534 19 A Listed Company as the Target
tium, and obtains advise at the various stages of its decision-making. The acquisi-
tion could be frustrated if the potential acquirer had to disclose each of its early
steps to the public or if information about its plans leaked out to the public. The
acquirer may nevertheless have such a duty if its shares have been admitted to
trading on a regulated market.^93
Selective disclosure. The Directive on market abuse prohibits certain forms of
selective disclosure of inside information to outsiders.^94 There is a disctinction be-
tween making recommendations and other forms of disclosure.
An issuer’s managers and many other people^95 who possess inside information
are prohibited from “recommending or inducing another person, on the basis of
inside information, to acquire or dispose of financial instruments to which that in-
formation relates”.^96 For obvious reasons, it is irrelevevant whether that person
owes a duty of confidentiality or not.^97
As regards other forms of selective disclosure, a manager is prohibited from
“disclosing inside information to any other person unless such disclosure is made
in the normal course of the exercise of his employment, profession or duties”.^98
In England, the categories of recipient who need information to perform their functions in-
clude, for example, the following: (a) the issuer’s advisers and advisers of any other per-
sons involved in the matter in question; (b) persons with whom the issuer is negotiating, or
intends to negotiate, any commercial financial or investment transaction (including pro-
spective underwriters or placees of the financial instruments of the issuer); (c) employee
representatives or trade unions acting on their behalf; (d) any government department or
any statutory or regulatory body or authority; (e) major shareholders of the issuer; (f) the is-
suer’s lenders; and (g) credit-rating agencies.^99
Public disclosure. Such a selective disclosure will trigger a duty to disclose inside
information to the public unless the issuer has a legitimate interest for delaying
disclosure, the issuer can ensure confidentiality, and delaying disclosure would
would not be likely to mislead the public.^100
(^93) Article 6(1) of Directive 2003/6/EC (Directive on market abuse).
(^94) See also DTR 2.2.10 G: “The FSA is aware that many issuers provide unpublished in-
formation to third parties such as analysts, employees, credit rating agencies, finance
providers and major shareholders, often in response to queries from such parties. The
fact that information is unpublished does not in itself make it inside information. How-
ever, unpublished information which amounts to inside information is only permitted to
be disclosed in accordance with the disclosure rules and an issuer must ensure that at all
times it acts in compliance with this chapter.”
(^95) See Articles 2(1), 2(2) and 4 of Directive 2003/6/EC (Directive on market abuse).
(^96) Article 3(b) of Directive 2003/6/EC (Directive on market abuse).
(^97) See Article 6(3) of Directive 2003/6/EC (Directive on market abuse).
(^98) Article 3(a) of Directive 2003/6/EC (Directive on market abuse).
(^99) DTR 2.5.7 G (2).
(^100) Article 6(2) of Directive 2003/6/EC (Directive on market abuse).