Distinction between the concepts of inside information and relevant information
Until the implementation of the RLD (25 November 2018), there were two different definitions –but very similar– of "inside information" in our legal system: the one contained in Article 7 of the Regulation (UE) 596/2014 of the European Parliament and of the Council, of 16 April 2014, on market abuse (RMA) and the definition contained in Article 226 of the Securities Market Act (SMA).
Likewise, Article 228 of the SMA included the definition of "relevant information" that largely overlapped with that of inside information. This article also established an obligation for issuers to make public and disseminate all relevant information (not inside information as required by the RMA).
The RLD has modified Articles 226 and 227 of the SMA in order to clarify these two concepts:
- the definition of inside information disappears from the SMA and is now only contained in Article 7.1 of the RMA which –in what concerns to financial instruments– establishes that is "information of a precise nature, which has not been made public, relating, directly or indirectly, to one or more issuers or to one or more financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments"; and
- the definition of relevant information is now contained in Article 227 of the SMA which establishes that it will be "the other information of a financial or corporate nature related to the issuer or its securities or financial instruments that any law or regulation obliges them to make public in Spain or that they deem necessary, for their special interest to diffuse among investors".
Both the inside information and the relevant information must be communicated to the Spanish Securities & Exchange Commission (CNMV) for its publication on its page and be simultaneously available on the website of the issuer itself; but only the inside information will be subject to the ban on making transactions with such information set out in Article 14 of the RMA.
For all these reasons, issuers are going to have to split their current "relevant factual model" in two in order to have: (i) a model for the dissemination of inside information pursuant to Article 17 of the RMA and Article 226 of the SMA; and (ii) another model for the dissemination of relevant information pursuant to Article 227 of the SMA and, where relevant, any other applicable provisions.
On the other hand, the RLD has modified Article 229 of the SMA in such a way that it allows the issuer that chooses to delay the dissemination of inside information not to submit an explanation or justification regarding the concurrence of the conditions that allow the delay in publication. However, the issuer must always notify the CNMV of the delay and if the CNMV expressly requests such explanation or justification, it must then send it.
Elimination of the obligation to have internal regulations for conduct in the securities market
Before the implementation of the RLD, Article 225 of the SMA established which were the subjects obliged to respect market abuse rules, but after the RLD's modification of this article, it defines who the competent authority for the implementation of RMA is.
By way of this amendment, it can be understood that the obligation (in the former wording of the aforementioned Article 225 of the SMA) that issuers had to prepare, submit to the CNMV and comply with an internal regulations for conduct in the securities market (IRC) has been eliminated.
In view of the aforementioned, issuers would not be obliged to prepare an IRC and would be directly subject to compliance with the provisions of the RMA, the SMA and its implementing provisions.
It is interesting to note in this regard that the entities registered in the Alternative Stock Market (MAB) would continue to be subject to the obligation of having said IRC in accordance with the provisions of the MAB Regulation of 20 December 2017, unless it is amended.
Relaxation of the notification threshold for persons discharging managerial responsibilities
The new wording of Article 230 of the SMA raises the notification threshold of operations carried out by persons discharging managerial responsibilities and their closely related persons from 5 thousand euros to 20 thousand euros.
The possibility of raising this threshold was provided for in Article 19 of the RMA which establishes a threshold of 5 thousand euros to notify the operations carried out by persons with managerial powers within a calendar year, empowering the competent authorities to raise it, this being our case.
To this end, it should be noted that the RMA states that both administrators and senior executives are persons discharging managerial responsibilities. However, the threshold of 20 thousand euros only applies to senior executives (as it was before the case for the 5 thousand euros threshold), as in accordance with the provisions of articles 125 of the SMA and 31 of Royal Decree 1362/2007, regulating the transparency requirements applying to issuers, pursuant to which administrators must communicate "any operations carried out on shares of the issuer or on securities or other financial instruments referenced to said shares", without being subject to any threshold.