COVID-19: Listing Authority’s policy regarding the automatic suspension of securities

The MFSA has published a circular (the “Circular”) about the suspension of one of the Listing Authority’s policies which, under normal circumstances, requires the Malta Stock Exchange to suspend the trading of financial instruments admitted to trading when issuers fail to publish, inter alia, audited annual financial statements or their interim financial statements within the timeframes stipulated in the Listing Rules, particularly LR 5.56 and 5.85 (the “Suspension Policy”). The Suspension Policy ensures that investors have sufficient information to properly assess the financial position of the company in which they have invested. The Suspension Policy also protects potential investors who were considering making an investment without the required updated information on the issuer’s financial situation.

In view of the exceptional circumstances created by the COVID-19 pandemic which may hinder issuers in meeting these reporting deadlines referred to above, and in line with ESMA’s request to competent authorities (including the MFSA) not to prioritise supervisory actions against issuers in respect of upcoming reporting deadlines set out in the Transparency Directive (and the Listing Rules), the Listing Authority has decided to temporarily suspend the Suspension Policy for securities listed on the Official List of the Malta Stock Exchange until further notice. In other words, issuers listed on the Main Market and fail to publish timely annual / interim financial statements will not automatically have their securities suspended from trading. This being said, given the important role played by timely publication of financial statements, the Listing Authority may still exercise its powers to impose immediate suspension where it deems it appropriate to protect investors.

As mentioned in a previous MFSA communication, the MFSA (and the Listing Authority) have asked issuers which expect the publication of their financial reports to be delayed to publish a Company Announcement in order to (a) inform the market about the delay, (b) highlight the reasons for the delay, and (c) disclose the estimated publication date of the financial reports. Issuers are also obliged to inform the MFSA about the delay.

Furthermore, issuers expecting their 2019 annual financial reports to be delayed, should explore alternative publications, including the publication of preliminary financial statements (once clearance is obtained from the auditors).

Naturally, the Circular needs to be read in conjunction with other recent MFSA communication through which the MFSA, inter alia, encouraged all issuers to “maintain an open line of communication with their investors”.