These are condensed, exam-ready and streamlined notes made from Classes, the Resource Pack and the Legacy Notes.
Public Companies is inherently content-heavy therefore these notes will help in streamlining the information you really need in readiness for exams.
The exam is formatted in a che...
Continuing Obligations 2 – Share Dealing and Disclosure
Overview
o PDMRs – Persons Discharging Managerial Responsibilities
o PCAs – Persons Closely Associated
Continuing Obligation that applies personally to directors/senior managers/PDMRs in
relation to dealings in C’s shares and responsibilities
Rules under Market Abuse Regulations (‘MAR’) intend on ensuring transparency and fair
dealing in quoted securities of D’s companies by:
1. Requiring Ds to comply with disclosure obligations – relating to dealings in their own
C’s securities; and
2. Not to deal in their own C’s securities during a period prior to announcement of C’s
financial results – when they may be in possession of insider information
Transparency Directive & DTRs provide SHs with requirements to disclose their interests
where they exceed or fall below certain thresholds
Dates for Publishing Accounts:
A listed company's annual Four months from the end of the (DTR 4.1.3R)
financial report financial period to which it
relates
A private company's annual Nine months from the end of (s442 (2) (a) CA 2006)
report and accounts the financial period to which it
relates
A listed company's half-yearly Three months from the end of (DTR 4.2.2R (2))
report the financial period to which it
relates
A public company's annual Six months from the end of the (s442 (2) (b) CA 2006)
report and accounts financial period to which it
relates
Disclosure of Transactions by PDMRs (and PCAs)
Article 19 MAR – requires notification of transactions conducted by PDMRs – including Ds
– of listed companies on their own account, or by a PCA
o MAR, Recital 59 – “not only valuable info for market participants but also constitutes
additional means for competent authorities to supervise markets”
o Reality – CS/in-house lawyers primarily responsible of ensuring MAR compliance
o APPLIES TO BOTH companies on a REGULATED MARKET (MM) and Multilateral Trading
Facility (MTF) which includes AIM
,Does it apply?
MAR 19(4) This Article shall apply to:
ISSUERS who:
MAR 3.1.21 ‘issuer’ – means a legal entity governed by private or public law, which issues or
proposes to issue financial instruments
have requested or approved admission of their financial instruments
MAR 3.1.1. ‘financial instrument’ – ‘financial instrument’ means a financial instrument as
defined in Article 4(1)(15) of MiFID II Directive 2014/65/EU.
Always state that ordinary shares are financial instruments by virtue of FSMA 2000
(the prescribed markets and qualifying investments order 2001)
to trading on a Regulated Market
MAR 3.1.6 ‘regulated market’ – see if C is admitted (or applied for admission) is defined in
s103(1) of the FSMA 2000 – refers to Article 4(1)(21) of the MiFID II Directive (2014/65/EU) –
includes all main EEA regulated markets and exchanges (MM)
have requested admission to trading of their financial instruments on a Multilateral Trading Facility
MAR 3.1.7 ‘multilateral trading facility’ – refers to Article 4(1)(22) of MiFID II Directive
(2014/65/EU) – includes AIM
(For MCQs – a C which has made a request for admission to trading will be subject to these rules)
START HERE
Article 19(11) MAR states that:
A PDMR
Must not conduct any transaction for their own account
In their own companies shares
During a closed period
MAR, Article 19 (p.114) – applies to PDMRs & PCAs
Purpose Article 19 restricts the ability of PDMRs to deal in the company’s shares.
PDMRs manage day-to-day business of C – best position to make personal profits from
shares – PDMRs have advantage over SHs through insider knowledge
Market integrity and investor protection – requires Ds do not abuse their position for
personal profit
Only works where the person is buying shares in THEIR OWN COMPANY – NOT ANOTHER
COMPANY.
STEP 1: IS THE PERSON A PDMR/PCA?
PDMR Defined in MAR, Article 3(1)(25) – (a) & (b) as:
a. A member of the administrative, management or supervisory body [of a listed C]
Includes: directors and managers of sufficient seniority
, b. A senior executive who is not a member of the administrative, management or
supervisory body of that entity, but who has regular access to inside information*
relating directly or indirectly to [the listed company] and the power to make
managerial decisions affecting the future developments and business prospects
[of the listed company]
Senior executive not a D – DTR 3.1.2AG(2) – the nature or absence of
contractual arrangement will not prevent them being a PDMR if they have
regular access to C’s inside information and can make managerial decisions
affecting C
Whether or not someone is a PDMR will therefore be an issue of fact based on
whether their decisions are sufficiently important and whether they have access to
inside information.
UNSURE ABOUT INSIDE INFO?
*Inside information – see MAR Article 7
Article 18(1) MAR provides for an insider list and if someone is on that list they are
likely to have regular access to inside information.
o AIM companies are exempt from having insider lists under MAR 18(6)
however technicalities mean many have to for other reasons
Obligation to MAR Art 19(5) – Issuers obliged to draw up a list of “all persons discharging managerial
draw up a list responsibilities and persons closely associated with them”
o Ensures FCA, and other regulators, know who is in charge/have inside
info/influence/control/closely associated – must state in writing of their obligations
Note that MAR, Article 19 will NOT apply to PDMRs once they leave the company.
Application o s.91(2) FSMA – FCA can still impose financial penalty on any former D who, whilst
upon leaving being a D, was knowingly concerned in a breach of the Listing Rules
the company
MAR Art 14/15 – prohibits insider dealing / attempted insider dealing / unlawful disclosure
Other relevant of inside information / market manipulation / attempted market manipulation
rules o Also subject to insider dealing regime of CJA 1993 and statutory duties for Ds
Person Closely Defined in MAR, Article 3(1)(26). Further guidance given in s131AC FSMA (p1007)
Associated to a NB: wider definition in s252 CA06 does not apply.
PDMR (PCA)
The definition includes:
a. Certain members of the PDMR’s family that is his:
i. Spouse
ii. Civil partner
iii. Child/Stepchild under 18 (not married or civilly partnered)
iv. Relative with whom, as at the date of the transaction, he has shared a
house for at least one year;
b. Any legal person, trust or partnership, the managerial responsibilities of which are
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