National market abuse prohibitions will be replaced by the Market Abuse Regulation as of 3 July 2016. The Market Abuse Regulation will make significant changes to how inside information is dealt with. The most significant changes for companies listed in the Netherlands are the following:
The scope of insider dealing will be broader. The use of inside information by cancelling or amending an order where the order was placed before the person concerned possessed the inside information, shall also qualify as insider dealing.
Delayed disclosure of inside information
More stringent requirements are set for the delay in disclosure of inside information. Detailed information should be documented, i.e. (i) date on which the inside information arose, (ii) date of the decision to delay the disclosure of inside information, (iii) date of the expected publication of the inside information and (iv) the identity of all persons with responsibilities for the decision of delaying the public disclosure of inside information and monitoring of the conditions for postponement. Where a company listed in the Netherlands has delayed the disclosure of inside information it should inform the Dutch Authority for Financial Markets (Autoriteit Financiële Markten ("AFM")) that disclosure of the information was delayed immediately after the information is disclosed to the public. Upon request of the AFM the listed company shall provide a written explanation of how the conditions for delay in the disclosure of inside information were met.
More stringent requirements are set for market soundings. The discloser should assess whether the information that will be provided qualifies as inside information. Before making the disclosure the discloser shall (i) obtain the consent of the person receiving the market sounding to receive inside information, (ii) inform the person receiving the market sounding that he is prohibited from using that information, or attempting to use that information, by acquiring or disposing of, for his own account or for the account of a third party, directly or indirectly, financial instruments relating to that information, (iii) inform the person receiving the market sounding that he is prohibited from using that information, or attempting to use that information, by cancelling or amending an order which has already been placed concerning a financial instrument to which the information relates, and (iv) inform the person receiving the market sounding that by agreeing to receive the information he is obliged to keep the information confidential. The discloser shall maintain a record of all information given to the person receiving the market sounding.
The format of the insider list will change and needs to include more detailed information. The new template of the insider list has been laid down in Commission Implementing Regulation 2016/347 of 10 March 2016. Listed companies or person acting on their behalf shall take all reasonable steps to ensure that each person on the insider list acknowledges in writing the legal and regulatory duties entailed and is aware of the sanctions applicable to insider dealing and unlawful disclosure of inside information.
The term for the notification of insider transactions will be shortened. Currently insiders are required to notify to the AFM of insider transactions within five business days following the transaction date. Under the Market Abuse Regulation such notifications should be made by persons discharging managerial responsibilities promptly and no later than three business days after the date of the transaction.
Listed companies should draw up a list of all persons discharging managerial responsibilities and persons closely associated with them (e.g. spouses and children) and shall notify the persons discharging managerial responsibilities of their obligations with respect to managers' transactions. Persons discharging managerial responsibilities shall also notify the persons closely associated with them of their obligations with respect to managers' transactions in writing and shall keep a copy of this notification.
Details of the requirements are laid down in several Commission Implementing Regulations. Also the European Securities and Markets Authority (ESMA) and the AFM have published guidance with respect to the new market abuse regime. In the Netherlands further details will be implemented in the Decree on the Implementation of the Regulation and Directive Market Abuse (Besluit implementatie verordening en richtlijn marktmisbruik).
The aforementioned changes could have consequence for employee share schemes or insider trading policies. Should you require additional information, please contact us.