CMS has produced a guide to the changes that AIM Regulation proposes to make to the AIM Rules for Companies to bring them into line with the EU Market Abuse Regulation (MAR), and the steps AIM companies should now start taking to prepare themselves for the new regime. MAR comes into effect on 3 July 2016 and will make significant changes to the rules on directors’ share dealings and how inside information is dealt with. The final version of the amended AIM Rules is expected to appear in late May or early June.
Relevant points include:
- An AIM company that believes it may have inside information (currently known as unpublished price-sensitive information) will need to consider both the AIM Rules and MAR provisions to decide whether an announcement must be made immediately or whether a delay is permitted. If necessary, the company’s nominated adviser may need to consult the Financial Conduct Authority (FCA) as well as the Exchange.
- If a company delays disclosing inside information to the market, when it does announce the information it must tell the FCA that it has delayed doing so and, if requested by the FCA, must provide the FCA with an explanation of why it believed a delay was justified.
- AIM companies will have to keep lists of persons working for them who have access to inside information either regularly or in connection with a particular project (insider list). The insider list must follow a prescribed format.
- AIM companies will be required by the AIM Rules to have a share “dealing policy” that includes certain minimum provisions. The policy will need to provide that during the closed period of 30 days ahead of the publication of annual and half-yearly financial results (MAR closed periods) a person discharging managerial responsibilities (PDMR) must not “conduct transactions on their own account, or for the account of a third party [e.g. a spouse or relative], directly or indirectly” in the company’s shares, except in certain narrowly defined circumstances. A PDMR broadly means a director or senior executive.
- The dealing policy can, if the company chooses, also restrict dealings by PDMRs at other times (non-MAR closed periods), such as when the company is in possession of unpublished inside information, whether or not the PDMR who is proposing to deal happens to know about it.
- PDMRs and persons closely associated with them must notify both the FCA and the company of all “transactions conducted on their own account” relating to shares in the company or derivatives or financial instruments related to such shares. (Companies can, however, decide to require such a person to notify only once a threshold of EUR 5,000 is reached.) The obligation to notify the FCA is new. A notification must be made promptly and no later than three business days after the date of the transaction. In turn the company must announce details of the transaction to the market promptly and no later than three business days after the transaction occurs. A specially prescribed form must be used.
- Company policies and procedures relating to share dealings by directors and others and the safeguarding and disclosure of inside information will need to be updated to reflect the new regime. The changes will need to be reviewed when the Exchange publishes the final version of the amended AIM Rules.
- AIM companies should decide which of their senior executives should be categorised as PDMRs from 3 July, and will need to update the list to reflect subsequent staff changes.
The CMS briefing note on the impact of MAR on AIM companies can be found here
This article was written by Gary Green, Nicholas Stretch, James Parkes, Helen Johnson, Partners at CMS Cameron McKenna LLP, and Peter Bateman, Professional Support Lawyer at CMS Cameron McKenna LLP.