General Share Dealings

Question 1

For your understanding

Answer 1

• Listed companies are not always aware of the identity of their own shareholders. Unlike private companies, listed companies are not permitted to make transfers of their shares subject to prior approval. This is because the shares must be freely transferable under the LRs. Due to the inevitable delay in information reaching the company’s register of members, it would be possible for shareholders to build up a substantial stake in a company without the directors’ knowledge. In addition, many shareholders hold their shares through nominees, therefore their identity is not immediately apparent to the company.
• As a result, a number of provisions in legislation and in the DTRs provide for shareholders to disclose their shareholdings or voting rights to companies within a short time of obtaining a certain level of shareholding or in particular circumstances.
• When a person purchases or disposes of shares in a listed company, it is important that he/she/it is aware of the disclosure obligations that may arise, particularly if the person is, or is closely associated with, a director of that company.

Question 2

NOTE: SEE THE IMAGES IN YOUR REVISION NOTES

Answer 2

NOTE: SEE THE IMAGES IN YOUR REVISION NOTES

Question 3

What is the obligation?

Answer 3

• Art 19(1) MAR: if PDMR or PCA deals in an issue of shares, he or she must notify the issuer AND the FCA within three business days after the transaction.

Question 4

Who is a PCA?

Answer 4

• Meaning of “person closely associated” (PCA) to a PDMR. Includes spouse/civil partner/dependent children, including step children/relative who has shares the same household for at least one year on date of transaction. Could also be any legal person/trust/partnership whose managerial responsibilities are discharged by PDMR/PCA, directly or indirectly controlled by the PDMR/PCA, set up for the benefit of the PDMR/PCA/economic interests are substantially equivalent to those of PDMR/PCA.
•

Question 5

If PCA deals on their own account, who notifies issuer and FCA?

Answer 5

Note that it is the PCA rather than the PDMR him/herself who must notify in respect of the dealing by the PCA: Art. 19(2) MAR. If it is the PCA who must notify, there is no obligation for the PDMR to make any disclosure of PCA’s dealings under Art. 19 MAR, as Art. 19(1) MAR refers only to transactions carried out on a person’s own account. As mentioned above, Art. 19(5) MAR requires each PDMR to notify their PCAs of these obligations under Art. 19 MAR in writing, and
• to keep a copy of the notification.

Question 6

What is the threshold for the statutory requirement to notify issuer and FCA?

Answer 6

• Art 19(8): statutory requirement for notification only kicks in above a threshold of €5,000 or its equivalent in pound sterling.
  • NOTE: However, in practice listed cos generally have internal dealing codes that require PDMRs to notify all transactions, regardless of their size.

Question 7

What notification obligations are there on the issuer?

Answer 7

• Art 19(3) MAR: once the PDMR or PCA has notified the listing co of his or her dealings, there is then an obligation on the issuer MAR to notify the public via an RIS within three business days
  • In order to allow the issuer to comply with this deadline, a listed co’s dealing code is also likely to require disclosure by PDMR to the company during a shorter time period e.g. 2 days, allowing them one business day to notify the public through RIS announcement

Question 8

What additional obligations are there on the issuer?

Answer 8

Additional issuer/PDMR obligations: Art. 19(5) MAR

• Issuers must:
  i) notify their PDMRS of their obligations under Art. 19 MAR in writing; and
  ii) draw up a list of all of their PDMRs and PCAs.

Question 9

What additional obligations are there on the PDMR?

Answer 9

• PDMRs must also:
  i) notify their PCAs of their obligations under Art. 19 in writing; and
  ii) keep a copy of such notification.