Market Soundings: The Interaction between Securities Regulation and Company Law in the United Kingdom and Italy

55 Pages Posted: 3 Aug 2017

See all articles by Stefano Lombardo

Stefano Lombardo

European Corporate Governance Institute (ECGI); Free University of Bozen-Bolzano - CRELE Center for Research in Law and Economics; Free University of Bozen-Bolzano - Faculty of Economics and Management

Federico M. Mucciarelli

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Dipartimento di Economia Marco Biagi, Modena

Date Written: August 1, 2017

Abstract

Before deciding on operations involving share issuance or sale, companies or shareholders may seek to disclose information to selected investors, in order to gauge their opinion on the envisaged market operation. Such ‘market soundings’ risk violating the prohibition of insider trading and yet such selective disclosures have been partially accepted in several European jurisdictions. Market soundings have been recently regulated in the Market Abuse Regulation, which clarifies under which circumstances they are allowed and the position of the involved parties. This Article analyses the rules on market soundings in the Market Abuse Regulation with regard to initial public offers of securities, issuance in the secondary market and accelerated bookbuildings. Additionally, it will be stressed that market soundings might also violate national company law rules and principles, mostly those related to directors’ duties and liabilities. This Article addresses how Italian and English company law regimes react towards selective disclosures. It will be shown that a tension may still exist between national company law rules and uniform rules on the prohibition of market abuses.

Keywords: market soundings, insider trading, company law, securities regulation, European Union, Italy, United Kingdom

JEL Classification: G38, K22

Suggested Citation

Lombardo, Stefano and Mucciarelli, Federico M., Market Soundings: The Interaction between Securities Regulation and Company Law in the United Kingdom and Italy (August 1, 2017). ECGI - Law Working Paper No. 362/2017, Available at SSRN: https://ssrn.com/abstract=3012183

Stefano Lombardo (Contact Author)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Free University of Bozen-Bolzano - CRELE Center for Research in Law and Economics ( email )

Free University of Bolzano
Piazza Universita
Bolzano, BZ 39100
Italy

Free University of Bozen-Bolzano - Faculty of Economics and Management

Piazza Universita
Bolzano-Bozen (BZ), 39100
Italy
+39 0471 013491 (Phone)

Federico M. Mucciarelli

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Dipartimento di Economia Marco Biagi, Modena

Viale Berengario 51
Modena, Modena 41121
Italy

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