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Red Flags at Night: Tern “Holdings in Company” RNS – does anyone give a **** about disclosure rules?

By Nigel Somerville, the Deputy Sheriff of AIM | Friday 27 November 2015

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Does anyone give a flying wotsit about disclosure rules on AIM any more? At no-one-is-watching o’clock yesterday (5.14pm) AIM-listed Tern plc (TERN) released an RNS detailing yet more selling by institutional investor Hargreave Hale. This has been an on-going off-load ever since I pointed out a few problems HERE, HERE, HERE, HERE, and HERE but it would appear to me that someone has been breaching disclosure rules big style. Was it the company or Hargreave Hale? Some explanation is needed pronto.

Yesterday's RNS – a TR1 – showed that Hargreave Hale (HH) had offloaded enough shares to drop it below 5%. My understanding is that between the FCA Disclosure and Transparency Rules and AIM Rules, each time a 1% threshold is crossed above 3% of the issued share capital (making the holder a substantial shareholder), an RNS has to ensue. The holder of the shares has to report the transaction to the company, and the company has to release an RNS. Perhaps readers who know better will correct me on that.

We were told yesterday evening that HH held 2.96 million shares ahead of the RNS-triggering transaction on 25 November and 2.66 million shares afterwards, representing 4.75% of the issued share capital.

But the last holdings in company RNS regarding the HH stake in Tern was way back on 26 August, when it had reduced its stake to 5.26 million shares representing 9.53% of the issued shares.

So what happened about the crossing of the 9%, 8%, 7% and 6% thresholds? As I understand it, between AIM Rules and the FCA Disclosure and Transparency Rules, the crossing of each of those thresholds should have to be reported by the holder (ie HH) to the company (Tern), which in turn should have reported it to the market with an RNS. It would appear that either HH did not report its disposal(s) to Tern, or Tern failed to issue correspinding RNS(s).

It is crystal clear that HH has been selling steadily since the 26 August RNS. It has gone down from over 9% of Tern, as reported by RNS on 26 August, to about 5.3% without an RNS being released. As such, it appears to me as though someone has been flouting the rules.

The implications here are clear: either Tern has failed to report substantial shareholder transactions to the market or HH has failed to report its dealings to the company. If my reading of AIM Rules and the FCA Disclosure and Transparency Rules are correct then there has been a flagrant breach.

As such I will be writing to AIM Regulation and the FCA to ask for an urgent investigation. If the rules are there, they should be abided by. If the regulators consider that the rules do not matter, then the rules should be ditched as a waste of everybody’s time - including the directors of Tern, and those in charge at HH. The regulators can’t have it both ways: either the rules matter or they do not.

Does anyone give a FF for the rules any more?

Meanwhile, investors in Tern might want to consider whether they too should follow HH’s lead. It did, after all, own about 20% of the company not all that long ago.

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    Nigel, the 3% threshold doesn’t apply to all classes of share owner. Market makers, for example, don’t have to make any disclosure if they hold less than 10%. Investment managers/fund managers (including, presumably, Hargreave Hale), have no disclosure obligation below 5% and no 1% increment thresholds between 5% and 10%.

  2. Nigel Somerville

    D&D – thank you for this. It highlights some of the confusion. From AIM Rule 17 (2014 edition):

    “An AIM company must issue notification without delay of:…..any relevant changes to any significant shareholders, disclosing, insofar as it has such information, the information specified by Schedule Five”

    In the definitions we have:

    “relevant changes – Changes to the holding of a significant shareholder above 3% (excluding treasury shares) which increase or decrease such holding through any single percentage.”


    “significant shareholder – Any person with a holding of 3% or more in any class of AIM security (excluding treasury shares).”

    and a “person”….

    “person An individual, corporation, partnership, association, trust or other entity as the context admits or requires.”

    Here is the information required under Schedule Five:

    “Pursuant to rule 17, an AIM company must make notification of the following:
    (a) the identity of the director or significant shareholder concerned;
    (b) the date on which the disclosure was made to it;
    © the date on which the deal or relevant change to the holding was effected;
    (d) the price, amount and class of the AIM securities concerned;
    (e) the nature of the transaction;
    (f) the nature and extent of the director’s or significant shareholder’s interest in the
    (g) where a deal takes place when it is in any close period under rule 21, the date upon
    which any previous binding commitment was notified or the date upon which the
    Exchange granted permission to deal in order to mitigate severe personal hardship; and
    (h) where the notification concerns a related financial product, the detailed nature of the

    My suspicion is that Disclosure and Transparency Rules (as per the FCA) are more akin to the situation you have described, but are the AIM Rules quoted above not clear that the crossing of the 9, 8, 7 and 6% thresholds also should be reported? Or have I missed something else?


    The AIM regs do state in several places that their issuers which are UK incorporated are subject to DTR5 in toto. The FCA also makes this clear:

    The relevant sections of DTR5 are DTR 5.1.3 and 5.1.5:

  4. Nigel

    I assume you will not bother to correct yet another of your very poorly researched articles on TERN Plc and will be leaving the original article as it stands despite being now corrected by Duck and Dive.
    I’m sorry but if AIM need to investigate anyone then surely it needs to be you and this website.
    You first started covering TERN at around 2p a share and have been proven to be consistently wrong but yet continue to write untrue and misleading articles in an effort to discredit the company in investor eyes.
    This is shameful behaviour.

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