Corporate Disclosure

The European Securities and Markets Authority (ESMA) has issued today a call for candidates in order to renew the composition of its Consultative Working Group (CWG) which advises ESMA’s Corporate Reporting Standing Committee (CRSC).

The CRSC undertakes ESMA’s work on issues related to accounting (under International Financial Reporting Standards – IFRS), audit, periodic financial reporting, electronic reporting developments and storage of regulated information. The CRSC contributes to and monitors regulatory developments, and establishes appropriate supervisory convergence in these areas, primarily in reference to requirements under the Transparency Directive, Accounting Directive, IAS Regulation and Audit Regulation.

ESMA has established the CWG to benefit from the expertise of stakeholders who are involved in these topics. The purpose of the CWG is to provide technical assistance to ESMA in relation to the CRSC’s work, CWG members are selected for a renewable term of two years.

Interested experts are asked to send their application to ESMA, using this form, along with their CV and letter of motivation, by 8 Februray 2019.

The current members of the CRSC CWG are listed on ESMA’s website here.

Information on shareholder cooperation and acting in concert under the Takeover Bids Directive

The European Securities and Markets Authority (ESMA) has published an update to its statement on practices governed by the Takeover Bid Directive (TBD), focused on shareholder cooperation issues relating to acting in concert and the appointment of board members. The update concerns a change to the Croatian creep-in threshold and secondary threshold in Appendix B. The statement contains a White List of activities that shareholders can cooperate on without the presumption of acting in concert.

The European Securities and Markets Authority (ESMA) today publishes the priorities that the European enforcers will particularly consider when examining 2018 financial statements of listed companies. These priorities are set out in the annual Public Statement on European Common Enforcement Priorities (Statement), which promotes the consistent application of the International Financial Reporting Standards (IFRS) and other financial and non-financial reporting requirements. 

The 2018 enforcement priorities for IFRS financial statements, reflecting the relevance and magnitude of the change introduced by new reporting standards, and taking into account issues identified by NCAs through their enforcement activities, are:

·         the application of IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments, for the first-time in the 2018 IFRS financial statements; and

·         disclosure on the implementation and expected impact of IFRS 16 Leases coming into force  in 2019.

In addition, the statement highlights the requirements to disclose non-financial information, with a focus on environmental matters, and specific aspects of ESMA’s Guidelines on Alternative Performance Measures.

Steven Maijoor, Chair, said:

“This year’s enforcement priorities focus on the new standards that are applied for the first time in annual financial statements: IFRS 15 and IFRS 9. These standards have introduced significant changes for the financial statements of many issuers, and ESMA expects them to provide sufficient level of transparency on the application of the new standards. In particular, issuers should focus on the application and recognised impact of the new accounting models for revenue recognition and for impairment of financial assets.

“Non-financial reporting, most notably on environmental matters, is gaining momentum in Europe, as part of a broader EU initiative to achieve a more sustainable financial system. To serve this purpose investors and the public need high-quality disclosures.”

2018 Enforcement Priorities

The enforcement priorities for IFRS financial statements in 2018 are:

·         Specific issues relating to the application of IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments: Issuers should in particular focus on identification and satisfaction of performance obligations, disaggregation of revenue and the disclosure of significant judgements related to recognition of revenue.  For credit institutions, ESMA highlights the application of the new expected credit loss model (ECL) and, in particular, careful consideration and disclosure of significant inputs used in the assessment of a significant increase of credit risk and in the determination of ECL;

·         Disclosure of the expected impact of the implementation of IFRS 16 Leases: The publication of financial statements will happen after the entry into effect of IFRS 16 and all issuers should be in a position to disclose the expected impact. Issuers that will be significantly impacted are also encouraged to consider what information would enable analysts and other users to update their models.

In addition to these common enforcement priorities, ESMA highlights specific requirements relating to the sections of the annual financial report other than the financial statements (such as management reports and non-financial statements). These include specific requirements on:

·         the disclosures of non-financial information, and notably those related to environmental and climate change-related matters; and

·         the application of the ESMA Guidelines on Alternative Performance Measures (APMs).

Finally, ESMA highlights the importance of disclosures analysing the possible impacts of the decision of the United Kingdom to leave the European Union.

Next steps

ESMA and European national enforcers will monitor and supervise the application of the IFRS requirements as well as any other relevant provisions outlined in the Statement, with national authorities incorporating them into their reviews and taking corrective actions where appropriate. ESMA will collect data on how European listed entities have applied the priorities and ESMA will report on findings regarding these priorities in its Report on the 2019 enforcement activities.