On 9 January 2009, the FSA published a statement on its website entitled "Disclosure and Model Code obligations in respect of the use of shareholdings as security". The statement is intended to clarify the position regarding the notification obligations of persons discharging managerial responsibility (PDMRs), such as directors, and their connected persons who grant security over their shares. The statement follows widespread media coverage which surrounded David Ross and Carphone Warehouse in December 2008.
In its statement the FSA confirmed that a grant of security over shares (by the creation of a security interest such as a pledge, mortgage or charge) does fall within the meaning of a "transaction" for the purposes of chapter 3 of the Disclosure and Transparency Rules (Transactions by persons discharging managerial responsibilities and their connected persons). Therefore, in accordance with DTR 3, PDMRs and their connected persons must notify the company in writing where security has been granted over their shares. Such notification must contain the information set out in DTR 3.1.3R and must be made within four business days of the date of the transaction. Following receipt of such a notice, the company must, in turn, make an announcement to the market as soon as possible and in any event by no later than the end of the business day following receipt of the notice.
The FSA gave PDMRs or their connected persons who had granted security over shares until 23 January 2009 to disclose this to the market. The FSA indicated that it would not take any enforcement action in relation to disclosures made prior to this deadline.
View the FSA statement (web page).