First Q&A from ESMA on the operation of the Market Abuse Directive
The European Securities and Markets Authority has published the first in an intended series of questions and answers on the Market Abuse Directive (MAD). These Q&As are intended to promote common supervisory approaches and practices across the EU on how the MAD operates in practice.
The first Q&A deals with the disclosure of information by issuers on their dividend policy and:
“reminds issuers that they should consider any relevant information related to dividend payments and policies as inside information, should this information be likely to have a significant effect on the prices of either the issuer’s shares or related derivatives or both…various aspects of dividend policies and payments…might have a significant effect on the prices of derivative instruments, such as ex-date, provisional and final amounts, nature of the payment (ordinary or special dividend), any changes on previously announced information, and changes in dividend payment patterns. For instance, the issuer’s decision to change the ex-dividend date compared to preceding year’s date should be disclosed in a timely manner so that the information is incorporated into the pricing models used on the derivative markets.
The disclosure of this type of information should be done promptly, even when the proposals for any change on dividend policy, including dates and nature of the dividend, are still subject to further consideration or approval by the general shareholders meeting.
Investor relations units should take special care when replying to questions posed by investors or firms so as to ensure that only the information that was previously disclosed by the issuer under the MAD obligations is provided in those answers and that selective or unintended disclosures regarding the issuers’ dividend policy are avoided.
ESMA therefore calls on issuers, especially those whose shares are included in reference indices and are the underlying in listed derivatives contracts, to pay special attention to this issue in order to ensure an effective and harmonised application of MAD”.
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