Supervision of listed companies' disclosure obligations

The Financial Supervisory Authority monitors compliance by listed companies with their disclosure obligations. The primary aim of supervision of disclosure obligations as laid down in the Securities Markets Act is to ensure that investors have access to adequate information for making an informed assessment of listed companies and their securities. Possible cases of abuse are monitored and investigated in order to increase the pre-emptive effect of supervision. We consider it important that a high degree of confidence in information disclosed by listed companies is maintained in Finland.

Compliance in disclosure obligations is monitored both ex ante and ex post. Monitoring of prospectuses in connection with securities offerings is primarily ex ante supervision, whereas supervision of ongoing and periodic disclosure obligations is both proactive and reactive in nature.

Focus on the scope and quality of information provided in prospectuses

We scrutinise and approve prospectuses issued for securities offerings and listing purposes. This process involves a review of the information required by securities markets legislation. We also assess the consistency of the prospectus content and how well the information provided in the prospectus meets the general quality requirements set for information. These general quality criteria include the adequacy, relevance, comprehensibility, consistency, justifiability, timeliness and clarity of information.

The Financial Supervisory Authority must approve a prospectus, unless it is obviously erroneous or incomplete. However, we cannot ascertain the accuracy of the information provided in the prospectus; responsibility for the accuracy of the information content lies with those who produce the prospectus.

Supervision concerning prospectuses generally relates to the time when the prospectus is examined. In this respect, supervision is conducted as an ex ante exercise. Even so, supervision also includes an ex post aspect, in that the information content of prospectuses may if necessary be compared with information subsequently obtained from a listed company or securities offering.  We will then evaluate whether the information in the prospectus has been true, adequate and justified also in the light of the more recent information.

Listing and securities issuance often raise specific questions concerning the presentation of financial information. These questions may, for instance, refer to pro forma information and its appropriateness and how corporate acquisitions and mergers are dealt with in the financial statements and half-yearly reports included in the prospectus.

Supervision includes both examination of irregularities as well as thematic reviews

We monitor compliance by listed companies with their ongoing and periodic disclosure obligations, both proactively and reactively. Proactive supervision includes e.g. on-site visits related to disclosure practices. Reactive supervision consists of both examinations of individual cases of detected irregularities and thematic reviews targeted at several listed companies.

Our aim is to ensure compliance by listed companies with their ongoing disclosure obligation, so that they disclose, without undue delay, any such decisions and matters that are likely to have a material impact on the value of their securities. Such information may include, for example, details of significant organisational changes, decisions by courts of law or authorities, corporate acquisitions, and general financial information, such as future prospects and profit warnings.

As regards the periodic disclosure obligation, we seek to ensure that companies' half-yearly reports and financial statements and management reports include the information required under securities markets legislation. We also supervise the publication of this information within the period of time prescribed by law. To the extent possible, we also endeavour to establish that the information content of these reports meets the general quality criteria set for information (e.g. the adequacy, relevance, consistency, justifiability, timeliness and clarity of information).

In connection with the supervision of ongoing and periodic disclosure obligations, we also encounter more specific questions that we need to address in our supervisory work.  Such questions may concern the adequacy and justifiability or potentially misleading nature of assessments of future prospects, the timeliness and clarity of profit warnings, as well as the objective of pro forma information and its separation from official financial information and the principles for compiling pro forma information.




17 November 2015

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