New Transparency Requirements for Issuers of Securities Approved by the Council of EU

Transparency Directive which sets out transparency requirements for the issuers of securities on the regulated markets has been adopted by the Council of European Union.

The purposes of the adoption of the Transparency is are outlined below. The purposes include:

· Simplification of the obligations: By simplifying certain requirements it is aimed to make the regulated markets more attractive to the small and medium sized issuers. An example of efforts to simply regulations includes elimination of the requirement to publish quarterly financial statements

· Improvement in legal clarity and effectiveness: Improvement in legal clarity and effectiveness is sought through directive. This improvement is sought notably with respect to the disclosure of corporate ownership. The requirements that will help in achievement of this purpose include the disclosures of major holdings of all financial instruments that can be used to gain economic interest in listed companies.

· Provision of sanctions: The purpose is to provide for sanctions that are severe enough to discourage breach of transparency requirements.

The draft directive also includes certain requirements that are specific to certain industries. For example it includes requirements that address particularly forestry industry and oil, gas and minerals industry. An example of such requirement is that the listed companies operating in forestry industry or oil, gas and minerals industry are required to disclose payments to governments where they operate (country-by-country reporting). The issuers are required to prepare annual reports on payments made to the governments. The reports are required to be made public within the six months after the end of the financial years. These reports are required to remain public for at least 10 years.

The European Parliament has already approved this directive in June 2013 along with the new Accounting Directive. It will become applicable on the 20th day following that of its publication in the Official Journal of the European Union.