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.
Keywords: Europe, EU, Banking, Securities, ESEF, Q&A, EU Law, ESEF Regulation, Transparency Directive, iXBRL, EC
Previous ArticleUS Agencies Urge Banks to Use Fallback Language in Legacy Contracts
HM Treasury notified that, after considering all responses, the government intends to bring forward further legislation, when the Parliamentary time allows, to address issues identified in the consultation on supporting the wind-down of critical benchmarks.
EIOPA launched the 2021 stress test for the insurance sector in EU.
UK authorities jointly published the third edition of Regulatory Initiatives Grid setting out the planned regulatory initiatives for the next 24 months.
EC is requesting feedback on the proposed Commission Delegated Regulation on the content, methodology, and presentation of information that large financial and non-financial undertakings should disclose about their environmentally sustainable economic activities under the Taxonomy Regulation.
OSFI has set out the near-term priorities for federally regulated financial institutions and federally regulated private pension plans for the coming months until March 31, 2022.
Under the Italian G20 Presidency, BIS Innovation Hub and the Italian central bank BDI launched the second edition of the G20 TechSprint on the lookout for innovative solutions to resolve operational problems in green and sustainable finance.
ACPR published Version 1.0.0 of the RUBA taxonomy, which will come into force from the decree of January 31, 2022.
EBA proposed the regulatory technical standards on a central database on anti-money laundering and countering the financing of terrorism (AML/CFT) in EU.
ECB published its response to the targeted EC consultation on the review of the bank crisis management and deposit insurance framework in EU.
BCBS, CPMI, and IOSCO (the Committees) are inviting entities that participate in market infrastructures and securities markets through an intermediary as well as non-bank intermediaries to complete voluntary surveys on the use of margin calls.