OPINION OF ADVOCATE GENERAL

Poiares Maduro

delivered on 25 May 2004 ( )

Case C‑384/02

Anklagemyndigheden

v

Knud Grøngaard

v

Allan Bang

(Reference for a preliminary ruling from the Københavns Byret (Denmark)

(Directive 89/592 – Prohibition on the disclosure of inside information to a third party, unless in the normal course of the exercise of employment, profession or duties – Inside information concerning a merger between two quoted companies – Employee-elected board member – Member of a corporate liaison committee established between a trade union and a company)

1. 1. The reference for a preliminary ruling in the present case concerns the interpretation of Article 3(a) of Council Directive 89/592/EEC of 13 November 1989 coordinating regulations on insider dealing.( ) More precisely, the question consists in determining under what circumstances and conditions an insider can be allowed to disclose privileged information to a third party ‘in the normal course of the exercise of his employment, profession or duties’.

I – Facts, applicable law and questions referred for a preliminary ruling

2. Charges were brought against Mr Grøngaard and Mr Bang in criminal proceedings before the Københavns Byret (Copenhagen District Court) because they had disclosed privileged information.

3. Mr Bang is the politically-elected general secretary of the Finansforbundet, which is a trade union representing workers employed within the financial sector.

4. Mr Grøngaard was at the material time the employee-elected member of the executive board of the company RealDanmark, a quoted company and a major financial institution. At the same time, Mr Grøngaard had been appointed by the Finansforbundet as a member of the corporate liaison committee, established by an agreement concluded between RealDanmark and Finansforbundet. Mr Grøngaard is also secretary of Kapitalkreds (Capital Division), one of the 11 divisional associations of the Finansforbundet.

5. Mr Grøngaard disclosed inside information to Mr Bang on two occasions. Following an extraordinary board meeting of RealDanmark on 22 August 2000, he first disclosed the details of a discussion on merger negotiations with Danske Bank, a quoted financial institution, to Mr Bang on 23 August.

6. Between 28 August and 4 September 2000, Mr Bang consulted his two deputy general secretaries, Mrs Madsen and Mrs Nielsen, and a colleague in the secretariat of the Finansforbundet, Mr Christensen, passing on the same information that he had received from Mr Grøngaard. On 31 August 2000, Mr Christensen purchased shares in RealDanmark for approximately EUR 48 000.

7. On 18 September 2000, further discussions were held at a RealDanmark board meeting on merger details. It was also the subject of discussions at an extraordinary meeting of the corporate liaison committee on 22 September 2000. Mr Grøngaard was present at both meetings. He again approached Mr Bang on 26 September 2000 with a view to helping employees deal with the consequences of the merger. They notably discussed the planned schedule for the merger, as well as the expected increase in the value of RealDanmark’s shares of between 60% and 70%.

8. On 27 and 28 September 2000 respectively, Mr Bang passed on information to the head of the secretariat of the Finansforbundet, Mr Larsen and to his colleague Mr Christensen, including the planned date of notification of the merger and the anticipated conversion rate. On 29 September 2000, Mr Christensen purchased additional shares in RealDanmark for approximately EUR 214 000.

9. On 2 October 2000 the merger between RealDanmark and Dansk Bank was made public. Following this announcement, RealDanmark’s quotation increased by 65%. Mr Christensen sold his shares in RealDanmark on 2 and 3 October 2000, making a net gain of around EUR 180 000. He was later sentenced to 6 months’ imprisonment for insider dealing.

10. Criminal proceedings were brought against Mr Bang and Mr Grøngaard for disclosing privileged information, in breach of Paragraph 36(1) of the Lov om Værdipapirhandel (Danish Law on Trade in Transferable Securities) (hereinafter ‘the Værdipapirhandelslov’). Under Paragraph 94(1)(1) of the Værdipapirhandelslov, they risk either a fine or imprisonment of up to 18 months. These provisions form part of Denmark’s implementation of the Directive, contained in Paragraphs 34 to 39 and 93 to 96 of the Værdipapirhandelslov. Paragraph 36(1) of the Law provides that ‘any person in possession of inside information may not disclose( ) such information to any other person unless such disclosure is made in the normal course of the exercise of his employment, profession or duties’. This prohibition of disclosure applies to all insiders, i.e. anyone in possession of privileged information. By contrast, under Article 3(a) of the Directive, only primary insiders are prohibited from ‘disclosing that inside information to any third party unless such disclosure is made in the normal course of the exercise of his employment, profession or duties’.

11. Article 1(1) of the Directive defines inside information as ‘information which has not been made public of a precise nature relating to one or several issuers of transferable securities or to one or several transferable securities, which, if it were made public, would be likely to have a significant effect on the price of the transferable security or securities in question’. Article 2(1) of the Directive describes primary insiders as someone who gets access to inside information ‘by virtue of his membership of the administrative, management or supervisory bodies of the issuer, by virtue of his holding in the capital of the issuer, or because he has access to such information by virtue of the exercise of his employment, profession or duties’.

12. Paragraph 36(1) of the Værdipapirhandelslov has therefore a wider scope than Article 3(a) of the Directive. This is in conformity with Article 6 of the Directive which enables Member States to adopt more stringent provisions than those laid down in the Directive and in particular to extend the scope of the prohibition laid down in Article 3.

13. In those circumstances, the national court referred the following questions to the Court for a preliminary ruling:

‘1.Does Article 3(a) of Directive 89/592 preclude a person from disclosing inside information in the case where that person received the inside information in his capacity as an employee-elected member of the board of the undertaking to which the inside information relates and that information is disclosed to the general secretary of the trade union which organises the employees who elected the person concerned as a board member?

2.Does Article 3(a) of Directive 89/592 preclude a person from disclosing inside information in the case where that person received the inside information in his capacity as a member of the undertaking’s corporate liaison committee and that information is disclosed to the general secretary of the trade union which appointed the person concerned to be a member of the corporate liaison committee?

3.Does Article 3(a) of Directive 89/592 preclude the general secretary of a trade union from disclosing inside information in the case where that general secretary received the inside information under the circumstances outlined in Question 1 and the information is passed on to: (a) the general secretary’s two deputies; (b) the senior administrative manager of the union’s secretariat; and (c) colleagues of the general secretary within the union’s secretariat?

4.Does Article 3(a) of Directive 89/592 preclude the general secretary of a trade union from disclosing inside information in the case where that general secretary received the inside information under the circumstances outlined in Question 2 and the information is passed on to: (a) the general secretary’s two deputies; (b) the senior administrative manager of the union’s secretariat; and (c) colleagues of the general secretary within the union’s secretariat?

5.What bearing on the answers to Questions 1 to 4 has the fact that the inside information which is disclosed is (a) information on the commencement of merger negotiations between two companies quoted on the stock exchange; (b) information on the date of merger of two companies quoted on the stock exchange; or (c) information on the level of the rise in the value of shares in a company quoted on the stock exchange which is anticipated by reason of the fact that the company is to merge with another quoted company?’

14. Written observations were submitted by Mr Grøngaard, Mr Bang, the Danish Government and the Commission. Oral submissions were made at the hearing held on 24 March 2004 on behalf of Mr Grøngaard, Mr Bang, the Danish and the Swedish Governments and the Commission.

II – Assessment

15. At the heart of the questions referred by the national court is the interpretation of Article 3(a) of the Directive and more precisely what should be the scope of ‘the normal course of the exercise of his employment, profession or duties’ for an insider to be able to disclose inside information. This has to be considered in relation to three different contexts.

16. The first question raises the issue of whether an employee-elected board member can disclose inside information to a general secretary of a trade union.

17. The second question deals with the relationship between a member of an undertaking’s corporate liaison committee and the general secretary of the union he is representing.

18. The third and fourth questions both address the problem of whether a general secretary of a trade union may disclose information to certain members of that trade union. They can therefore be dealt with together.

19. The fifth question asks whether the type of inside information that has been disclosed is a relevant factor when interpreting Article 3(a) of the Directive. I will include considerations in relation to the fifth question while assessing the legality of the disclosures made in the contexts set out in questions one to four.

20. Although the main subject-matter of the present case is the scope of an exception to the prohibition on disclosing inside information, fundamental social rights on the information and consultation of workers have been mentioned in the arguments before the Court. The right of workers to be informed and consulted can conflict with the disclosure requirements imposed by the Directive for the smooth functioning of capital markets( ).

21. Indeed, to the extent that the Directive – and in this instance the Danish law on insider trading – includes a disclosure prohibition on privileged information encompassing information relating to contemplated mergers, with potential consequences on employees, there could be cases where this provision might conflict with the right of workers to get information on events likely to affect their situation. That is because the disclosure prohibition included in the Directive is imposed on all potential investors, with no consideration as to their specific role in a company (i.e. with no distinction being made as between management and labour). Reconciling the objectives pursued by the two sets of norms will therefore prove necessary even when they do not directly conflict.

22. Keeping in mind the protection of social rights conferred by Community law, and before turning to the questions referred by the national court, I will first explain the role of the disclosure prohibition in the Directive, before determining the conditions under which persons may benefit from an exception to the disclosure prohibition of Article 3(a) of the Directive in the three contexts highlighted above.

A – The role of the prohibition on disclosure in the Directive

23. The parties take opposite views on the scope that Article 3(a) of the Directive should have. Mr Grøngaard and Mr Bang contend that a restrictive interpretation of Article 3(a) of the Directive would run contrary to the principle nulla poena sine lege and to Article 7 of the Convention for the protection of human rights and fundamental freedoms( ).

24. Whereas I agree that the application of the principle of legality is required by the criminal nature of the case, I think it has a different impact from that which Mr Grøngaard and Mr Bang have submitted. It should first be recalled that, according to Article 13 of the Directive, Member States only have to ensure that ‘the penalties shall be sufficient to promote compliance with [its provisions]’. Penalties for infringement of provisions of the Directive are thus not necessarily of a criminal nature as in Paragraph 94(1)(1) of the Værdipapirhandelslov. The interpretation of the scope of a directive may not, however, be conditional upon the type of national proceedings (civil, criminal, administrative) in which that interpretation is relied on.( ) Therefore, while the Court will limit itself to giving an interpretation of the Directive, the national court will be entrusted with the duty ‘to ensure that [the legality] principle is observed when interpreting, in light of the wording and the purpose of the Directive, the national legislation adopted in order to implement it’.( ) The legality principle does not, therefore, of itself require a specific interpretation of the disclosure prohibition included in Article 3(a) of the Directive.

25. The other observations submitted to the Court support a restrictive interpretation of the exception to the disclosure prohibition that should, in my view, prevail for reasons which I will expound below.

26. The Anklagemyndighed (Public Prosecutor’s Office), in its submissions before the national court, and the Commission and the Danish Government, before this Court, have put forward several arguments to support this opinion. First, the restrictive interpretation is, according to the Anklagemyndighed and the Danish Government, supported by the literal interpretation of the provision. Second, such an interpretation is in line with the purpose of the Directive, which is to ensure that investors are treated equally and are protected against the unlawful use of inside information. In order to achieve these objectives, the prohibition of disclosure of information has a preventive function. In addition, the Commission underlines the fact that Article 3(a) of the Directive represents an exception to a general rule and should as such be interpreted narrowly.

27. Whereas the exact meaning given to Article 3(a) can only be clarified in relation to specific cases, it is useful to identify the role of this provision within the Directive in order to assess its scope. The main objective of the Directive is to ensure the smooth operation of the secondary market in transferable securities( ).To that end, the Directive fosters investors’ confidence( ). Such confidence relies on the fact that all investors are placed on an equal footing( ). It follows from this principle that all investors should be granted identical access to information. In fact, equality of access to information on quoted companies and on securities guarantees the rational formation of prices on the market.

28. Placing investors on an equal footing on capital markets is achieved in two ways. On the one hand, this implies a duty of transparency, whereby quoted companies are required to publish a certain amount of relevant information so that the price of their shares corresponds to the objective value of the company.( ) That enables all investors to assess the price of shares by reference to the true situation of the companies concerned. On the other hand, equal footing between investors is ensured by the prohibition on the use and disclosure of inside information laid down in the Directive( ).

29. In the present case, only the disclosure prohibition as set out in Article 3(a) of the Directive is concerned. The rationale behind the disclosure prohibition is that the more people are entrusted with inside information, the higher the risk is that someone will take advantage of it, thereby affecting the integrity of the market. The disclosure prohibition is thus a necessary corollary of the prohibition on using inside information and has a preventive role. It should also be noted that such a prohibition is limited to inside information as defined by Article 2 of the Directive and lasts only so long as inside information is not made public. Any exception to such prohibition risks undermining investors’ confidence in the market and should therefore be construed narrowly.

30. Whereas, taking into consideration the objective of the Directive, it seems that any exception to the prohibition set out in Article 3(a) of the Directive should be construed narrowly, the literal meaning of the expression ‘in the normal course of the exercise of his employment, profession or duties’ appears on the face of it to have an unlimited scope, since any insider, whatever his activity, can in principle invoke it. However, the conditions under which the disclosure of inside information can lawfully be made will have to be elaborated in relation to the practical context in which it occurred.

31. The Anklagemyndighed and the Danish Government note that preparatory documents to the Directive( ) provide for an exception to the disclosure prohibition only in cases where it is necessary or appropriate.

32. Mr Grøngaard and Mr Bang argue, however, that, in accordance with consistent case-law( ), preparatory works cannot be used for purposes of interpretation where the wording of such documents is not reflected in the wording of the provision in question.

33. It is true that no general standard can be deduced from preparatory works, since they can only add to the literal meaning of the provision in question. It may also be added that, in the present instance, the preparatory documents cited have not been published, which militates against their use in interpreting the Directive. The word ‘normal’ will in fact be interpreted by reference to the national context. The preparatory works none the less reinforce the appropriateness of a restrictive interpretation of the exception to the prohibition on disclosure( ).

34. Finally, it is important to note that the definition of what activities of a board member may be included in ‘the normal course of the exercise of his employment, profession or duties’ will depend heavily on the rules governing the exercise and nature of those functions in different national legal systems. The guidance which the Court may give to the national court in interpreting the Community provision will, therefore, have to be complemented by the latter court’s analysis of the relevant national rules that define and regulate the various professional activities where disclosure of inside information may take place.

B – Disclosure of inside information by an employee-elected board member to the general secretary of a trade union

35. Two cases must be distinguished here. The first is that of an employee-elected board member seeking advice from an expert and the second is that of him consulting his ‘background’ (referring either to shareholders or to employees of the company).

1. The case of an employee-elected board member seeking advice from the general secretary of a trade union in the capacity of an expert in social and industrial relations

36. In assessing the case of an employee-elected board member seeking advice from the general secretary of a trade union in his capacity as an expert in social and industrial relations( ), I will address three relevant issues: first, the ability to consult an expert; second, whether the general secretary of a trade union should be regarded as an expert in social and industrial relations; and, third, the scope of the permissible transmission of information.

37. As regards the first issue, Mr Grøngaard submits that, in his capacity as board member, he could lawfully consult the general secretary of a trade union on difficult decisions he had to take in relation to the planned merger.

38. The Commission and the Danish Government acknowledge that an employee-elected board member may consult an expert in order to exercise his duties towards the company, but insist that such advice may be sought only if it is being sought in the interests of the company and only if the expert is bound by a duty of confidentiality. At the hearing, the Danish Government argued that consultation of the general secretary of a trade union by an employee-elected board member will be in the interests of the company only in exceptional cases.

39. All parties thus acknowledge that a member of the board of directors acts within the normal course of his duties when seeking expert advice. They also agree that an employee-elected member of the board has the same faculty. However, that does not amount to authorising board members to disclose inside information to their advisers. Further, and as noted by the Commission and the Danish and Swedish Government, since company law is harmonised by EC law only to a very limited extent, what is the normal course of employment of a member of a company board will have to be determined by reference to the applicable national law. EC law will, however, impose limits on the interpretation of national law.

40. First of all, and most evidently, the national court will have to interpret the relevant provisions of national law in the light of the objective of the Directive, namely that any exception to the prohibition on disclosure risks undermining confidence in capital markets. That requires balancing the possibility of a board member seeking qualified advice on a transaction against the risk that allowing disclosure will breach the principle of equality between investors.

41. In order to safeguard the investor protection principle, a board member’s ability to disclose inside information has to be limited by reference to that member’s objective need to seek advice, the need for the expert to get access to inside information, and, finally, the type of information transmitted. In other words, a board member can disclose inside information within the normal course of his duties only where he seeks advice in order to perform his duties and limits such disclosure to what is necessary for him to get the relevant expert advice.

42. Secondly, the interpretation that the national court will give of the exception to the prohibition on disclosure will have to be in conformity with the fundamental social rights protected by EC law. Indeed, as the Swedish Government mentioned in its oral observations before the Court, the Directive does not contain an absolute prohibition on disclosure. Interests other than the proper functioning of capital markets, such as the interests of workers, therefore have to be taken into account. As a result, the interests of workers, and in particular the effects which the transaction may have on their employment situation, will be relevant when assessing whether, in order to perform the specific function of an employee-elected board member, it might be necessary to consult an expert in social and industrial relations.

43. A second issue needs to be raised in relation to the possibility of the general secretary of a trade union acting as an expert in social and industrial relations. In other words, a finding that a board member is entitled to consult an expert in social and industrial relations would not suffice to authorise Mr Grøngaard to disclose information to the general secretary of his trade union. It is also necessary to assess whether the latter can be regarded as an expert in social and industrial relations and was acting as such. In fact, one might wonder whether, in view of his primary mission to protect workers’ rights, he can be regarded as an independent expert. At the hearing, the Danish Government attempted to establish a distinction between the advice given by a lawyer and that given by the general secretary of a trade union. However, to define what may be regarded as an expert consultation would risk unduly restricting the right of a board member, within the performance of his duties, to consult the person he judges the most able. EC law does not in principle appear to debar the general secretary of a trade union from acting as an expert in certain circumstances, but it will nevertheless have to be verified that Mr Grøngaard was not simply passing on information to a person in circumstances which cannot be qualified as ‘consulting an expert’.

44. If Mr Grøngaard was indeed acting in the performance of his duties when he consulted Mr Bang in order to assess the impact of the merger on RealDanmark employees, and Mr Bang can be regarded as an expert in social and industrial relations, the legality of the disclosure will be established in principle. Its scope will then need to be defined. On this, two opposite views are presented by the parties.

45. On the one hand, the Anklagemyndighed considers that the more liable to affect share values the inside information disclosed may be, the less often any disclosure of such information will have been made in the normal course of employment of the person concerned.

46. On the other hand, Mr Grøngaard submits that there should be no link between the type of information disclosed and the possibility of disclosing information in the normal course of employment. He nevertheless justifies disclosing the precise schedule of the planned merger by the need to explain why the Finansforbundet would have to make resources available to set up a merger task force. He further argues that he had to disclose information on the expected conversion rate in order to assess whether a competing offer for the company was likely.

47. In this regard, the general economy of the Directive requires a strict interpretation of what may lawfully be transmitted. As recalled above, the concept of inside information is defined in Article 2 of the Directive in a functional manner. What makes information inside information is its ability to have an influence on the quotation of shares. Disclosing inside information therefore necessarily entails the risk that the recipient will be able to predict a change in quotation. Defining whether inside information is more or less likely to have an impact on quotation will, moreover, prove impossible in most cases. It should also be borne in mind that any exception to the prohibition on disclosure set out in Article 3(a) of the Directive automatically reduces its preventive function.

48. Finally, and contrary to what both the Commission and the Danish Government submit, it does not seem necessary to make the legality of a disclosure of information under Article 3(a) of the Directive subject to the existence of a specific duty of confidentiality. In fact, the third indent of Article 2(1) of the Directive already provides for a duty of confidentiality where a person has access to inside information ‘by virtue of the exercise of his employment, profession or duties’.

2. The case of an employee-elected board member consulting the general secretary of a trade union in the latter’s capacity as his ‘background’

49. The question is whether, in addition to consulting the general secretary as an expert, Mr Grøngaard could consult him in his capacity as his ‘background’.

50. Mr Grøngaard argues that, since all board members enjoy equal rights and prerogatives, to prohibit employee-elected board members from disclosing information to their ‘background’ would effectively result in discriminating against them since, under Danish law, board members are allowed to disclose information to shareholders with whom they have specific ties, or who appointed them, without breaching their duty of confidentiality. Mr Bang argues in the same way on this question, based on the guidelines issued by the Finansforbundet which state that an employee-elected board member can always consult the general secretary of the trade union, even if he is bound by a duty of discretion.

51. The Commission considers that, in the case of board members, their behaviour has to be assessed taking into consideration their ‘double loyalty’, on one hand towards the company and on the other towards the persons who appointed or elected them, such as shareholders. However, the Commission expresses doubts as to whether allowing a board member to consult his background could be compatible with the objectives of the Directive.

52. For the Danish Government, the disclosure of inside information by a board member to his ‘background’ (referring either to shareholders or to employees of the company) will fall within the normal course of the exercise of his duties only where (1) it is covered by a mandate by the company, (2) the disclosure of information is objectively justified by the interests of the company, and (3) it meets a need to know on the part of the shareholders/employees in the light of the function of the person providing information.

53. Whilst the assessment as to whether a board member may consult his ‘background’ depends partly on national company law, elements of comparative law are relevant to this controversial question. The possibility of a board member consulting a shareholder as his ‘background’ is excluded under German law.( )In Italian law, some academic legal opinion accepts the idea that a board member may transmit even confidential information if the interests of shareholders risk being affected otherwise( ) Under Dutch law, individual communication from a board member to a shareholder is in principle not allowed. Only if, for example, the success of a public offer could be dependent upon shareholders’ agreement may they be informed of such a transaction before the information becomes public( ). Overall, this quick comparative overview shows that consultation of their background by board members is contemplated only in a few legal systems, and it is lawful only if strict conditions are met.

54. Another point might be relevant in this regard. In my view, the possibility to consult their respective background could be different as between, on the one hand, board members elected by the general assembly and, on the other, employees. Rather than strictly constituting consultation of a ‘background’, contacts between an employee-elected board member and a trade union general secretary might inherently belong to the role of a workers’ representative, as was suggested by the Swedish Government in its oral observations before the Court. That will have to be assessed in light of the specific national rules that define the participation of workers’ representatives on the company board.

55. In its interpretation of Danish law, the national court will, however, have to take Community law into account in the three following respects. First of all, the national court will have to interpret national legal provisions in light of the risk that confidence in capital markets might be undermined, contrary to the aim of the Directive. Secondly, it should be recalled that, for the reasons mentioned above, any exception to the prohibition on the disclosure of inside information should be construed narrowly. Thirdly, workers’ rights to be informed and consulted, as protected by Community law, will also have to be taken into account.

56. Social rights relating to the consultation and information of workers are enshrined, in particular, in Articles 17 and 18 of the 1989 Charter on Fundamental Social Rights of Workers, in Article 27 of the Charter on Fundamental Rights, and in Article 136 EC, which provides that ‘the Community and the Member States … shall have as their objectives the promotion of … dialogue between management and labour’. They also belong to the Community legal order as general principles of law resulting from the constitutional traditions common to the Member States( ). Such rights have also been developed by secondary legislation such as Directive 94/45/EC( ).The purpose of that directive, as interpreted by the case-law, is ‘to ensure that the employees of Community-scale undertakings are properly informed and consulted when decisions which affect them are taken in a Member State other than that in which they are employed’( ). Recent measures, which had not been adopted at the time of the facts at issue, add to the right of workers to be informed and consulted on events likely to have an impact on their situation( ). Those measures all organise the circulation of information within a company towards an increase of the access to information granted to workers’ representatives, through workers’ committee or employee-elected board members, as found in Danish companies. Social rights in relation to trade unions could also be of some relevance, even if it is undisputed that the rights to create and to join trade unions, which are protected by Community law( ), do not directly imply a right to transmit inside information from a company to a trade union. All this should be taken into account in interpreting the national provisions that regulate the consultation by a board member of his or her background (notably, in determining whether employees are to be included in the concept of ‘background’ when the right to consult the ‘background’ is granted by national legislation).

57. Finally, even if the national court were to find that, under Danish law, all board members had the right to consult their ‘background’, it would remain doubtful whether the general secretary of a trade union could be considered as the ‘background’ of an employee-elected board member, since the latter represents all employees in a company and not only those who are members of the trade union( ).

C – Disclosure of inside information by a member of an undertaking’s corporate liaison committee to the general secretary of the trade union which appointed him

58. In order to answer this issue, it should be borne in mind that, in this instance, Mr Gr?ngaard is acting in his capacity as a member of the liaison committee and not as a board member as in the first question. The application of Article 3(a) of the Directive will thus have to be assessed in another set of circumstances. In this instance, insider information was transmitted by the member of a liaison committee to the general secretary of the trade union which appointed him.

59. Liaison committees are a specific feature of Danish law. At the hearing, in answer to a question put by the Court on 4 February 2004, it was specified that the liaison committee in this case was created by an agreement concluded between RealDanmark and the Finansforbundet. The liaison committee is composed of representatives of RealDanmark’s management and of the trade union in equal numbers. The Danish Government and Mr Grøngaard support divergent interpretations as to the possibility of the liaison committee taking binding decisions. Overall, it appears that setting up a liaison committee enables the channelling of information between a company and a trade union.

60. Mr Grøngaard considers that, in his capacity as a representative of the Finansforbundet within the corporate liaison committee, he was entitled to disclose inside information to the general secretary of that trade union.

61. The Commission acknowledges the possibility of a liaison committee member consulting an expert, as long as the expert is bound by a duty of confidentiality. While expressing doubts as to the possibility of allowing disclosure to the ‘background’, the Commission accepts that a member of a liaison committee representing a trade union could treat that trade union as his ‘background’. It also argues that any disclosure to the ‘background’ should be subject to the condition that the informed person is bound by a duty of confidentiality.

62. The Danish Government suggests that identical conditions should be applied in assessing the legality of information disclosure by an employee-elected board member and by a member of a corporate liaison committee.

63. If the link between the trade union and the liaison committee is sufficiently strong to establish that transmitting information to the liaison committee is equivalent to disclosing it to the trade union, then the disclosure of information can be considered lawful for the purpose of Article 3(a) of the Directive.

64. More generally, and following the same framework analysis as adopted for the previous question, the national court will have to determine whether Mr Grøngaard, acting as a member of the liaison committee, could, in the normal course of his employment, disclose inside information to the general secretary of the trade union he was representing. Consideration will have to be given to the nature of his role at the liaison committee in order to establish whether it implied transmitting information to the general secretary of a trade union.

65. As regards the scope of the disclosure, the decision to refer questions for a preliminary ruling does not specify in how much detail the planned merger was discussed in the liaison committee. It will be for the national court to determine which information was lawfully passed because it was discussed at the liaison committee meeting, putting the emphasis on the preventive function of Article 3(a) of the Directive.

D – Disclosure of inside information by the general secretary of a trade union to members of that trade union

66. This last question concerns the dissemination of information within a trade union. While it does not seem relevant to consider how the information was obtained, the legality of the disclosure will have to be assessed. It should be noted that similar issues will arise, for example, within any financial institution giving advice to a company. Whereas the Directive does not prescribe anything on this point, it is relevant to note that several capital markets’ (regulatory) authorities have introduced guidelines imposing controls and limitations on such dissemination of inside information within an entity.( )

67. Mr Bang maintains that he was acting within the limits of his function as the general secretary of a trade union when he passed on information received from Mr Grøngaard to selected members of that trade union. He submits that, without transmitting such information, he would not have been able to perform his duties. He further relies on an opinion of the Danish Ministry of Justice of 23 November 2001 which stated that the transmission of information belonged to the normal course of the exercise of his duties. Although the Danish Ministry of Justice also required that the transmission of information be appropriate and necessary, and therefore concluded that, in the present case, it was not lawful, Mr Bang discards those criteria and believes that the disclosure was legal.

68. The position of the Danish Government seems to have evolved between its written and its oral observations. It initially took the view that, since Mr Grøngaard illegally transmitted inside information to Mr Bang, the latter could not legally disclose it to any third person. If the first communication had been lawful, it could have been argued that the general secretary of a trade union could, in the normal course of his duties, transmit information to his closest colleagues in order to protect the interests of trade union members. At the hearing, the government gave up this distinction and argued that disclosure could be deemed legal only if it was made in the interests of the company from which the information originated.

69. The Commission suggests answering that the general secretary of a trade union cannot in principle disclose inside information, unless such transmission occurs within his function as adviser of a primary insider and the persons receiving the information are bound by a duty of confidentiality. Whether the general secretary obtains the information from an employee-elected board member of from a member of the liaison committee is, the Commission submits, irrelevant.

70. In my opinion, the origin of the information, i.e. whether it was obtained from Mr Grøngaard acting as an employee-elected board member or in his capacity as a member of the liaison committee, is irrelevant. In either case, Mr Bang was bound by the prohibition on communication contained in Paragraph 36(1) of the Værdipapirhandelslov. The question to be resolved is therefore only whether Mr Bang could disclose inside information ‘in the normal course of the exercise of … his duties’ as the general secretary of a trade union. Bearing in mind the profession of the person transmitting the information, disclosure will be lawful only if it occurred in order to perform specific duties. The scope of the transmission will have to be considered separately.

71. As the general secretary of a trade union, Mr Bang had to protect the interests of workers, which was a task he could not perform on his own.( ) Mr Bang could therefore disclose inside information to colleagues, but only subject to limitations as to the type of information which could legally be disclosed and on the addressees of the transmission. On both accounts, the national court should balance the need to react against potential lay-offs caused by the planned merger against the risk that equality between investors could be breached on the secondary market. It thus seems clear that Mr Bang could disclose some information to some of his colleagues in compliance with Article 3(a) of the Directive.

72. But a general right to inform members of the trade union cannot be read out of Article 3(a) of the Directive. As regards the recipients of inside information, Mr Bang has informed his two deputies, the senior administrative manager of the union’s secretariat and colleagues within the union’s secretariat. As there is no evidence explaining how Mr Bang decided to whom he would disclose information within the trade union, and for which purpose each disclosure was made, it cannot be decided whether Mr Bang could, within the normal course of the exercise of his duties as a trade union general secretary, disclose information to those persons. The national court will have to assess in each individual case whether the recipient of the information needed such information in order to perform his tasks within the trade union.

73. As regards the scope of the disclosure, its precise boundaries will have to be limited to what was necessary in order to achieve the objective sought by the disclosure, which in the present case was to protect the interests of RealDanmark workers( ). (28)

III – Conclusion

74. Accordingly, the questions referred by the national court should, in my opinion, be answered as follows:

1) Article 3(a) of Council Directive 89/592/EEC of 13 november 1989 coordinating regulations on insider dealing should be interpreted as meaning that an employee-elected board member may disclose inside information to the general secretary of a trade union only if, in the light of the relevant national rules defining the function of board members, that disclosure can be regarded as necessary for the exercise of his or her functions, having regard to the expertise that could be provided by the general secretary of the trade union in relation to the subject-matter of the disclosure or to a possible right of such a board member under national law to consult his ‘background’.

2) Article 3(a) of Directive 89/592 should be interpreted as meaning that an employee-elected board member, when consulting an expert and in so far as such consultation is made within the performance of his duties, cannot disclose inside information to that expert unless and only to the extent that such disclosure is necessary for the expert to be able to give qualified advice.

3) Article 3(a) of Directive 89/592 should be interpreted as meaning that a member of an undertaking’s corporate liaison committee cannot disclose inside information to the general secretary of a trade union which appointed him to that committee unless the links between the liaison committee and the trade union are such that informing the liaison committee is equivalent to informing the trade union.

4) Article 3(a) of Directive 89/592 should be interpreted as ´meaning that the general secretary of a trade union, however he obtained access to inside information, cannot disclose such information to members of his trade union unless such disclosure is necessary for him to be able to perform his duties, limited to the information necessary for trade union members to be able to perform their trade union tasks, and restricted to the members whose assistance is necessary for him to perform his duties.