UK: New market abuse and inside information regime

The EU Market Abuse Regulation (MAR), which replaces the Market Abuse Directive, comes into force on 3 July 2016 and is directly applicable in EU Member States. MAR will have a significant impact on all UK listed (including AIM-listed) companies, considerably expanding the scope of the current regime in terms of the markets and products that will be covered, and introducing more stringent regulation and significant new procedural requirements in a number of areas. It implements new provisions governing the timing of closed periods, dealing in shares by persons discharging managerial responsibilities (PDMRs) and insider trading. To reflect MAR, the existing UKLA Model Code is to be repealed and the AIM rules amended.

MAR's impact on employee share plans will need to be carefully analysed, for example the new regime will have an impact in relation to:

• action in connection with employee share plans proposed when inside information exists (in light of the new insider information regime);
• any operation of share plans during MAR closed periods, as the current regime's exemptions relating to the operation of share plans (in particular all-employee plans) will be repealed, giving rise to some uncertainties. Note that MAR imposes "closed periods" of 30 days prior to year-end and half-year results. There has been concern that, where preliminary results are published, an additional closed period would apply, of 30 days ending on the publication of the annual report. However, the Financial Conduct Authority (FCA) has recently given its view that this will not be the case, provided there is no other inside information (although this view remains subject to any contrary European guidance).
   

MAR will also need to be considered in an employment context; in particular the new rules on disclosure of inside information may impact on executive termination negotiations.

Actions for employers

In addition to familiarising themselves with the new regime, companies will need to update company share dealing codes and template employment agreements. They should also brief PDMRs on new requirements to notify dealings directly to the FCA.

See our Remuneration and Incentives Briefing for further details.