The Relevance of Time in Shaping a New Sanctions Theory in Capital Markets Law

As financial disclosure in the highly globalised financial markets serves to equalise market opportunities, poor and inaccurate disclosure leads to inequality among investors, governments, and institutions. There has been a steady but rather slow process of harmonisation of national sanctions for companies breaching their disclosure obligations. Without compromising the potential efficiency of these harmonisation measures, included in the Prospectus, Transparency and Market Abuse Directives, this paper aims to create and propose an alternative method to increase the efficiency of sanctions in corporate law. By focusing on the importance of time, as an element that influences - at least in theory - corporate decisions in relation to the eventual breach of disclosure obligations, this paper seeks to re-conceptualise the importance of sanctions in this area and to link their severity to the element of time that is potentially instrumentalised by listed companies. In this study, we argue that linking sanctions and time should prompt the legal framework to accentuate the severity of sanctions imposed in certain circumstances, while also adopting a differentiated approach to the types of sanctions imposed for the breach of specific disclosure obligations. This novel approach proposes to accentuate the targeting function of sanctions by associating them with the violation of different types of disclosure obligations and to create indirectly a de facto harmonisation trend amongst regulators and judges at the national level. This will become feasible through the creation of specific "aggravating circumstances" in the area of disclosure obligations, which will allow more severe sanctions to be imposed and national frameworks to converge gradually. 

If listed companies are sanctioned in a more targeted way when they violate disclosure obligations, the inequality between their strategies and the need for reliable information will gradually decrease. This novel approach proposes to accentuate the targeting function of sanctions and therefore tackle inequality in capital markets expressed by informational asymmetry and lack of sophistication.