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Another step toward increasing transparency on the captal market: the ISA regulates Pre-Ruling: From now on Pre-Ruling will apply to all supervised entities and the decisions


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The ISA has decided on the Regularization of Pre-Ruling, which is currently available to public companies. The regularization applicable up until today to public companies will be expanded to all supervised entities and will include mutual funds’ management companies, trustees, investment advice licensees, investment marketing licensees and licensed portfolio managers. All questions and answers addressed to them will be published on the ISA website. The plenum of the ISA had decided to publish the Procedure for Pre-Ruling Regularization, for public comments; following the reception of comments the procedure will go into effect.
A Preliminary Appeal is – a specific plea or request of a particular enquirer for receiving the ISA’s opinion regarding a potential transaction. Preliminary appeal related to an array of facts pertaining to a certain transaction or activity, it’s binding the ISA only regarding these particular facts. This type of appeal is brought up before the ISA prior to carrying out of a planned transaction, in case it is within the ISA’s jurisdiction, in order to attain a directive, position or answer pertaining to the action in question and proceed accordingly.
A Preliminary Appeal is usually a complex question, entailing broad or innovative aspects an answer to which is not self evident. The ISA will exercise discretion regarding the urgency and necessity of answering preliminary appeals.
Preliminary appeals are divided into two main categories:
* request for the ISA’s directive in regard to a transaction or a future deal planned by the petitioner (pre-ruling);
* request for a no action letter, an ISA consent not to take future enforcing measures under certain circumstances, described by a company in its letter.
The ISA is of opinion that beyond the answers to applicants themselves, there is a clear public importance in publishing these answers and making them available to the public. The publication is intended to increase both legal and business certainty, to promote equality, fairness and uniformity in providing answers to the public. The publication is in fact the implementation of basic market principals – transparency and impartiality of information for all.
According to the plenum decision the query submitted to the ISA has to be specific, detailed and substantiated; it has to include the following details:
* name of the supervised entity related to the query along with complete, detailed and factual description of the query’s background;
* description of the problematic character of the issue in question along with its possible solutions;
* details and evaluation of accounting or legal sources (including a professional opinion) related to the issue and examined by the applicant;
* name of the adviser who wrote the opinion that is the basis of the application;
* detailed proposition of the applicant for the resolution of the problem supported by arguments for the aforesaid solution;
* applicant’s declaration stating that he is obligated to implement the pre-ruling issued by the ISA;
* applicant’s agreement to publish his query on the website, and if necessary – an application to be exempt from publishing the query supported by reasons for this request. Please note: the publishing consent is a pre-condition for processing the pre-ruling requests.
* The pre-ruling query and the answer issued to it, by the ISA, will be published, in full, on the ISA website and will be disclosed to the public. The ISA might consent to special requests for postponement, partial publication or non publication of certain queries in cases where there will be justification to act as aforesaid for the following reason – the pre-ruling relates to a personal /private matter of an individual (as oppose to a business or trade matter);
* Where a publication of names or circumstances related to the issue might substantially hurt a person’s reputation (including a company) and when the publication of the matter or the names, is not essential to the substance of the publication;
* When the query reveals a trade secret or business information, the publication of which might hurt the applicant;
* When the query relates to negotiations that have not yet culminated in a deal;
* When the query is submitted under special/extraordinary circumstances or the answer does not set a precedent related to a large number of issuing entities, providing it wasn’t preceded by a similar query on the same subject.

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