A new market abuse regime will come into force in Ireland on 3 July 2016 and will replace the existing market abuse regime that has been in force in Ireland since 2005.
This briefing outlines the practical steps that listed companies need to take in order to comply with the requirements of MAR.
The new market abuse regime will comprise of a Market Abuse Regulation (596/2014) (MAR) and the Criminal Sanctions for Market Abuse Directive (2014/57/EU) (CSMAD). MAR will set out the revised market abuse framework while CSMAD complements MAR by introducing minimum rules for criminal sanctions for market abuse. As MAR is an EU Regulation, it will be directly effective in Ireland on 3 July 2016, so there is no requirement for any national legislation to implement MAR into Irish law.
MAR will extend the application of the existing market abuse regime beyond issuers with shares admitted to trading on EU regulated markets, such as the Main Securities Market of the Irish Stock Exchange, to include issuers of securities trading on multilateral trading facilities, including the Irish Stock Exchange's Enterprise Securities Market (ESM) and the London Stock Exchange's Alternative Investment Market (AIM).
Implications for Listed Companies
Listed companies should review their business structures to be ready for the introduction of MAR. In particular, the following steps should be taken in order to ensure compliance with the requirements of MAR.
1. Insider Lists
Listed companies will need to update their insider lists so that they contain the additional information for each insider as required under MAR. This information will include, inter alia, the insider’s home address, e-mail address, PPS number and the date and time of access to personal information. Companies can maintain the practice of maintaining deal specific insider lists and permanent insider lists.
2. Delayed Disclosure of Inside Information
Listed companies will be required to make a notification to the Central Bank of Ireland if they have delayed the disclosure of inside information and may be required to provide a written explanation of how the conditions for delay were satisfied. These obligations are supported by detailed record keeping requirements as described below.
3. List of PDMRs and Associated Persons
Listed companies must maintain a list of all persons discharging managerial responsibilities (PDMRs) and their associated persons. This list is distinct from the insider list. It should be noted that MAR will prohibit PDMRs and their associated persons from dealing in their company’s securities in a “closed period” of thirty calendar days before the announcement of an interim financial report or a year-end report, subject to certain limited exceptions.
4. Notification of PDMR Dealing
Listed companies will need to ensure that PDMR dealings can be notified within the new deadlines in MAR and in the required format. PDMRs of a company with bonds admitted to trading on a multilateral trading facility will now be subject to the reporting obligation if they conduct a transaction in any of the following:
- The public bonds of the company; or
- Shares, ADRs, debt instruments, derivatives or other related financial instruments of the company, even if the PDMR holds no public bonds in the company and even if the only admission to trading is of those bonds.
Once the total gross value of the transactions reaches €5,000 within a calendar year, all subsequent PDMR dealings in the calendar year must be notified promptly by the PDMR to their company no later than three business days after the date of the transaction. In addition, the company must notify the transaction to the Central Bank within three working days of the transaction date.
5. MAR Training
All personnel in a listed company should undergo MAR training. Documented records of this training should be maintained by the company.
6. Written Notification and Acknowledgement of MAR Responsibilities
Following their training, employees and PDMRs should receive a written notification of their MAR obligations and they should be required to acknowledge these obligations in writing. PDMRs are also required to notify any person who is closely associated with them of their MAR obligations and retain a record of these notifications.
7. Company’s Internal MAR Compliance Manual
Listed companies will need to update their existing internal market abuse compliance manuals in order to ensure that they reflect the new requirements under MAR. In particular, companies will need to update their internal procedures for identifying and disclosing inside information to the market and the processes in place for delaying disclosure. Existing manuals will need to be updated to reflect the significant record keeping duties under MAR.
8. Market Sounding Manual
Listed companies should have a market sounding manual which sets out all of the relevant requirements of MAR. Under MAR, “market soundings” comprises of the communication of information, before the announcement of a transaction, to one or more potential investors in order to engage the interest of those potential investors in the possible transaction and the conditions relating to it, such as its size or pricing.
9. Record Keeping
Records should be stored in a durable medium that allows them to be replayed or copied and must be retained in a format that does not allow the original record to be altered or deleted. In addition, records should be stored in a searchable medium to ensure that they are accessible and readily available on request.
Listed companies will need to review their websites in order to ensure that all disclosures of price sensitive information can be retained in an easily accessible location for a period of at least five years following its release.