Thanks for the question, crazybrab.
The regulations for directors dealing in their own companies'
securities are set out by the Financial Services Authority (FSA) in
the "Model Code", an appendix to the FSA's "Listing Rules".
Below there are links to two explanations of the main points in the
FSA's Model Code for directors. The excerpts I quote are brief for
copyright reasons.
Then there is a link to the Model Code itself, and a few links to
additional information.
Guidance from the Institute of Chartered Secretaries & Administrators
---------------------------------------------------------------------
"Key restrictions within the code, include:
~ Directors must not deal in shares during the two months before the
announcement of final and interim results, or between the end of the
financial year and the announcement of annual results. Where a company
publishes quarterly results, the period is reduced to one month save
for the final period which
remains as previously stated or, if shorter, the period from the
relevant financial period end up to and including the time of such
publication. These are known as close periods.
~ A director must not deal at any time that he is privy to price
sensitive information, which has not been published. The definition of
?price sensitive? being any information relevant to the company?s
shares which, if published, could have a significant effect on the
value of the securities.
~ The director must seek clearance from the chairman or other
designated director prior to entering into the transaction.
~ Clearance must not be given during close periods or during periods
when unpublished price sensitive information is known which is
reasonably likely to lead to an announcement being made. These are
known as prohibited periods."
ICSA Guidance Note
Directors? Share Dealings
http://www.icsa.org.uk/pdfs/guidance/030408_DirShareDealings.pdf
============
"The Model Code contains a virtually absolute prohibition on directors
buying or selling shares during a ?close period?, which broadly means
the two month period preceding the preliminary announcement of
companies? annual or half-yearly results (or if a company reports on a
quarterly basis, it refers to the period of one month preceding the
announcement of the quarterly results).
Even outside the close periods, the code requires a director who
wishes to buy or sell shares to advise the chairman of the company in
advance and receive clearance. In the case of the chairman, he is
obliged to advise the board of his intentions and obtain approval from
the board or a director designated for the purpose of doing this. The
Model Code provides that clearance must not be given for dealing in
any close period. It also prohibits dealing at any other time if there
is in existence unpublished information which is likely to have an
effect on the quoted price of the shares."
"The directors who risk jail with insider trades"
by Robin Tutty - partner in the corporate department of City law firm Fox Williams
http://www.computerweekly.com/Article13009.htm
=============
You will find the Model Code itself in the Chapter called "Directors"
(Chapter 16) of the FSA Listing Rules, available on the FSA website.
It starts on page 5 and covers:
"definitions
dealings by directors and relevant employees
- purpose of dealing
- dealing in close periods
- clearance to deal
- circumstances for refusal
- dealing in exceptional circumstances
- director acting as trustee
dealings by connected persons and investment managers
special circumstances
- awards of securities and options
- exercise of options
- qualification shares
- saving schemes
- guidance on other dealings"
APPENDIX TO CHAPTER 16
THE MODEL CODE
http://www.fsa.gov.uk/pubs/ukla/chapt16-3.pdf
Access also from this page:
http://www.fsa.gov.uk/pubs/ukla/lr_chapters4/
=============
You may also be interested in this "Guide for directors of UK listed companies"
from the legal firm of Freshfields Bruckhaus Deringer:
http://www.freshfields.com/practice/corporate/publications/pdfs/3382.pdf
At the end of last year the rules were slightly revised.
The main change with respect to directors' dealings was:
" With respect to the Model Code, the definition of "dealing" is being
amended to include the "entering into of any contract for differences
or any other contract the purpose of which is to secure a profit or
avoid a loss by reference to fluctuations in price of any securities
of the company". This change is being made to ensure that the controls
on directors' dealings in shares keep up with market developments."
"Changes explained by Law-Now"
http://www.legalday.co.uk/lexnex/cmck03/October/cmck081003.htm
See also:
"FSA wants to retain regulatory light touch but come down heavy on
those who go against the spirit of the rules"
http://www.independentdirector.co.uk/news/revamp_aims_direct_spotlight.phphtml
"The Model Code is an appendix to the Listing Rules. Its purpose is to
ensure that directors, certain employees and people connected with
directors or employees do not abuse, and do not place themselves under
suspicion of abusing price sensitive information. This applies to
price sensitive information they may have, or be thought to have,
especially in periods leading up to an announcement of results."
http://www.fsa.gov.uk/pubs/press/2001/084.html
I hope this gives you all the information you need, but please just
ask if you need any clarification or further assistance.
Best Wishes - Leli
Searches:
fsa rules director OR directors "share dealings"
"listing rules" directors dealings fsa
"model code" fsa
"model code" directors guidance
"model code" directors guide fsa
fsa rules "insider trading"
and browsing the FSA website:
http://www.fsa.gov.uk |
