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The EU Transparency Directive |
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The 20th January 2007 marked the implementation in the UK of the EU Transparency Directive. David Glass of London based law firm Pritchard Englefield reviews it's implications for companies listed on the main board of the LSE as well as AIM and Plus Markets.
This has significant implications for companies listed on the main board of the London Stock Exchange and to a lesser extent for companies listed on prescribed markets such as AIM and Plus Markets.
The purpose of the Directive is to increase disclosure and reporting requirements by fully listed companies and to a lesser extent by companies quoted on other prescribed markets such as AIM and Plus Markets. Additional requirements on disclosure of voting rights are also imposed on substantial shareholders in those companies.
The rules are complex and have resulted in amendments to the Listing Rules issued by the UK listing Authority as well as to the Disclosure Rules (now renamed the Disclosure and Transparency Rules) issued by that body (which is part of the Government-backed Financial Services Authority).
The main implications for fully listed companies in the UK are that they will be required to publish financial statements four times a year – an annual report, a half yearly report and two interim management statements or quarterly reports; secondly, that the half yearly report will need to include the principal risks and uncertainties to a company’s business for the remaining six months of that year; and thirdly that the annual report will need to be published within four months of the year end rather than six months.
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Prior to the introduction of the Transparency Directive, the UK already imposed a high level of disclosure on fully listed companies and this is now reinforced by the provisions of the Transparency Directive. Fully listed companies will be obliged to disclose regulated information on a fast and pan-European basis, making use of regulatory information services (such as RNS which is the regulatory information service of the London Stock Exchange).
The Directive also imposes obligations on Member States to ensure that there is at least one Officially Appointed Mechanism (“OAM”) for the central storage of regulated information.
The Transparency Directive (“TD”) is part of the so-called Financial Services Action Plan (“FSAP”) of the EU, the purpose of which is to create a single European capital market. The TD is designed to complement and reinforce other aspects of FSAP, in particular the Market Abuse Directive (popularly known as “MAD”)
The arrival of TD as part of the FSAP shows that MAD is by no means the last acronym on the subject!
© January 2007 David Glass
All Rights Reserved.
See also: Safeguarding the spirit of the London Stock Exchange |
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