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EU transparency directive simplifies corporate reporting

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20th Nov 2013
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The European Parliament has passed a new European Transparency Directive 2013/50/EU affecting listed companies.

The directive, which was recently published in the Official Journal of the European Union (OJEU) on 6 November, will remove the requirement for listed companies to publish interim statements on a quarterly basis.

But it will be up to individual member states to introduce the local laws and administrative measures to comply with the new directive within the next two years. In the UK, for example, adjustments will be needed to FCA disclosure and transparency rules before that can happen. The government has asked the FCA to carry out a cost benefit analysis and consultation process on the changes, Out-law.co.uk reported.

The redrafted directed is designed to make it easier for small and  medium-sized issuers to get access to capital by reducing the administrative burdens around seeking a listing on a regulated exchange within the union. The obligation to publish interim management  statements or quarterly financial reports was identified as a key burden.

The current obligation for companies listed on UK exchanges is to publish annual and half-yearly accounts, with two interim management statements three months and nine months into their financial year. Interim statements should be published within two months of the period end, but do not have to contain detailed financial information. They are more about indicating how the company expects to perform over the short-term.

The directive will extends the deadline for publishing half-yearly financial reports to three months after the end of the reporting period rather than two.

The directive also sets out a harmonised regime for notifying the aggregation of major holdings of shares with financial instruments. It’s somewhat difficult to decipher how the directive will achieve its aim of providing more visibility for organisations building up stealth holdings, as the wording leaves leeway for members states Member States to carry on with more stringent requiremtns to aound voting rights, takeovers and other transactions affecting company ownership.

Companies in the UK that have made the transition to filing their financial statements online (including submissions to HMRC to accompany corporation tax returns), may be advised to monitor the directive’s plan to improve access to information on companies on regulated exchanges via a European electronic access point that should be up and running by 1 January 2018.

The company reporting portal will be developed an maintained by the European Securities and Market Authority (ESMA) and the directive says that a mandatory single electronic reporting format will come into effect from 1 January 2020, subject to a cost-benefit analysis by ESMA.

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