How Has the Transparency Directive Affected Investors From EU Market?

How Has the Transparency Directive Affected Investors From EU Market?

About the Transparency Directive, which establishes minimum requirements for periodic reporting of information about publicly traded companies across EU.

What is the Transparency Directive?

The Transparency Directive officially came into force in January 2005, but only took effect in the UK in 2007. It was set up to establish minimum requirements for the periodic reporting of information about publicly traded companies across the EU, a move that in turn enhances transparency on EU Capital Markets.

Periodic Information

Periodic information is published to show the financial situation of the issuer of securities. The information is mainly found in documents like the annual financial report, which is made public by the issuer, at the latest four months after the end of each financial year. Another source of information is the half-yearly report created by the issuer of shares or debt securities, available at least 2 months after the relevant period. Finally, Interim Management Statements are made by the management of each issuer if quarterly financial reports have not already been published.

What Does This Mean For Investors In the EU Market?

Transparency DirectiveUnder the regulations of the Transparency Directive, issuers who have securities that trade in an EU regulated market are required to disclose periodic information to the investors. Issuers are also obliged to make public any changes in the rights related to all classes of shares and new debt issues, along with any related security or guarantee.

When a shareholder’s position rises above or falls below a specific threshold, they are obliged to inform the issuer who, in turn, must inform the market.

Investors must also be made aware of all relevant details relating to the Annual General Meeting, including the time, location, agenda and their participation rights. Information taken from the meeting will then be made available to all shareholders highlighting the decisions made regarding the issue of new shares and the payment of dividends. An increased transparency in information provides investors with protection and enables them to exercise their rights by proxy through a financial institution designated by the issuer.

Help and Advice for Companies

Further information regarding the Transparency Directive and the impact it can have on companies and their advisers can be found on londonstockexchange.com through UnaVista. An overview can be seen on the page at: http://unavista.londonstockexchangegroup.com/articles/transparency-directive-review/

Specific information for the UK is also provided in this guide, along with a look at the effectiveness of the Transparency Directive within the EU markets.

 

Author Bio

April Orchid is a finance and business content provider and has featured on top business and finance blogs. She prides herself on writing clear incisive articles with her strong understanding of today’s financial commerce, as well as the latest financial regulation and legislation that affect you, from CRD IV to Form PF.

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