#3309 - Dealings In Shares Crib Sheet - Public Companies and Equity Finance

Dealings in Shares – Disclosures & Clearance

1. Has there been a transaction between a PDMR and the issuer?

   1. DTR 3.1.2R PDMRs and connected persons have a duty to disclose certain transactions conducted on their own account to the company

      1. DTR 1.1.1(2) DTR 3 applies to issuers incorporated in the UK whose financial instruments are admitted to trading on a regulated market

         1. Financial instruments include ordinary shares

         2. Regulated Market is the Main Market

      2. Conducted on own account includes the grant & exercise of share options

   1. Is there a PDMR?

      1. 96B(1) FSMA a PDMR includes:

         1. (a) Director (Equitable Life - includes a non-executive director) of an issuer:

            1. 96A(1)(c)(i) registered in the UK who has requested or approved admission of its shares to trading on a regulated market, or

            2. 96A(1)(c)(ii) not registered in the UK or another EEA state but who has requested or approved admission of its shares to trading on a regulated market

               1. 103(1) refers definition of regulated market to Art 4.1(14) MiFID Regulated market is the Main Market, but not AIM

         2. (b) A senior executive of such an issuer who

            1. (i) Has regular access to inside information relating directly or indirectly to the issuer and

            2. (ii) Has the power to make managerial decisions affecting the future development and business prospects of the issuer

   2. Is there a connected person?

      1. 96B(2) FSMA the definition of ‘connected persons’ from Sch 11B applies to section 96 FSMA and therefore to PDMRs

         1. Sch 11B FSMA, para 1(1) manager means PDMR

         2. Para 2(1) following are connected with a manager

            1. Para 2(1)(a) Members of the manager’s family

               1. Para 3(2)(a) the manager’s spouse or civil partner

               2. Para 3(2)(b) any relative of the manager who, on the date of the transaction, has shared the same household as the manager for at least 12 months

               3. Para 3(2)(c) the manager’s children or step children under the age of 18

            2. Para 2(1)(b) A body corporate with which a manager is associated

               1. Para 4(2)(a) manager or person connected with a manager is a director or senior executive who has the power to make management decisions affecting the future development and business prospects of the body corporate

               2. Para 4(2)(b) Manager and persons connected with the manager together are (i) interested in at least 20% of the shares or (ii) are entitled to exercise or control the exercise of more than 20% of the voting power at any general meeting of that body

                  1. Para 9(1) a person who enters into a contract to acquire shares is taken to have an interest in them

                  2. Para 4(4) references to voting power, the exercise of which is controlled by the manager, include voting power whose exercise is controlled by a body corporate controlled by the manager

                     1. Para 5(2)(a) a manager is taken to control a body corporate if the manager or connected person with the manager is interested in any part of the equity share capital of that body or is entitled to exercise or control the exercise of any part of the voting power at a general meeting of that body and Para 5(2)(b) the manager, or connected persons of the manager and other managers of the issuer, together are interested in more than 50% of that share capital or are entitled to exercise/control the exercise of more than 50% of that voting power

            3. Para 2(1)(c) A person acting in the capacity as a trustee of a trust

               1. (i) beneficiaries of which include a manager or person who by virtue of above is connected with him or

               2. (ii) the terms of which confer a power on the trustees that may be exercised for the benefit of the manager or any such person, other than a trust for the purposes of an employee’s share scheme or pension scheme

            4. Para 2(1)(d) A person acting in his capacity as partner (i) of the manager or (ii) of a person who is connected with the manager

            5. Para 2(1)(e) A firm that is a legal person under the law by which it is governed in which

               1. (i) the manager is a ‘partner’

               2. (ii) a partner is connected with the manager

               3. (iii) a partner is a firm in which a manager is a partner or in which there is a partner who is connected with the director

   3. Is there a transaction?

      1. Any buying or selling of shares will be a transaction

         1. A transaction which is the result of an action taken by a PDMR or otherwise undertaken with their consent

         2. A transaction whose beneficiaries are mainly PDMRs

         3. Transactions having a material impact on a PDMRs interest

   4. What is the duty on the PDMR & Connected Persons

      1. DTR 3.1.2R PDMRs and connected persons must notify the issuer in writing of the transaction within 4 business days on which the transaction occurred

      2. DTR 3.1.3R the notice must include

         1. The name of the PDMR or connected person

         2. Reason for the notification

         3. Name of the company

         4. Description of the financial instrument

         5. Nature of the transaction

         6. Date & place of transaction

         7. Price & volume of the transaction

   5. Duty on the Company

      1. DTR 3.1.4R Listed companies must notify an RIS of this information ASAP and no later than the end of the business day following receipt of the information by the company

         1. DTR 3.1.5R the notification should include the information required by DTR 3.1.3R

      2. LR 9.8.6A A listed company is required to set out a snapshot of the total interests of a director and his connected persons as at the end of the period under review

         1. If it does not have this information it will need to request it from the director

            1. The company does not need to approach any connected persons directly

      3. LR 9.8.6 Additional disclosure requirements on the company

2. Has a restricted person dealt in the company’s shares without clearance?

   1. Is the company premium listed?

      1. LR 9.1.1R a premium listed company must comply with Chapter 9 of the Listing Rules

         1. LR 9.2.8R a premium listed company must ensure that its PDMRs comply with the Model Code

            1. Model Code is found in Annex 1 to Chapter 9 of the Listing Rules

      2. LR 9.2.9G A company can impose more rigorous obligations than those required by the Model Code

         1. APPLY TO THE FACTS – HAS THIS HAPPENED?

   2. Does X fall within the Model Code i.e. is he a PDMR?

      1. Appendix 1 to the Listing Rules defined PDMRs as in 96B FSMA

         1. 96B(1)(a) FSMA PDMRs includes a director

            1. Equitable Life includes a NED

         2. 96B(1)(b) FSMA PDMR includes a senior executive who

            1. (i) has regular access to inside information relating directly or indirectly to the issuer

               1. Inside information as in 118C FSMA

            2. (ii) has the power to make managerial decisions affecting the future development and business prospects of the issuer

         3. 96A(1)(c)(i) Issuer must be registered in the UK and have requested or had approved admission of its shares to trading on a regulated market

   3. Is there any prohibition on dealing?

      1. Para 3 Model Code provides that a restricted person must not deal in any of the company’s shares unless he obtain advance clearance to deal

         1. Para 1(f) a restricted person includes a PDMR

         2. Para 1(c) outlines what dealing includes

            1. Para 2 outlines what dealing excludes

         3. Para 1(g) securities includes shares

      2. Para 21 A PDMR must take reasonable steps to prevent any dealing by or on behalf of any connected person of his in any securities of the company during a close period

         1. Para 22 A PDMR must advise all of his connected persons the name of the listed company within which he is a PDMR, of the close period during which they cannot deal and that they must advise the listed company immediately after they have dealt in the securities

            1. Appendix 1.1 of the Listing Rules Connected person as defined in 96B(2) FSMA which is set out in Sch 11B FSMA

               1. SEE DTR 3 NOTES

   4. Is Clearance required and from whom?

      1. Clearance is always required

         1. Directors (other than Chairman or CEO)

            1. Para 4(a) Clearance from Chairman, or other director designated by the board

         2. Company Secretary

            1. Para 4(a) Clearance from Chairman, or other director designated by the board

         3. Chairman

            1. Para 4(b) Clearance from the Chief Executive or Senior Independent Director, or a committee of the board or a nominated officer

         4. Chief Executive (CEO)

            1. Para 4(c) Clearance from Chairman or Senior Independent Director, or a committee of the board, or a nominated officer

         5. If Chairman & CEO are the same person

            1. Para 4(d) Clearance from the Board of Directors

         6. PDMR (Other than a director)

            1. Para 4(e) Clearance from a company secretary, or designated director

      2. Para 5 a response to a request should be given within 5 business days

      3. Para 8(a) Clearance will not be given during a prohibited period

         1. Para 1(e) a prohibited period is any close period or a period during which inside information exists in relation to the company

            1. A close period is the 60-day period prior to the publication of the preliminary announcement of the company’s annual results or the annual financial report and the period from the end of the relevant financial period up to the publication of the half-yearly report

            2. 118C FSMA inside information is information of a precise nature which is not generally available and relates directly or indirectly to an issuer of a financial instrument and would, if generally available, be likely to have a significant effect on price

   5. Are there any special circumstances that might permit dealing

      1. Para 9 Clearance to SELL may be given during a prohibited period where the restricted person is not in possession of inside information and is in severe financial difficulty or other exceptional circumstances exists

         1. Para 10 gives examples

         2. LR 9.2.10R If other exceptional circumstances is relied upon, the company must notify an RIS of the information under DTR 3.1.4R including the...