MARKET ABUSE REGULATIONS
ICSA, GC100 and the QCA issue joint MAR specimen dealing policy and code
As you will be aware, the Financial Conduct Authority (FCA) has now deleted the Model Code (previously Annex 1 of Listing Rule 9) as it did not consider that the Model Code was compatible with MAR (which took effect from 3 July 2016). However, during the consultation process in respect of changes to the FCA Handbook in light of MAR, the FCA stated that it would support an industry-led development of codes or best practice in this area.
On 24 June 2016, an industry-led working party consisting of ICSA: The Governance Institute, GC100, the Quoted Companies Alliance and other market participants published a suite of documents including a dealing code designed to replace the Model Code.
The suite of specimen documents includes a dealing policy, a dealing code and a dealing procedures manual. Whilst the documents are labelled as specimen documents, the stated intention is to introduce "a single, industry-led dealing code rather than a variety of, no doubt broadly similar, codes which would potentially create confusion in the market".
It is therefore anticipated that many companies will adopt the specimen documents with very few, if any, changes.
A copy of the specimen documents can be found here (although you will need to register on the ICSA website before you will be able to download the documents).
Investment Association (IA) revise Principles of Remuneration to reflect MAR
Currently, the IA's Principles of Remuneration (formerly known as the ABI remuneration guidelines) state that:
“The rules of a scheme should provide that share or option awards should normally be granted within a 42 day period following the publication of the company’s results.”
However, given the change in definition of closed periods in MAR and the ongoing uncertainty regarding the interpretation of a closed period for MAR purposes, the Investment Association has decided to amend this provisions in its Principles of Remuneration to state:
“The rules of a scheme should provide that share or option awards should normally be granted within a 42 day period immediately following the end of the closed period under Market Abuse Regulation (EU) 596/2016”
As you will be aware (and as highlighted in our May 2016 update) the Financial Conduct Authority (FCA) has announced that, pending clarification from the European Commission (EC) and the European Securities and Markets Authority (ESMA), it will continue to take the view that where an issuer announces preliminary results, the closed period exists immediately before the preliminary results are announced and ends on the publication of the preliminary results. If this interpretation prevails following the clarification sought, the 42 day grant window will remain the same. The grant period will only change if the EC and ESMA take the view that the closed period runs immediately prior to and ends with the publication of the annual report.
Companies should review their share plan rules to ensure that their grant windows are not unnecessarily restricted and make any necessary amendments once the views of the EC and ESMA are known. Such amendments are unlikely to require shareholder approval.
A copy of the IA announcement in respect of the changes to the Principles of Remuneration can be found here.
The Prudential Regulation Authority (PRA) updates Remuneration Policy Statement templates
On 30 June 2016, the PRA noted that firms within the scope of the Remuneration Part of the PRA Rulebook are expected to ensure that their remuneration policies, practices and procedures are clear and documented. To record those policies, practices and procedures, and assess their compliance with the requirements, firms should complete a Remuneration Policy Statement (RPS) using the updated templates provided here.
A summary of the main changes to the templates can be found on the PRA website -here.