24 June 2021
The Financial Services Act 2021 is bringing in new changes to UK MAR which will take effect from next Tuesday, 29 June 2021. The key change is an extension to the deadline for companies to notify the market of transactions by their persons disclosing managerial responsibilities (PDMRs) or any persons closely associated (PCAs) with the PDMR.
UK MAR is the UK’s post-Brexit implementation of the EU’s Market Abuse Regulation. It contains a number of restrictions on dealings in securities by PDMRs and those with inside information. In a share plans context, ‘dealings’ caught by UK MAR can be quite wide-ranging – including grants, vestings and exercises, as well as sales of shares.
UK MAR also contains notification requirements for dealings by PDMRs and their PCAs, which are 3-fold:
- The PDMR / PCA must notify the company of the dealing;
- The PDMR / PCA must notify the regulator (the FCA) of the dealing; and
- The company must notify the market of the dealing.
In each case, this notification currently has to be made within 3 business days of the dealing taking place.
New notification timing
The changes coming into effect in the UK next week relate to the deadline for companies to notify the dealing to the market. From 29 June, instead of having to notify the market within 3 days of the dealing itself, the company will have to make the notification within 2 working days of when the company itself is notified by the PDMR / PCA.
This does not change the timing for the PDMR / PCA notifications to the company and the FCA – these still need to be made within 3 working days of the dealing taking place (although there is a new definition of 'working days' as well).
This is a positive change that will be welcomed by companies. There has been wide-spread criticism of the alignment of the deadlines for the 3 notifications since MAR was first introduced 5 years ago. This is due to the fact that companies may not be aware of PDMR / PCA dealings until notified by the individual themselves, and if they choose not to notify the company until towards the end of the deadline, the company may not have sufficient time to then notify the market within that same 3 day deadline.
It is for this reason that many companies have written shorter deadlines, for the individual to notify the company, into their internal dealing code and/or dealing policies. In preparation for next week’s change, companies may want to revisit these documents and consider whether they should be updated to reflect the new timing.
The change brings UK MAR into line with EU MAR, which adopted this change from the beginning of this year. Following the end of the Brexit transition period, any changes to EU MAR are not automatically incorporated into UK MAR, but will require separate UK legislation to bring them into effect, as happened here. Whilst it is clear that the UK government will keep abreast of EU MAR developments and consider amending UK MAR to retain consistency, the UK could choose to deviate in future. To this end, Tapestry, working with the Share Plan Lawyers Group, is currently involved in detailed discussions with the FCA about the future of UK MAR and we hope that this will bring helpful clarifications and beneficial changes to UK MAR for the incentives industry. It will be interesting to see how these discussions develop and we will, as always, keep you up to date with matters as they progress.
If you have any questions about this alert, or we can help you with any queries you have about MAR, please do let us know.
Hannah Needle FGE