Allianz Global Investors GmbH & Ors v G4S Limited (formerly known as GS4 PLC)

The court considered the meaning of the expression "person discharging managerial responsibility" (PDMR) in section 90A and Schedule 10A of the Financial Services and Markets Act 2000 (FSMA) in claims for issuer liability for misleading published information and dishonest delay. The judge concluded that the Schedule 10A definition is exhaustive and, where an issuer has directors, the PDMRs for the purposes of the regime are its directors (including persons occupying the position of director and, as accepted by the defendant, de facto and arguably shadow directors) rather than a wider category of senior executives. The judge therefore rejected the claimants' submission that the term should be given an autonomous EU financial-law meaning embracing senior executives generally.

However, the court also held that the question whether certain named senior individuals (labelled P1–P4) were de facto directors of the issuer was highly fact-specific. The pleadings together with the evidence disclosed a real (not fanciful) prospect that P1–P4 might be found to have acted at the directorial level of the issuer; accordingly the defendant’s strike-out and summary judgment application in respect of those allegations was refused and that issue must proceed to trial (subject to clarification of the pleadings).

Background and parties: The defendant was a listed holding company providing security and related services; the claimants were institutional investors alleging that information published by the defendant about events in its operating subsidiary (G4S Care & Justice Services (UK) Ltd) was untrue, misleading or was dishonestly delayed, in breach of the issuer-liability regime in section 90A and Schedule 10A FSMA. The defendant applied to strike out or obtain summary judgment in three related actions, principally on the ground that the claimants had not pleaded that particular senior individuals (P1–P4) were "persons discharging managerial responsibilities" (PDMRs) within the meaning of section 90A / Schedule 10A.

Nature of the application: The defendant sought strike-out or summary judgment under CPR 3.4 and CPR 24 to remove allegations that P1–P4 were PDMRs; the claimants argued for a broader construction of PDMR and/or that they had a realistic prospect of proving that P1–P4 were de facto directors of the issuer.

Issues framed:

• Issue 1: Whether the statutory term PDMR in Schedule 10A is limited to directors (de jure, de facto, or arguably shadow directors) or extends to senior executives who are not directors but have managerial power affecting the issuer's prospects.
• Issue 2: If the narrower meaning applies, whether the claimants have a real prospect of proving P1–P4 were de facto directors of the defendant.

Reasoning on construction: The judge traced the legislative history, including the Transparency Obligations Directive (TOD), the 2003 market-abuse Directive, the 2004 Commission Directive and domestic implementing provisions. He observed that Schedule 10A paragraph 8(5) provides an exhaustive definition and that Parliament deliberately did not adopt the broader PDMR definition used elsewhere in Part 6 of FSMA. Applying established principles of interpretation (including the obligation to interpret domestic law in light of EU instruments so far as possible), the judge concluded there was no reason to import the market-abuse definition of PDMR into the issuer-liability regime. The textual structure of paragraph 8(5), the legislative materials and the Government's stated intention to limit and provide certainty for issuer liability supported a narrow reading: where an issuer has directors, PDMRs are its directors (and related de facto/shadow forms), and sub‑paragraph (c) only applies where an issuer has no directors.

Reasoning on de facto directorship: The judge reviewed the law on de facto directorship and concluded that whether an individual is a de facto director is an intensely fact-sensitive inquiry directed to whether the person participated at the highest (directorial) level of corporate governance. The pleadings, responses to particular requests for further information and witness evidence disclosed a sufficient factual foundation and a realistic prospect that P1–P4 may be held to have acted as de facto directors of the defendant. Given the factual complexity, the need for disclosure and witness evidence, and the novel corporate structure of a listed holding company operating through subsidiaries, the judge refused the defendant's application to strike out or obtain summary judgment on that point and directed parties to address whether pleadings require clarification.

Subsidiary procedural findings: The court found the pleadings could have been clearer and invited the parties to agree or be heard on appropriate amendments to spell out the plaintiffs' de facto director case. The court used labels P1–P5 because of reporting restrictions. The judge noted that he would hear parties about further clarification and possible amendments.

The application was allowed in part and dismissed in part. The court held that the term "person discharging managerial responsibilities" in Schedule 10A is confined, where the issuer has directors, to its directors (including persons occupying the position of director and, where established, de facto or arguably shadow directors); the claimants' broader construction extending to non-director senior executives was rejected. However, the court refused to strike out or give summary judgment against the claimants' allegations that P1–P4 were de facto directors, concluding there is a real prospect such a finding could be made at trial and that the question is fact-specific and requires disclosure and a full hearing. The parties were ordered to address whether the pleadings should be clarified.