) any other PersonG to whom it is necessary to disclose the information in the ordinary course of business of the Reporting EntityG .
        (3) For the purposes of (1)(c), the Reporting EntityG must, before making disclosure to a PersonG , provide to that PersonG a written notice that:
        (a) the information is provided in confidence and must not be used or be allowed to be used for a purpose other than the purpose for which it is provided; and
        (b) the recipient must take reasonable steps to ensure that the recipient or any PersonG having access to the information through the recipient does not deal in the relevant SecuritiesG , or any other related Investment, or disclose such information without legitimate reason, prior to market disclosure of that information by the Reporting EntityG .
        (4) Where a Reporting EntityG makes selective disclosure of Inside InformationG pursuant to (1), it must ensure that a full announcement is made to the market as soon as possible, and in any event, when it becomes aware or has reasonable grounds to suspect that such information has or may have come to the knowledge of any PersonG or PersonsG other than those to whom the selective disclosure was made.
        Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

        • MKT 4.2.3 Guidance

          1. It is likely that Inside InformationG will be made known to certain EmployeesG of the Reporting EntityG . A Reporting EntityG should put in place procedures to ensure that EmployeesG do not disclose such information, whether or not inadvertently, and that EmployeesG are adequately trained in the identification and handling of Inside InformationG (see Rules and associated Guidance).
          2. Rule 4.2.3 does not excuse a Reporting EntityG from its overriding obligation to disclose Inside InformationG as soon as possible pursuant to Rule 4.2.1. A Reporting EntityG which proposes to delay public disclosure of Inside InformationG should refer to Rule 4.2.4, which sets out the limited disclosure exceptions permitted.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

    • Disclosure Exceptions

      • MKT 4.2.4

        (1) A Reporting EntityG need not, subject to (2), make disclosure of information pursuant to Rule 4.2.1, where, in the reasonable opinion of the Reporting EntityG , the disclosure required by that Rule would:
        (a) be unduly detrimental to the legitimate interests of the Reporting EntityG ; or
        (b) disclose commercially sensitive material.
        (2) Where a Reporting EntityG intends not to make the disclosure pursuant to (1), it must immediately file with the DFSAG a confidential report which:
        (a) contains all the information which it seeks not to disclose and the reasons for non-disclosure; and
        (b) is in the English language and, where any documents accompanying the report are not in the English language, an English translation of such documents.
        (3) The DFSAG may:
        (a) specify the period during which disclosure of the information included in the confidential report need not be disclosed to the markets; and
        (b) extend the period referred to in (a) upon application by the Reporting EntityG .
        (4) Where a confidential report is filed with the DFSAG under (2), the Reporting EntityG need not comply with the requirements in Rule 4.2.1 during the period permitted by the DFSAG pursuant to (3), unless or until one of the following occurs:
        (a) the DFSAG directs the Reporting EntityG to comply with Rule 4.2.1;
        (b) the Reporting EntityG becomes aware that there is a material change of circumstances that renders the reason for non-disclosure of the information no longer valid; or
        (c) the Reporting EntityG becomes aware or has reasonable grounds to suspect that the relevant Inside InformationG has or may have come to the knowledge of any PersonG or PersonsG other than by way of selective disclosure in accordance with Rule 4.2.3.
        (5) The procedures in Schedule 3 to the Regulatory Law apply to a decision of the DFSAG under (3) or (4)(a).
        (6) If the DFSAG decides to exercise its power under (3) or (4)(a), the Reporting EntityG may refer the matter to the FMTG for review.
        Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
        [Amended] DFSA RM134/2014 (Made 21st August 2014). [VER5/06-14]

      • MKT 4.2.5

        By filing a report under Rule 4.2.4, the Reporting EntityG undertakes that the contents of the report and any accompanying documents are true, accurate and not misleading and contain all the information which the DFSAG would reasonably expect to be made aware of in the circumstances of the case.

        Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

        • MKT 4.2.5 Guidance

          1. Examples of circumstances under which a Reporting EntityG might rely on the exception from disclosure in Rule 4.2.4 include where:
          a. it would be a breach of law to disclose such information;
          b. the information is a trade secret;
          c. there are negotiations in course where the outcome or normal pattern of those negotiations would be likely to be affected by public disclosure;
          d. the information is provisional and generated for internal management purposes prior to later public disclosure; or
          e. there are impending developments that could be jeopardised by premature disclosure.
          2. Rule 4.2.4 does not permit a Reporting EntityG to delay public disclosure of the fact that it is in financial difficulty or of its worsening financial condition and is limited to the fact or substance of the negotiations to deal with such a situation. A Reporting EntityG is also not permitted to delay disclosure of Inside InformationG on the basis that its position in subsequent negotiations to deal with the situation will be jeopardised by the disclosure of its financial condition.
          3. Where the DFSAG considers that the reliance on permitted exceptions under Rule 4.2.4 is not in the interests of actual or potential investors, market integrity or the DIFCG , it may direct the Reporting EntityG to make either a holding announcement or full market disclosure (see Rule 4.5.1). The DFSAG may, in addition, require the Authorised Market InstitutionG in which the SecuritiesG are traded to suspend trading of the relevant SecuritiesG .
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

    • Control of Inside Information

      • MKT 4.2.6

        A Reporting EntityG must establish effective arrangements to deny access to Inside InformationG to PersonsG other than those who require it for the exercise of their functions within the Reporting EntityG .

        Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

      • MKT 4.2.7

        A Reporting EntityG must establish and maintain adequate systems and controls to enable it to identify at all times any PersonG working for it under a contract of employment or otherwise, who has or may reasonably be likely to have access to Inside InformationG relating to the Reporting EntityG , whether on a regular or occasional basis.

        Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

      • MKT 4.2.8

        A Reporting EntityG must take the necessary measures to ensure that its Directors and Employees who have or may have access to Inside InformationG acknowledge the legal and regulatory duties entailed, including dealing restrictions in relation to the Reporting Entity'sG SecuritiesG or any related Investments, and are aware of the sanctions attaching to the misuse or improper use or circulation of such information.

        Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

      • MKT 4.2.9

        A Reporting EntityG must nominate two individuals to be its main points of contact with the DFSAG in relation to continuing disclosure and other obligations under this chapter.

        Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]

        • MKT 4.2.9 Guidance

          Framework for handling Inside InformationG

          1. The responsibility for ensuring that a Reporting EntityG has an adequate overall policy on the handling of Inside InformationG lies with the BoardG of the Reporting EntityG . Whilst responsibility for compliance with the continuing obligations set out in the RulesG lies with the Reporting EntityG , DirectorsG should be aware that they may be held PersonG ally liable for breaching these RulesG .
          2. Reporting EntitiesG should have a consistent procedure for assessing whether information is Inside InformationG and should clearly identify those within the Reporting EntityG who are responsible for the communication of this information to the market.
          3. Reporting EntitiesG should put in place arrangements for maintaining the confidentiality of Inside InformationG before announcement. These should include adequate training for EmployeesG in the handling, distribution and announcement of Inside InformationG as appropriate. Reporting EntitiesG should, for example, guard against the risk of Inside InformationG being leaked to the market through selective disclosure of internal briefings or via trade journals. Where the Reporting EntityG considers that this may have occurred, an announcement should be made immediately.

          Inadvertent disclosure

          4. In situations where the Reporting EntityG will be open to questioning that may be designed to elicit or may have the effect of eliciting Inside InformationG (such as during shareholders' meetings or dealing with analysts or journalists), the Reporting EntityG should plan in advance how it will respond to such questions. If the Reporting EntityG intends to disclose Inside InformationG at such a meeting, an announcement must be made before or at the same time as the meeting.
          Derived from RM81/2011 (Made 30th November 2011). [VER1/11-11]
          [Amended] DFSA RM120/2013 (Made 14th July 2013). [VER4/07-13]