FCA and HM Treasury issue consultation paper on the UK implementation of the remaining changes to the Transparency Obligations Directive

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23 Mar, 2015

The Financial Conduct Authority (FCA) and HM Treasury have issued a joint consultation paper 'CP 15/11 Implementation of the Transparency Directive Amending Directive (2013/50/EU) and other Disclosure Rule and Transparency Rule Changes'.

The primary purpose of this paper is to consult on the UK implementation of the remaining changes to the Transparency Obligations Directive made by the Transparency Directive Amending Directive (TDAD). These rules apply to entities with securities admitted to trading on an EEA regulated market that have the UK as their "home state" for securities regulation.

The consultation covers a number of topics. The key points of accounting, auditing and governance interest are:

  • relaxing the publication deadline for half-yearly reports from two months to three months;
  • extending the period for which an issuer must retain its annual and half-yearly reports on a website from five years to ten years;
  • requirements to notify the FCA of changes in voting rights held. The UK already goes further than the directive by requiring disclosure of positions in financial instruments that have a similar economic effect to owning shares; minor adjustments are needed to align with the TDAD; and
  • a proposal to extend the regime to allow sanctions to be applied to "the members of administrative, management or supervisory bodies of the legal entity concerned". The existing provisions of the Financial Services and Markets Act 2000 only apply to directors - this change is necessary to allow for different forms of legal entity. In addition, the law will be amended to allow the voting rights of such persons to be suspended if they fail to make necessary notifications to the market.

Finally, the FCA notes that some parts of TDAD do not require UK implementation at this stage. These include facilitating easier cross-border access to regulated information by providing for a central point of access for the EU, rather than one point of access per member state, and working towards electronic submission of filings of regulated information (including annual and half-yearly reports) by 1 January 2020. Work on both of these areas will be taken forwards by the European Securities and Markets Authority (ESMA) and is likely to involve the use of XBRL.

Comments are invited by 20 May 2015. The changes must be transposed into UK law by 26 November 2015.

The consultation paper can be accessed here (link to FCA website).

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