5.5. Market Soundings
5.5.1. Definition of Market Sounding
The following constitute Market Sounding:
- (a) the communication of information, prior to the announcement of a transaction, in order to gauge the interest of potential investors in a possible transaction and the conditions relating to it, such as its potential size or pricing, to one or more potential investors by:
- (i) an Issuer; or
- (ii) a secondary offeror of a Security, in such quantity or value that the transaction is distinct from ordinary trading and involves a selling method based on the prior assessment of potential interest from potential investors; or
- (iii) a third party acting on behalf or on the account of a Person referred to in (i) or (ii); and
- (b) disclosure of Inside Information by a Person intending to make a takeover bid for the Securities of a company or a merger with a company to parties entitled to the Securities, will also constitute a market sounding, provided that:
- (i) the information is necessary to enable the parties entitled to the Securities to form an opinion on their willingness to offer their Securities: and
- (ii) the willingness of parties entitled to the Securities to offer their Securities is reasonably required for the decision to make the takeover bid or merger.
5.5.2. Disclosure of Inside Information in the course of Market Sounding
Disclosure of Inside Information made in the course of Market Sounding will be deemed to be made in the normal exercise of a Person’s employment, profession or duties (and will not constitute unlawful disclosure of Inside Information (MAR 5.2.65) provided that the Person making the disclosure complied with the requirements in MAR 5.5.3 (Requirements on a Person conducting or intending to conduct Market Sounding).
5.5.3. Requirements on a Person conducting or intending to conduct Market Sounding
A market participant must:
- (a) prior to conducting a Market Sounding, consider whether the Market Sounding will involve the disclosure of Inside Information and make a written record of its conclusions and reasons thereof; and
- (b) before making the disclosure of Inside Information:
- (i) obtain the consent of the Person receiving the Market Sounding to receive Inside Information; and
- (ii) inform the Person receiving the market sounding that he is prohibited from using that information, or attempting to use that information, by acquiring or disposing of, for his own account or for the account of a third party, directly or indirectly, Securities relating to that information; and
- (iii) inform the Person receiving the market sounding that he is prohibited from using that information, or attempting to use that information, by cancelling or amending an order which has already been placed concerning a Security to which the information relates; and
- (iv) inform the Person receiving the market sounding that by agreeing to receive the information he is obliged to keep the information confidential; and
- (c) make and maintain a record of all information given to the Person receiving the Market Sounding, including the information given in accordance with points (i) to (iv), and the identity of the potential investors to whom the information has been disclosed, including but not limited to the legal and natural Persons acting on behalf of the potential investor, and the date and time of each disclosure. The disclosing market participant must provide that record to the competent authority upon request; and
- (d) provide its written record to the AFSA upon request; prior to conducting a Market Sounding.
5.5.4. Information which ceases to be Inside Information
Where information that has been disclosed in the course of a Market Sounding ceases to be Inside Information according to the assessment of the disclosing market participant, the disclosing market participant must inform the recipient accordingly, as soon as possible and maintain a record of the information given to the recipient.