Regulatory
Disclosures:
Related Parties and Significant Owners
Insider Transactions
Position: Insiders should make relevant and comprehensive disclosure of their trading activities in the securities of their company prior to execution of planned trades.
Rationale: Such disclosures will provide investors with an indication of how people with presumably superior knowledge view the company’s operations and financial prospects prior to letting those insiders trade on that information.
Where stated: EAC - UK Listing Rules; CAC - CSA Internal Stock Sales
Large Ownership Positions
Position: Companies should have to disclose agreements and transactions in securities that give certain entities control of 5% or more of all voting interests by the end of the day the transactions are made.
Rationale: Large shareowners may have significant influence over the management of a company, or its governance policies and, as such, can affect the value of shareowners’ interests. Market participants need to know this information without delay to create a level playing field between insiders and ordinary investors and shareowners. These disclosures should include transactions in convertible and derivative securities and agreements that could give those entities control of 5% or more of all voting interests.
Where stated: EAC - EC Transparency Directive 02
Deadline for Filing Beneficial Ownership Reports
Position: Companies should have to file beneficial ownership reports and subsequent changes to beneficial ownership within two days of the transaction.
Rationale: Investors want and need information about changes in beneficial ownership because it provides insight to management’s views of the company’s performance and/or future prospects.
Where stated: CAC - CSA Internal Stock Sales
Related-Party Transactions
Position: Issuers should have to disclose all business transactions completed or proposed in the past year between the issuer and related parties, together with a description of the nature, size, and purpose of such transactions.
Rationale: Management may use company assets to influence the manner in which board members vote on certain important issuers. Such related-party transactions could create conflicts for the board members when deciding whether to vote in the best interests of shareholders or in their own best interests.
Where stated: EAC - CESR Prospectus Directive 03 (PDF)
Insider Loans
Position: Issuers should have to disclose the due dates and terms of any loans they have made to major shareholders, key personnel, or board members.
Rationale: Such information will help investors understand the duration of such loans and act as a deterrent to open-ended insider loans which may shield effective compensation.
Where stated: EAC - CESR Prospectus Directive 03 (PDF)