Closed periods under MAR

21st October 2016

The Market Abuse Regulation (MAR) came into effect on 3 July 2016.  Getting ready for MAR by that deadline was something of a scramble for many of those impacted by the new regime – for companies certainly, but also for the government and regulators.  The date passed with some questions still not satisfactorily resolved.  One of these concerned the relationship between MAR “closed periods” and the publication of preliminary results.

Article 19(11) of MAR states that, subject to limited exceptions (as defined in Article 19(12)), a person discharging managerial responsibilities within an issuer shall not conduct any transactions on their own account or for the account of a third party, directly or indirectly, relating to the issuer’s financial instruments during a “closed period” of 30 calendar days before the announcement of the issuer’s interim financial report or year-end report.  This obligation applies equally to AIM and Main Market companies.  What was not clear from the text of MAR and its accompanying technical standards was whether Article 19(11) meant that issuers announcing preliminary results needed to impose closed periods before the announcement of preliminary results, before publication of the year-end report or both.

AIM Regulation has published a statement to clarify the issue for AIM companies. AIM Regulation’s statement mirrors the approach of the Financial Conduct Authority (FCA), namely that where an issuer announces preliminary results, the 30-day closed period is immediately before the preliminary results are announced.  This only applies where the preliminary announcement contains all inside information expected to be included in the year-end report.

AIM Regulation has also stated:

• AIM companies must comply with both the AIM Rules and MAR. Where the two overlap, AIM Regulation will work closely with the FCA (as the competent authority for MAR) but will not itself opine on compliance with MAR
• compliance with MAR does not automatically mean compliance with the AIM Rules and vice versa
• AIM companies must have a dealing code even though this is not a MAR requirement (and therefore Main Market companies do not, strictly speaking, need one). The requirement under AIM Rule 21 is for AIM companies to have a “reasonable and effective dealing policy” and AIM Regulation considers this to be consistent with the AIM Rule 31 requirement for AIM companies to have “sufficient procedures, resources and controls” to enable it to comply with their AIM Rule obligations.

WM comment

The clarification of the relationship between closed periods and preliminary results for AIM companies is welcome, particularly in that it follows the guidance previously published by the FCA.

It will be apparent by now that compliance with MAR is a substantial undertaking, both for companies and Nomads/sponsors. If you would like to discuss any aspect of MAR compliance, please do not hesitate to contact the writer.