In the principles of treating investors fairly, and to enable a transparent trading exchange platform where all investors are trading on information equality, Fundy has promoted a policy of 100% transparency by companies in their updates/reports to investors.
We hope that the following can provide clarity to companies on the information disclosure guidelines as well as provide guidance on what actions to take in certain scenarios.
In any circumstances where there is doubt or confusion on whether specific information is required to be disclosed, or ahead of certain events, we encourage companies to reach out to your friendly Fundy Account Managers who will be best placed to provide guidance and clarity.
In order to ensure the fair, orderly and transparent functioning of the Marketplace, an Issuer is responsible for:
- disclosing regular updates on the results and operations of the Issuer;
- disclosing other material information which relates, directly or indirectly, to the Issuer or relevant Investment(s), and which would reasonably be considered likely to have a material impact on the price(s) of those Investments.
General obligations
An Issuer must ensure that all the information made available on the Marketplace is fair, clear and not misleading, and is made available in a timely manner to all Investors.
Information must allow a reasonable investor to determine the potential impact of an event or circumstances on the Issuer, or on the Investment price.
An Issuer must take reasonable care to ensure that any information it discloses is not misleading, false or deceptive and does not omit anything likely to affect the importance of the information.
Fundy has the right, at any time, to require an Issuer to publish such information in such form and within such time limits as it considers appropriate to protect Investors or to ensure the smooth operation of the Marketplace. Issuers must provide their comments and additional information without delay.
Regular updates
An Issuer must regularly disclose updated information on its KPIs. Fundy and each Issuer will separately agree on, and disclose, the KPIs which are relevant and material in measuring the performance and success of an Issuer.
An Issuer must provide an update either on a monthly or a quarterly basis within 4 weeks of the end of the respective reporting period. The sequence of regular reporting by an Issuer will be determined together with the admission to trading of relevant Investments.
Financial statements
An Issuer must disclose its annual report by the earlier of 4 months after the end of its financial year or the date by which filing of accounts is required by the relevant government authority applicable to an Issuer.
Ad hoc disclosure
An Issuer must immediately report and publish any information that has or may have a material impact on an Issuer and consequently on the Investment price.
Material information which potentially affects an Issuer or an Investment price is specific to each Issuer. Directors of each Issuer must take reasonable care to identify all such events and circumstances that may potentially materially affect an Issuer, its operations, its assets and financial position.
Examples of such events and circumstances:
- Significant events in the operation of the Issuer, e.g. material client agreement signed or terminated, entering new market(s);
- Fundraising – related information upon completion of the fundraising, e.g., valuation, dilution;
- Changes in key staff members;
- Changes in the business model, e.g. an Issuer determines to launch new business line, pivot to new product or service;
- Material corporate events, e.g. dividends, changes in share capital;
- Significant changes in rights attached to Issuer shares or other securities relevant for investors;
- Acquisitions or mergers or other types of corporate restructurings;
- Regulatory proceedings against the Issuer or Directors;
- Litigation or arbitration proceedings initiated against or by the Issuer or any of its significant subsidiary;
- Bankruptcy or dissolution proceedings initiated regarding an Issuer or its significant subsidiary.
Issuer may be required to clarify or confirm a market rumor or information that is being disseminated which the Issuer knows to be false.
Directors’ Transactions
General
Directors and other key staff members of an Issuer inevitably have immediate and direct access to the operations and financial condition of an Issuer, as well as a strong understanding and grasp of the overall development of, and market for, a business. It is important for the fair functioning of the Marketplace that there be transparency in their transactions in Investments.
Obligation to report
An Issuer must have in place, and maintain, an updated list of directors, other key staff members and/or any persons connected to the Issuer (with access to inside information) (“Insider List”). The Issuer will provide Fundy with a copy of the Insider List, and will notify Fundy of any change to the Insider List within 3 days of the change becoming effective. The Issuer will also notify Fundy of any prohibited periods where inside information may be available and therefore there is a possibility of insider trading.
Scenarios
Q: The company has met with some prominent investors and wants to disclose to this group of investors confidential information relating to a potential round of fundraising and the tentative valuation. Is this acceptable?
A: The company should ensure that all information is disclosed to all investors in order to avoid potential insider trading if there are investors who trade on the basis of the confidential information. Alternatively, the company can apply to Fundy to suspend the trading when it has determined that confidential and/or price-sensitive information will be disclosed to some investors at private events etc. Failure to do may result in investors with privileged information engaging in insider trading, which is a prohibited market conduct in multiple jurisdictions, and may result in regulatory actions against the company and/or the insiders.
Q: The company has raised an amount which is far lower than its expected valuation. The company wishes to disclose the information only to certain investors to avoid negative publicity. Is this acceptable?
A: The company has to disclose the information fairly to all investors on the Fundy platform or apply to Fundy to suspend trading. Failure to do may result in investors with privileged information engaging in insider trading, which is a prohibited market conduct in multiple jurisdictions, and may result in regulatory actions against the company and/or the insiders.
Q: The company wishes to selectively disclose certain information to specific large investors in order to boost their fundraising take-up. The information is not intended to be disclosed on the Fundy platform. Is this acceptable?
A: The company has to disclose the information fairly to all investors on the Fundy platform or apply to Fundy to suspend trading. Failure to do may result in investors with privileged information engaging in insider trading, which is a prohibited market conduct in multiple jurisdictions, and may result in regulatory actions against the company and/or the insiders.
Q: The company has shared information with some investors at a private event. Should trading be suspended before the information is disclosed?
A: The company has to disclose the information fairly to all investors on the Fundy platform or apply to Fundy to suspend trading before the event. Failure to do may result in investors with privileged information engaging in insider trading, which is a prohibited market conduct in multiple jurisdictions, and may result in regulatory actions against the company and/or the insiders.
Q: The company has new information to enhance the appeal of its new investment offer and intends to disseminate the information only to new investors. Is this acceptable?
A: The company has to disclose the information fairly to all investors on the Fundy platform or apply to Fundy to suspend trading before the event. Failure to do may result in investors with privileged information engaging in insider trading, which is a prohibited market conduct in multiple jurisdictions, and may result in regulatory actions against the company and/or the insiders.
Q: The company has disclosed inaccurate price-sensitive information to some investors at a private event. How should the company manage the impact?
A: The company should have made the disclosure on the Fundy platform in the principle of treating all investors fairly, or applied to Fundy to suspend trading before disclosing the information. If the relevant investors had traded on the basis of the inaccurate information, this would be seen as insider trading and both the company and/or the relevant investors may be subject to regulatory actions. The offence of insider trading will still be applied even if the price-sensitive information is inaccurate.
The impact of the inaccurate information would be mitigated if the trading had been suspended, allowing time for the company to correct the information. If the information was posted publicly on Fundy platform for all investors, the company would only need to make a clarification update to the announcement. There would not be any element of prohibited market conduct such as insider trading, which could negatively impact the company and/or the investors.