Corporate law update: 23 - 29 May

This week:

• An email stating that an individual had been placed on an insider list itself amounted to inside information

• The Government publishes its post-implementation review of the UK’s streamlined energy and carbon reporting (SECR) regimes, setting out next steps

Knowledge that someone was included on an insider list itself amounted to inside information

The Court of Justice of the European Union (CJEU) has held that an organisation acquired inside information relating to an issuer, and so became prohibited from dealing in the issuer’s financial instruments, when it learned that the issuer’s chief executive officer (CEO) had been included in an insider list maintained by the issuer.

What is the regarding law on inside information?

Under Articles 8 and 14 of the European Union Market Abuse Regulation (EU MAR), a person must not deal in an issuer’s financial instruments (which includes its equity shares) while in possession of inside information relating to that issuer, subject to certain exceptions.

Under Article 7 of EU MAR, to be “inside information”, information must satisfy four conditions. These include that the information is “of a precise nature” and that, if it became public, it would be likely to have a significant effect on the prices of the issuer’s financial instruments.

Broadly speaking, to be “precise”, information must be specific enough to enable a conclusion to be drawn as to the possible effect of a particular set of circumstances or event on the prices of the issuer’s financial instruments.

Under regulations that supplement EU MAR, an issuer must keep an insider list for each separate piece of inside information relating to it, identifying all persons who have access to it (“insiders”). An issuer may also keep a separate list of “permanent insiders” – individuals who have access to insider information at all times.

EU MAR no longer applies in the UK. However, the UK’s principal legislation regarding market abuse – the UK Market Abuse Regulation (UK MAR) – derives from EU MAR and contains substantially similar provisions.

What happened in this case?

In Case C-363/24 (Finansinspektionen v Carnegie Investment Bank AB), a Swedish issuer, by email, informed a bank that had taken security over some of its shares that the issuer’s CEO and principal shareholder had been placed on an insider list.

The CEO had been placed on an insider list on account of the issuer’s chief financial officer having resigned. However, the email did not state any reason for including the CEO on an insider list. It merely stated that the CEO was not permitted to sell shares in the issuer.

The bank concluded that this email did not constitute inside information and proceeded to seize and sell shares in the issuer pursuant to the security arrangements. The Swedish financial regulator subsequently alleged that the bank had engaged in insider dealing and sought payment of a fine.

The Swedish courts referred the matter to the CJEU.

What did the court say?

The CJEU concluded that the mere fact that an individual has been included in an insider list will not, in and of itself, amount to inside information, because that degree of detail is not “sufficiently precise”. This is the case for any individual, but particularly for the issuer’s CEO, who will generally have access to inside information on an ongoing basis and may be a “permanent insider”.

However, the court noted that a communication stating that someone has been placed on an insider list could amount to inside information if it includes “other elements”.

In this case, the statement that the individual was prevented from selling shares implied the existence of an event with adverse implications for the issuer that could incentivise an investor to sell shares in the issuer (or, at least, might influence an investor’s decisions on the issuer’s shares). The email was capable of allowing a conclusion to be drawn about the prices of the issuer’s financial instruments.

The email was, therefore, “precise” and capable of amounting to inside information.

The court also held that, for information to amount to “inside information”, it is not necessary for an issuer to correctly conclude that the information is “inside information”, so long as its reasoning is “credible”. As a result, so long as the issuer’s reason for including its CEO on an insider list was credible, the email could amount to inside information (even if that reason turned out to be wrong).

What does this mean for me?

EU law no longer applies in the UK. As such, this decision is not binding within the UK, and the UK courts are not obliged to follow it.

However, given the similarity between and common origin of the UK and EU market abuse regimes, it would not be surprising if courts in the UK were to adopt a similar approach should the question arise.

The key take-away for persons who may be looking to buy or sell securities on the capital markets is to carefully scrutinise any information they received from an issuer, take professional advice where appropriate, and perhaps to err on the side of caution.

Conversely, an issuer that discloses details that might amount to “inside information” should be careful to ensure that the recipient is put in no doubt as to whether the issuer regards the details as (and that the recipient is now in possession of) inside information. This will not prevent a recipient from taking a contrary view, but it shifts the burden significantly.

Issuers should also bear in mind that disclosing inside information is, generally speaking, prohibited by both UK MAR and EU MAR unless an exception applies, such as where the disclosure is made in the normal exercise of an employment, a profession or duties and the issuer can ensure the confidentiality of the inside information.

Access the European court’s decision that an email confirming that an individual had been placed on an insider list was itself inside information

Government sets out next steps for streamlined energy and carbon reporting

The Government has published its post-implementation review of the UK’s streamlined energy and carbon reporting regime (SECR).

Introduced in 2019, SECR requires larger and systemically important companies and limited liability partnerships (LLPs) to publicly report on certain carbon-related metrics. These include emissions from combustion or consumption of fuels (measured in CO2₂e), energy consumed from the purchase of electricity (measured in kWh), and at least one emissions ratio.

For companies, the precise metrics depend on whether the company is quoted or unquoted, with more intensive reporting requirements applying to quoted companies.

The review finds that SECR has mainly met its objectives and has delivered measurable benefits, including reductions in electricity and gas use.

However, although most in-scope entities complied with SECR, the practice is not universal. The review finds that SECR remains relevant, but that its influence is increasingly seen as compliance-driven and less integrated into wider organisational decarbonisation planning and decision-making.

As a result, the Government intends to retain SECR but make some amendments to implement targeted reforms designed to improve effectiveness, reduce duplication and ensure coherence with the evolving reporting landscape.

Specific measures the Government intends to take include:

• introducing a standardised disclosure template to improve consistency and comparability;

• aligning SECR definitions and metrics with International Sustainability Board (ISSB), Corporate Sustainability Reporting Directive (CSRD) and Taskforce on Climate-related Financial Disclosures (TCFD) standards to reduce duplication and improve coherence;

• exploring light touch forward-looking elements (such as optional targets or qualitative narratives) to maintain engagement without disproportionate burdens; and

• assessing digital access options that enhance usability and benchmarking while safeguarding assurance and data quality.

The Government intends to consult on these reforms in 2026.

Read the Government’s post-implementation review of the UK’s streamlined energy and carbon reporting (SECR) regime (opens PDF)