FAQs

The Transparency Directive (TD) is a directive on the harmonisation of transparency requirements for information about issuers whose securities are admitted to trading on a regulated market.

The TD replaces and updates the existing EU legislation on the admission of securities to official stock exchange listing and on information to be published on those securities (CARD).

The TD establishes 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 also deals with how this information should be stored and disseminated.

Regulated information is a defined term in the TD. It includes all information that the issuer - or any other person who has applied for the admission of securities to trading on a regulated market without the issuer's consent - is required to disclose under the TD. It involves financial information, major shareholding disclosures etc. And it covers inside information - under Article 6 of the Market Abuse Directive or under laws, regulations or administrative provisions of a Member State adopted under Article 3 of the TD. This allows a home Member State to impose more stringent requirements on issuers than those set out in the TD.

The TD prescribes the minimum content of annual, semi-annual and interim management reports:

• Annual Accounts - the TD requires all issuers to produce their annual accounts in accordance with IAS. These must be made public – at the latest – four months after the end of the financial year. The annual report must include audited financial statements, a management report and statements by responsible persons (see below). The financial statements of both EU and non-EU issuers will have to be prepared in accordance with IFRS (or an equivalent standard). The TD requires the management report to include an explanation of material events and transactions that occurred in the relevant period. It must also describe the impact of these events on the issuer's and its controlled undertakings', financial position (this information is already required in EU issuers' management reports).
• Semi-annual accounts – 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 (this information is already required in the management reports of EU issuers).
• Interim management statements – these will be required from share issuers that do not report quarterly. This is another new requirement: share issuers will be required to produce two statements during their financial year, to cover the period between the beginning of the relevant six-month period and the date the statement is published.

The TD requires issuers' annual and half-yearly financial reports to include consolidated financial statements. These will have to be prepared in accordance with IFRS, unless they are prepared in accordance with GAAP that are determined to be equivalent to IFRS.

When a shareholder acquires or disposes of shares that have voting rights attached, they will be required by the TD to notify the issuer if it results in the thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75% - whether these are reached or exceeded or if they fall below. The TD also establishes what the content of this should be.

Parent undertakings are required to combine their holdings with those of their controlled undertakings for notification purposes.

Issuers must ensure equal treatment for all holders of shares that are in the same position.

Issuers must ensure that all facilities and information needed to enable shareholders to exercise their rights are available and that shareholders are not prevented from exercising their rights by proxy. The issuer shall:

• provide information on the place, time and agenda of meetings;
• make available a proxy form on paper or electronically, together with the notice of the meeting or on request after the meeting is announced;
• designate a financial institution that shareholders may exercise their financial rights through; and
• publish notices or distribute circulars concerning the allocation and payment of dividends and the issue of new shares.

If securities are admitted to trading on a regulated market only in one Member State, regulated information must be disclosed in a language accepted by the competent authority in that Member State.

If securities are admitted to trading on a regulated market in an issuer's home Member State and one or more host Member States, the issuer must disclose regulated information in a language accepted by the competent authority in the home Member State. And, the issuer can opt to disclose information in a language accepted by the competent authorities of the host Member States or in a “language customary in the sphere of international finance”.

If an issuer has securities admitted to trading on a regulated market in one or more host Member States, but not in the home Member State, the issuer has a choice of disclosing the regulated information in either a language accepted by the competent authorities of those host Member States, or it can do this in a "language customary in the sphere of international finance".

The TD seeks to create a mechanism for giving out regulated information throughout Member States that means investors and the market have fast access on a non-discriminatory basis throughout the EU. CESR has been charged with establishing how this will be done. However, issuers will be required to use media that can be reasonably relied on for effective dissemination to the public throughout the EU. In addition, the home Member State cannot impose an obligation on issuers to use media operators in its own jurisdiction.

• EU Issuers - the home Member State of issuers of shares or low-denomination debt securities (as defined in the TD) with less than EUR 1000 admitted to trading on a regulated market will be the Member State its registered office is in. If the issuer only has high-denomination debt securities (more than EUR 1000) it can choose its home Member State from the Member State its registered office is in or one of the Member States where it has securities admitted to trading on a regulated market.
• Non-EU Issuers - the home Member State of issuers of shares or low-denomination debt securities will be its home Member State, as designated in the Prospectus Directive. If the issuer only has high-denomination debt securities, it can choose its home Member State from one of the Member States where it has securities admitted to trading on a regulated market.