Karpasia Shipping: delayed disclosure, a leaked rumour and a PDMR buying into the closed period

The mechanism. Article 17(4) MAR allows an issuer to delay disclosure of inside information where all of the following hold: immediate disclosure would likely prejudice the issuer's legitimate interests; the delay is not likely to mislead the public; confidentiality can be maintained; and the competent authority is informed. Ongoing contractual negotiations of this size are a recognised example of a legitimate interest, since early disclosure could destroy the counterparty's willingness to sign.

12 February. The decision was defensible on its face, but only with proper governance: a documented board decision, a restricted information circle, an insider list, monitoring for leaks and information asymmetry, and a documented assessment that the conditions continued to be met throughout the delay.

6 March. The conditions collapse. A media report of 'advanced talks' and a 12% share-price rise show that confidentiality has not been maintained, and continued silence in the face of a price-moving report risks misleading the market, which is the second condition. From that point the issuer had to reassess and, in practice, disclose as soon as reasonably possible. Note that the duty is not to "respond to every rumour": it is to assess whether the leak has destroyed the basis for the delay.

The notification failure. MAR requires the issuer to inform CySEC immediately after disclosure, with a written explanation of how the conditions for the delay were satisfied. KAR never contacted CySEC at any point - a separate infringement regardless of whether the original delay was justified.

Also missing. No leak investigation, no refresh of the insider list, and no evidence the board reconsidered the delay after 6 March.

The insider list. Article 18 MAR requires a complete list of everyone with access to the inside information, updated promptly, recording for each person the date and time of access and the reason. It must be reliable enough to support a supervisory investigation. KAR's list fails on every count: last updated in 2023, 12 names, no external counsel or brokers (who plainly had access), and the assistant who maintains it is not on it. The failures are sanctionable in their own right, and they deprive the firm of the one tool that would show who could have leaked the talks.

The 5 March purchase. The finance director is a PDMR and an executive with direct access to the negotiation. Buying 15,000 shares while the information was inside and undisclosed is prima facie insider dealing under Articles 8 and 14 MAR: he used inside information to acquire the issuer's securities. The fact that the deal was legitimately delayed does not make the information any less inside - it makes it more sensitive, because the public was trading without it. The profit (roughly 15,000 × €0.95, about €14,250) is irrelevant to liability.

Correct handling now. Do not "tidy" the insider list retrospectively in a way that obscures timing; preserve the audit trail and the trading records. Escalate to the board and to the compliance function, require the finance director to abstain from any further dealings, consider whether the firm must self-report, and expect CySEC to investigate with the assistance of the insider list and transaction reporting. The notification obligation in Article 19 is also live: once the €5,000 annual threshold is crossed, the trade must be notified to the issuer and to CySEC within three business days.

The closed period. Article 19(11) MAR prohibits a PDMR from dealing, directly or indirectly, during a closed period of 30 calendar days before the announcement of the year-end or interim report. Annual results are due on 28 April, so the closed period opens on 29 March. 10 April falls squarely inside it.

The exceptions. Dealing is permitted only in a closed list of situations - for example exceptional circumstances involving severe financial difficulty, or a transaction under a scheme or plan agreed before the closed period began, where the PDMR could not have altered or influenced the terms. A discretionary decision to increase a holding is neither. "I already bought in March" is not an exception either.

Independent ground. Even outside the closed period, the director remains in possession of inside information about the charter's execution, counterparty and financial effect, and about the leak investigation. Article 14 would still bite.

What the company should do. Refuse pre-clearance; instruct the director in writing not to deal; record the refusal. Because the March trade is already suspicious, the company should review its PDMR dealing policy, consider suspending dealing permissions for all insiders until after the results, and ensure the notification of the March trade has been made. If the director deals anyway, the company must escalate, preserve records and cooperate with CySEC. Continuing to allow the director to hold an unfettered dealing mandate after the March trade would itself be a governance failure.