Handling confidential, market-sensitive information

Australasian Investor Relations Association (AIRA) and Governance Institute of Australia have updated “Handling confidential, market-sensitive information: Principles of good practice”, a guide designed to help organisations safeguard sensitive data and comply with continuous disclosure rules.

These principles are designed to strengthen how companies handle confidential, market-sensitive information, with lapses potentially undermining trust in equity markets.

1. Develop internal systems to protect confidential, market-sensitive information
   The first principle is about building strong internal systems to keep confidential, market-sensitive information safe. This means having clear policies and guidelines that spell out how employees should handle this information.
2. Maintain an insider list when conducting a confidential, market-sensitive transaction
   It’s a good idea for companies to keep a list of everyone who knows about a market-sensitive deal, both inside the company (like directors and employees) and outside (such as advisers, service providers, and major investors). Try to keep this group as small as possible.
3. Ensure directors, executives and employees are aware of their confidentiality obligations.
   Make sure confidentiality rules and trading restrictions are built into employment contracts, agreements with contractors, and directors’ appointment letters. This can be done by adding clear confidentiality clauses or by referring to your company’s code of conduct, confidentiality policy, trading policy, or disclosure policy.
4. Require advisers and other service providers to enter into confidentiality agreements before passing on confidential, market-sensitive information.
   When talking to potential advisers or investors about a deal, companies should keep track of who they’ve spoken to and when. It’s helpful to start conversations with a quick reminder about the need for confidentiality and that the information might be market-sensitive, meaning insider trading laws could apply.
5. Know which, when and how investors or potential investors are being brought into the “inside”.
   Sometimes companies need feedback from potential or existing investors about a deal, depending on their situation and market conditions. When doing this, it’s crucial to keep market-sensitive information confidential and follow formal procedures to avoid breaking continuous disclosure or insider trading laws.

Advisers who handle confidential, market-sensitive information should have strict rules to prevent their directors and employees from trading on that knowledge. The exact approach will depend on the adviser’s business and activities.

You can find the complete set of principles and a detailed explanation of each, as well as more information about protecting confidential information in your organisation, in our Resource Centre.