ESMA's work in the area of corporate disclosure aims at providing investors with adequate information on the companies they invest in, thereby ensuring better investor protection. It covers a number of fields: International Accounting Standards, Prospectus, Transparency, Audit, Takeover Bids and Corporate Governance related to listed companies.
This work is carried out by the Corporate Finance Standing Committee (CFSC) and the Corporate Reporting Standing Committee (CRSC), which are supported by several permanent working groups and a number of temporary task forces.
The objective of the International Accounting Standards (IAS) Regulation is the harmonisation of the financial information presented by issuers of securities in the European Union (EU) in order to ensure a high degree of transparency and comparability of financial statements. This will ensure an efficient functioning of the European capital market and of the internal market.
The EU prospectus regime harmonises requirements for the drafting, approval and distribution of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market in an EU Member State. The regime is designed to reinforce investor protection by ensuring that all prospectuses, wherever issued in the EU, provide clear and comprehensive information. At the same time, it is designed to make it easier for companies to raise capital throughout the EU on the basis of approval from a single competent authority.
The Transparency Directive (TD) issued in 2004 and revised in 2013 aims to ensure transparency of information for investors through a regular flow of disclosure of periodic and on-going regulated information and the dissemination of such information to the public. Regulated information consists of financial reports, information on major holdings of voting rights and information disclosed pursuant to the Market Abuse Directive (2003/6/EC).
Corporate Governance for listed companies
ESMA identifies and addresses developments in the area of listed companies’ corporate governance, including those proposed by the European Commission, and undertakes further actions in accordance with ESMA’s responsibilities.
The Audit Directive (2014/56/EU) applicable from mid-2016 introduced stricter requirements on the statutory audits of public-interest entities, such as listed companies, credit institutions, and insurance undertakings. This reduces risks of excessive familiarity between statutory auditors and their clients, encourage professional skepticism, and limit conflicts of interest.
Takeover Bids Directive
The Takeover Bids Directive (TOD) aims to ensure equal treatment in Europe for all companies launching takeover bids or that are subject to a change in control. It also ensures protection and fair treatment of investors in companies that are subject to such situations and have at least some of their securities admitted to trading on a regulated market in a Member State.