The European Securities Markets Authority (Esma) has published an amended version of guidelines on inforcement of financial information applicable to national competent authorities (NCAs), which are responsible for enforcing publishing of such information by issuers listed on regulated markets.
The requirements derive from the Transparency Directive, while the drive to amend the guidelines stem from a 2017 peer review. Esma decided to amend the guildelines to increase harmonisation in the way NCA's apply the enforcement.
The amendments mainly related to the methods used to select the issuers whose financial information should be subject to examination (Guideline 5) and the proceedure NCAs apply when they carry out such examination (Guideline 6).
Steven Maijoor, Esma chair, said: "Ensuring that issuers provide investors with the full picture of their financial performance and situation is a prerequisite for transparent capital markets. Investors need to know the financial health of issuers in whom they may wish to invest. We need to ensure that the disclosure of financial information is comparable across the EU. Subjecting issuers to a similar level of scrutiny by national competent authorities enhances both market confidence and investor protection."
The changes will require NCAs to further harmonise:
- the way they select issuers for examination, by requiring that their selection should be based on a combination of:
- a risk-based approach;
- random selection; and
- the time period within which all issuers in an NCA's jurisdiction should be examined following the peer review's recommendation of a maximum period of 10-15 years; and
- the way in which they undertake their examinations, including by requiring that a minimum proportion of examinations should cover the entire financial statement and entail interaction with the issuer.
The amendments to the guidelines will become effective on 1 January 2022.