European Parliament adopts a transparency directive

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01 Apr 2004

The European Parliament has approved a new Transparency Directive that will improve the information that investors receive, though not quite as far as had been proposed.

The Directive now goes to the Council of Ministers for final approval. Among the provisions:

  • All securities issuers will have to provide annual financial reports within four months after the end of their financial year.
  • More detailed half-yearly financial reports by share issuers will be required, based on IAS 34.
  • The Parliament did not adopt the Commission's proposal for quarterly financial reports. Instead, the compromise Directive requires that share issuers publish interim management statements in between the annual financial report and the half-yearly financial report. These statements should include a narrative description of the financial position and of the impact of material events on that financial position. This would not apply to those share issuers who publish full quarterly financial reports.
  • The Parliament considered but did not adopt management remuneration disclosure requirements.
  • More information is required on related party transactions.
  • More information will be provided by bond issuers.
  • A mechanism will be established for assessing at EU level the equivalence between international accounting standards and non-EU country accounting standards for the purpose of allowing companies from non-EU countries to submit their national GAAP financial statements rather than IFRS statements.
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