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Transparency Directive

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).

ESMA actions in the area of the TD are intended to foster common procedures and consistent application throughout the European Union by building a common supervisory culture among competent authorities.

Financial reporting

The TD requires issuers of securities traded on regulated markets within the EU to ensure appropriate transparency through a regular flow of information to the markets. The TD sets specific requirements in relation to annual and half yearly financial reports. Additional requirements might be required at a national level.

Since 2012, ESMA defines on a yearly basis European common enforcement priorities (ECEP) in order to promote the consistent application of the European securities and markets legislation and International Financial Reporting Standards (IFRS), and especially the provisions of the Transparency Directive. Those priorities are a key focus of the examination of issuers’ financial statements. They are made public so that listed companies and their auditors take due account of these areas when preparing and auditing IFRS financial statements.

In terms of Regulatory Technical Standards (RTS), ESMA prepared draft RTS with respect to the operation of a European Electronic Access Point (EEAP) at the EU level. The EEAP will be a web-portal for the provision of easy and fast access to regulated information stored by all Officially Appointed Mechanisms (OAM).

ESMA has also developed draft RTS to specify the European Single Electronic Reporting Format (ESEF) for the preparation of annual financial reports in a single electronic reporting format that will take effect from 1 January 2020.

Major shareholdings

At the end of 2014 ESMA submitted to the EC four RTS on major shareholdings which covered specific issues with regard to use of specific calculation methods of thresholds as well as application of existing exemptions from notification requirements.

ESMA also elaborated on an indicative list of financial instruments that are subject to notification requirements according to the TD.

ESMA Final Report was submitted to the European Commission and the RTS were published in the Official Journal of the European Union (Commission Delegated Regulation (EU) 2015/761 of 17 December 2014).

In order to contribute to the consistent application of the TD, ESMA has published a standard form for shareholders to notify major holdings of voting rights to competent authorities and issuers as required under the TD. The use of this standard form is not mandated by the TD. However, its use is recommended by securities regulators as it will provide investors with comparable information on major holdings and simplify the process for persons subject to the notification obligation.

ESMA also works to achieve supervisory convergence in this area by making use of other tools such as Q&As

The Q&As are aimed at National Competent Authorities (NCAs) to ensure that in their supervisory activities they converge along the lines of the responses adopted in the Q&As. This includes activities in the areas of periodic information, major shareholding notifications, and dissemination of regulated information. They are also intended to help issuers and market participants by providing clarity as to the content of the TD requirements.

Alternative Performance Measures

In 2015, ESMA published the Final Guidelines on Alternative Performance Measures (APMs) for listed issuers. Their aim is to encourage European issuers to publish transparent, unbiased, and comparable information on their financial performance in order to provide users a more comprehensive understanding of their performance. The guidelines set out the principles that issuers should follow when presenting APMs in documents that qualify as regulated information.

These guidelines apply to APMs disclosed by issuers or persons responsible for the prospectus when publishing regulated information or prospectuses on or after 3rd July 2016. They apply to all competent authorities under  the Market Abuse Regulation or the Prospectus Directive .