Ban on insider dealings
The provisions of insider dealings legislation and — above all — the ban on insider dealings are designed to keep the capital market functioning. The existence of insider information is the starting point. Insider information is concrete information regarding circumstances that are not known to the public that directly or indirectly relate to the issuer of insider papers or the insider papers themselves and that have the potential to significantly influence the share price if they became public. Such potential is deemed to exist if a knowledgeable investor would take the information into account when making investment-related decisions leading to the sale or purchase of securities.
In addition, companies are now obligated to maintain insider directories of individuals and corporate entities that have access to insider information.
Ad-hoc Publicity
Which information needs to be published?
All insider information that directly relates to the issuer must be published immediately. This also applies to insider information which relates to circumstances which have occurred within RWE’s field of activity as well as to circumstances that have occurred outside RWE’s field of activity and that are purely external in nature. However, changes in general market data, e.g., increases in prime rates or market statistics, are not considered insider information.
This means that insider and ad-hoc information are largely equivalent.
Who needs to be informed prior to the publication of insider information?
The management of stock exchanges where securities and securities derivatives are registered for trading must be informed. Furthermore, the German Federal Bank Supervisory Authority (BaFin) must also be informed.
How should information be published?
Information briefs or bulletins must be accessible to all professional players on the trading market as well as to all issuers via a widespread information system. Moreover, a notice must be posted on RWE’s website, and the publication must immediately be sent to the stock exchanges and the German Federal Bank Supervisory Authority (BaFin).
What does one need to consider regarding the exemption of information from ad-hoc publicity?
RWE makes its own decisions on exemption. Certain conditions must be met if such an exemption is to protect RWE’s justified interests. This would be the case if the disclosure of insider information would impair ongoing negotiations or if it would affect valuations in the event of a multiple-step decision-making process (executive board resolution that is still subject to supervisory board approval). Such an exemption may not mislead the public. The confidentiality of insider information must be guaranteed at all times.
Derelictions of duty can be punished with a fine of up to one million euros.
Directors’ dealings
The amendments made to Sec. 15a of the German Securities trading Act (WpHG) introduced stricter obligations to inform the public of securities dealings. For example, the transaction volume exempted from mandatory disclosure was reduced from €25,000 within 30 days to €5,000 per year. In addition, the deadline for reporting such dealings was shortened to 5 working days.
