United States: Governance & Securities Law Focus: Europe Edition, July 2016

EU DEVELOPMENTS

EU Referendum: UK Votes to Leave the European Union

As you are likely aware, the UK public voted on 23 June 2016 to leave the European Union. The vote itself has no legal effect on the laws of the UK or EU, and the UK will remain a member of the EU until there is either an agreement to exit or a two-year period expires from the date of issuance of a formal notice of exit by the UK government. That notice, when served, triggers a negotiation period of up to two years during which time the current EU laws continue to apply in the UK.

For further information on the departure of the UK from the European Union, please see our "Brexit" resource page which includes FAQs and industry specific comments, at:

Common Operation of Market Abuse Directive: ESMA Updates Q&A

On 1 April 2016, the European Securities and Markets Authority ("ESMA") published an updated version of its Q&A on the common operation of the Market Abuse Directive. The updated Q&A includes a new question on investment recommendations. The question deals with whether material that is intended for distribution channels or for the public, which concerns one or more financial instruments and contains statements indicating that these financial instruments are "undervalued," "fairly valued" or "overvalued," falls within the definition of "recommendation" contained in Article 1(3) of Commission Directive 2003/125/EC.

The update on the common operation of the Market Abuse Directive can be accessed here:

Prospectuses: ESMA Updates Q&A

On 6 April 2016, ESMA published version 24 of its Q&A on prospectuses. This version includes one new question around whether a prospectus can include an additional column to reflect recent or future material changes to the capitalisation and indebtedness statements required pursuant to Item 3.2 of Annex III (Minimum disclosure requirements for the share securities note) of the Prospectus Regulation. ESMA considers that it will depend on whether or not the change has triggered the requirement to disclose pro forma financial information, whether it is a recent complex change, whether it is a recent straightforward change and, in the case of a future change, whether it is certain or not.

Version 24 of ESMA's Q&A on prospectuses can be accessed here:

Transparency Directive: Final Draft Commission Delegated Regulation on European Electronic Access Point

On 19 May 2016, the Commission published the final draft text of its delegated regulation supplementing the Transparency Directive with regard to regulatory technical standards on access to regulated information at Union level.

The draft is substantially the same as the draft submitted by ESMA to the Commission in September 2015. The publication of the regulation in the Official Journal and its entry into force are subject to the European Parliament and Council not opposing the regulation. For a summary of the previous draft submitted by ESMA on 28 September 2015, please see our Q3 2015 Governance and Securities Law Focus newsletter available here:

Market Abuse Regulation: Regulation Takes Direct Effect in All Member States

On 3 July 2016, the Market Abuse Regulation ("MAR") took effect and became directly applicable for all Member States. At the same time, Member States (other than the UK and Denmark who chose not to opt into that directive) were required to have implemented the Criminal Sanctions for the Market Abuse Directive.

MAR replaces and extends the application of the EU's previous Market Abuse Directive in a number of significant ways, while retaining certain core underlying concepts and rules – such as the concept of "inside information" that must generally be disclosed to the market as soon as possible, limited circumstances in which this disclosure may be delayed, the requirement to maintain and update "insider lists," reporting of transactions by "persons discharging managerial responsibilities" ("PDMRs") and prohibitions on insider dealing and manipulation of the market.

Key areas in which MAR extends the previous EU market abuse regime include:

  • applying to securities traded on multilateral trading facilities (and, from January 2018, organised trading facilities) as well as regulated markets;
  • applying to market participants in emissions trading allowances (although these provisions will not take effect until January 2018);
  • imposing "closed periods" during which PDMRs may not deal in securities; and
  • laying down much more detailed and prescriptive mechanisms and procedures that must be followed to comply with MAR (e.g. in relation to conducting market soundings) or to fall within certain safe harbours (such as those established for share buy backs and stabilisation transactions).

MAR was finalised and officially published in 2014 and various ancillary implementing or delegated measures have also been issued or are being issued under MAR.

For our previous coverage of MAR in the Governance and Securities Law Focus newsletters, please see:

To view a copy of our MAR briefing, please see:

To view the regulation itself, please see:

MiFID: Commission Delegated Regulation on Admission to Trading (Corporate Aspects)

On 24 May 2016, the European Commission published a delegated regulation under the Markets in Financial Instruments Directive (II) ("MiFID II") regarding the technical standards for the admission of financial instruments to trading on regulated markets. Corporate aspects of the text of the regulation remain in substantially the same form as the text proposed by ESMA in its September 2015 report.

For a summary of the previous draft submitted by ESMA on 28 September 2015, please see our Q3 2015 Governance and Securities Law Focus newsletter available here:

The delegated regulation will enter into force on the 20th day after its publication in the Official Journal and will apply from 3 January 2017, subject to the European Parliament and Council not opposing it under Article 13 of Regulation 1095/2010.

The delegated regulation can be accessed here:

MiFID and MAR: Council Adopts Legislation to Extend the MiFID II Implementation Date

On 17 June, the Council announced that it had adopted legislation amending MiFID II and the proposed new regulation amending the Markets in Financial Instruments Regulation ("MiFIR"), MAR and the Central Securities Depositories Regulation to, among other things, postpone the implementation date of the MiFID II legislative package by one year to 3 January 2018. No substantive changes have been made to the Parliament's text adopted on 7 June.

The resolutions of the European Parliament made on 7 June can be accessed here:

The press release can be accessed here:

On 30 June 2016, the instruments were published in the Official Journal and are now in force. For further information on the delay to the implementation of MiFID II, please see our client note available here:

UK DEVELOPMENTS

PSC Register: BIS Non-Statutory Guidance

On 12 April 2016, the Department for Business, Innovation and Skills ("BIS") published updated versions of both its non-statutory guidance for companies, SEs and LLPs and its non-statutory guidance for people with significant control.

The revised guidance is broadly the same as previous guidance, however amendments include:

  • clarifying that a person's direct and indirect interests must be aggregated for the purpose of choosing the appropriate statement to include in a PSC register;
  • deleting an option to acquire shares from the examples of rights exercisable only in certain circumstances. The guidance for companies also includes a new paragraph stating that weighted voting rights on particular matters are unlikely to meet the voting rights test in the second specified conditions; and
  • correcting the official wording for inclusion in the PSC register of an LLP.

For a summary of the previous BIS non-statutory guidance, please see our Q1 2016 Governance and Securities newsletter available here:

The updated versions of the non-statutory guidance can be accessed here:

LSE Consultation on Changes to AIM Rules for Companies Ahead of the Market Abuse Regulation

In the UK, the introduction of MAR has led to certain significant amendments to the Financial Services and Markets Act 2000 and the FCA Handbook, largely to repeal or recast guidance or rules that have been replaced by, or may have conflicted with, the new directly applicable MAR requirements.

In addition, on 13 April 2016, the London Stock Exchange ("LSE") issued AIM Notice 44, the purpose of which was to consult on proposed changes of the AIM Rules for Companies in light of MAR coming into effect on 3 July 2016.

The key proposals were to:

  • amend the guidance on AIM Rule 11 (General disclosure of price sensitive information) to clarify that AIM Companies will have to comply with both AIM Rule 11 and Article 17 of MAR;
  • amend AIM Rule 17 (Disclosure of miscellaneous information) to remove the notification requirement in relation to directors' dealings which is satisfied by complying with Article 19 of MAR;
  • incorporate a new rule on dealing policy; and
  • clarify AIM Rule 41 (Cancellation) which deals with the circumstances in which the LSE might waive the requirement for shareholder approval to cancel securities which are or will be admitted to trading on an EU regulated market or an AIM Designated Market.

On 14 June 2016, the LSE published AIM Notice 45 to announce that following the consultation, all of the consequential changes envisaged in AIM Notice 44 would be made to the AIM Rules for Companies and Nominated Advisors and the AIM Note for Investing Companies, save that the definition of applicable employee for the purposes of AIM Rule 21 (Dealing policy) and the respective guidance were also amended. The new versions of the rules came into effect on 3 July 2016.

AIM Notice 44 can be accessed here:

AIM Notice 45 can be accessed here:

The revised AIM Rules for Nominated Advisers can be accessed here:

The AIM Note for Investing Companies can be accessed here:

FCA: Interim Report on Investment and Corporate Banking Market Study

On 13 April 2016, the Financial Conduct Authority (the "FCA") published its interim report on the investment and corporate banking market study.

The FCA began a market study into investment and corporate banking on 22 May 2015. This market study focused on choice, transparency, bundling and cross-subsidisation in debt and equity capital markets, and mergers and acquisitions. The market study also focused on the links between competition in these primary market services and related activities such as corporate lending and broking and ancillary services.

This interim report highlights the FCA's current conclusions stating that, while many clients feel well-served by primary capital market services, there were also some areas where improvements could be made to encourage competition. There was a particular concern around cross-subsidies in the universal banking model between corporate banking and investment banking, as well as specific market practices such as syndication and reciprocity. The FCA suggests some possible remedies for the issues identified.

The FCA expects to publish its final report in summer 2016.

The interim report can be accessed here:

Prospectuses: FCA Discussion Paper on Availability of Information in the IPO Process

On 13 April 2016, the FCA published a paper opening a discussion with the aim of ensuring market participants have access to the right information at the right time during the IPO process. Currently there is a blackout period between research on the issuer being published by the banks supporting the IPO and circulation of the issuer's prospectus, which means that investors only gain access to an important source of information late in the process. In addition, analysts unconnected with the IPO generally lack access to the management of the issuer, leaving them with little information on which to base their independent research.

The discussion paper sets out alternative IPO process models which comprise different combinations of two ideas: a requirement to delay the release of any research by analysts at banks connected to the IPO until after the prospectus is published, and a requirement to invite analysts from unconnected banks and independent research providers to any meetings with management.

The discussion period closes on 13 July 2016.

The discussion paper can be accessed here:

To continue reading this article, please click here

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
 
In association with
Related Video
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.