RE: Oakey129 Mar 2019 11:29
Restrictions on dealings in shares
Directors of companies with shares quoted on a stock exchange are obliged not only to disclose details of their dealings, but also to observe restrictions on when they can buy and sell shares in their company. (There are few restrictions on when shares in an unquoted company can be bought or sold, but a director may have entered voluntarily into a ‘lock-in’ agreement not to sell their shares for a certain period, and many unquoted companies will have restrictions in their articles or in a shareholders’ agreement that limit the ability to transfer shares freely.)
There are three separate regimes that potentially restrict a director or a senior manager of a fully listed company (or a director of an AIM company) from dealing in the company’s shares:
the criminal offence of insider dealing;
the Model Code;
the civil market abuse rules.
These regimes can overlap: more than one of them might apply to a single set of facts. Moreover, their reach is potentially wide. They relate not just to directors but also to senior managers below board level, and indeed, in some circumstances, to any employee who has unpublished price-sensitive information about their company when they deal in its shares. A humble lab technician in a pharmaceuticals company who sees that the final tests on a new wonder drug are not going well might be just as liable as a director who deals before a profits announcement. So the rules on share dealing need to be widely known and understood throughout the organisation (for an example in another sector, see the case of Matthew and Neel Uberoi, described in OUT-LAW guide's guide to The Model Code on share dealing).
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