Page - 128 - in Austrian Law Journal, Volume 2/2019

ALJ 2019 Hartlieb 128 3. Market Transparency in the Form of Transparency of Shareholdings The disclosure obligation is also intended to ensure market transparency in the form of transparency of shareholdings,24 i.e. investors should be informed about the extent of the instruments held by a manager in the issuer. In order to achieve this goal,25 however, additional regulations are needed. For example, the notification of a purchase of shares can only make a meaningful contribution to the objectives of shareholding publicity if it is known how many shares the manager already holds. This requires accompanying reporting obligations, such as the obligation to disclose the portfolio of financial instruments already held by the issuer when assuming the function of a board member or a corresponding annual report as part of the issuer's annual financial statements. Without this information, the reporting obligation with respect to managers' transactions can only be used to verify that a manager has or no longer has a certain number of financial instruments of the issuer. However, this is not so much an element of shareholding transparency as part of general market transparency. 4. Market Integrity Finally, the reporting obligation serves the integrity of the capital market: greater transparency of managers' transactions constitutes a preventive measure against market abuse, particularly insider dealing.26 Managers would, due to the transparency, refrain from transactions with dubious external effects in advance.27 Additionally, full and proper market transparency is a prerequisite for the confidence of market actors. Moreover, it constitutes an additional means for competent authorities to supervise markets. However, the reporting obligation is not able to prevent insider dealing by managers within this scope: insider trading is subject to the prohibition of insider trading, so there is no reporting obligation. A reporting obligation could therefore only prevent the exploitation of insider information if a manager was prepared to violate the ban on insider trading sanctioned under criminal law, but nevertheless felt obliged to comply with the reporting obligation in the transaction.28 Whether a manager would do this seems doubtful. Rather, it may be assumed that an executive violating the insider trading prohibition will also violate the reporting obligation.29 In this case, however, the obligation to report neither increases the probability of the transaction being discovered nor the authority's ability to control it. The disclosure obligation therefore covers transactions on the basis of information that is below the threshold of insider information. The use of such information is not prohibited, even if the 24 See, e.g., Fleischer, supra note 10, at 1220; Frank A. Schäfer, § 16 Directors’ Dealings, in Handbuch börsennotierte AG, at 16.2 (Reinhard Marsch-Barner/Frank A. Schäfer eds, 4th ed. 2018). 25 For more information on the objectives of publicity of shareholdings, see Kalss & Oppitz & Zollner, supra note 13, at 18/7. 26 Kumpan, supra note 13, at 448; Stegmaier, supra note 19, at 6; see also Grundmann, supra note 16, mn 531. 27 See Fleischer, supra note 10, at 1220; Kumpan, supra note 13, at 448; Schäfer, supra note 24, at 16.2. 28 Mårten Knuts, The Optimal Scope of Disclosure by Association Regime under MAR, ECFR 495, 504 (2016); see also Philipp Maume & Martin Kellner, Directors‘ Dealings unter der EU-Marktmissbrauchsverordnung, ZGR 273, 276 (2017); Pfüller, supra note 16, at 28. 29 Equally Sethe & Hellgardt, supra note 1, at 14.