T&T Securities and Exchange Commission
The Trinidad and Tobago Securities and Exchange Commission (TTSEC), as the regulator of the securities industry, uses various mechanisms to fulfill its legal mandate to protect the rights and interests of investors.
One of the mechanisms TTSEC uses to promote investor protection is to ensure that registrants disclose all relevant information investors need to make the investment decision that best suits their needs and risk tolerance. This is known as a disclosure-based regulatory system. In a disclosure-based regulatory system, the regulator tries to ensure that investors are provided with the necessary information about the products and market participants; to make an informed investment decision. It is important to note that the TTSEC does not seek to tell investors whether an investment opportunity is good or bad for them.
According to the disclosure-based regulatory framework of the TTSEC, all registrants are required to comply with certain continuous disclosure requirements as described in the Securities Act Chapter 83:02 (SA) and the associated additional provisions. Compliance with these requirements ensures that registrants submit certain disclosure documents to the TTSEC within certain deadlines and make them available to their investors. The information contained in these rolling disclosure documents is often critical to ensuring that investors have relevant and accurate information in deciding which investments are most suitable for their needs.
The following table lists some of the more common continuous disclosure documents that registrants are required to file with the TTSEC and the deadlines by which these documents should be filed with the TTSEC under the SA.
Several of the documents listed in the table contain the registrant’s annual accounts. The financial statements are a very important source of information and essentially reports that are prepared by the management of a company and contain information about the performance of a company. There are four main messages that appear in a company’s financial statements:
(1) Balance Sheet or Balance Sheet – The balance sheet identifies a company’s assets, liabilities, and the company’s registered capital. Put simply, the balance sheet shows what a company owns and what it owes at the time the balance sheet is drawn up;
(2) Income Statement or Income Statement – these statements show the company’s total revenue, total cost (the amounts paid to make its products or provide its services), total expenses (what it pays as overhead expenses hat) and the net income for any period. In summary, these statements indicate how much money a company has earned and spent over a certain period of time;
(3) Cash flow statement or cash flow statement – cash flow statements report on the exchange of money between a company and the outside world over a certain period of time. that is, it shows how much cash is entering and exiting the company; and
(4) Statement of changes in equity – this list shows the changes in the company’s share capital, reserves and retained earnings over time.
The information in financial statements can be used by investors to assess various aspects of business performance such as profitability, liquidity, solvency and efficiency. All of these affect the ability of the company and its investors to get a return on their investments.
Additional valuable information about reporting issuers can be found in Material Change Reports. These are reports that are filed with TTSEC and published in the newspapers when the business, business, assets or ownership of a reporting issuer changes, when that change may be considered important to an investor in making an investment decision. Therefore, by definition, material change notifications contain information that investors should consider in deciding whether to buy, hold or sell an interest in a particular company.
In addition, ongoing disclosure documents provide investors with valuable information about a company and thus also about their holdings in this company. Investors should review these documents when making investment decisions. They are a critical part of the regulatory framework and failure of a registrant to comply with the continuous disclosure requirement is a violation of the SA. As a result, the TTSEC can take enforcement action against that registrant under Section 156 (2) of the SA. This section states, among other things: “… a person is liable to pay who violates this Act only because he or she has not submitted or published a document or deed prescribed by this Act or the Articles of Association within the prescribed period or has an administrative penalty of 1,000 US dollars per day for each day that the document or deed is outstanding after the prescribed time. “
In essence, Section 156 (2) requires a registrant to pay a US $ 1,000 administrative penalty for each day that they fail to submit a document required by the law within the prescribed time limit, including ongoing disclosure documents.
As we continue to work towards a more effective and efficient regulatory framework, registrants are reminded of the importance of not only preparing these documents for ongoing disclosure but also submitting them in a timely manner. Investors are advised to use these documents before making any investment decisions.
For more information about the securities market and the role and functions of TTSEC, please visit our corporate website at www.ttsec.org.tt. To become a smart investor, visit our investor education website www.investucatett.com and download our investor protection mobile application from Google Play and the Apple Store. You can also take the online course and test your knowledge in our interactive investment game InvestorQuestTT at www.investorquest-tt.com. Remember to connect with us on Facebook. Twitter, Instagram, LinkedIn or YouTube.