On 6 July 2017, ESMA updated its Q&A relating to the Market Abuse Regulation ("MAR") which included a clarification on the definition of a "closely associated person" for the purposes of Article 3(1)(26) of MAR. Under Article 3(1)(26)(d), the definition of a "closely associated person" includes a legal person, trust or partnership, the managerial responsibilities of which are discharged by a person discharging managerial responsibilities ("PDMR"). In the Q&A, ESMA clarified that the reference to "managerial responsibilities of which are discharged" for the purposes of Article 3(1)(26) should be read to cover only those instances where a PDMR within an issuer (or a closely associated natural person) takes part in or influences the decisions of another legal entity to carry out transactions in financial instruments of the issuer. This differs from the definition of a PDMR within an issuer in Article 3(1)(25).

The practical implication of this publication by ESMA is that it is now clear that unless persons and legal entities actively take part in or influence the decisions of another legal entity (whether exercising executive or non-executive functions on the board of that entity or otherwise), that legal entity will not be subject to the notification obligations under Article 19(1) (managers' transactions) of MAR. This is the position unless the legal entity in question is directly or indirectly controlled by, was set up for the benefit of, or its economic interests are substantially the same as those of the PDMR within the issuer.