The developments with respect to COVID-19 raise a number of challenges for issuers of securities listed on a regulated market relating to – among other things – disclosure of information and periodic financial reporting.
The European Securities and Markets Authority (“ESMA”) has made a number of recommendations with respect to the disclosure of information relating to COVID-19. Two important ESMA disclosure recommendations are:
Issuers should disclose as soon as possible any relevant significant information concerning the impacts of COVID-19 on their fundamentals, prospects or financial situation in accordance with their transparency obligations under the Market Abuse Regulation.
Issuers should provide transparency on the actual and potential impacts of COVID-19, to the extent possible based on both a qualitative and quantitative assessment on their business activities, financial situation and economic performance in their 2019 year-end financial report if these have not yet been finalised or otherwise in their interim financial reporting disclosures.
In addition to the recommendations from ESMA, we feel that it would be prudent for issuers to take into account the following with respect to the COVID-19 situation:
- Issuers should regularly evaluate their message and communication plan for updating investors, analysts and other stakeholders to ensure up-to-date and consistent disclosure of information.
- Issuers should assess whether it is necessary to provide information regarding the expected impact on their medium to long-term financial results, including their results for the remainder of the year.
- Issuers should be prepared to address questions relating to COVID-19 and its expected impact on their results during investor and analyst meetings and earnings calls. As always, issuers should be mindful not to disclose material non-public information with attendees of such meetings and calls that have not been disclosed properly through a press release.
- Finally, issuers that have provided guidance to the market regarding their operational or financial results, should consider whether there is a need to update or withdraw such guidance with a view to adequately manage the market’s expectations.
We will continue to closely monitor the legal developments and regulatory recommendations with respect to the COVID-19 situation and provide updates where appropriate.