CopiedDelegated List vs Subsidiary List – Personal Responsibility, Pitfalls and Practical Tips

The EU has released certain MAR alleviations related to SME Growth Markets (SMEGMs). The SMEGM insider list alleviations will not apply to persons with inside information acting on the issuer’s behalf or the issuer’s account (e.g., accountants, lawyers, rating agencies). This clarification implies that current obligations for these service providers (“advisers”) continue concerning their own lists, i.e., the subsidiary insider lists (sublists).

Categories of Persons with Inside Information Copied

Initially, it is crucial to differentiate such advisers from three other categories that obtain inside information:

1. Issuer’s Own Employees and/or Management
2. Auditors, Notaries, and Other Individuals: Those who access inside information through their work but do not act on behalf or account of the issuer.
3. M&A Transaction Counterparties

Notably, the above three categories are not required to produce their lists. Categories (a) and (b) must be included in the issuer’s list, whereas category (c) does not need to be listed, as they do not perform tasks for the issuer. However, some NCAs (e.g., Denmark) recommend that the issuer:

• (i) Specify the counterparty contact person in the insider list.
• (ii) Notify the counterparty that the information in question is inside information while adhering to MAR Art. 14 prohibitions on unauthorized disclosure.

Types of Lists Under MAR Art. 18 Copied

MAR Art. 18 indicates two types of lists maintained outside the issuer:

1. Subsidiary List Obligation for Advisers: Advisers must maintain their sublists, integrated within the same paragraph that outlines the compulsory insider list for issuers (Art. 18:1).
2. Delegated List (Art. 18:2): When a third party acts on behalf of or on the issuer’s account to draw up and update the insider list, the issuer remains fully responsible for compliance.

It is clear that there is an obligation to maintain parallel lists:

• (i) One by the issuer.
• (ii) One is by the adviser acting on behalf of the issuer and having access to the issuer’s inside information.

The issuer must also note, within its insider list, information regarding the adviser, including:

• Engagement of the adviser.
• Disclosure of inside information.
• Time of engagement or disclosure.
• Identity of the adviser contact person.

Guidance and Best Practices Copied

• Function and Reason for Insider Access: The ambiguous field “Function and reason for being insider” can be split into subheadings like:
  • Function: External auditor.
  • Reason: Control of bookkeeping records.
  • Comment: Keeps its own insider list.
• National Identification Number: In cases where there is no personal ID number, the official corporate ID number of the advisory firm may be used instead.

Key Points for Issuers and Advisers Copied

• Adviser Contact Person Requirement: NCA investigations in 2019 revealed that some issuers fail to provide the adviser contact person in their lists, which is a serious violation.
• Responsibility for Sublists: ESMA MAR Q&A clarifies that advisers are solely responsible for the MAR sublist. However, if the issuer delegates its list to an adviser, the adviser remains responsible for the sublist, while the issuer remains responsible for its delegated list.

Conclusion Copied

Maintaining sublists is equally burdensome for advisers and issuers, especially when combined with delegated lists. Issuers and advisers must ensure compliance by clearly differentiating responsibilities and adhering to MAR requirements. Logwise offers a solution to streamline these compliance processes.

Manage subsidiary lists effectively—book a demo now to explore practical compliance tips with Logwise.