UK: The Market Abuse Regulation – Impact On AIM Companies

On 3 July 2016 the Market Abuse Regulation (MAR) will come into force and will apply directly to AIM traded companies. The London Stock Exchange has recently confirmed the changes it will make to the AIM Rules as a result of MAR. AIM companies should take final steps now to prepare for the new regime under MAR and the new AIM Rules. The revised AIM Rules will come into force on 3 July 2016.  

What are the main changes for AIM companies?

Disclosure of inside information

Under MAR, AIM companies will be required to disclose inside information as soon as possible, subject to certain circumstances when disclosure can be delayed. There are no changes to the current AIM Rule 11 which sets out a general disclosure of price-sensitive information for AIM companies. There is some overlap between the obligations to disclose under the AIM Rules and MAR but they are not identical and there are additional requirements that apply under MAR. An AIM company will need to consider both the AIM Rules and MAR when deciding whether disclosure to the market should be made immediately or whether disclosure can be delayed.

The guidance to AIM Rule 11 will signpost companies to the separate obligation to comply with their obligations under MAR. These include requirements around the format and content of notification of information to the market and making that information available on the AIM company's website.

AIM intends to work closely with the FCA to reduce duplication of regulation.

Delaying disclosure

If an AIM company delays disclosure of inside information to the market, it must keep detailed records of its decision to do so, including: the time and date of when the company decided to delay disclosure, the persons responsible for the decision to delay disclosure and the steps that the company took to monitor the conditions permitting the delay. Subsequently, when the inside information is announced, the company must inform the FCA that disclosure was delayed and the FCA may ask for written explanation of the reasons and justifications for delaying disclosure.

Insider lists

Under MAR, companies are required to keep up-to-date insider lists which list all persons acting for them who have access to inside information (on a permanent and ad hoc basis). Further, companies are required to ensure that any person on the list acknowledges in writing their legal and regulatory duties in respect of inside information and the potential sanctions for breach. Insider lists should be kept in a prescribed form electronically.

Dealings by "persons discharging managerial responsibilities"

MAR introduces:

  • new disclosure obligations on "persons discharging managerial responsibilities" (PDMRs) and "persons closely associated" (PCAs) with them; and 
  • new restrictions on PDMR dealings during "closed periods",

which will apply to AIM companies.

A PDMR includes not only board members but also any senior executive who has regular access to inside information and power to make managerial decisions affecting the development and business of the company. A PCA to a PDMR includes: a spouse or civil partner, a dependent child, another relative living with a PDMR for at least 12 months and a legal person, trust or partnership set up for, controlled or the benefit of, a PDMR or another of its PCAs.

Disclosure obligations

PDMRs and their PCAs will be required to notify the company and the FCA within three business days of every transaction conducted on their own account relating to shares or debt instruments in the company or related derivatives or other financial instruments. Companies are under an obligation to promptly, and in any event  within three business days, make public each transaction notified to it, by its PDMRs and their PCAs. These requirements go further than current AIM Rule 17, which relates only to directors dealings and which will therefore now be deleted.

The threshold requiring disclosure under MAR is EUR 5,000 per annum. However, as there was no previous threshold for disclosure and due to the complications around conversion rates, an AIM company may wish to ensure that all transactions are notified.

Notification of dealings (both by a PDMR/PCA) should be made in the form prescribed by the FCA.

Companies are required to keep a list of all PDMRs and their PCAs. A company must notify its PDMRs in writing of their obligations to disclose dealings to the company and the FCA, and PDMRs are required to notify their PCAs of the same.

Prohibited dealings

MAR sets out a legal prohibition on PDMRs conducting transactions on their own account or for the account of third parties during closed periods. This is subject to only limited exemptions. A closed period under MAR is a period of 30 days immediately preceding the announcement of a company's interim or year-end financial report.  

As the obligations under existing AIM Rule 21 and the new obligations under MAR are not fully aligned (the current definition in the AIM Rules of "closed period" is, for example, more extensive than that set out in MAR), AIM Rule 21 in its current form will be deleted.

The FCA have advised, pending clarification from the European Commission and ESMA, that where a company announces preliminary results the closed period will be 30 days immediately preceding announcement of the preliminary results. The announcement will end the closed period provided it contains all inside information expected to be included in the year-end report.

Share dealing code

It will be a new requirement of AIM Rule 21 for an AIM company to have a share dealing code in place.  A share dealing code sets out the requirements and procedures for PDMRs dealing in the securities of the company and, in many respects, this new AIM Rule codifies market practice for AIM companies.

At a minimum, the share dealing code must include: when a company's closed periods are;  when a PDMR requires clearance to deal in the company's securities; the nominated person within the company to grant clearance; the procedure to obtain clearance and the company's assessment for clearance; the timeframe for dealing and notification of dealing in accordance with MAR. A company may wish to extend its share dealing code to restrict PDMR dealings, for example in circumstances where the company is in possession of unpublished inside information (whether the PDMR was aware of such information or not).

AIM has stated that a share dealing code should be tailored to a particular company's circumstances to ensure it is understood and applied effectively in practice.

What does an AIM company need to do?

AIM companies will need to consider the following:

Disclosure of inside information

  • Processes: Review existing processes for consistency with MAR.
  • Delay Disclosure Committee: Consider whether it is appropriate to adopt a committee to make decisions about whether disclosure of inside information can be delayed.  If not, who has responsibility for that decision?
  • Clear Record Keeping: Keep detailed records including specific dates and times about delaying disclosure of information.
  • Insider List: Keep an electronic up-to-date list of all persons who have access to inside information in the format compliant with MAR. Persons listed on the insider list should acknowledge in writing their legal and regulatory duties in respect of inside information.

PDMR dealings

  • PDMR and PCA List: Keep an up-to-date list of all its PDMRs and their PCAs and notify its PDMRs in writing of their obligations to disclose dealings to the company and the FCA.
  • Share Dealing Code: Review its current share dealing code (assuming the company has one) and either update the current form or adopt a new share dealing code that is compliant with the AIM Rules and MAR.
  • Nominated Clearance Person: Nominate an appropriate person to grant clearance to PDMRs to deal in accordance with the share dealing code.
  • Existing Employee Share Schemes: Review any existing employee share schemes to ensure they are compliant with the exceptions for dealing during closed periods under MAR.

More generally, AIM companies should consider what training is appropriate for its employees in respect of compliance with the company's obligations under MAR and the new AIM Rules.

Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
6 Sep 2018, Business Breakfast, Glasgow, UK

Decarbonising our heat is a key component of The Scottish Energy Strategy and an essential piece of the complex matrix we must tackle if we are to meet our climate change obligations.

11 Sep 2018, Business Breakfast, Milton Keynes, UK

Join us for our next development breakfast round table event reflecting on the on-going planning discussion regarding the Oxford-Cambridge corridor and helping you consider how best to cash in on the exciting opportunities by considering the benefits of promotion and option agreements.

20 Sep 2018, Seminar, London, UK

Environmental regulation and liability have risen up the boardroom agenda over the past decade. Recent changes to environmental sentencing have brought this area of risk even more into focus.

Similar Articles
Relevancy Powered by MondaqAI
Reed Smith (Worldwide)
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Reed Smith (Worldwide)
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions