ESMA has on 6 July 2017 updated its Q&A regarding the interpretation of closely associated persons who are subject to the notification obligations relating to managers' transactions under the Market Abuse Regulation ((EU) No 596/2014, "MAR").

According to the definition in MAR, a closely associated person is, inter alia, a legal person, trust or partnership, "the managerial responsibilities of which are discharged" by a person discharging managerial responsibilities within an issuer (a "Manager") or by a natural person closely associated with such Manager.

ESMA has in its interpretation confirmed that the reference to "the managerial responsibilities of which are discharged" in the MAR definition of a closely associated person should be read to cover those cases where a Manager within an issuer (or his/her closely associated natural person) takes part in or influences the decisions of another legal person, trust or partnership (a “legal entity”) to carry out transactions in financial instruments of the issuer in question.

For example, in the case of mere cross board membership, where a person sits in the administrative, management or supervisory body of an issuer and also in the board of another legal entity where they exercise executive or non-executive functions, without however taking part nor influencing the decisions of that legal entity to carry out transactions in financial instruments of the issuer, then that person should not be considered to be discharging managerial responsibilities within that legal entity within the meaning of the MAR definition of a closely associated person. Therefore, that legal entity would not be subject to the notification obligations relating to managers' transactions under MAR, unless that legal entity is directly or indirectly controlled by, is set up for the benefit of, or its economic interests are substantially equivalent to those of that person.

As a consequence of ESMA's above interpretation, the temporary interpretation of the Finnish Financial Supervisory Authority (the "FIN-FSA") issued in summer 2016, which allowed issuers to apply the so called narrow interpretation of a closely associated person, has been revoked and the FIN-FSA has updated its own MAR Q&A accordingly. Issuers should inform their Managers of the new interpretation, and the Managers should then re-evaluate the scope of their closely associated persons and, where necessary, inform them accordingly. The FIN-FSA still allows issuers to apply the narrow interpretation until necessary practical arrangements (such as the issuer's notification to the Managers and the Managers' notification to closely associated entities) have been undertaken, but expects that such actions are undertaken by 31 October 2017.

ESMA's updated MAR Q&A can be found through the following link: https://www.esma.europa.eu/sites/default/files/library/esma70-145-111_qa_on_mar.pdf.

The FIN-FSA's "Markkinat" publication through the following link: http://www.finanssivalvonta.fi/fi/Tiedotteet/Markkinat/Documents/Markkinat_2_2017.pdf.

The FIN-FSA's updated MAR Q&A through the following link: http://www.finanssivalvonta.fi/fi/Saantely/Saantelyhankkeet/mar/19_artikla/Documents/Finanssivalvonta_Q_A_Johtohenkiloiden_liiketoimet_MAR_19_artikla.pdf.