Chapter 6: Regulation of Listed Companies Flashcards
What is MAR?
Market Abuse Regulation
When did MAR come into effect?
July 2016
What are the three offences under MAR?
1 Unlawful disclosure
2 Market manipulation
3 Insider dealing
What is market manipulation?
Any transactions or behaviour which gives false or misleading signals of supply or demand.
What is insider dealing?
Using inside information to deal in securities.
What information must be recorded in an insider list?
- name
- telephone number (work and personal)
- company name and address (work and personal)
- function and reason for being an insider
- date and time of obtaining/ceasing access to insider information
- NI number
For how long must insider lists be maintained?
5 years from creation or latest update.
What are the two types of insider list?
1 Permanent - for those who always have access
2 Project - for those who have access for a limited time
What conditions must be met to justify a delay in releasing insider information?
- does not prejudice issuer’s legitimate interests
- where the delay will not mislead the public
- where the issuer can keep the insider information confidential.
What is a PDMR?
Person Discharging Managerial Responsibility
What is a connected person?
Someone sufficiently close to a PDMR that they can be considered connected.
What is a closed period under MAR?
30 days prior to release of a financial statement, during which times PDMRs and connected persons must not deal in securities.
What are the 3 exceptions to the closed period rule?
- severe financial difficulty requiring immediate sale of shares
- trading under an employee share scheme
- the transaction has no personal benefit
What is meant by “market soundings”?
Seeking the views of a major shareholder prior to announcing a major transaction, in case the holder is likely to oppose the transaction.
Will MAR still apply after Brexit?
The UK government have confirmed that MAR will continue to apply post-Brexit.
Did MAR replace the CJA 1993?
No, criminal offences related to dealing are still covered by CJA 1993 IN THE uk.
Which law makes insider dealing a criminal offence?
CJA 1993 Part V.
What are the three insider dealing offences under CJA 1993 Part V?
1 Knowingly dealing in securities on the basis of insider information
2 Encouraging another to engage in such dealing
3 Disclosing inside information otherwise than in the proper performance of one’s employment, office, or profession.
What is the role of the FCA?
Regulating financial services in the UK, with the overall aim of protecting customers, ensuring the financial services industry remains stable, and promoting healthy competition.
What is the role of the Stock Exchange?
To provide a regulated primary market and secondary market for securities.
What is the difference between and offer for sale and an offer for subscription?
An offer for sale related to new or existing securities first acquired by an issuing house and then offered to the public. An offer of sale is direct from the company
What is the difference between a placing and a vendor consideration issue?
A placing is securities purchased by an issuing house and placed with investment clients. A vendor consideration issue is a of shares to a vendor instead of cash.
On which LSE services are FTSE 250 shares usually traded?
SETS (Stock Exchange Electronic Trading Service
What conditions does a company have to meet to be admitted to the Official List?
- must be duly incorporated and act in accordance with its articles
- filed audited accounts for the last three years
- at least 75% of the business covered by a historic revenue-earning record
- current key executives must have played a significant role in the company’s business
- must be capable of making decisions independently of any controlling shareholders.
- shares must be fully paid
- the first shares listed must have a value of at least £700,000
- at least 25% of share capital must be in public hands
- satisfy the FCA that sufficient working capital is available for the next 12 months
