Contributed By CHSH Cerha Hempel Spiegelfeld Hlawati
In the case of extended circumstances, the realisation of the transaction and of each intermediate step is, in each case, in and of itself subject to the principles of ad hoc disclosure in accordance with Article 17 of the Market Abuse Regulation (Regulation (EU) 596/2014). The existence of inside information can be assumed if either:
a) sufficiently likely;
b) price-specific; and
c) price-relevant, or
a) has already occurred or its occurrence is sufficiently likely;
b) is price-specific; and
c) is price-relevant.
Intermediate steps that derive their price relevance from the final result are to be regarded as price-relevant if the occurrence of the final result can actually be expected.
Generally, the information is not precise enough to constitute inside information at the time at which the target is first approached or the negotiations commence. If a non-binding letter is signed, the question of whether there exists an obligation to issue an ad hoc notification comes down to the price specificity and price relevance of such a step. If these questions can be answered in the affirmative, the intermediate step itself is subject to an ad hoc reporting obligation. The question of how likely it is that the final result will occur plays a crucial role in this respect because on the one hand not every intermediate step is specific enough to enable a conclusion to be drawn on the effect it will have on the share price and, on the other hand, a reasonable investor does not buy or sell because, for instance, a non-binding letter is signed, but because these steps contain information relating to the final result. Generally, the signing of definitive agreements triggers an obligation to issue an ad hoc notification.