The Channel Islands Securities Exchange Authority Limited (the Exchange) has recently announced changes to chapter 7 of its listing rules (Listing Rules) applicable to issuers listed under chapter 7 (investment vehicles) and to its model code for securities transactions (Model Code) each of which will take effect from 1 September 2016.

Proposed changes to chapter 7 of the Listing Rules

Principles and guidance based approach

The most important change is one of approach: chapter 7 will follow what the Exchange describes as a "principles and guidance based approach" comprising a revised set of rules which  must be adhered to and accompanying guidance notes which are intended to explain the implications of such rules and indicate possible means of compliance and/or recommend a particular course of action or arrangement.  The expectation of the Exchange is that this approach will make chapter 7 more up to date, accessible and enable the Exchange to be more dynamic and facilitate product innovation. 

Summary of key changes to chapter 7

Some of the key changes made to chapter 7 are as follows:

  • Expansion of chapter 7 to encompass all types of investment vehicles (not just investment funds).
  • Simplification of the conditions to listing, including guidance as to how to satisfy the Exchange's requirements relating to the experience and independence of directors and investment managers.
  • Overhaul of the continuing obligations applicable to chapter 7 issuers including revising the over-arching principles of continuing obligations, clarifying the timing for making notifications to the Exchange and  where there is a change of service provider, extending the range of service providers in respect of whom notifications to the Exchange are required.
  • Streamline provisions relating to transactions entered into by chapter 7 issuers. These include welcome changes that shareholder approval for substantial and/or related party transactions is only now required where they fall outside the scope of the investment vehicle's activities and investment policy and clarifying that start of life/end of life transactions are not caught so long as they are within the investment policy or, in the case of end of life, a winding-up or similar process approved by holders.

Chapter 7 issuers are advised to make themselves familiar with the changes to the Listing Rules, particularly those relating to continuing obligations. 

Model Code

The Model Code has been revised following the European Union's implementation of the Market Abuse Regulation (MAR) with the intention of aligning the Model Code with certain provisions of MAR relating to persons in managerial positions and their dealings.  The revised Model Code will take effect from 1 September.  The revised version is available here: Appendix VI - Model Code 

Some of the key changes include:

  • Reduction of "closed periods" from 60 to 30 calendar days.
  • Clarify those individuals whose dealings are covered by the Model Code. In brief, the revised Model Code closely follows MAR's concepts of "persons discharging managerial responsibilities"  (PDMR) and their "persons closely associated" (PCA).
  • Permit dealings by a PDMR pursuant to a "trading plan" under which an independent third party has discretionary authority to undertake trading decisions on behalf of the PDMR. Providing such a plan has been cleared in advance in the usual manner before a prohibited period and certain other requirements are complied with a PDMR may deal pursuant to the trading plan during a prohibited period.

Issuers subject to the Model Code are advised to review their current dealing policies before 1 September to ensure compliance with the revised Model Code.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.