CopiedGuide To Permanent Insiders and Persons Discharging Managerial Responsibilities

At Logwise, we frequently receive questions from companies using our logbook service regarding insiders and Persons Discharging Managerial Responsibilities (PDMRs), specifically under the Market Abuse Regulation (MAR). A common question is: What is the difference between a PDMR and a permanent insider, and how do a company’s obligations vary concerning these categories?

What is a PDMR? Copied

A PDMR is defined under MAR Art. 3.25 as:

• (a) A member of the administrative, management, or supervisory body of the entity; or
• (b) A senior executive not part of the bodies listed in point (a) has regular access to inside information and has the authority to make managerial decisions affecting the company’s future developments and business prospects.

Category (a) includes positions such as Board of Directors (including deputies), CEO/Managing Director, and possibly COOs, but typically not Vice Presidents. A supervisory body refers to a board like the German Dual Board system. Internal compliance officers and auditors are not considered PDMRs.

Category (b) often includes other members of group management, though it may vary based on the company’s structure. The assessment depends on the organisation, operations, and size of the company.

A PDMR is identified based on their position in the company, irrespective of whether they have insider information at any given time. Notably, a PDMR is always an individual (i.e., a physical person).

Are PDMRs Also Insiders? Copied

The short answer is no. While PDMRs may access inside information, the two categories have separate definitions and obligations. A PDMR may not hold any insider information yet still be subject to PDMR obligations, such as a general trading prohibition during closed periods. A PDMR can trade company shares outside closed periods if they do not possess insider information.

What is a Permanent Insider? Copied

Permanent insiders are defined in Commission Implementing Regulation (EU) 2016/347 as individuals who have access to all inside information within the issuer due to their function or position. The permanent insider list is optional and supplementary to the compulsory event-based insider list.

Smaller issuers sometimes use the permanent insider list to reduce the administrative burden of maintaining insider lists. However, it is crucial to note that ESMA has emphasized that the permanent insider list should only be used for a limited group of individuals, such as the CEO, CFO, Executive Assistant, Chairman of the Board, Head of Legal Department/Compliance Officer, and CTOs.

Should PDMRs Be Included in the Insider List? Copied

PDMRs should be included in the insider list if they possess inside information. The company must maintain two separate lists:

1. Event-Based Insider List (Logbook): For individuals with access to specific inside information.
2. PDMR and Persons Closely Associated (PCA) List: Based on the positions and associations of PDMRs and their PCAs.

Company Obligations Regarding PDMRs Copied

The company must keep a list of all PDMRs and PCAs, regardless of the logbook. There is no specified format requirement for this list, but it must include:

• Name and position of PDMRs.
• Names and business names of their PCAs, in a manner that indicates the associations.

PDMRs must be notified in writing of their status and obligations, and these notifications must be preserved. The company is not required to confirm that the PDMR has understood the notification, but confirmation may be necessary to demonstrate receipt. The company is also not responsible for handling transaction notifications received by the issuer.

Trading During Closed Periods Copied

There are specific circumstances under which PDMRs may be granted dispensation to trade during closed periods. However, these are limited to very special situations.

Conclusion Copied

The distinction between PDMRs and permanent insiders is crucial for regulatory compliance under MAR. While both categories have overlapping aspects, the obligations and management requirements differ significantly. Handling insider lists and PDMR notifications is essential for maintaining compliance and ensuring transparency.

Ensure smooth compliance for PDMRs and permanent insiders—book a demo now to explore Logwise solutions.

The below articles might also be of interest for you:

Financial reports and delayed disclosure – how to manage?

6 situations when you may create an insider list