INTRODUCTION
The Market Abuse Regulation (EU 596/2014) ("MAR") together with the Market Abuse Directive on criminal sanctions for market abuse (Directive 2014/57/EU ('CSMAD') became applicable in Ireland and across the European Union on 3 July 2016. MAR replaces the previous Market Abuse Directive (2003/6/EC).
MAR applies to issuers with securities listed or traded on regulated markets ("Regulated Markets"), Multilateral Trading Facilities ("MTFs") and Organised Trading Facilities ("OTFs") within the EU.
Issuers with securities listed on Regulated Markets, MTFs and OTFs in the EU, including the Regulated Market ("RM") and Global Exchange Market ("GEM") of Euronext Dublin, should carefully review the obligations under MAR and to adopt policies and procedures to ensure compliance with the regulations.
For the purpose of this memorandum MAR, CS MAD, together with the implementing regulations and guidance are collectively referred to as ("the Regulations").
If you have any questions on MAR, please contact a member of our Listing Team or your usual Financial Services contact.
INSIDER RULES
Determining what constitutes inside information:
It is the responsibility of the Directors to determine whether information constitutes inside information. Where information is determined to constitute inside information, it must be made public as soon as possible.
The definition of what constitutes inside information is set out in Appendix I. It encompasses information which has not been made public relating, directly or indirectly, to an issuer of securities which are listed or traded on a regulated market, MTF or OTF, which, if the information were made public, would be likely to have a significant effect on the prices of those listed/traded financial instruments or on the price of related derivative financial instruments. In determining the likely significance of information, a fund is required to assess whether the information in question would be likely to be used by a reasonable investor as part of his/her investment decision and would be likely to have a significant impact on the price of the funds financial instruments or related derivative financial instruments (the "reasonable investor test").
In the context of a listed fund, "issuer" may be interpreted as (i) the umbrella as a whole, where the information may have a potential impact on the price of all of the securities of the fund or (ii) a listed sub-fund, where the information relates only to securities within that listed sub-fund.
The decision as to whether information constitutes inside information is of critical importance, and the key elements of that decision should be documented and appropriate records maintained, including decisions that information did not constitute inside information.
In particular:
- The date and time that the fund and/or relevant person came into possession of the information;
- The date and time of the decision as to whether the information constitutes inside information and the outcome of that decision;
- In the case of a protracted process – the consideration of whether each stage may in itself constitute inside information; and
- The identity of those persons involved in decision.
Where information is determined to constitute inside information, specific Insider Rules apply:
These rules relating to inside information apply to any person who possesses inside information by virtue of:
- the person's membership of the administrative, management or supervisory bodies of a listed fund;
- the person's holding in the capital of a listed fund;
- having access to the information through the exercise of the person's employment, profession or duties; or
- the person's criminal acts.
These rules also apply to any person who possesses inside information under circumstances other that those referred to above, where that person knows, or ought to know, that it is inside information. Where that person is a legal person, these rules shall also apply, in accordance with national law, to the natural persons who participate in the decision to trade, amend or cancel an order for the account of the legal person involved. This effectively extends the insider rules to any person in possession of inside information, who is aware, or ought to be aware that it constitutes inside information.
Insider Rules - Conditions, requirements and prohibitions which apply to a listed fund and those persons acting on behalf of the fund when in possession of inside information:
- Publication of Inside Information;
- Trading Restrictions;
- Restriction on Unlawful Disclosure of Inside Information; and
- Preparation and Maintenance of Insider Lists.
A. Public Disclosure of Inside Information
A listed fund must inform the public as soon as possible of inside information.
The information must be made public in a manner which enables fast access and complete, correct and timely assessment of the information by the public. The listed fund must post and maintain on its website, for a period of five years, all inside information it is required to disclose publicly.
Where there is any change in published inside information, and the change itself constitutes new inside information, this new information is covered by inside information provisions under the Regulations, and the full process of public disclosure will have to take place again.
Inside information must be published by sending an announcement to either:
- A Regulatory Information Service ("RIS"); or
- Indirectly to a RIS via the Companies Announcements Office of Euronext Dublin.
The announcement must identify:
- That the information is inside information;
- The name of the listed fund;
- The identity of the person within the listed fund making the notification: name, surname, position within the fund;
- The subject matter of the inside information;
- The date and time in which it is taking place (including time zone); and
- Where relevant, the explanation of the terms of any delay in notification.
In the event that persons within the listed fund disclose any inside information to any third party in the normal course of an exercise of an employment, profession or duties, the listed fund will make complete and effective public disclosure of that information,
- simultaneously in the case of an intentional disclosure, and
- promptly in the case of non-intentional disclosure.
This provision shall not apply where the person receiving the information owes a duty of confidentiality to the fund, whether contractual, legal or regulatory
Delay in publication of inside information
A listed fund may delay publication of inside information only in very specific circumstances where the following three specific tests are met:
- Immediate disclosure is likely to prejudice the legitimate interests of the fund;
- Delay of disclosure is not likely to mislead the public; and
- The fund is able to ensure the confidentiality of the information.
Records of the reasons, and minutes as appropriate, supporting the above decisions must be maintained.
Where disclosure has been delayed and the confidentiality of that inside information is no longer ensured, the fund must disclose the information to the public as soon as possible, including circumstances where rumor explicitly relating to the inside information is sufficiently accurate.
Throughout the period of the delay, the fund must continue to assess the delay to ensure that the three conditions (a) to (c) above are constantly fulfilled, particularly the condition concerning confidentiality and must ensure that the inside information is then publicly disclosed. The fund must document evidence of the on-going monitoring of the conditions of the delay.
Notification to the Central Bank of a Decision to Delay Publication
Where a listed fund has delayed the disclosure of inside information, it must inform the Central Bank of Ireland (the "Central Bank") of the delay immediately after the information is made public. Such notification will be in writing and delivered in electronic form through the Central Bank's Online Reporting System (the "ONR").
It is important that supporting documents and minutes as appropriate are kept of the decision to delay which can be provided to the Central Bank when the information is made public.
Notification to the Central Bank of the Explanation for a Delay
In addition to the notification to the Central Bank of any delay in publication of inside information, a listed fund is required to provide the Central Bank with a written explanation, in prescribed format, of how the conditions for delaying disclosure, as set out under (a) to (c) above were met. Where the explanations are not notified simultaneously with the notification of a delay in publication by the fund, but provided at a later date upon request of the Central Bank, the full information in relation to the delay must be provided together with any such explanation.
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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.
