Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW -

the iden­tity of the len­der, nor the amount of such loan had been dis­closed to the pub­lic. Af­ter the shares were ac­quired by the ap­pel­lants, the de­tails of the loan were an­nounced on SENS and the share price of Listco shares in­creased dra­mat­i­cally.

The ques­tion be­fore the court was whether:

The rel­e­vant in­for­ma­tion con­sti­tuted “in­side in­for­ma­tion” which was de­fined in the Se­cu­ri­ties Ser­vices Act as fol­lows — “spe­cific or pre­cise in­for­ma­tion, which has not been made pub­lic and which —

1. Is ob­tained or learned as an in­sider; and

2. If it were made pub­lic would be likely to have a ma­te­rial ef­fect on the price or value of any se­cu­rity listed on a reg­u­lated mar­ket”.

The ac­qui­si­tion by the ap­pel­lants of the Listco shares con­tra­vened the in­sider trad­ing pro­vi­sions of the act, which pro­hibit a per­son who knows that he or she has in­side in­for­ma­tion from deal­ing in the listed se­cu­ri­ties to which the in­side in­for­ma­tion re­lates or which are likely to be af­fected by it. By way of de­fence, the ap­pel­lants con­tended that the rel­e­vant in­for­ma­tion did not con­sti­tute “in­side in­for­ma­tion” as the rel­e­vant in­for­ma­tion was, among other things:

Not “spe­cific or pre­cise” in­for­ma­tion as the loan was merely ap­proved in prin­ci­ple, no loan agree­ment had been con­cluded in writ­ing, there were con­di­tions prece­dent to the loan and there was un­cer­tainty whether Listco would ul­ti­mately be able to ac­cess the funds; and

Not “likely to have a ma­te­rial ef­fect” on the price or value of Listco’s

Pic­ture: iSTOCK

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