The form and content of the ad hoc disclosure are governed largely by the second subparagraph of Article 17(1) of the MAR in conjunction with point (b)(i) to (v) of Article 2(2) of Commission Implementing Regulation (EU) 2016/1055 and section 26 (4) of the WpHG in conjunction with section 4 of the WpAV. For emission allowance market participants, see also section I.3.10.4.

Information about the issuer and its financial instruments

Section 4 (1) of the WpAV requires ad hoc disclosures to contain the following information:

• A clearly highlighted header: “Disclosure of inside information under Article 17 of Regulation (EU) No 596/2014”.

• The header must also contain a keyword that is identifiable as a subject line and summarises the main content of the disclosure.

  Several keywords must be provided if several items of inside information are publicly disclosed together in a single ad hoc disclosure.¹ Examples of such keywords include:

  • liquidity problems/overindebtedness,
  • mergers and acquisitions,
  • financial data,
  • dividend payments,
  • alliances/cooperation,
  • corporate actions,
  • strategic business decisions,
  • personnel matters,
  • legal matters/litigation,
  • other.
• The issuer’s full (company) name and address.
• The International Securities Identification Numbers (ISINs) of the shares, bonds with warrants, convertible bonds and profit-participation certificates with equity-like features issued by the issuer, if they are admitted to trading on an organised market in Germany or if such admission has been applied for.
  If the issuer has issued other financial instruments that have been admitted to trading or for which admission to trading has been applied for, the only information required for those financial instruments is the location of the website where the corresponding information for those financial instruments is available in a permanently updated and complete file. The homepage must contain a prominent indication of a page with information for investors where the file must be easy to find.
• The stock exchange and the trading segment for which admission to trading has been granted or applied for.

Details of the inside information

The following details must be disclosed:

• The inside information to be publicly disclosed.
• The date when the circumstances underlying the information arose. If the issuer delayed disclosure under Article 17(4) of the MAR and if the underlying circumstances change in the course of the delay period up to the time when the ad hoc disclosure is made public, the date when the information arose must be based on these changed circumstances.
• A short explanation about the extent to which the information directly concerns the issuer, if this is not evident from the information to be disclosed.

• An explanation why the information would be likely to have a significant effect on the stock exchange or market price if it became publicly known, if this is not evident from the information to be disclosed. The second subparagraph of Article 17(1) of the MAR requires in this respect that the inside information be made public in a manner that enables complete, correct and timely assessment of the information by the public.

  With regard to agreements subject to an ad hoc disclosure obligation, this means that the key aspects of the agreement must be disclosed. In addition to the subject matter of the agreement, the contracting parties and the term of the agreement, these include in particular the material rights and obligations under the agreement, i.e. as a rule the purchase price or sale proceeds, which must be given at least as a ballpark figure to the extent as their nature and amount, in light of the issuer’s net assets, financial position and results of operations, at least partially influence the potential of the information in question to have a significant effect on prices. The same applies to mergers and acquisitions.

  Alternatively, to enhance the ability of the capital markets to assess the information, the direct and future effects of the net assets, financial position and results of operations of the issuer can be explained (e.g. a need to recognise an impairment loss in the case of the sale of an asset, or expected future additional income – e.g. due to synergies – and any resulting adjustments to forecasts). A ballpark figure for the volume and the term of an agreement on a significant order may also be significant factors for the assessment.

  A confidentiality agreement cannot waive this obligation. However, the issuer is not required to disclose the details of an agreement (e.g. discounts or special terms granted).

  For financial data and related forecasts, as well as dividends, this means that the relevant benchmark must also be disclosed in the ad hoc disclosure (see sections I.2.1.5.1 and I.2.1.5.2 in the “Inside information” chapter). There should also be an indication of whether there have been material changes in the issuer’s basis of consolidation or its accounting policies compared with the comparative period. This is the only way to ensure that market participants and investors can quickly assess, compare and process the material information.

  In the case of personnel-related matters, it should be noted that – to the extent that the reasons for the price-sensitivity are not attributable solely to any individual or individuals and are known to the capital markets – the reasons behind the personnel-related matter must also be disclosed. It should be considered that these reasons may in themselves constitute inside information (e.g. in the case of termination for good cause under section 297 of the AktG).

  In the case of capital increases, the key terms must be disclosed, in particular the nature, volume, details of pre-emptive rights or their disapplication, issuing price and expected proceeds. The reason for the capital increase may also be a factor with the potential to have a significant effect on prices, in which case it must be disclosed. Note in such cases that this reason may already itself constitute inside information (e.g. an urgent need for cash funds in the event of financial distress).

Explanation of financial performance measures

In accordance with the ESMA Guidelines on Alternative Performance Measures (APMs)², issuers who use alternative performance measures when disclosing regulated information must explain them. This also applies to the disclosure of inside information under Article 17 of the MAR (see paragraph 3 of the APM Guidelines). APMs are understood as financial measures of historical or future financial performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial reporting framework (see below) (see paragraph 17 of the APM Guidelines). The Guidelines are supplemented by the ESMA Q&As, which clarify additional questions on the use of APMs.³

APMs are usually derived from or based on the financial statements prepared in accordance with the applicable financial reporting framework, such as (see paragraph 18 of the APM Guidelines):

• operating earnings,
• cash earnings,
• earnings before one-time charges,
• earnings before interest, taxes, depreciation and amortisation (EBITDA),
• net debt,
• autonomous growth or similar terms denoting adjustments to line items of statements of comprehensive income, statements of financial position/balance sheets or statements of cash flow.

According to paragraph 4 of the APM Guidelines, they do not apply to certain performance measures, and certain performance measures are not deemed to be APMs under paragraph 19 of the APM Guidelines:

• performance measures based on regulatory requirements, including measures defined in the Capital Requirements Regulation and Directive (CRR/CRD IV),⁴
• performance measures defined or specified by the applicable financial reporting framework⁵, such as revenue, profit or loss, or earnings per share,
• physical or non-financial measures, such as number of employees, number of subscribers, sales per square metre (when sales figures are extracted directly from financial statements) or social and environmental measures, such as greenhouse gases emissions, breakdown of workforce by type of contract or by geographic location,
• information on major shareholdings, acquisition or disposal of own shares and total number of voting rights.

Issuers who use APMs must define them and the basis of calculation adopted, and the definition must be disclosed in a clear and readable way (see paragraphs 20 and 21 of the APM Guidelines). Note that the presentation of APMs should not distract from the presentation of measures directly stemming from financial statements (see paragraphs 35 and 36 of the APM Guidelines).

As a general principle, the explanations required by the APM Guidelines (see in particular paragraphs 33, 34, 41–43) can be incorporated by reference (paragraph 45), for example by a reference to the issuer’s website where the explanations can be checked, or to other documents previously published by the issuer that contain these disclosures on the APMs and that are readily and easily accessible to the users. As before, the text of the ad hoc disclosure must be limited to the material information and explanations subject to an ad hoc disclosure obligation.

However, in accordance with Question 10 of the ESMA Q&As, a reference is not permitted if it refers to comparatives for the corresponding previous periods (see paragraph 46 of the APM Guidelines). The following are also not permitted: the use of references in connection with the label of an APM (see paragraph 22 of the APM Guidelines), the exuberant use of APMs in connection with the presentation of performance measures directly stemming from financial statements (see paragraphs 35 and 36 of the APM Guidelines), and in circumstances where a reference would impair consistent presentation over time (see paragraph 41 of the APM Guidelines).

Scope of disclosure

The disclosure should be brief. The inside information must be disclosed on the basis of the content that is current at the date of disclosure; there is no requirement for the ad hoc disclosure to include a description of how the inside information developed during the period of delay. As a general principle, quotes from members of governing bodies, contracting parties, etc., do not belong in an ad hoc disclosure. BaFin will not object if there is a need to append certain additional information (such as a disclaimer) to the text of the ad hoc disclosure notification if this is required by capital market legislation in other countries in which the issuer’s financial instruments are also admitted to trading. As far as possible, however, this information should be kept separate from the text of the disclosure. Issuers who are not required to provide such additional information should not do so.

Marketing messages/abuse of ad hoc disclosure

Ad hoc disclosures may not be used for marketing activities (second sentence of second subparagraph of Article 17(1) of the MAR). Including marketing messages makes it difficult for the general public to quickly identify and digest genuinely important information.
In light of this, attention is drawn again to the need to limit the content of ad hoc to the content specified by the legislator. Accordingly, any persons who combine inside information with the marketing of their activities commit an administrative offence in accordance with section 120 (15) no. 8 of the WpHG.
For example, repeating information provided at the beginning of an ad hoc disclosure towards the end of the disclosure as verbatim quotes of management board members or other persons is not in compliance with the ad hoc disclosure requirements. The same applies if previously published information is repeated, unless this is required, e.g. as part of a correcting disclosure. Additionally, responses to attacks by the company’s competitors, giving the company’s own assessment of its competitors or commenting on general economic trends are not permitted in ad hoc disclosures.
Publishing the issuer’s company profile and interim reports and annual financial statements in full is also abusive conduct. Although interim reports and annual financial statements may be subject to an ad hoc disclosure obligation, only the inside information (e.g. significant profit growth) or the relevant financial data may be disclosed, not the entire report that may comprise several pages.

Footnotes: