536 19 A Listed Company as the Target
Neither does the Directive prohibit the use of such information by the acquirer
generally. For example, not all forms of buyer due diligence are prohibited.
Public disclosure. Second, the Directive does not prevent the simultaneous dis-
closure of inside information to the public and selectively as such information
ceases to be inside information.^108 Again, the Directive does not prohibit the use of
information disclosed in such a way.^109
Public change of control transactions. Third, there can be one or two exemp-
tions that apply to public change of control transactions that have been regulated
otherwise.
The disclosure of information to the target’s shareholders and the public is
regulated not only by the Market Abuse Directive but even by the Directive on
takeover bids and national takeover laws as well as EU merger directives. The
preamble of the Market Abuse Directive implies that their provisions can prevail
over the provisions of the Market Abuse Directive.^110
It is therefore: (1) fairly certain that the prohibition to disclose, recommend or
induce will not prohibit disclosures to the extent that a restrictive interpretation of
the Market Abuse Directive is necessary to give effect to other instruments of
Community law; (2) likely that the prohibition to disclose, recommend or induce
will not prohibit disclosures to the extent that they are necessary to comply with
takeover or merger laws; and (3) possible that the prohibitions will not apply to
disclosures which are objectively necessary before a public takeover or merger
can take place.
Furthermore, the prohibition to use inside information may not apply where the
acquirer trades in shares only in the capacity of offeror or merger party and in that
context. It is also stated in the preamble that “[h]aving access to inside information
relating to another company and using it in the context of a public take-over bid
for the purpose of gaining control of that company or proposing a merger with that
company should not in itself be deemed to constitute insider dealing”.^111
Both exemptions can be explained by the need to ensure internal coherence of
Community law. In addition, permitting due diligence can make European take-
overs easier. Member States may have adopted a more detailed and stricter disclo-
sure regime.
No other exemptions. The Directive on market abuse does not explicitly pro-
vide for any other exemptions. There is thus a prohibition to disclose inside infor-
mation. Selective disclosure without sufficient confidentiality will trigger a man-
datory disclosure obligation. A party that has received inside information must not
use it “by acquiring or disposing of, or by trying to acquire or dispose of, for his
own account or for the account of a third party, either directly or indirectly, finan-
cial instruments to which that information relates”.^112
(^108) Article 6(1) of Directive 2003/6/EC (Directive on market abuse).
(^109) For US law, see already In the Matter of Cady, Roberts & Company.
(^110) Recital 28 of Directive 2003/6/EC (Directive on market abuse): “... public take-over bid
or other proposed change of control ...”
(^111) Recital 29 of Directive 2003/6/EC (Directive on market abuse).
(^112) Article 2(1) of Directive 2003/6/EC (Directive on market abuse).