526 19 A Listed Company as the Target
ted to trading on a regulated market, it may thus have a duty to disclose some-
thing. If the prospective acquirer is a privately-owned company, it has no such
disclosure obligations.
Furthermore, the target company may have a duty to disclose information about
other parties’ plans to buy or sell its shares provided that the disclosure of such in-
formation would be “likely to have a significant effect” on its own share price, the
information is “of a precise nature”, and the information is in its possession.^37
The actual enforcement of one’s own decision to buy or sell shares will not be
regarded as the use of inside information about the existence of such a decision.
The Directive contains an exemption: “Since the acquisition or disposal of finan-
cial instruments necessarily involves a prior decision to acquire or dispose taken
by the person who undertakes one or other of these operations, the carrying out of
this acquisition or disposal should not be deemed in itself to constitute the use of
inside information.”^38
The City Code on Mergers and Takeovers provides for a “bidder exemption” after a policy
change in 1972.^39 An offeror’s own pre-announcement trading in the capacity of the offeror
is thus not prohibited. In the US, a similar bidder exemption is based on section 14e of the
Securities Exchange Act of 1934 and Rule 14e-3 adopted by the SEC under the Act.^40
Disclosure of major holdings. Disclosure obligations can be triggered by trading.
Like the 1968 Williams Act that amended the Securities Exchange Act of 1934,^41
the Transparency Directive lays down an obligation to disclose information about
major holdings. The provisions of the Transparency Directive are complemented
by special requirements to notify holdings in certain regulated businesses subject
to prudential regulation and ownership controls.^42 This regime was amended in
2007.^43
According to the Transparency Directive, a person acquiring or disposing of
shares so that its holding with a publicly traded company reaches, exceeds or falls
below certain thresholds must inform the company, which is in its turn responsible
(^37) Article 1(1) of Directive 2003/6/EC (Directive on market abuse).
(^38) Recital 30 of Directive 2003/6/EC (Directive on market abuse).
(^39) Rule 4.1 of the City Code on Takeovers and Mergers.
(^40) See Davies PL, The Take-over Bidder Exemption and the Policy of Disclosure. In: Hopt
KJ, Wymeersch E, European Insider Dealing - Law and Practice. Butterworths, London
(1991) pp 244–248.
(^41) Section 13(d)(1) of the Securities Exchange Act of 1934 requires any person who ac-
quires the beneficial ownership of more than 5% of any equity security of a class that is
registered pursuant to Section 12 of the Exchange Act to make a filing on Schedule 13D.
Under the 1976 Hart-Scott-Rodino Antitrust Improvements Act, share acquisitions ex-
ceeding a certain threshold trigger notification to the antitrust agencies.
(^42) See, for example, Article 10(3) of Directive 2004/39/EC (MiFID).
(^43) Directive 2007/44/EC amending Directive 92/49/EEC and Directives 2002/83/EC,
2004/39/EC, 2005/68/EC and 2006/48/EC as regards procedural rules and evaluation
criteria for the prudential assessment of acquisitions and increase of holdings in the fi-
nancial sector.