Insider Management FAQ by the Team Ticker

In Market abuse regulation (Regulation (EU) No 596/2014) insider information is defined as information of precise nature, which has not been made public, relating, directly or indirectly, to one or more issuers or to one or more financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments (MAR Article 7 [1])

How can something be interpreted as precise or significant enough?

1. Precise nature of information = specific enough to enable a conclusion to be drawn as to the possible effect on the prices of the financial instruments or the related derivative financial instruments.
   
   
2. Information that would likely have a significant effect on the prices of financial instruments is defined as information a reasonable investor would be likely to use as part of the basis for his or her investment decisions

Any essential change in the company’s result and financial position:

• Significant reorientation of business operations, significant recovery plans and profit improvement programmes
• Significant co-operation agreements
• A merger or division of the company or other significant corporate arrangement
• Share issue, a purchase or redemption offer or another change relating to the shares of the company, such as the combining or division of shares or share series.
• Takeover bids and significant share issues

An issuer shall inform the public as soon as possible of inside information which directly concerns that issuer (MAR Article 17 [1])

An issuer or an emission allowance market participant, may, on its own responsibility, delay disclosure to the public of inside information provided that all of the following conditions are met:

• An immediate disclosure is likely to prejudice the legitimate interests of the issuer or emission allowance market participant;
• A delay of disclosure is not likely to mislead the public;
• The issuer or emission allowance market participant is able to ensure the confidentiality of that information. (MAR Article 17 [4] )

If these preconditions are met, the listed company shall make a decision to delay the disclosure of inside information, document the decision and establish an insider list. Usually the decision to delay disclosure and the establishment of an insider list take place simultaneously.

After the decision, the listed company shall ensure that all preconditions of delayed disclosure are met during the entire delay procedure.

Usually the decision to delay disclosure and the establishment of an insider list take place simultaneously.

If the preconditions of delaying the disclosure of inside information are met, the listed company shall make and document the decision and establish an insider list.

Issuers or any person(s) acting on their behalf or on their account, shall draw up a list of all persons who have access to inside information and who are working for them under a contract of employment, or otherwise performing tasks through which they have access to inside information, such as advisers, accountants or credit rating agencies (MAR Article 18 [1])

Typically counterparties and other third parties who have obtained insider information maintain their own project based insider lists and the issuer only marks one person responsible of the counterparty or third party to the issuer’s own insider list (e.g. responsible partner of an advisory company).

ESMA has prepared Commission implementing regulation (EU) 2016/347 laying down implementation and technical standards with regard to the precise format of insider lists. The correct format of insider lists can be found here: 
https://eur-lex.europa.eu/legal-content/en/TXT/PDF/?uri=CELEX:32016R0347&qid=1459927202284&from=EN

Insider lists must be kept up to date in an electronic format and updated promptly every time when:

• there is a change in the reason for including a person already on the insider list;
• there is a new person who has access to inside information and needs, therefore, to be added to the insider list; and
• a person ceases to have access to inside information. (MAR Article 18 [4])

Each update shall specify the date and time when the change causing the update occurred.

Companies need to always ensure possibility to retrieve previous versions of the insider list ((EU) 2016/347 Article 2 [4c]). This can be a complicated task if lists are handled with excel, but can be done for example by saving a new pdf-version of the list each time a change is made.

Issuers or any person acting on their behalf or on their account shall retain the insider list (and its previous versions) for a period of at least five years after it is drawn up or updated.

According to MAR Article 3 (25) ‘a person discharging managerial responsibilities’ (PDMR) means a person within an issuer, an emission allowance market participant or another entity referred to in Article 19(10), who is:

• a member of the administrative, management or supervisory body of that entity; or
• a senior executive who is not a member of the bodies referred to in point (a), who has regular access to inside information relating directly or indirectly to that entity and power to take managerial decisions affecting the future developments and business prospects of that entity;

In practice this means that PDMRs are Members of the board / Board of directors and the CEO.

In addition the company can define other persons on management team level, who have regular access to insider information and have the authorization to make managerial decisions affecting the future development and business prospect e.g. CFO, Heads of business units.

According to MAR Article 3 (26) and ESMA’s Q&A on MAR (last updated 23rd of March 2018) a ‘person closely associated’ means:

• A spouse, or a partner considered to be equivalent to a spouse in accordance with national law;
• A dependent child, in accordance with national law;
• A relative who has shared the same household for at least one year on the date of the transaction concerned; or
• A legal person, trust or partnership in which a PDMR within an issuer (or a closely associated natural person) takes part in or influences the decisions to carry out transactions in financial instruments of the issuer.
• A legal person, trust or partnership that is directly or indirectly controlled by the PDMR or a closely associated natural person
• A legal person, trust or partnership that has been set up for the benefit of a person discharging managerial responsibilities or a closely associated natural person
• A legal person, trust or partnership that’s economic interests are substantially equivalent to the economic interests of a person discharging managerial responsibilities or a closely associated natural person