Notification Obligations: General Data Security Notification Obligations

The Notification obligations. Companies are required to inform the relevant authority that monitors the financial market on regular basis, about all transactions for their account relating to shares or debt instruments of the issuer, where the Manager is employed, or to derivatives or other financial instruments linked thereto. In respect of participants in markets, this concerns transactions involving allowances, the auction products based on them, or the derivatives relating to them.

Notification Obligations

Notification Obligations

The financial market supervision authorities, such as AFM proactively monitor the behaviors, orders, and transactions of investors in the market. If there is a cause, the authority investigates compliance with the prohibition of insider dealing. The proactive supervision by the authority of compliance by issuers with their obligations, such as publishing inside information as soon as possible, functions here as an important means of detecting possible violations.

For an auction platform, auctioneer, and/or auction monitor, this concerns transactions relating to allowances, derivatives thereof, or auctioned products based thereon. Article 19(7) of the MAR mentions several specific transactions that come within the scope of the notifying obligation. Among them is the pledging or lending of financial instruments by or on behalf of a person with a notifying obligation. In addition, the European Commission has the power under Article 19(14) of the MAR to further specify the types of transactions that are subject to the notifying obligation of Article 19(1) of the MAR.

European Securities And Markets Authority

On the proposal of the European Securities and Markets Authority (ESMA), the European Commission has accordingly defined a delegated regulation.4 It contains a (nonexhaustive) list of the types of transactions (in addition to those referred to in Article 19(7) of the MAR) that are subject to the notifying obligation of Article 19(1) of the MAR. For this list, the AFM refers interested parties to the delegated actions.

The notifying obligation applies to parties closely related to the persons, specifically the spouse, or a partner considered to be equivalent to a spouse, a dependent child according to local relevant law, a relative who has shared the same household for at least one year on the date of the transaction concerned. The obligation to notify the relevant financial market authority also lies with a legal person, trust, or partnership, the managerial responsibilities of which are discharged by a person discharging managerial responsibilities.

What To Notify?

The authority must be informed about all the transactions for its account relating to shares or debt instruments of the issuer, where the Manager is employed, or to derivatives or other financial instruments linked thereto. 

For the market participants, the auction products, or the derivatives, are required to be notified to the financial market regulator. For an auction platform, auctioneer, and/or auction monitor, this concerns transactions relating to derivatives, or auctioned products.

Usually, the notification requirements contain information, such as the name of the person subject to the notifying obligation, the reason for the notification, the name of the relevant issuer or an auction platform, auctioneer, the identifier of the securities, the nature of the financial transaction including sale and, purchase and whether it is linked to the share option scheme.

Companies identify the relevant authority, to which they are required to report the transactions. The date and, place of the transaction including the price and volume of the transaction are included. The persons must notify their transactions, no later than three business days of the transaction. The notification is made to the relevant authority that supervises the company, and the issuer. 

When Does The Notification Obligation Not Apply?

If a fixed-term employment contract for less than six months is signed, the employer is not required to provide notice. Even if the employee and employer’s employment relationship is based on a temporary employment contract with a temporary employment clause, the employer is not required to provide notice. If an employee is appointed for a specific project or to replace, for example, an employee on maternity leave, i.e. if no calendar date has been set for the end of the employment, there is no obligation to give notice.

Notice Vs. Termination

It is critical to define the difference between giving notice and terminating a contract. By law, notice is required when a fixed-term employment contract of more than six months expires. Withdrawing from an employment contract is one way to end it. There is no requirement to notify in the event of termination, but a period of notice is required. This prevents the employer from terminating an employment contract and leaving the employee unemployed for an extended period of time.

Final Thoughts

If the employee is on a fixed-term contract, the employer is required to notify the employee in writing one month before the statutory end of the fixed-term employment contract whether or not the contract will be extended. This is known as the employer’s obligation to notify, and it is required when signing a six-month or longer fixed-term employment contract.

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