- notification of major holding of voting rights;
- half yearly financial reports;
- equivalence of transparency requirements for third countries issuers;
- the procedural arrangements whereby an issuer may elect its ‘home Member State’ competent authority for the purposes of the Directive.
Through the publication of this second consultation paper, CESR completes the first step in the finalisation of the technical advice that CESR is mandated to deliver by June 2005 to the European Commission so that level 2 implementing measures of the Directive can be completed. The consultation on this second paper will close on 4th March 2005.
The first part of the second consultation paper is dedicated to eight issues which, in the mandate from the European Commission, relate to notifications duties of major holding of voting rights in companies whose securities are admitted to trading on regulated markets (Chapter 1).
The draft advice notably clarifies the conditions and requirements that management companies and investment firms and their parent undertakings should comply with in order to benefit from the exemptions provided by the Transparency Directive. These exemptions allow a parent undertaking to avoid aggregating their own holdings, with the holdings of their management companies and investment firms for notification purposes. Further important issues covered include, the clarification of which person should make the notification when the shareholder and the holder of the corresponding voting rights is not the same person. In addition, the advice addresses various questions in relation to notifications of holdings of financial instruments. Finally, the advice also touches on some of the more practical issues such as, the standard form to be used throughout the Community by investors (with major holdings) which are required to make notifications and the determination of a calendar of “trading days” for all Member States for notification purposes.
The second part of the paper (Chapter 2) covers three specific issues raised in relation to half yearly reporting. Namely, the minimum content of half-yearly financial statements not prepared under IAS/IFRS; the meaning and scope of “major” related parties transactions which must be reported on within the half-yearly reports of issuers of shares; and, the auditor’s review of half-yearly report (where such a review has been conducted).
A third chapter of the consultation paper covers the issue of equivalence of third countries’ requirements with the disclosure requirements of the Transparency Directive. In this respect, CESR was requested to provide advice on the possible principles that competent authorities should apply in order to, at a later stage, establish a list of third countries which can be considered as equivalent. Briefly, CESR’s proposed approach is to test equivalence by looking first at the key principles and objectives of the different disclosure requirements of the Directive and then to establish what a third countries’ framework has to include in order to be deemed to be equivalent. It is worth noting that the advice proposed by CESR in this paper should be seen as separate, although consistent, with the advice that CESR will in parallel develop on GAAP equivalence.
A second aspect of the EC mandate on equivalence relates to the issue of independence requirements for third countries’ management companies and investment firms. CESR proposes at this stage to approach the equivalence issue by putting the onus on the parent undertaking of the third countries companies and firms themselves, i.e. by requiring them to comply with the same conditions as those stated for EU entities (see above), instead of uniquely looking at third countries specific requirements.
Finally, the consultation paper also deals with some aspects of the procedural arrangements whereby issuers may elect their home Member State. The draft advice addresses firstly, situations where the competent authority under the Prospectus Directive is not the same as the competent authority for the Transparency Directive and, secondly, those situations where the issuer is listed on different markets and is de-listed from one of them
Responses to the proposed advice are welcomed by 4th March 2005 and can be submitted online via CESR’s website under the heading “consultations”.
CESR will also be hosting a public hearing on 17 February 2005 at 2:30pm at CESR’s premises in Paris. All those wishing to attend the open hearing can register via the CESR website (www.cesr-eu.org) under the heading “hearings”.
Click here to view "Indicative CESR Work Plan for the mandate and progress report under the Transparency Directive".
Background
- CESR received on 29 June 2004 the official request from the European Commission for technical advice on implementing Level 2 measures of the Transparency Directive. The purpose of this consultation document from CESR is to seek comments on the draft technical advice that CESR proposes to submit to the European Commission.
- There were two elements in the request of the European Commission.
This first element was a mandate given to CESR for technical advice on priority
measures that are needed to complete the Directive. This advice must be delivered by
June 2005. This mandate covered a number of different technical issues which can be
grouped as follows:
- Different technical issues related to notifications of major holdings of voting rights in companies whose shares are admitted to trading on regulated markets.
- The minimum standards for the dissemination of regulated information and implementing measures on the conditions under which periodic financial reports of issuers must be kept available.
- Different technical questions related to half-yearly financial reports and to equivalence of transparency requirements for third countries issuers.
- CESR’s work on Transparency is taken forward by an expert group chaired by Andres Trink, Chairman of the Estonian Financial Supervision Authority.
- CESR is an independent Committee of European Securities Regulators. The role of the
Committee is to:
- Improve co-ordination among securities regulators;
- Act as an advisory group to assist the EU Commission, in particular in its preparation of draft implementing measures in the field of securities;
- Work to ensure more consistent and timely day to day implementation of community legislation in the member states.
- Each Member State of the European Union has one member on the Committee. The members are nominated by the Member States and are the Heads of the national public authorities competent in the field of securities. The European Commission has nominated the Director General of the DG Market, as its representative. Furthermore, the securities authorities of Norway and Iceland are also represented at a senior level.
