19.6 Selective Disclosure to Outsiders by the Acquirer 533quires an announcement already when “negotiations or discussions are about to be extended
to include more than a very restricted number of people (outside those who need to know in
the companies concerned and their immediate advisers).”
Pursuing the acquisition. Supply and demand will influence the price of securities.
One might therefore ask whether a party may buy or sell a large block of shares
knowing that such dealings will influence share price. The answer is yes, provided
that the share price is not influenced artificially (manipulated).^88 A distinction is
made between the prior decision to buy or sell on one hand and the carrying out of
the acquisition or disposal on the other. The preamble of the Market Abuse Direc-
tive implies that the carrying out of the acquisition or disposal should not be
deemed in itself to constitute the use of inside information^89 – as that information
can be inside information only provided that no party has made it public, failure to
disclose it will not change the result.
19.5 Selective Disclosure to Lenders...........................................................
The Directive on market abuse does not prohibit the selective disclosure of inside
information to holders of unregulated loans or prospective lenders, provided that
the person making the disclosure makes it “in the normal course of the exercise of
his employment, profession or duties”.^90 Such a disclosure can trigger a duty to
make a public disclosure according to the Market Abuse Directive, unless the per-
son receiving the information owes a duty of confidentiality.^91 In addition, some
issuers of debt instruments may have undertaken a contractual duty to disclose in-
formation to the public.^92
19.6 Selective Disclosure to Outsiders by the Acquirer
For many reasons, it is in the interests of the potential acquirer to ensure selective
exchange of information, keep such information confidential, and delay making its
intentions known to the public. Selective disclosures are necessary internally for
reasons of information-gathering and because a company must take care of its in-
ternal decision-making. The potential acquirer will also need to exchange informa-
tion selectively with third parties when it arranges financing, organises a consor-
(^88) Article 5 of Directive 2003/6/EC (Directive on market abuse). See also Directive
2003/124/EC.
(^89) Recital 30 of Directive 2003/6/EC (Directive on market abuse).
(^90) Article 3(a) of Directive 2003/6/EC (Directive on market abuse).
(^91) Article 6(3) of Directive 2003/6/EC (Directive on market abuse).
(^92) See, for example, EHYA and LMA Recommended Market Market Practices, Disclosure
by Issuers of of Non-Investment Grade Debt Securities (June 2008); CESR, Consulta-
tion Paper, Transparency of corporate bond, structured finance products and credit de-
rivatives markets (December 2008).