Corporate confidentiality is a concept of paramount importance. As a matter of fact it has universal application. The rationale underling the concept is that disclosure of information may be declined for cogent business considerations which mandate corporate confidentiality. Reasons of corporate confidentiality may embrace information that its release would prejudice the ability of the company to pursue specific and limited objectives or to complete a transaction under way, that disclosure of information would provide competitors with confidential corporate information, prone to disclose the status of ongoing negotiations that would prejudice the successful completion of those negotiations. Under the circumstances, disclosure shall be made once actual information is available, such as a final decision to proceed with the transaction. The yardstick that justifies withholding of material information is that potential harm to the company or the investors may be caused by material disclosure which may reasonably be considered to outweigh the undesirable consequences of declaring disclosure. However most Stock Exchange Markets discourage delaying disclosure for a lengthy period, since it is unlikely that confidentiality can be maintained beyond a short term.
It may be in order to indicate that it is the responsibility of each listed company to determine which information is material, that is to say information that is likely to affect securities prices. It is submitted that the materiality of information differs from one company to another company in light of the size of its profits, assets and capitalization, the nature of its operations and many other factors. Instant let go of information is essential to ensure that it is quickly accessible by all investors and to reduce the risk of persons with no access to information acting upon undisclosed information. Abnormal trading market by major changes in the price or trading volume of any company's securities prior to announcement of material information is uncomfortable to company's management and is detrimental to the reputation of the securities market, as the investing public may presume that particular persons have benefited from access to material information which was not disclosed to the public.
Companies' members of Stock Exchange markets are obliged to notify the relevant Stock Exchange of any developments which are required to be disclosed. Such developments embrace any material information consequences of which reflect on its shares prices when materializes and Stock Exchange Market administrative executive body is entitled to announce the said information via different media means in the forms it deems fit at the company's cost. The market price of a company's securities may be affected by factors directly relating to the securities themselves as well as by information concerning the company's business and affairs such as changes in company's issued capital, and dividends decisions.
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