This briefing explains the new regime which requires companies admitted to trading on AIM to maintain insider lists.
The new regime comes into effect on 3 July 2016. AIM Companies will need to comply with Article 18 (Insider lists) of the EU Market Abuse Regulation (MAR) and the relevant implementing regulation.
AIM Companies have not previously been required to maintain insider lists. DTR 2.8R which contains the current requirements for issuers to maintain insider lists only applies to listed companies. MAR extends that regime to AIM Companies.
AIM Companies should consider whether any current transaction or corporate development constitutes inside information for the purposes of MAR. If the relevant information is inside information then an insider list will be required. A significant amount of personal information must be collected in respect of each person on the insider list.
Whilst the requirement to maintain an insider list may be familiar to many the prescriptive nature of the new regime and level of detail involved is likely to be an unwelcome surprise.
Separate briefings explain the new MAR regime for the disclosure of inside information by AIM Companies and the notification of transactions by PDMRs and PCAs and restrictions on dealings by PDMRs during closed periods.
Insider lists: the rules for AIM Companies
The following rules on insider lists now apply to AIM Companies:
- Article 18 of MAR
- Commission Implementing Regulation 2016/347 laying down implementing technical standards with regard to the precise format of insider lists and for updating insider lists in accordance with MAR.
Unfortunately these requirements are not contained in a single comprehensive standalone document. Further details on each of them are set out below.
Under MAR an AIM Company or any person acting on its behalf or on its account must:
- draw up a list of all persons who have access to inside information and who are working for them under a contract of employment or otherwise performing tasks through which they have access to inside information, such as advisers, accountants or credit rating agencies (insider list);
- update the insider list in accordance with MAR; and
- provide the insider list to the FCA as soon as possible following a request from the FCA (MAR Article 18 (1)).
An AIM Company or any person acting on its behalf must take all reasonable steps to ensure that any person on the insider list:
- acknowledges in writing the legal and regulatory duties entailed
- that he/she is aware of the sanctions applicable to insider dealing and unlawful disclosure of inside information (MAR Article 18 (2)).
Where another person acting on behalf or on the account of the AIM Company assumes the task of drawing up and updating the insider list, the company remains fully responsible for complying with Article 18. The company must always retain a right of access to the insider list.
The FCA's website will specify the electronic means which should be used when an insider list is submitted to the FCA.
Format of the insider list
An AIM Company must use the prescribed templates when creating and maintaining its insider list.
The templates are set out in Annex I of Commission Implementing Regulation 2016/347 laying down implementing technical standards with regard to the precise format of insider lists and for updating insider lists in accordance with MAR.
Two templates have been provided. The first is a deal or event specific list. The second template allows a company to keep a permanent insiders section of the insider list. This will include details of those people who have access at all times to inside information within the company.
The deal or event specific list must contain detailed information using the relevant prescribed format. The following information is required for a deal/event specific list: first name, surname, birth name if different, professional telephone numbers (work direct telephone line and work mobile numbers), company name and address, function and reason for being an insider, the date and time at which the person obtained access to the inside information, the date and time at which the person ceased to have access to the inside information, date of birth, national identification number (if applicable), personal telephone numbers (home and personal mobile telephone numbers) and personal full home address.
Retention of the insider list
AIM Companies or any person acting on their behalf or on their account must retain the insider list for a period of at least five years after the list was drawn up or updated.
No FCA Guidance
All of the provisions of DTR 2.8 which previously covered insider lists and provided some practical guidance have been deleted. Some open issues include:
- what information to provide for UK nationals in the column of the insider list which requests the "National Identification Number"
- what happens if a person refuses to communicate personal information
- whether a person can acknowledge his/her legal and regulatory duties for the purposes of Article 18(2) MAR in paper format or electronic means (including via click though acceptance of an email)
- whether advisers acting on behalf of an issuer (e.g. an underwriter or financial adviser) do not need to keep on their insider lists information about employees of persons acting for them (e.g. the advisers’ advisers, such as lawyers acting for an underwriter or financial adviser)
- the issuer’s responsibility when another person acting on behalf or on the account of the issuer assumes the task of drawing up and updating the insider list.
Exemption from the requirement to prepare an insider list
AIM Companies cannot currently take advantage of any exemption from the requirement to prepare an insider list. An exemption will be available for issuers whose financial instruments are admitted to trading on an SME growth market but this will not affect the position on 3 July 2016.
AIM Rules for Companies
The AIM Rules for Companies do not refer to insider lists. This reflects the fact that MAR will operate as a separate regime in the UK and that the FCA is the competent authority for MAR in the UK.