New rules for insider reporting and insider lists

New rules for insiders will be issued on 3 July 2016. New rules have been added regarding insider lists, the term "insider person" has been replaced by the term "person discharging managerial responsibilities", the time period within which changes must be reported has been shortened to three days and more financial instrument categories are now subject to the transaction reporting obligation.

On the 3rd of July 2016 the Regulation (EU) No. 596/2014 of the European Parliament and of the Council on market abuse (MAR) will enter into force and become directly applicable in Swedish law. The rules governing the reporting obligation for insiders in the Act (2000:1087) concerning Reporting Obligations for Certain Holdings of Financial Instruments (ROCHFI), in addition to certain issuers' obligation to keep an insider list, will be repealed.

These will be replaced in the aforementioned Act with references to Article 18 (Insider lists) and Article 19 (Managers' transactions) in MAR. The most important new features in MAR when it comes to the rules for Managers' transactions (insider reporting) and Insider lists will be presented below.

• Additional issuers will be subject to the new rules (Article 18.7 and 19.4)

Starting from the 3rd of July 2016, the rules will be applicable to issuers whose financial instruments are admitted to trading on a regulated market or an MTF platform. Where reference in the provisions of MAR is made to OTFs, SME growth markets, emission allowances or auctioned products based thereon, those provisions shall not apply to OTFs, SME growth markets, emission allowances or auctioned products based thereon until 3 January 2017.

• Extended regulatory framework for insider lists (18)

An insider list shall be created once an event takes place that results in persons employed by the issuer gaining access to inside information. The issuer can also, in accordance with the new rules, opt to create a list of "permanent insiders" who are expected to have continuous access to all inside information within the issuer. Updates of the permanent insiders list are not event-based in the same way, and persons included in this list will not have to be added to other insider lists within the same issuer. Templates for these insider lists, as well as further information on forthcoming changes in this area, can be found in the Commission Implementing Regulation (EU) 2016/347 (see link at the bottom of the page).

• The term "insider person" is replaced by "person discharging managerial responsibilities" (3.25)

The definition of persons obligated to report their transactions has been changed.

• Persons discharging managerial responsibilities, and to them closely associated persons, are to report their transactions to the issuer as well as to Finansinspektionen within three business days (19.1)

Reports in accordance with 19.1 shall be filed with both the issuer and Finansinspektionen. According to the proposed amendments to Swedish legislation, Finansinspektionen will disclose these transactions on its website and keep a public register of the reported information.

The reports are to be filed without delay, but at the latest three business days after the transaction date. This deadline is thereby shortened in comparison to the one currently applicable for filing reports of changes in holdings for insider persons (five business days).

The obligation to report, however, only applies once a total transaction amount of EUR 5,000 has been reached within the calendar year (the calculation of the transaction amount is made without netting). This includes the transaction that caused the amount to reach or exceed the EUR 5,000 threshold. In Article 10.2 of the Commission Delegated Regulation (EU) 2016/522, the types of transactions that will be subject to the reporting obligation are specified in further detail (see link at the bottom of the page). Furthermore there will no longer be any requirements for persons discharging managerial responsibilities to report holdings at the time the insider position arose.

• The definition in ROCHFI of persons or closely associated persons owning ten per cent or more of the share capital or voting rights will be repealed. These persons will not, per default, be obliged to report their transactions under the new rules.

As stated in the previous paragraph, the obligation to report transactions in the issuer applies to persons discharging managerial responsibilities and to them closely associated persons, once a total transaction amount of EUR 5,000 has been reached within the calendar year.

Persons or closely associated persons owning ten per cent or more of the share capital or voting rights will therefore no longer be obliged to report their holdings in the issuer, nor their subsequent transactions unless the criteria for obligation to report in accordance with the new rules have been met.

• An increased number of financial instrument categories will be subject to the transaction reporting obligation (19.1 and 19.7)

The reporting obligation will cover transactions carried out in shares and debt instruments of the issuer, as well as other related financial instruments. It should also be noted that transactions made under endowment insurance policies will now be subject to the reporting obligation, in accordance with 19.7.

• The issuer shall keep a record of all persons discharging managerial responsibilities as well as of closely associated persons (19.5)

This means the issuer's current obligation to file reports of new insider persons to Finansinspektionen ceases to apply.

• The issuer shall inform, in writing, all persons discharging managerial responsibilities of their obligations under Article 19 (19.5)

According to current regulations set out in ROCHFI, the issuer is only required to inform certain categories of insider persons of their reporting obligations. This requirement is now extended to cover all persons discharging managerial responsibilities within the issuer.

• Persons discharging managerial responsibilities shall inform closely associated persons in writing of their obligations under Article 19 (19.5)

• Closely associated persons will be responsible for filing reports of their transactions (19.5)

The responsibility for filing reports of transactions carried out by closely associated persons will not be delegated to the persons discharging managerial responsibility, as is the case under current regulations.

• The definition of closely associated person is changed (3.26)

The changed definition of closely associated legal persons is worth noting in particular.

• The closed period will apply to all persons discharging managerial responsibilities (19.11)

According to ROCHFI, the closed period currently applies only to certain categories of insider persons and to them closely associated persons. Article 19.11 in MAR, however, applies to all persons discharging managerial responsibilities within the issuer, but not to them closely associated persons. The closed period will consist of the 30 days before the announcement of an interim financial report or a year-end report that the issuer is obliged to make in accordance with national law or the rules of the trading venue where the issuer's shares are admitted to trading (the day of the actual announcement included).

The new rules on manager's transactions apply to persons discharging managerial responsibilities, and to them closely associated persons, within issuers that have their registered office in Sweden, in addition to issuers that are not registered in a Member State but for whom Sweden constitutes the home Member State (Article 19.2). The scope of these rules, in other words, is in accordance with present sections 1a-2 of ROCHFI.

The new rules on insider lists will apply to issuers that have applied for their securities to be admitted to trading, or approved their admission to trading, on a regulated market or an MTF platform located in a Member State.

Finansinspektionen will communicate further on the forthcoming routines for filing reports of transactions carried out by persons discharging managerial responsibility and to them closely associated persons, as well as the routines for the disclosure of this information.

Please note that following this transition, the forms currently used for insider reporting will be removed from Finansinspektionen's website. This will be done at a later stage, in July, as reporting obligations under the old regulations will still have to be fulfilled. During the transitional period, Finansinspektionen will keep two registers simultaneously, one to comply with the old ROCHFI regulations and another with transactions reported from the 3rd of July and onwards.