As expected, regulations have been made to preserve the Companies Act 1985 definition of “connected person” for the purposes of the obligations of persons discharging managerial responsibility under the Model Code and the Disclosure and Transparency Rules.
Background
PDMRs have obligations under the Model Code to seek to prevent certain dealings by their connected persons. PDMRs and their connected persons also have obligations to notify an issuer of any transactions in securities of the issuer under DTR 3.
The definition of connected person for these purposes is that in section 96B(2) of the Financial Services and Markets Act 2000. Section 96B(2) itself refers to the definition of connected person in section 346 of the Companies Act 1985, which was repealed in 2007. FSMA retained that reference (by savings provisions contained in the Third Commencement Order) rather than adopting the wider definition of connected person in section 252 Companies Act 2006.
Regulations were made in July 2009 which made various amendments to miscellaneous legislation, mainly to update references to the 1985 Act to the corresponding provisions of the 2006 Act. Those Regulations amended section 96B(2) FSMA with effect from 1 October 2009 to refer to the wider definition of connected person in the 2006 Act. This caused concern as it would have potentially extended the disclosure requirement under DTR 3 to people who had previously fallen outside the definition of connected person and also extended the obligations of PDMRs to seek to prevent dealings to a wider group of “connected persons”. It was also thought to be an inadvertent amendment, as the FSA had not been consulted on the change.
Amendment Regulations
Amendment Regulations have now been made which supersede the July 2009 Regulations and ensure that “connected person” will continue to be defined in FSMA in the same terms as those set out in section 346 of the 1985 Act. The Amendment Regulations replace the whole of section 96B(2) with a new Schedule 11B to FSMA, which sets out the definition in full. The definition in the new Schedule 11B is substantively the same as that set out in the existing section 96B(2).
See The Financial Services and Markets Act 2000 (Amendment) Regulations 2009 (SI 2009/2461), available at http://www.opsi.gov.uk/si/si2009/pdf/uksi_20092461_en.pdf
An accompanying explanatory memorandum is available at http://www.opsi.gov.uk/si/si2009/em/uksiem_20092461_en.pdf