3 July 2016 the European Parliament’s and the Counsel’s Regulation (EU) No. 596/2014 regarding market abuse (MAR) will enter into force, as will the European Commission’s Implementing Regulation (EU) 2016/347 of 10 March 2016 regarding the precise format for insider lists and for updating insider lists.
These regulations introduce a number of new rules on the preparation of insider lists, including who is obligated to prepare insider lists, requirements to the content and the updating thereof, and the format according to which the insider lists must be prepared.
This webpage article outlines the requirements to the preparation and updating of insider lists for when the rules enter into force on 3 July 2016.
The Obligation to prepare Insider Lists
Where previously the obligation to prepare insider lists applied solely to issuers, whose financial instruments were traded at a regulated market place, the new rules impose an obligation on all issuers whose financial instruments are traded at a marked place, meaning that regulated market places, multilateral trading facilities and organized trading facilities, or persons who act on their behalf and on their account shall prepare insider lists on persons with access to insider information.
Small or medium-sized entities with an average market value below EUR 200,000,000 measured over three years are, however, exempt from the obligation, provided that the following conditions are met:
- The entities take reasonable steps to ensure that persons with access to inside information appreciate the legal duties and are aware of the sanctions.
- The entities are able to provide an insider list to the Danish Financial Securities Authority upon request.
The list must contain detailed information on the persons who are employed or perform tasks for the issuer and who have access to inside information in connection hereto. Persons who perform tasks for the issuer could for example be advisers, accountants etc.
These insider lists must be retained for the longer of i) a period of five years after the list has been prepared or ii) a period of five years after the list has been updated.
Two Types of Lists
In accordance with the new rules, the issuer is entitled to prepare two separate sections in an insider list, of which the first section is mandatory;
- A section containing the persons who have access to specific inside information, including the type of inside information that these persons have access to. This section is divided into subsections for each type of inside information and is thus not a collective list of persons who have access to inside information. Persons who have the access to several types of inside information will thus appear in each section.
- An additional section containing the persons who have permanent access to inside information. This option has been adopted in order to avoid that one person appears several times from the list under different types of inside information.
New Rules on the Content and updating of the Insider Lists
The regulations provide further requirements to the information on persons with access to inside information to be included on the insider list. These requirements include the persons’ birth names, private and work phone numbers, CPR nos./national ID nos. and private addresses.
Going forward, the insider list must contain the following information:
- The following information on the identity of any person with access to inside information:
- the person’s name, surname, birth name (if different from the present);
- the person’s birth date and CPR no. (or similar national ID no.);
- the person’s full private address;
- hardline and cell phone number of the person’s work phone;
- hardline and cell phone number on the person’s private phone; and
- name and address of the company by which the person is employed.
- The reason for including the person on the insider list, including the person’s work title and insider status.
- Date and time of when the person was given access to inside information.
- Date for preparing the insider list.
Furthermore, the issuer shall continuously update the insider list in the event of one or more of the following circumstances:
- The reason for including the person on the list is altered;
- A person who was not already included on the list is given access to inside information; or
- A person ceases to have access to inside information.
Both the date and the time of the circumstance that caused the list to be updated is to be specified.
Going forward, the persons included on the insider lists must at minimum electronically acknowledge the legal duties and the sanctions imposed upon such persons. This constitutes a tightening of the current rules, according to which the persons are only required to be informed hereof.
New Format for preparing Insider Lists
The European Commission’s Implementing Regulation sets forth two standard forms for insider lists on persons with access to specific inside information and persons included in the additional section, respectively. The insider lists must be prepared in accordance with these forms.
The insider lists must be prepared electronically in order to ensure that only clearly identified persons have access to the lists and that there is access to previous versions of the lists.
The new rules will enter into force on 3 July 2016, but companies that become subject to the obligation to prepare insider lists should already review and, if necessary, amend their procedures on preparing and updating the insider lists.
Due to the tightening of the requirements to the content of the lists, companies should also commence the collection of the additional information required to be included in the insider lists, including birth names, relevant phone numbers, CPR nos./national ID nos. and private addresses.
Lastly, the companies should update their templates for insider lists in order to comply with the electronic format to be applied on 3 July 2016 regarding the preparation and submission of insider lists.