Now that the FCA has announced the changes it proposes to make to the Listing Rules to bring them into line with the EU Market Abuse Regulation (MAR), Main Market companies should be taking steps to prepare themselves for the new regime, which comes into effect on 3 July 2016 and will make significant changes to the rules on director and senior employee share dealings and how inside information is dealt with.
Summary of changes
- Companies must be rigorous in assessing and recording when inside information arises and, where its announcement is delayed, why a delay was permitted.
- If there is a delay, the company must record when the inside information first arose and the decision was taken to delay announcing it and why. When the information is eventually announced, the company must notify the FCA of the delay and, if requested by the FCA, provide the FCA with an explanation why. Disclosure policies and similar materials may need amending.
- Insider lists must now follow a prescribed format, and more information needs to be recorded about each individual on the list.
- Companies are no longer required by the Listing Rules to have a share dealing policy that is no less rigorous than the Model Code (which is being withdrawn). However, we expect most companies to continue with a share dealing policy.
- The share dealing policy will need to be amended to bring it into line with MAR. In particular, under MAR a PDMR must not deal in the company’s shares during the closed period of 30 days ahead of the publication of annual and half-yearly financial results (MAR closed periods), except in certain narrowly defined circumstances. Other amendments could be made at the same time.
- PDMRs and persons closely associated with them (PCAs) will have to notify the company of all transactions relating to shares in the company, and in turn the company must announce details to the market. Such transactions must also be notified to the FCA. A prescribed form must be used.
- Dealings by PDMRs and their PCAs will have to be notified and announced more quickly: notification to the company must be made within three business days (currently four); and the company must announce details within the same three business days (currently by no later than the end of the business day when the company receives details from the individual).
- Companies can decide to require PDMRs and their PCAs to notify dealings only once a threshold of EUR 5,000 is reached, but we expect most companies will want all dealings to be notified.
for our briefing note on the impact of MAR on Main Market companies.