Featured Product

    EC Note on Application of EU Law for European Single Electronic Format

    November 06, 2020

    EC adopted an explanatory note on the way the European Single Electronic Format (ESEF) will work for listed companies in EU. Following requests from stakeholders, the note clarifies how to apply certain provisions of the EU law in the context of ESEF, including the audit of ESEF-compliant annual financial statements, the use of an electronic signature, and the responsibilities and liabilities of issuers. EC also published a set of frequently asked questions (FAQ) on ESEF. From 2021 onward, all listed companies in the EU will be able to use the ESEF—a new, single electronic document—when publishing their annual financial reports.

    The aim of ESEF is to make it easier for listed companies to meet transparency requirements and ultimately to enhance transparency on the capital markets in EU. These provisions in the ESEF regulation stem from Directive Transparency Directive, Audit Directive, and Accounting Directive. In particular, the note provides: 

    • Clarifications on existing EU provisions concerning audit. The note clarifies that EU law requires statutory auditors to provide an audit opinion on whether the financial statements included in the annual financial reports comply with the relevant statutory requirements laid down in the ESEF Regulation. Under the Transparency Directive, third-country issuers are required to disclose annual financial reports drawn-up in accordance with all the requirements in the ESEF Regulation, together with an audit report prepared in accordance with the Audit Directive. As a result, it is the responsibility of a third-country issuer to ensure that its auditors provide an audit opinion on whether the financial statements included in the annual financial report comply with the relevant statutory requirements laid down in ESEF Regulation.
    • Clarifications on EU provisions on use of an E-Signature. The note clarifies that the existing EU law does not prevent issuers or statutory auditors from using an e-signature for signing the annual financial reports, documents included therein, or the audit reports, respectively. In the absence of specific rules in force at the national or regulated market level, issuers and/or statutory auditors may apply their preferred option, including a handwritten or an e-signature.
    • Clarifications on EU provisions on the responsibility and liabilities of issuers. The note clarifies that an issuer’s administrative, management, or supervisory body is responsible for drawing up and disclosing the annual financial reports in compliance with the ESEF Regulation. EU law does not prevent issuers from expressing, on a voluntary basis, for instance, in the responsibility statement within the annual financial report, a specific statement regarding the compliance of the annual financial report with the ESEF Regulation. EU law does not prevent issuers from disclosing additional versions of their annual financial reports that are non-ESEF compliant or that include ESEF-compliant financial statements for which compliance with ESEF was not checked by the statutory auditors. However, it should be made clear that these additional non-ESEF compliant versions of the annual financial reports constitute non-official versions.

    The note also clarifies provisions concerning the use of ESEF files to fulfil other EU obligations. In case of a limited liability company with securities listed on the regulated markets in EU, the EU law does not prohibit the use of the audited financial statements prepared and published in accordance with the ESEF Regulation to fulfil legal obligations other than the ones stemming from the Transparency Directive. The EU law, therefore, does not prevent the implementation of national and/or administrative rules that would allow issuers to file the ESEF-compliant financial statements as accounting documents with a business register. Besides, the officially appointed mechanisms are also required to disseminate at least the ESEF-compliant annual financial reports submitted by issuers. 

     

    Related Links

    Keywords: Europe, EU, Banking, Securities, ESEF, Q&A, EU Law, ESEF Regulation, Transparency Directive, iXBRL, EC

    Related Articles
    News

    HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs

    HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.

    February 24, 2021 WebPage Regulatory News
    News

    BoE Sets Out Plan to Transform Data Collection from Financial Sector

    BoE has set out a three-phased plan to transform data collection from the UK financial sector over the next decade.

    February 23, 2021 WebPage Regulatory News
    News

    BIS Issues Updates on Technology Initiatives on Cross-Border Payments

    BIS recently made a couple of announcements with respect to the planned and ongoing work in the area of financial technology.

    February 23, 2021 WebPage Regulatory News
    News

    ESRB Updates List of Macro-Prudential Measures in February 2021

    ESRB updated the list of national macro-prudential measures applied by each member state in the European Economic Area.

    February 22, 2021 WebPage Regulatory News
    News

    BoE Survey Shows Positive COVID Impact on Outsourced Banking Services

    BoE has set out results of a survey on the impact of COVID-19 events on the use of machine learning and data science.

    February 22, 2021 WebPage Regulatory News
    News

    ECB Issues Opinion on Proposal to Regulate Crypto-Asset Markets in EU

    In response to a request from the European Council and Parliament, ECB published an opinion on the proposed regulation on markets in crypto-assets.

    February 22, 2021 WebPage Regulatory News
    News

    APRA Announces Aggregate Committed Liquidity Facility for Banks

    APRA announced the updated aggregate amounts for the 2021 Committed Liquidity Facility (CLF) established between the Reserve Bank of Australia (RBA) and certain locally incorporated authorized deposit-taking institutions that are subject to the Liquidity Coverage Ratio (LCR).

    February 19, 2021 WebPage Regulatory News
    News

    ECB and UK Authorities Agree on Post-Brexit Supervisory Cooperation

    ECB published supervisory Memorandums of Understanding (MoUs) with UK as well as other European and non-European authorities.

    February 19, 2021 WebPage Regulatory News
    News

    EIOPA Outlines Strategic Supervisory Priorities for Insurance Sector

    EIOPA identified business model sustainability and adequate product design as the two EU-wide strategic supervisory priorities.

    February 19, 2021 WebPage Regulatory News
    News

    US Agencies to Revise FFIEC 031, FFIEC 041, and FFIEC 051 Reports

    After considering comments received on the November 2020 proposal, US Agencies (FDIC, FED and OCC) are proceeding with the proposed revisions to the reporting forms and instructions for Call Reports FFIEC 031, FFIEC 041, and FFIEC 051.

    February 19, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6618