The New Market Abuse and Disclosure Regime in the UK - A Guide for Listed Companies

This briefing is intended merely to highlight issues and not to be comprehensive, nor to provide legal advice. Although the ACT and Linklaters have taken all reasonable care in the preparation of this note, no responsibility is accepted by the ACT or Linklaters for any loss, however caused, occasioned to any person by reliance on it.

The EU Directive on insider dealing and market manipulation (the “Directive” or “MAD”) aims to harmonise market abuse rules across the EU.1

Although the UK market abuse regime introduced in 2001 means that we have something of a head start in this area, the implementation of the MAD introduces a number of significant new compliance measures aimed at preventing market abuse.

This note summarises the key provisions implementing the MAD as they affect UK-listed companies and their advisers, including:

• the new regime for disclosure of price-sensitive information by listed companies
• the requirement for companies to maintain lists of people who have access to inside information
• the requirement for senior managers and their “connected persons” to disclose dealings in their company’s securities
• the obligation on companies to ensure that persons with access to inside information acknowledge their duties and understand the sanctions attaching to misuse of it
• the obligation on companies to establish effective arrangements to deny access to inside information to persons other than those within the company who need to know
• the revised market abuse regime with EU-wide safe harbours for specified stabilisation and share buy-back activities
• the obligation on investment banks to notify suspicious transactions
• the new disclosure regime in relation to investment research and recommendations.

The Directive was due to be implemented in member states by 12 October 2004. The UK implementing measures came into force on 1 July 2005 at the same time as the new Listing Rules and the Prospectus Rules implementing the Prospectus Directive. This was also the implementation date for the Directive in Sweden.

Other member states that have already implemented the Directive include Germany, Italy and Spain.