Boost to investors" right to information European companies may face pressure to disclose inside information to financial markets at an earlier stage following a ruling by the EU's highest court involving Daimler's former chief executive. The European Court of Justice ruled that in protracted matters it may not always be appropriate for listed companies to wait for a formal board decision before informing shareholders. The ruling could thus pave the way for more transparency but could complicate the ability of companies to manage market sensitive news such as the departure of key personnel. The share price of Daimler, the German car and truckmaker, rose by almost 9 per cent in July 2005 after its board agreed that Jürgen Schrempp, chief executive, would step down at the end of that year, to be replaced by Dieter Zetsche. Mr Schrempp had first discussed his intention to leave more than two months earlier with the chairman of the supervisory board, and subsequently with other members of the board. A disgruntled shareholder filed a suit in Germany, claiming to have suffered loss after he sold shares before Daimler's announcement. Germany's Federal Court of Justice sought clarification on points of law from the ECJ. EU law requires listed companies to disclose inside information as soon as possible when this is of a "precise nature," has not been made public and could move the market. The EU's top court said that in the case of a drawn-out corporate process intended to bring about a particular circumstance or event, "a step preceding a decision by a listed corporation may constitute inside information which must be disclosed to the financial markets." It said any other interpretation meant "certain parties who possessed inside information could be in an advantageous position vis a vis other investors and be able to profit from that information." The case will now return to Germany's federal court, where the eventual ruling will be closely watched by German companies who have tightened up corporate governance standards in recent years following a spate of high-profile scandals. Thomas Heidel, a lawyer with Meilicke Hoffmann & Partner, said the ruling did not mean companies will be obliged to inform the market immediately about all sensitive information or unhatched plans. In Germany companies are, for example, permitted to contact the regulator and explain why certain information cannot yet be disclosed. Still, Mr Heidel said the ruling "must lead to companies informing the market about certain matters earlier and so an important effect could be increased transparency for investors." Klaus Nieding, vice president of the DSW shareholder protection association, said that in theory the ruling should lead to more transparency. However, he said there was also a risk it might have the opposite effect of sowing uncertainty and confusion. "One can't easily say when something changes from being a rumour to becoming a fact," he explained. Investors would not benefit if a company rushed to disclose news of a CEO's intended departure if that person then subsquently chose to stay. A Daimler spokesman said it remained to be seen how the German court would decide on the basis of the ECJ verdict. The spokesman added that the company was pleased that in one respect "the ECJ seems to have partially upheld our legal opinion." The court said the magnitude of a possible future share price movement was immaterial as to whether insider information already existed. The case is Markus Gettl v Daimler AG.