Supervision of listed companies' disclosure requirements 

The objective of monitoring compliance by listed companies with their disclosure requirements is to ensure that investors have access to essential and 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 pro-active effect of supervision. We consider it important that a high degree of confidence in financial information is maintained in the Finnish market.

Compliance with disclosure requirements is monitored both ex ante and ex post. Ex ante monitoring focuses on the scrutiny and approval of prospectuses and listing particulars. By contrast, compliance by listed companies with their ongoing and periodic disclosure requirements is mainly monitored ex post.

Focus on information 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, consistency, justifiability, timeliness and clarity of information.

FIN-FSA must approve a prospectus, unless it is obviously faulty or inadequate. However, we are unable to ascertain the accuracy of the information provided in the prospectus; responsibility for the accuracy of the information content lies with the compiler of the prospectus.

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

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 interim reports included in the prospectus.

Supervision of both examination of ambiguities as well as theme inspections

We mainly monitor compliance by listed companies of their ongoing and periodic disclosure requirements ex post. On the one hand, supervision consists of examinations of individual cases of detected ambiguities; on the other hand, it takes the form of inspections based on particular themes or targeted at a number of listed companies.

Our aim is to ensure compliance by listed companies with their ongoing disclosure requirements so that they publish, without undue delay, the decisions and facts that tend 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 by the authorities, corporate acquisitions and overall financial information, such as the business prospects and profit warnings.

As regards periodic disclosure requirements; we seek to ensure that companies' interim reports, financial statement releases and financial statements 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 (eg the adequacy, relevance, consistency, justifiability, timeliness and clarity of information).

In connection with the supervision of ongoing and periodic disclosure requirements, we also face a number of specific questions that we need to assess in our supervisory work.  Such questions include the adequacy and justifiability or potentially misleading nature of the business prospects presented, 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.

2 June 2009