09 Jun 2016

Deal or no deal


Print version of this briefing 

MAR brings with it changes to the notification of transactions and restrictions on dealings during closed periods regimes for persons discharging managerial responsibilities (PDMRs) in Article 191.

With MAR having direct effect, the FCA and the London Stock Exchange (AIM) are amending their rulebooks to ensure consistency with MAR from 3 July 2016. Both the FCA and AIM are removing the notification rules from DTR 3 and AIM Rule 17 respectively, instead signposting Article 19 of MAR. To comply with the restrictions on dealings obligation, the FCA is deleting the Model Code and AIM is replacing AIM Rule 21. These changes will have a significant impact on the share dealing codes and procedures of both listed and AIM companies.

The concepts of PDMRs and their connected persons remain the same under MAR, although connected persons become "persons closely associated" (PCAs).2  MAR expands the securities covered by both regimes to include debt instruments, in addition to shares, derivatives and other financial instruments linked to them.

Widening the net: Notification of transactions

The MAR regime requires PDMRs and their PCAs to notify "every transaction conducted on their own account".  Although this has similar "on own account" wording as DTR 3, the examples of notifiable transactions under MAR are wider3. Non-exhaustive examples include the automatic conversion of a financial instrument into another and transactions undertaken by a portfolio manager on a PDMR's behalf, even where discretion is exercised. MAR was amended recently to include new exemptions for transactions involving units or shares in a collective investment undertaking or asset portfolio where exposure to the issuer’s shares or debt instruments does not exceed 20% of the assets held or the PDMR does not and could not know of the exposure. It also exempts transactions by managers of collective investment undertakings where they have full discretion4.

MAR has introduced a de minimis threshold to notifications, where previously transactions had to be notified regardless of size. So there is no notification requirement for transactions by PDMRs and PCAs of under €5,000 (aggregated) per calendar year5. We expect companies to ask PDMRs to notify all dealings in any event, to prevent any errors in calculations or dealings in restricted periods. ESMA is considering the € exchange ratio for transactions in other currencies.

On good form

The written notification previously made by PDMRs to the company must now be made to the company and the FCA, in a mandatory standard form sent electronically6. The FCA has published a copy of the online form to be used for notifications to the FCA7.

PDMRs and PCAs must notify the company within 3 business days of any transaction. The company has the same 3 day timeframe within which to announce the notification through an RIS, giving them little time to make the announcement when a PDMR or PCA makes notification late in the day. Companies should consider asking for notifications within a shorter timeframe e.g. 2 business days, to give them time to announce. Previously PDMRs and their connected persons had 4 business days and the company had to announce asap and by the end of the next business day.

Spreading the word

Companies must notify their PDMRs in writing of their obligations and keep a PDMR and PCA list, so will need to ask PDMRs to confirm their PCAs.

Under MAR, PDMRs are required to notify their PCAs of the notification requirements in writing and to keep a copy. Although a new requirement, it was previously best practice to notify connected persons of their obligations.

Action points: Notification procedures


  • Revise or draft PDMR and PCA list
    • Review who is a PDMR
    • Ask PDMRs to confirm their PCAs
  • Give PDMRs written notification and training on revised obligations
  • Make new notification template available
  • Ensure procedures reflect new timescales for notifications


  • Give PCAs written notification of revised disclosure obligations and keep copies
  • Notify company of PCAs
  • Consider effect of wider concept of notifiable transaction 


To deal or not to deal: Restrictions on dealings

MAR requires that a PDMR shall not conduct transactions on its own account or for the account of a third party, directly or indirectly during a closed period8. The current restrictions on PDMR dealings for premium listed companies are in the Model Code. AIM companies must ensure directors and applicable employees do not deal during a closed period, in accordance with AIM Rule 21 and many adopt a similar share dealing code to the Model Code. There are a number of differences between MAR and the current restrictions in the Model Code:


Restricts PDMRs only. No requirement to seek to prohibit dealings of persons closely associated.

Model Code:Restricts PDMRs. PDMRs must also seek to prohibit dealings of connected persons and investment managers acting on PDMR/connected person's behalf during a close period. PDMRs must also take reasonable steps to prevent connected person dealings of a short term nature.

Companies may consider whether to keep an obligation on PDMRs to seek to prohibit dealings of persons closely associated in a closed period, even if not required by MAR.

Restricted periods

 Closed periods being 30 calendar days before interim or year-end reports announcements obliged to be made public under national law or trading venue rules (MAR closed periods).

Model Code: Has a wider concept of prohibited periods being closed periods and periods where there is inside information.

Closed periods being 60 days before any preliminary announcement of annual results or publication of the annual report (or, if shorter, the period between the end of the financial year to the announcement or publication); for half-year results the end of the half-year financial period to the published report; and 30 days before quarterly reports announcements (or, if shorter, the period between the end of the quarter and the announcement).

Although MAR only covers closed periods, for periods where there is inside information consideration needs to be given to the insider dealing and other market abuse regimes. Companies could keep such periods as an additional prohibited period in their share dealing code. 

The FCA recently announced that, until further clarification from the European Commission and ESMA, it will continue to take the view that preliminary announcements of annual results end a closed period. The 30 day MAR closed period will run immediately before the prelims are announced. This is in response to a lack of clarity as to whether the 30 day MAR closed period runs before the prelim results, the year-end report or both.

Carve-outs and exemptions where dealing can occur

 Includes limited exemptions where dealings are permitted in a MAR closed period: exceptional circumstances (e.g. severe financial difficulty), under certain employee share or saving schemes, qualification or entitlement of shares or transactions with no change of beneficial ownership.9 A PDMR must provide a reasoned written request when requesting permission to deal in exceptional circumstances and the company must take into account a list of factors when considering the request.

Model Code: Has a list of carve-outs where clearance is not required e.g. gifts, takeover acceptances, rights issue entitlements. There are also exemptions where trading can take place in a prohibited period, including: exceptional circumstances (e.g. severe financial difficulty), qualification shares, awards of securities and options, exercise of options, saving schemes and trading plans (all in certain circumstances).

 In their revised share dealing codes, outside of MAR closed periods, companies have a choice as to carve-outs and exemptions which is discussed further below.

The precise extent of the exemptions to dealing in a MAR closed period is not clear, as the list of permitted trades contained in Article 9 of the Delegated Regulation is not exhaustive. See our article Getting the green light for a discussion of the impact of MAR on share incentive arrangements.

The deletion of the Model Code from the Listing Rules leaves premium listed companies without a requirement for a share dealing code or a policy where PDMRs seek clearance for dealings (outside MAR closed periods). For a number of reasons it is expected that companies will put in place an alternative share dealing code, although questions arise over what the content of that code should be and whether it should be similar to the Model Code or a fresh approach taken. The code must comply with Article 19 during MAR closed periods but companies are left with a choice of what to include outside MAR closed periods. For example, whether to include any additional prohibited periods (e.g. inside information or extended financial reporting periods) and any wider exemptions where dealing can occur in such times; whether to have carve-outs where clearance is not required outside MAR closed periods; and whether PDMRs should seek to prohibit PCA dealings as in the Model Code.

The FCA has said that it supports the development of industry-led codes or best practice. Until best practice develops, companies will need to consider the content of their share dealing code and ensure it is MAR compliant.

In the new AIM Rule 21, AIM companies are required to have a "reasonable and effective" dealing policy in place for directors and applicable employees. The FCA as the competent authority will be responsible for the investigation and enforcement of AIM company breaches of MAR. AIM expects companies to have put in place policies to ensure compliance by 3 July 2016, yet without more detailed guidance again questions arise as to the precise content of that dealing policy.

Action points: Share dealing codes 

  • Review and amend existing code or adopt new code
  • Ensure code complies with MAR during MAR closed periods, including:
    • Covering debt instruments
    • MAR 30 day definition of closed periods
    • Reflecting MAR exemptions where permitted dealing can occur
    • Timescales for notifications
  • Consider code content for outside MAR closed periods e.g. any additional prohibited periods, permitted dealings or carve-outs
  • Monitor any industry-led developments of a standardised code/best practice and amend company's code in due course

1 Article 19(1) for notification of transactions and Article 19(11) and (12) for restrictions on dealings in close periods of Regulation 596/2014
2 The FCA are retaining use of the term "connected person" in the FCA Handbook
3 See Article 19(7) Regulation 596/2014 and Article 10 of Delegated Regulation 2016/522
4 Article 19(1A) inserted by Article 56 of the Benchmark Regulation
5 Article 19(8) of Regulation 596/2014
6 The template for notification and public disclosure is in Implementing Regulation 2016/523
7 Primary Market Bulletin May 2016/No.15
8 Article 19(11) of Regulation 596/2014
9 Article 19(12) of Regulation 596/2014. More detail on the exemptions is included in the Delegated Regulation, including that the PDMR must demonstrate that the transaction cannot be executed at another moment in time (Articles 7 to 9 of Delegated Regulation 2016/522)


Joanne Wallace

Joanne Wallace
Senior knowledge development lawyer

T:  +44 20 7809 2129 M:  Email Joanne | Vcard Office:  London