EU Transparency Directive | Overview and Summary of Requirements

  • By: Staff Editor
  • Date: October 21, 2011
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The EU had initially implemented a legislation titled Consolidated Admissions and Reporting Directive or CARD. The Commission made changes to CARD and issued the Transparency Directive or TD which came into effect on January 20, 2005.

The Transparency Directive was implemented with the aim of establishing minimum requirements on “periodic financial reporting and on the disclosure of major shareholdings for issuers whose securities are admitted to trading on a regulated market in the EU.”
The TD not only establishes these requirements but also deals with the mechanisms through which this information is to be stored and disseminated.
The TD covers the following areas:
  1. The minimum content of annual, half-yearly and interim management statements;
  2. The notification requirements of both issuers and investors in relation to the acquisition and disposal of the major holdings in companies;
  3. The method of disseminating and storing the information covered in 1 & 2 on a pan-European basis
The Transparency Directive applies to all issuers whose securities have been admitted to trading on regulated markets situated or operated within the EU. These issuers, will, under the directive, have to disclose periodic and ongoing information for investors on a Pan-European basis.
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Member states’ requirements
  • Home member states can implement additional transparency requirements apart from those established by the TD.
  • But Host member states cannot impose “more severe requirements on issuers admitted to trading on a regulated market within the host Member State's territory, or on investors in relation to their major shareholding disclosure notification requirements.”
Overview of requirements
Disclosure of financial information
Under the TD, issuers, who have securities admitted to trading on a regulated market situated or operated within the EU, will be required to disclose annual and half-yearly financial reports, and in the case of issuers of shares, interim financial statements.
The TD also gives minimum requirements for the following:
Annual Accounts
  • All issuers have to produce their accounts in accordance with the International Accounting Standards or IAS
  • Annual accounts must be made public four months after the end of the financial year at the very least
  • The annual report from issuers must include:
    • Audited financial statements – Prepared in accordance with IFRA (both EU and non-EU)
    • A management report
    • Statements by responsible persons
Semi Annual Accounts
According to the TD, the management report must include an explanation of material events and transactions that occurred during the first six months of the financial year, and the impact of these events on the financial position of the issuer and its controlled undertakings.
Interim Management Statements
Share issuers who do not report quarterly have to release interim management statements.
Disclosure of major shareholders’ information
  • When shareholders’ holdings reach, exceed or move below certain thresholds stated in the TD (5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%), the shareholder notification requirement is triggered.
  • When this happens, the shareholder will be required to inform the issuer who will then inform the market.
  • Parent undertakings are required to combine their holdings with those of their controlled undertakings for notification purposes.
Dissemination and storage of regulated information
According to TD requirements,
  • Issuers will be required to disseminate regulated information in a fast, non discriminatory manner on a pan-European basis.
  • All regulated information will need to be stored and be easily accessible.
Additional Resources
Read the Transparency Directive in full


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