With effect from 1 October 2010, issuers (wherever incorporated) with equity or debt securities or depositary receipts traded on either the main market of the London Stock Exchange, AIM or PLUS markets have an additional potential liability to investors under section 90A of the Financial Services and Markets Act 2000.
For information first published after 1 October 2010, an issuer is liable to pay compensation to an investor who:-
a) Acquires, continues to hold or disposes of securities in reliance on the published information; and
b) Suffers loss as a result of any untrue or misleading statement in that published information or the omission from that published information of any matter required to be included within it.
There is a further liability where there was a delay due to dishonesty in the publication of that information. It is irrelevant whether the person making the statement intended the recipient to rely on it but it must be reasonable for the investor to rely on that information in deciding how to deal with the securities held by him.
In order for the issuer to have liability, a person discharging managerial responsibilities within that issuer must have known that the statement was untrue or misleading or was reckless as to whether this was the case.
Prior to 1 October 2010, issuers only had such liability for information contained in annual or half yearly reports, interim managements statements or voluntary preliminary statements published in advance of the foregoing. The information caught by the new regime is much more extensive as comprising all information published on or the availability of which is announced on a recognised information service (“RIS”). This could therefore catch not only financial results but also any ad-hoc announcements ranging from changes in major shareholdings to announcements on transactions. It is also irrelevant if the claimant obtains the relevant information from an RIS or another source. As long as it is actually published on an RIS, the liability will attach to the issuer.
The revised regime does not apply to a prospectus or listing particulars which are still governed in England by section 90 of the Financial Services and Markets Act 2000.