“We would like to try and reduce the size of our “Insider List” which currently stands at 671! We currently include employees who have access to: management accounts and sales analysis; business strategy; board papers; and changes in pension scheme funding. This basically includes our entire finance department, all our IT Department, senior employees, secretaries to senior staff and anyone else deemed to have access to insider information, although only PLC board members and Executive Committee members are deemed to be PDMRs. How do other companies compile who goes on their insider list?”
A good question. Following advice some years ago from our brokers, we take the same view as the second respondent, ie that Inside Information is a very rare occurrence, and in any case has to be announced immidiately in most instances where it exists. We therefore have an extremely small Insider list – PDMRs, the Company Secretary, the Group Financial Controller, Investor Relations Manager. On a few occasions over the last few years, there have been initial discussions surrounding issues which, depending on the ultimate decision taken by the Board, might give rise to Inside Information. In these instances we have put together a ‘project Insider list’ to include anyone else involved in the discussions and PA support.
We do separately keep a much larger list of ‘Restricted Persons’, to whom we choose to apply our Code for Dealing. This includes everyone who gets monthly management accounts and weekly sales figures (but not IT). This is because we would not want these people to be dealing in our shares during our Closed Periods. However, we consider that this falls outside the strict requirements for Insider Lists, for example we do not include dates of when people are added or removed, and it is generally only updated quarterly.
We have a small head office team and 5 business units each with its own “divisional board”. We have taken the view that our insider list comprises all head office staff and the divisional boards. This totals no more than 50 people (including our plc board). Even at that level we feel we are being conservative and very prudent, given the definition of inside information.
This is a common problem which suffers from internal politics and a misunderstanding of both current listing rule requirements and what constitutes “inside” information. If politics is set aside and a strict appliance of the latter factors applied the list should be very much smaller than is applied in many companies.
Dealing restrictions as a matter of course are now only applicable to PDMRS. Further all employees (and others connected to the company ) are subject to the criminal sanction of insider dealing. Inside information only emerges during the year end process if the result is materiallly different from market expectation. If it does, it must be anoucned without delay – thereby removing the dealing restriction.
Inside information is that which would result is a significant movement in share price. Typically this arises from transaction activity and rarely from trading activity (though obviously depends on the company and market).
Knowledge of transaction activity is typically restricted to a very few individuals.
Putting the above together it should be perferctly possible to keep insider lists down to a very small number , whilst ensuring that all employees are aware of the criminal offence of insider dealing and therefor better for them to err on the side of caution.
Our insider list usually runs at around 77people who have regular access to inside information and is increased if we are in the course of a transaction.
We draw the distinction between those who are authorised to have access to inside information as part of their job and are thus included on the list, and those who may gain access but are not authorised to do so, for example, members of the IT team.
We also include senior employees and secretaries to senior staff.
We have around 100,000 employees worldwidwide of which around 500 are insiders. Twice a year we circulate all of the Heads of Dept /functions for them to nominate insiders as follows:
The Close Period prior to the Interim Results will commence at close of business on Friday, 29 June and will run until the announcement of the Results on the morning of ??, ?? July 2012.
The purpose of this note is to request your assistance in updating the list of “insiders” under your responsibility (attached). It would be helpful if you could e-mail your list to ?? in this department by OPENING OF BUSINESS ON FRIDAY, 1 JUNE. We will then issue a note to all the individuals concerned explaining that they cannot deal in close periods at all, and cannot deal at other times without first obtaining prior consent by contacting me.
If removing or adding an employee from your list, please state whether that person is being removed on the basis that he/she no longer has access to inside information, has transferred to another division or company within the group, is a new employee or if they have left the group.
I would ask that you review the list critically with a view to ensuring that only those people who fall within the definition of insider, as set out below, are included.
“Insider” means any employee of ?? plc or director or employee of a subsidiary undertaking of ?? plc who, because of his office or employment in ?? plc is likely to be in possession of unpublished inside information in relation to ?? plc. Inside information may be described as information which:
(a) is precise;
(b) is not generally available;
(c) relates, directly or indirectly to ?? plc; and
(d) would, if generally available, be likely to have a significant effect on the price of ?? plc or on the price of related investments.
Our list is limited. We have taken advice on what is deemed to be inside information, in particular on the point of what type of information is deemed price sensitive.
On this basis we have been able to exclude from the list people who receive sales figures as it has been advised that it is likely that sales figures are not themselves price sensitive.