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1 Key points of the Prospectus Directive >>more>>
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3 Proposed changes to the AIM Rules >>more>>
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4 Update on the disclosure of Price Sensitive Information >>more>>
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5 Corporate Governance and the Combined Code >>more>>
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6 Corporate Governance Guidelines for Investment Trusts >>more>>
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7 Proposed amendments to the Listing Rules relating to Investment Companies >>more>> |
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| Public Companies Update October 2003 |
4 UPDATE ON THE DISCLOSURE OF PRICE SENSITIVE INFORMATION
On 5 August the Financial Services Authority ("the FSA") decided not to pursue its preliminary inquiry into Manchester United's release of the information regarding David Beckham's then proposed transfer to Barcelona Football Club. This footballing news was deemed to be price sensitive information ("PSI"), (i.e. information not in the public domain which, if made public, may lead to a substantial movement in the price of that company's shares) and should therefore have been released through a Regulated Information Services ("RIS"). Instead, Manchester United released the information to the Press Association news agency first, and this was the basis for the FSA inquiry. However, whilst this particular inquiry is not being pursued, it is not the end of the matter for listed football clubs. Also on 5 August, Ken Rushton, the Director of Listing at the FSA, issued a letter to all 9-football clubs listed on the Official List warning them about the way that they release PSI.
The letter recognises that the industry is susceptible to price sensitive developments and such developments increase during open transfer windows. However, despite the idiosyncrasies of the football industry Mr Rushton highlighted that listed clubs nevertheless need to adhere to the Listing Rules. In particular, the letter highlighted the following:
1. PSI must be released without delay through an RIS.
2. Holding announcements should be prepared when a price sensitive development is being kept confidential which can be used and released immediately through an RIS in the event of a leak of the price sensitive development.
3. Third parties (such as players' agents) involved in price sensitive negotiations should be made aware of the football club's disclosure obligations under the Listing Rules.
4. Football Clubs should have reference to section 15 of the UK Listing Authority's guidance on the dissemination of PSI.
5. Sanctions for failure to comply with the Listing Rules include public censure and unlimited fines.
The letter came just before the end of the recent transfer window, which closed at the end of August. It was a reminder of the importance of treating supporters and shareholders alike when PSI is released and the conflicts that can arise when this is not done. The question raised is whether such constraints on the release of PSI are practical for the football industry and as such, should football clubs be listed companies.
During transfer windows, (January and July - August) transfer speculation is rife and the barrage of press attention compounds this. There is an inevitable correlation between press stories which seek to satisfy supporters' (and hence readers') curiosity and PSI. For example, quotes given to journalists by insider sources at listed clubs over the likely sale of a core asset have price impacting implications. A comparison can be drawn to the leaking of information over a listed company's impending sale of a business division. Whilst the FSA clampdown on listed club's has not extended as far as the stories in the footballing gossip pages, the Manchester United inquiry and Mr Rushton's letter were timely reminders that listed football clubs, like other listed entities, have to exercise caution when releasing information which could constitute PSI.
If you require further information on any matter covered in this note, please contact your principal contact at Charles Russell or Simon Gilbert, Katy Knight, Clive Hopewell or Alexander Keepin (London), Francis Rundall or Richard Norton (Cheltenham) or Geoff Sparks (Guildford) and on 0207 203 5000.
Please note that the summaries above are a general indicative guide only. They are not exhaustive. This information has been prepared by the firm as a service to our clients. As it is a general guide, we recommend that you seek professional advice before taking action. No liability can be accepted by the firm for any action taken or not taken as a result of this information. The firm is not authorised under the Financial Services and Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment services to clients because we are members of the Law Society. We can provide these investment services if they are an incidental part of the professional services we have been engaged to provide.
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