The Market Abuse Regulation: the implications for AIM companies

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The Market Abuse Regulation (MAR) comes into effect on 3 July 2016. This will bring a number of significant changes for AIM companies, bringing them more into line with the regime that currently applies to Officially Listed companies. Whereas the previously applicable Market Abuse Directive only applies to instruments admitted to trading on a regulated market (which does not include AIM) MAR applies to different financial instruments admitted to multilateral trading platforms, including AIM.

The principal practical issues for AIM companies will be:

  • additional rules around disclosure of inside information to the market and new requirements, in particular as to record keeping, where disclosure is delayed
  • the introduction of a new requirement to keep insider lists
  • the introduction of a new mandatory closed period prior to financial results for directors and persons discharging managerial responsibilities.

The London Stock Exchange published AIM Notice 44 on 13 April 2106 and which contains a consultation on the various changes proposed to be made to the AIM Rules for Companies, and accompanying guidance, to reflect MAR.  AIM Rule 11, on the disclosure of price sensitive information, is the principal focus. AIM Rule 11 contains a general obligation on an AIM company to issue a public announcement via the RIS of certain market sensitive information. The Exchange intends to retain AIM Rule 11.  However, as AIM Notice 44 makes plain, MAR and AIM Rule 11 are different regimes. In particular, “inside information” under MAR has a specific and technical definition whereas AIM Rule 11 is more of a principles-based consideration in the context of the maintenance of a fair and orderly market  Compliance with AIM Rule 11 does not necessarily mean compliance with MAR and vice versa.

MAR is enforced by the Financial Conduct Authority (FCA) and any guidance published by AIM Regulation in respect of disclosure will only be in relation to an AIM company’s obligation under the AIM Rules and not under MAR which will be policed by the FCA.

Similarly, whilst AIM Rule 17 obliges directors to disclose dealings, the scope of the obligation differs from that under MAR. Notably, the MAR restrictions apply to persons discharging managerial responsibilities, not just directors, and also MAR includes a de minimis threshold of €5,000 per year below which transactions will not require disclosure. The Exchange is proposing to remove AIM Rule 17 and to refer instead to the disclosure obligations under MAR. The Exchange is also proposing to replace AIM Rule 21, which concerns restrictions on dealings, with a new rule reflecting MAR. The proposal is for the new AIM Rule 21 to require all AIM companies to have a dealing policy and to require all Nomads to consider this as part of their responsibilities.

WM comment

To comply with MAR, AIM companies will need to:

  • review and update existing share dealing codes
  • train directors (and persons discharging managerial responsibilities) on their obligations under the new regime
  • introduce an insider lists policy.