- Identifying Inside Information
- Defining Inside Information
- What is "inside information"?
- What does ‘precise’ mean?
- Has the information been made public?
- Will the information be likely to have a significant effect on price?
- Examples of inside information
- Key steps in specific scenarios
- Board changes
- Periodic financial information
- Financial distress
- Shareholder engagement – investor calls and meetings
- Fundraisings
- Systems and controls
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Identifying Inside Information
Identifying inside information is a challenging and finely balanced exercise. There is no single approach to a particular scenario as each case is fact-specific and needs to be considered on its merits. A careful analysis must be done on a case-by-case basis and in close consultation with your legal and financial advisers. In this guide, we summarise what is inside information and outline some practical steps that issuers can take to assist them with complying with their disclosure obligations under the UK Market Abuse Regulation.
Defining Inside Information
What is "inside information"?
Inside information is information of a precise nature which:
- 1
has not been made public;
- 2
directly or indirectly relates to one or more issuers, or to one or more financial instruments; and
- 3
if it were made public, would be likely to have a significant effect on the prices of those financial instruments, or on the price of related derivative financial instruments.
What does ‘precise’ mean?
Information is precise if it indicates a set of circumstances which exist or which may reasonably be expected to come into existence, or an event that has occurred or reasonably expected to occur. Indeed, there must be a realistic (rather than ‘fanciful’) prospect of the existence or occurrence. It does not have to be ‘exact’ and specific enough to indicate the price of a financial instrument will go up or down.
Has the information been made public?
Information could be made public via a market announcement, in the press or on the internet (whether provided on subscription or free of charge) or could be put together from information which is generally available. Note that information may not be inside information on its own – but when taken together from external sources and combined with information one holds and decisions one has taken, this could collectively be inside information.
Will the information be likely to have a significant effect on price?
Consider whether a reasonable investor would be likely to use the information as part of the basis of their investment decisions. Information which might be relevant includes that which affects the assets and liabilities of the issuer, its financial condition, its business performance and information previously disclosed to the market.
Examples of inside information
M&A activity – potential acquisitions, disposals, joint ventures and takeover offers
Significant litigation
Financial distress
Entering into or change in significant commercial arrangements
Significant changes to business strategy
New bank financing
Secondary equity capital raising
Senior board member appointments / resignations
Changes in trading or financial performance – particularly if not consistent with previous market announcements
New product developments or inventions
Material changes to dividend policy
Cyber attacks
Key steps in specific scenarios
Board changes
- Continuously monitor when inside information occurs during the succession process.
- Could arise at an early stage (ie. Director signalling intention to resign).
- The price sensitivity of the information will depend on a range of factors including the length of tenure of board member, their seniority, the circumstances of the resignation, the market’s expectations and whether a natural successor exists.
- A separate assessment must be made in relation to both the resignation and appointment of the new board director.
- Ensure that any information is kept strictly confidential, on a need to know basis only - from external recruiters to internal PAs. Remember your insider list obligations and recording reasons for any delay. Monitor for leaks and have a holding announcement ready.
Periodic financial information
- Start from the assumption that information relating to financial results could constitute inside information. Continue to assess the position and record this assessment throughout the process.
- Do not delay bad news with good news – where information is precise enough, it must be disclosed. Can only delay where immediate disclosure is likely to prejudice the legitimate interests of an issuer, you can ensure its confidentiality and where its delay is not likely to mislead the public.
- The FCA considers that circumstances which are likely to prejudice the legitimate interest of an issuer include where the issuer is in the process of preparing a periodic financial report and immediate public disclosure of information to be included in the report would impact on the orderly production and release of the report and could result in the incorrect assessment of the information by the public. However, it also states that an issuer will be able to carefully draft an announcement that will enable the correct assessment of the inside information by the public. It accepts that in some cases this will not be practicable other than through publication of the full financial report.
- Given the FCA’s position on this, it is critical that you assess whether there is inside information throughout the process and whether there is a legitimate reason to delay. Record your assessment and consult your advisers accordingly.
Financial distress
- There may be legitimate reason to delay disclosure of negotiations designed to ensure the recovery if the issuer’s financial viability is in grave and imminent danger. However, the FCA considers that one should not delay the disclosure of the fact that the issuer is in financial difficulty.
- If delaying, ensure confidentiality and record your decision. Announce as soon as possible.
Shareholder engagement – investor calls and meetings
- Avoid scheduling calls or communicating during a closed period – consider communications shortly after an issuer has published its financial report or update so that management can closely align its messaging with the results. May be helpful to prepare a script in advance and try to avoid deviating from language and tone of previously published statements to prevent any misconceptions that new information is being disclosed.
- Consult with advisers prior to calls/meetings to discuss information to be disclosed.
- Record the call / meeting or take a contemporaneous note of what was disclosed or discussed.
Fundraisings
- Ensure that investor communications comply with market soundings regime. Record all communications, insider lists and reasons for delay.
- Use project names and implement strict confidentiality protocols.
- Monitor social media or investor bulletin boards for potential leaks – have holding announcement ready.
Systems and controls
Ensure you have robust policies which set out formal processes for identifying and handling inside information. Tailor policies with a process suitable for the size and structure of your organisation.
Conduct regular training for employees (particularly in the finance team) so that they can identify inside information and know when and how to escalate and to whom. Put it in real-time context for your teams. Consider including typical role play scenarios – what should your employee do in these situations?
Minimise your insiders. Ensure the timely creation and updating of insider lists, record the reasons information was or was not classified as inside information or reasons for delay.
Ensure inside information is secured (password protected, restricted access, codenames).
Consider establishing a disclosure committee, responsible for determining when threshold for inside information is met and overseeing the timing and content of announcements. Put in place formal terms of reference. Committee should have access to external counsel (lawyers, brokers, sponsor, nomad) at short notice.
Have a contingency plan for when key people on the disclosure committee or board are on holiday. FCA does not consider inability to convene a board meeting as a justifiable reason to delay.
Be prepared – leaks can and do happen! Always be ready to release an announcement if required to the market as soon as possible. Inside information must be distributed via an RIS first – then use social media. Consider implementing a social media policy setting out clear guidance for employees.
Please note that this is note was written on 26 June 2025 and is intended to serve as a general guide. It should not be relied upon as a substitute for specific legal advice.
About Hogan Lovells - A Leading Global Law Firm
Learn more at Hogan Lovells – A Leading Global Law Firm or contact us.
James Cross
Partner
Tel: +44 (0)20 7296 2301
Email: james.cross@hoganlovells.com
Daniel Simons
Partner
Tel: +44 (0)20 7296 5128
Email: daniel.simons@hoganlovells.com
Danette Antao
Counsel Knowledge Lawyer
Tel: +44 (0)20 7296 2221
Email: danette.antao@hoganlovells.com
