The economic impact of the Covid 19 pandemic creates obligations for a large number of companies to ad hoc publicity in accordance with Art. 17 MAR, which has already existed in a number of cases. The uncertainty associated with the current situation about the further development, however, brings considerable difficulties here when such a publication has to take place and what content it should have. With this in mind, we would like to give you initial help.

In a recommendation for issuers, the European Securities and Markets Authority ( ESMA ) recommended immediate publication of relevant information regarding the effects of the pandemic on (i) its economic basis, (ii) its future prospects and (iii) the financial situation. You will find the exact wording at the end of this mail.

These notes require further clarification:

Company-specific effects

The effects of the pandemic, which are specific to the company concerned, or certain measures which the company concerned has initiated may constitute inside information that is subject to publication if it has the potential to have a significant impact on the share price. Not an easy question, with constant crashes across the board.

These circumstances are company-specific if they go beyond the event of the pandemic itself and specifically affect the respective company. Examples are:

• the interruption of production (due to infection of employees or delivery bottlenecks, due to official orders)
• the inclusion of short-time work,
• an (expected) decrease in orders from customers,
• the closure of plants or entire business areas,
• taking emergency funding or a
• Lowering or suspending the dividend.

It is more difficult to assess cases in which the entire sector of the issuer is affected by the effects of the corona virus. Whether there is an obligation to notify must be checked in each individual case.

For the most part, the postponement of the Annual General Meeting has so far not been regarded as inside information that is subject to publication, unless important capital or structural measures should be resolved at the Annual General Meeting.

Forecasts

In addition, a publication to adjust the forecast will be considered in particular. This may be necessary if the effects of the pandemic visibly prevent the previously published forecast from being achieved. In normal times, this would go hand in hand with the preparation and publication of a new forecast, and BaFin has so far required it to do so.

The BaFin is a soon FAQ post in which they dispense with the publication of a revised forecast in this particular situation. However, this must be done as far as the circumstances allow.

However, it must be checked whether an ad hoc publication is not necessary if the forecast is not met in line with market expectations.

And as a reminder: In the opinion of BaFin, self-exemption is not possible if the forecast deviates.

CONCLUSION

All of this is not an easy matter, especially against the background of possible sanctions under fines if the obligation to publish is incorrectly assessed. In cases of doubt, careful legal examination is therefore the order of the day.

ESMA RECOMMENDS ACTION BY FINANCIAL MARKET PARTICIPANTS FOR COVID-19 IMPACT

11 March 2020

The European Securities and Markets Authority (ESMA) , together with National Competent Authorities (NCAs), is closely monitoring the situation in view of the continuing impact of the COVID-19 outbreak on financial markets in the European Union (EU).

Following a Board of Supervisors discussion examining the market situation and contingency measures taken by supervised entities, ESMA is making the following recommendations to financial market participants:

• Business Continuity Planning - All financial market participants, including infrastructures should be ready to apply their contingency plans, including deployment of business continuity measures, to ensure operational continuity in line with regulatory obligations;
• Market disclosure - issuers should disclose as soon as possible any relevant significant information concerning the impacts of COVID-19 on their fundamentals, prospects or financial situation in accordance with their transparency obligations under the Market Abuse Regulation;
• Financial Reporting - issuers should provide transparency on the actual and potential impacts of COVID-19, to the extent possible based on both a qualitative and quantitative assessment on their business activities, financial situation and economic performance in their 2019 year-end financial report if these have not yet been finalized or otherwise in their interim financial reporting disclosures; and
• Fund Management - asset managers should continue to apply the requirements on risk management, and react accordingly.

ESMA, in coordination with NCAs, continues to monitor developments in financial markets as a result of the COVID-19 situation and is prepared to use its powers to ensure the orderly functioning of markets, financial stability and investor protection.

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