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All You Need to Know About Confidential Lists

Typical use cases for confidential lists and more

by Adam Kulesza 2 min

    Since the Market Abuse Regulation (MAR) came into effect almost 4 years ago, it’s no secret that the administrative burden has significantly increased, particularly around managing insider lists . When speaking to company secretaries and compliance professionals the subject of confidential lists comes up frequently with varying use cases.

    What is a confidential list?

    Confidential lists, which are also described as grey lists or shadow lists, are essentially a ‘holding pen’. Their primary use is for projects that would not be deemed to impact on the share price if the information was made public but where this could become the case. Members of the list are made aware that the information is confidential and that they should consider who they discuss the project with.

    Typical use cases for confidential lists

    A typical example would be a potential M&A transaction where two companies have engaged in high-level initial discussions. At this stage, that’s as far as the conversation has gone. It is, therefore, prudent to draw up a list of those privy to that information and notify them that they are now included on a confidential list and should be conscious of who they are talking to. In the event the deal becomes more concrete and would impact on the share price if the information were to be made public, the information would become inside information and the members of the project would become insiders.

    Given they are not a MAR requirement, confidential lists can provide a level of flexibility and aid with planning and there is no need to save a new version each time a change is made as you are required to do for insider lists under MAR.

    The above processes do, of course, involve creating more lists to manage and keep track of. However, the use of confidential lists will aid in preparing for inside projects and, hence, help with the administrative burden overall.

    The benefits of digitising the process

    Spreadsheets are the most common, first step, to managing confidential and insider lists, however, digitising the process through specialised software provides additional benefits such as:

    • Increasing efficiency: A software solution, such as EQS’s Insider Manager, enables you to manage confidential lists and, when required, flip the project from a confidential to an insider project with the click of a button. When flipping the project, you can group members together by reason for becoming an insider and the time they found out about the information, enabling quick conversion.
    • Reduced risk: Once the confidential list has been converted to an insider list, you can easily manage the process of having each insider confirm their obligations and personal information. No copying and pasting of information from emails and spreadsheets which can lead to errors and take time.

    In conclusion

    Confidential lists will ultimately help you be better prepared for events that could become inside information whilst also improving your overall process through increased efficiency.

    Confidential lists have a range of uses which provide more flexibility in your list management. Primarily, however, they provide an additional barrier to the disclosure (accidental or not) of sensitive information from within the company.

    Are you having trouble getting senior management buy-in? Look out for my next blog where I delve deeper into the advantages of automation and how to pitch it to the board, in their language.

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    Adam Kulesza
    Adam Kulesza

    Business Development Manager – EQS Group | Adam is working as Business Development Manager in our London office.