FIN-FSA will not act upon non-compliance with the requirement to publish ESEF financial statements in 2021
There is a proposal proceeding in the EU’s legislative process to amend the Transparency Directive, which would allow member states to let listed companies postpone the implementation of the ESEF1 by a year. Since the amendment of the Directive will not be in force by 1 January 2021, the FIN-FSA announces it will refrain from taking supervisory actions in 2021 if a listed company does not publish its annual financial report in the ESEF format for financial periods beginning on or after 1 January 2020.
ESEF regulation in force
In accordance with valid regulation, listed companies which operate in regulated markets and are issuers of shares or bonds must publish their annual financial reports in an electronic ESEF format (xHTML and iXBRL) as from financial periods starting on or after 1 January 2020. The ESEF requirements are based on the Transparency Directive and the Directive amending the Transparency Directive as well as a Commission Regulatory Technical Standard (RTS, Delegated Regulation of the EU Commission). In accordance with chapter 7, section 5 of the Securities Markets Act, a listed company shall make public its annual financial report in accordance with the Commission Regulatory Technical Standard.
Postponement of the ESEF by a year – FIN-FSA’s position
There is a proposal proceeding in the EU’s legislative process to amend the Transparency Directive, which would allow member states (member state option) to let listed companies postpone the implementation of the ESEF by one year. Hence, the application of ESEF regulation would not be mandatory until financial periods beginning in 2021. The application of the ESEF according to the original timetable would also be possible.
The postponement is part of the EU’s legislative package to alleviate the negative effects of the COVID-19 pandemic (Capital Markets Recovery Package) and an amendment to the Prospectus Regulation included within it.
Political agreement on the amendment of the Transparency Directive has been achieved in trilogue negotiations among the EU’s legislative bodies as regards the postponement of the ESEF (Daily News 11 / 12 / 2020 (europa.eu) > ESEF is discussed under Coronavirus: EU agrees to rules to make it easier for firms to raise capital through the ‘EU Recovery Prospectus’). However, the amendment of the Directive will not be valid yet by 1 January 2021, but its entry into force during the first half of 2021 can be considered highly probable.
The Ministry of Finance is preparing for the postponement of the implementation of the ESEF in Finland by proactively drafting a Government Bill to amend the Securities Markets Act. An announcement by the Ministry of Finance on the subject is available here (in Finnish).
The FIN-FSA will refrain from taking supervisory actions in 2021 if a listed company does not publish its annual financial report in the ESEF format for financial periods starting on or after 1 January 2020.
For further information, please contact
- Tiina Visakorpi, Head of Division, tiina.visakorpi(at)fiva.fi
- Riitta Pelkonen, Senior IFRS Accounting Expert, riitta.pelkonen(at)fiva.fi
1 ESEF – European Single Electronic Format, listed companies’ electronic financial reporting