RE: What are the rules26 Nov 2012 10:21
The freedom of directors and certain employees of companies admitted to AIM to deal in the company's quoted securities is restricted in a number of ways by statute, in the form of the Criminal Justice Act 1993, which imposes prohibitions on "insider dealing", creating criminal penalties for individuals who contravene these provisions, and by Rule 21 of the AIM Rules for Companies.
Rule 21 states that "an AIM company must ensure that its directors and applicable employees do not deal in any of its AIM Securities during a close period". Even if a Director would not be prohibited by law from dealing in a company's shares, there may be circumstances when it would be undesirable for him to do so to protect both the Company and himself against misinformed criticism.
Best practice is for a director not to deal in securities of the Company at any time without receiving clearance to do so from the Chairman or other designated director. Rule 21 prohibits dealings during a "close period" which includes when the director is in possession of unpublished price-sensitive information. A director must not be given clearance to deal in a close period or when any matter exists which constitutes unpublished price sensitive information (whether or not the director is aware of the matter) and the dealing would take place after the time when it has become reasonably practicable that an announcement will be required.
A "close period" is the period of two months immediately preceding the publication of the Company's annual results or, if shorter the period from the year end to the time of publication and (if the Company reports half yearly) the equivalent period preceding the interim report or (if the Company reports on a quarterly basis) the period of 1 month or, if shorter, the period from the end of the quarter to the time of announcement, when a Director is presumed to be in the possession of unpublished price-sensitive information regarding such results.
These restrictions on dealings in the Company's shares also apply to the grant or acceptance of options, to the exercise of options and to dealings in options by directors and extend to dealings of all such types by members of the director's immediate family and connected companies and trusts. A director must ensure no dealings take place by such persons at times when he himself would be prohibited from dealing.
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