At a recent breakfast briefing hosted by Practical Law, a panel of general counsel and company secretaries of FTSE 100 companies (Eleanor Evans of Rio Tinto, David Jackson of BP and Rosemary Martin of Vodafone) discussed the steps they are taking to implement the Market Abuse Regulation (MAR).
The key takeaways from the briefing related to inside information, inside lists, dealings by persons discharging managerial responsibilities (PDMRs), and closed periods.
Inside information: monitor constantly, keep good records
Although the definition of inside information will be broadly the same under MAR as under the current regime, the consequences of there being inside information will be more onerous and therefore companies should look closely again at the meaning of inside information. There is no ‘one size fits all’ answer to this, and every company will need to take its own view.
Company boards and executive teams should be made aware of the importance and implications of there being inside information, and systems need to be established to ensure constant monitoring and effective record-keeping. Two of the panelists have acquired software to monitor inside information and insider lists. According to the panel:
Ascertaining when information becomes inside information is a very difficult call to make and having to pinpoint the exact moment, and then write it down, is extremely daunting.
Insider lists: make them manageable
Companies are reviewing their insiders, with a possible view to reducing the number of people with inside information. None of the companies represented by the panelists intends to maintain a separate section of permanent insiders on its insider list.
Companies are generally likely to maintain a confidential project list which will become an insider list at the moment that information relating to the project becomes inside information – but at that moment it may be difficult to populate the list with all of the necessary information.
For practical reasons, it is therefore likely that companies will maintain their confidential project lists with most, if not all, of the information required for an insider list.
Reviewing PDMRs and putting in place dealing codes
Companies are generally reviewing the identity of their PDMRs, who must be made aware of the persons closely associated with them (PCAs). PCAs must be made aware of their obligations under MAR.
Most companies are putting in place a dealing code for their PDMRs. For some companies this will be similar to the Model Code but other companies are taking the opportunity to modernise their approach and adopt a new, simpler code.
Closed periods before quarterly results announcements
There is no requirement under MAR to implement a closed period before the announcement of voluntary quarterly results but it is thought that many companies will implement a closed period at this time.