Mandatory disclosure

Mandatory disclosure is a traditional remedy to market failures such as agency problems and asymmetric information. Therefore, all major jurisdictions around the world require firms that approach or have approached a significant number of investors to disclose material information to the public. This chapter compares the most significant regulatory approaches to mandatory disclosure in some selected jurisdictions. It does so by analysing some illustrative regulatory issues surrounding mandatory disclosure and highlighting how different legal systems approach them. Covered matters include primary market (prospectus) disclosure, secondary market ongoing disclosure duties, the role of mandatory rules in standardizing financial disclosure, the purpose and the contents of materiality tests in different settings, the strategies to reduce the regulatory burden on SMEs and make information more accessible to retail investors. The comparison among the jurisdictions considered confirms that convergence (or the lack thereof) is hard to measure based on the law on the books alone. On the one hand, similar rules may lead to divergent outcomes depending on the legal context and the supervisory styles. On the other hand, regulatory strategies that are far apart may not involve equally divergent approaches in practice. Even discounting these elements, however, some level of convergence seems to characterise the overall development of financial regulation, with the United States continuing playing a leading role in this regard. Clear examples in this direction are certain strategies to facilitate primary market information for frequent issuers as well as the simplification of ongoing disclosure duties through the pre-defined sets of material events.