09 Jun 2016

An inside job


Print version of this briefing

MAR includes changes to the rules on delaying the release of inside information and new requirements in the keeping of insider lists. There is an obligation on issuers to inform the FCA if they have delayed the disclosure of inside information and upon request to explain why the decision to delay was justified.  New rules around the keeping of insider lists means that issuers need to consider their current practices and ensure they are MAR compliant and AIM companies will need to keep insider lists for the first time.

Insider lists

What is the current position?

Issuers whose shares are listed on a regulated market (including the Main Market but not AIM) are required to keep lists of people working for them with access to inside information relating to the issuer.1 The lists should:

  • include the issuer's own employees with access to inside information;
  • include principal contacts at other firms acting on the issuer's behalf with whom it has had direct contact (e.g. deal advisers) with access to inside information; and
  • set out the names of the persons with access to inside information, the reason they are on the list and the date on which the list was created.

Practice has developed beyond the bare requirements of the DTR in relation to insider lists. Certain areas of practice will be enshrined under MAR, for example the keeping of a list for those who have regular access to inside information and another for those persons who have occasional access.

What is changing under MAR?

AIM companies: the requirement to keep insider lists will apply to AIM companies from 3 July 2016.  An exemption for AIM companies may be introduced under the SME Growth Markets regime but this will not come into force until MiFID II is implemented in January 2018.2

Form and content: MAR sets out new templates for insider lists which can be found here. The following details will need to be included in addition to the existing requirements:

  • the reason for including the person on the insider list;
  • the date and time at which the person obtained access to inside information; and
  • professional and personal telephone numbers, home address, former surnames, date of birth and national ID number (if applicable) of persons on the list.

MAR insider lists must be updated promptly, including the date of update, when there is a change in the reason for including a person on the list, when a new person has access to inside information and when a person ceases to have access to inside information.

Acknowledgement: issuers must take all reasonable steps to ensure that the persons on the list acknowledge in writing the legal and regulatory duties entailed and are aware of the relevant sanctions.

Multiple lists: multiple lists will be encouraged differentiating between permanent insiders and deal-specific insiders.  A permanent insider cannot be included on the deal-specific list.

Submission to FCA: issuers will be required to submit lists to the FCA on request. This is also the current position but the FCA is expected to publish details on its website on how to submit insider lists electronically.

Maintenance: issuers must retain insider lists for a period of at least five years after creation or update.

Responsibility: an issuer's advisers will in practice draw up their own insider lists3 but the issuer is ultimately responsible for compliance with MAR.

Action points for companies: Insider lists

  • review and amend as appropriate their policies on insider lists.  AIM companies should adopt such policies and create insider lists as applicable
  • ensure that all insiders confirm in writing that they are aware of their legal and regulatory duties and the sanctions relating to insider dealing
  • ensure that all relevant employees are briefed on and aware of the new requirements
  • update their template insider lists
  • check whether the additional information necessary is available from existing records and if not start to obtain it from each insider
  • consider who would be on the permanent insider list
  • review existing lists that are active on 3 July to check what further MAR information would need to be included


Delaying release of price sensitive information

The requirements in relation to disclosure of inside information are remaining broadly the same under MAR, i.e. issuers must disclose inside information as soon as possible.  Inside information is4:

  • information of a precise nature;
  • that has not been made public;
  • relating to the issuer or qualifying investments; and
  • which would be likely to have a significant effect on price.

MAR will however bring in changes to the rules on delaying the release of inside information.

Issuers will be permitted to delay disclosure of inside information provided all of the following conditions are met:

  • immediate disclosure is likely to prejudice the legitimate interests of the issuer;
  • delay of disclosure is not likely to mislead the public; and
  • the issuer is able to ensure confidentiality of the information.

Where an issuer has delayed the disclosure of inside information, it must notify the FCA of the delay immediately following that information being made public.  The FCA has published a copy of the online notification form to be used to notify the FCA of such delays.  The FCA can, if it so determines, additionally require the issuer to provide a written explanation of why the decision to delay disclosure of the inside information was justified.  Records should therefore be kept of the time and date when inside information first existed, when the decision was made to delay disclosure, who was responsible for the decision to delay and evidence of the fulfilment of the three delay conditions.

Draft guidelines from the European Securities and Markets Authority (ESMA) set out example scenarios in which an announcement cannot be delayed:

  • the inside information is materially different from a previous announcement in relation to the same matter;
  • the inside information relates to the fact that the issuer's financial objectives are likely not to be met where those objectives were previously announced; and
  • the inside information is in contrast with market expectations, where such expectations are based on signals previously set by the issuer.

The draft ESMA guidelines also set out scenarios in which an announcement can be delayed:

  • the issuer is participating in negotiations and their outcome would be prejudiced by disclosure;
  • the financial viability of the issuer is in grave and imminent danger; and
  • the issuer has developed a product or an invention and the immediate public disclosure of such information is likely to jeopardise the IP rights of the issuer.

Questions have been raised by industry bodies as to whether certain established market practices will still be permitted, for example seeking and signing irrevocable undertakings to commit to take up part of a new issue prior to announcement.  A response is awaited from ESMA or the FCA.

ESMA has issued draft regulations in relation to the disclosure of inside information including the means of disclosure and contents requirements.  The contents requirements include, amongst other things, a requirement to clearly identify that the information communicated is inside information.  Questions have been raised about how issuers can satisfy this requirement, for example whether a general reference to the communication containing inside information is sufficient. Further guidance from ESMA would be welcome.

AIM companies should be aware that Rule 11 of the AIM Rules sets out obligations relating to the disclosure of inside information.  The Inside AIM publication dated 29 April 2016 stated that while there was an overlap between AIM Rule 11 and MAR, AIM would continue to expect AIM companies to comply with both Rule 11 and the requirements of MAR.  The obligations under Rule 11 may (depending on the circumstances) be wider than those under MAR and the exemptions narrower.  There have been some objections to this stance but AIM has not yet responded.

 Action points for companies: Delaying disclosure

  • review the procedures for identifying and disclosing inside information
  • ensure there is a process in place to determine whether information constitutes inside information, whether disclosure should be delayed and for how long, who is responsible for those decisions and for keeping the matter under review and when disclosure should be made
  • consider whether a disclosure committee should be constituted and terms of reference drafted
  • ensure proper records are kept
  • ensure that all inside information disclosed to the market is made available on the company's website for at least five years


1 DTR 2.8.1R

2 Certain criteria will apply.  Further information will be provided when available.  

3 The FCA is considering certain points around advisers, e.g. whether they must keep on their insider lists information about employees of persons acting for them such as lawyers acting for a broker.

4 MAR will expand slightly the definition of inside information in relation to commodities and emissions allowances.  Emissions allowance market participants may also delay disclosure of inside information but are beyond the scope of this article.



Tom Page

Tom Page

T:  +44 20 7809 2021 M:  +44 7813 600 516 Email Tom | Vcard Office:  London

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