Price-sensitive information is still confidential information that could influence the share price of a company. This information is therefore expected to have an influence on the investment decision of an investor. The information is specific, concerns the company and has not yet been made publicly available. At the moment the information is disclosed it may have an impact on the share price.
Disclosing price-sensitive information
A company that wants to disclose price-sensitive information in the Netherlands has to do so by means of issuing a press release. The Dutch Act of Financial Supervision (Wft - Wet op het financieel toezicht) deals with the publication of price-sensitive information (in section 5.1.a). There is no checklist available of what is and what is not considered to be price-sensitive. This also varies by company, sector, etc. There is no straight forward right or wrong and each case has to be assessed individually. It should be noted though that the AFM monitors whether companies disclose their price-sensitive information timely and accurately and that the AFM can take measures if companies have not done so.
The Market Abuse Act
The Explanatory Memorandum of the Market Abuse Act, the law that governs price-sensitive information cites a few examples and AFM provides a – non-exhaustive – list of examples of price-sensitive information. A company can delay the dissemination of price-sensitive information, but only under strict rules. The confidentiality of the information has to be guaranteed during the deferment. An investor that has access to information about for instance a negative profit warning from a company, can use that information to his advantage by already selling his shares for a good price as the rest of the market is not aware of this information yet. That is why trading based on price-sensitive information, is prohibited by law. This is laid down in the Market Abuse Act.
Obviously there are people inside the company that need to have access to price-sensitive information, due to their profession/responsibilities. They are the so-called insiders and they have to oblige to strict rules that are included in an insiders policy. Also companies usually have a compliance policy which includes the rules on who can trade when in the shares of the company.