Overview

Transparency of publicly traded companies’ activities is essential for the proper functioning of capital markets. Investors need reliable and timely information about the business performance and assets of the companies they invest in.

The EU has special reporting rules for issuers with securities admitted to trading on regulated markets.

Transparency Directive

The Transparency Directive (2004/109/EC) requires issuers of securities traded on regulated markets within the EU to make their activities transparent, by regularly publishing certain information.

The information to be published includes

• yearly and half-yearly financial reports
• major changes in the holding of voting rights
• ad hoc inside information which could affect the price of securities

This information must be released in a manner that benefits all investors equally across Europe.

The Transparency Directive was amended in 2013 by Directive 2013/50/EU to

• reduce the administrative burden on smaller issuers, particularly by abolishing the requirement to publish quarterly financial reports
• make the transparency system more efficient, in particular as regards the publication of information on voting rights held through derivatives

European single access point (ESAP)

The Transparency Directive requires each EU country to create a storage mechanism (Officially Appointed Mechanism, OAM) to ensure the public can access the information disclosed by listed companies. On 25 November 2021, the Commission adopted a proposal for a European Single Access Point (ESAP), as set out in action 1 of the 2020 capital markets union action plan.

The proposal for an ESAP will expand the scope of information currently collected by the OAMs beyond the information required by the Transparency Directive. Information published by organisations acting in the financial sector will also be collected, when that information is relevant for use in financial services, capital markets and sustainable finance. It will build on several characteristics and functionalities, such as

• the scope of information
• formats
• the collection of information
• digital use and re-use
• the governance

The European single electronic format (ESEF)

The ESEF regulation introduced a single electronic reporting format for the annual financial reports of issuers with securities listed on EU regulated markets. It sets out general rules on the format of the annual financial reports as defined in Article 4(2) of the Transparency Directive, and more specific rules on the marking-up of the financial statements included therein. It does not apply to the half-yearly financial reports as defined in Article 5 of the Transparency Directive.

The regulation stipulates that all issuers must draw up and disclose their annual financial reports using the eXtensible HyperText Markup Language (XHTML) format. In addition, issuers that draw up their consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) have to mark up those consolidated financial statements using inline eXtensible Business Reporting Language (iXBRL) and block-tag the notes to the financial statements. The ESEF regulation contains the relevant taxonomy to be used. It is based on the IFRS taxonomy published by the IFRS Foundation.

The combination of the XHTML format with the iXBRL markups makes the annual financial reports readable both by machines and humans. This improves accessibility, analysis and comparability of the information included in the annual financial reports.

Useful links on ESEF

• Frequently asked questions on the ESAP proposal
• Staff working document accompanying the report on the review clauses in Directives 2013/34/EU, 2014/95/EU, and 2013/50/EU – fitness check
• One-year ESEF postponement
• Commission interpretative Communication on the preparation, audit and publication of the financial statements included in the annual financial reports drawn-up in accordance with Commission Delegated Regulation (EU) 2019/815 on the European single electronic format (ESEF)
• Memo: Frequently asked questions on the European single electronic format (ESEF)