Transparency Directive

The Transparency Directive of 2004 The process, which resulted in the 2004 version of the EU Transparency Directive, passed several years, consultations and revisions. The first step towards the EU Transparency Directive of 2004 took place in July 2001 when the commission of the European Union announced the first consultation regarding the transparency on publicly traded companies. This first consultation period lasted from 17 July 2001 until 30 September 2001. During that time interested parties were able to contribute comments on the proposals, which the commission drafted in its own consultation paper, regarding the new regime on disclosure requirements. Interested parties could be the issuers themselves, national agencies and associations, state authorities and European authorities, such as CESR. The consultation paper of the commission suggested a division of disclosure duties, in periodic and ongoing obligations, for example for financial reports (periodical) and ad hoc notifications (ongoing), and a focus on the publications of those information through a medium on a Europe-wide basis • Issuers are no longer obliged to publish interim reports (unless a Member State chooses to still impose it as an obligation) • Issuers who have activities in the extractive or logging of primary forest industries should disclose in a separate report, on an annual basis, payments made to governments in the countries in which they operate • Notification of major holdings of voting rights should include cash-settlement financial instruments with similar economic effect to holding shares and entitlements to acquire shares • Issuers should prepare their annual financial reports in the European single electronic reporting format (ESEF) (from 1 January 2020 on) • ESMA should develop and operate a web portal serving as a European electronic access point (EEAP) for regulated information ==Regulations==

The Directive specifies a range of regulations which have to be transformed into national law by the Member State, whereas the Directive only sets minimum standards. Member State have the possibility to set up stricter rules. Scope This Directive is directed to issuers whose securities are admitted to trading on a regulated market situated or operating within a Member State and regulates requirements regarding the disclosure of periodic and ongoing information. Definitions The Directive defines several terms, which are used in the new regulations, either by referring to other Directives or by its own definition. Periodic information Annual financial reports The issuer has to publish its annual financial report not later than four months after the end of the fiscal year and has to ensure that this report is accessible for at least five years. The annual financial report has to include the audited financial statements, a management report and a statement by officials that the financial statements were set up in compliance with the applicable accounting standards. In addition to the annual financial report the audit report should be published, as well. Half-yearly financial reports The issuer has to publish a financial report covering the first half of the fiscal year after the end of this relevant period. This report has to include the financial statements for the first half of the fiscal year, an interim management report (including major events in the first half-year, a forecast for the next half-year and their possible impacts and further financial statements) and a statement by officials that the financial statements were set up in compliance with the applicable accounting standards. In case this half-yearly report gets audited, the audit report has to be published as well. of the total amount of voting rights issued. This notification requirement can also be based on the following cases: • Acting in concert with other shareholders • Voting rights are held by a third party and will be transferred temporarily to a different shareholder • Shares are lodged as collateral • Life interest • Voting rights being held by a controlled undertaking • Voting rights be deposited with a third person (whereas the third person is allowed to exercise the voting rights on its own discretion) • Holding voting rights in behalf of the legal owner • Exercising voting rights as proxy This notification has to include the amount of voting rights held after acquisition/disposal, the day on which the event took place, the chain of controlled undertakings or the name of the (directly invested) shareholder from which the notifying party gets attributed the voting rights. Furthermore, a notification is required when a natural person or legal entity holds financial instruments, which result in the entitlement to acquire voting rights, whereas the acquisition is based on the holder's initiative. These regulations should not apply for shareholders, holding the shares as market makers, for clearing and settlement purposes and credit institutions, holding the shares in their trading book, and holding less than 10% of the total amount of voting rights issued. Information requirements for issuers Issuers are obliged to treat those shareholders equally, which are in the same position. Furthermore issuers have to make all available all kinds of information that are necessary for the shareholders to ensure the exercise of their rights. person to exercise their voting and/or financial rights, either in paper or electronic form. After the annual general meeting the issuer has to publish decisions made at the annual general meeting, if applicable, which are: payment of dividends and issue of new shares, including allotment-, subscription-, cancellation- and conversion rights of the new shares. General obligations As long as shareholders or issuers have to provide information to each other, e.g. disclose the holding of voting rights, this information has to be filed with the state authority at the same time as well. The same applies for issuers, who propose the annual meeting to change their articles of incorporation. Competent authorities and their power Each Member State of the European Union has to designate a state authority, which should be responsible for carrying out the obligations regarding shareholders and issuers. Therefore, the Member States have to empower the authorities to achieve the aims of the Directive. Especially the authorities should be able to require involved parties to provide them with information and documents regarding each single case or require the issuers and shareholder to disclose such information, which is necessary to fulfill their requirements. Additionally the authorities shall be empowered to carry out on-site inspection, to verify compliance with the statutory requirements. ==References==