8 January 2021

Capital Markets Update: ESEF Reporting Requirements And Updates To The Market Abuse Regulation

Ganado Advocates


Ganado Advocates is a leading commercial law firm with a particular focus on the corporate, financial services and maritime/aviation sectors, predominantly servicing international clients doing business through Malta. The firm also promotes other areas such as tax, pensions, intellectual property, employment and litigation.
In 2013 the Transparency Directive was amended to include, inter alia, a requirement for issuers (whose securities are listed on the Official List of the Malta Stock Exchange or on any other EU
Malta Antitrust/Competition Law
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ESEF Reporting Requirements

In 2013 the Transparency Directive was amended to include, inter alia, a requirement for issuers (whose securities are listed on the Official List of the Malta Stock Exchange or on any other EU regulated market) to prepare their annual financial reports (AFRs) in a single electronic reporting format (ESEF), thereby making reporting easier for issuers and facilitating accessibility, analysis and comparability of annual financial reports. In particular, the Transparency Directive and the Regulatory Technical Standards setting out the ESEF (RTS) require:

  1. all AFRs to be prepared in XHMTL (a programming language), which is human readable and can be opened with any standard web browsers; and
  2. issuers that prepare IFRS consolidated financial statements, to mark up these IFRS consolidated financial statements using the XBRL markup language. The markups must be embedded in the XHTML document version of the AFRs using the Inline XBRL format.1

The Listing Authority has therefore updated the Listing Rules, specifically the Definitions Section, as well as Chapters 5 and 8, to reflect issuers' obligations to start reporting their AFRs in the ESEF. For a detailed analysis on the updates, please refer to the Circular issued by the Malta Financial Services Authority on 24 December 2020, but, for ease of reference, the most salient changes to Chapter 5 of the Listing Rules are the following:

  • Listing Rule 5.55.6 – since the requirements under the RTS are considered to be "statutory requirements" within the meaning of the Audit Directive, Listing Rule 5.55.6 was inserted and AFRs must now include an auditors' report on the compliance of the said AFR with the ESEF.
  • Listing Rule 5.56 – this Listing Rule was amended to require AFRs to be validated (i.e. checked for their compliance with the RTS).
  • Listing Rule 5.56A – this Listing Rule 5was amended to clarify the applicability of the RTS requirements and is the operative provision which requires AFRs to be prepared in the ESEF.
  • Listing Rules 5.56B – a new Listing Rule 5.56B was added in order to specify that, as from the effective financial years, an AFR that is not prepared in line with the Listing Rule 5.56A is not considered to be in compliance with the Listing Rules.
  • Listing Rule 5.71A – a new Listing Rule 5.71A was added to clarify that the audit requirements of the financial statements shall inter alia also include the audit requirements relating to the RTS as may be prescribed by the Accountancy Board in terms of the Accountancy Profession Act.

For more information on the RTS, please refer to European Single Electronic Format web page on the European Securities and Markets Authority's (ESMA) website.

Important note on the effective date of application of the new ESEF requirements

The original intention was to have AFRs for financial years beginning on or after 1 January 2020 prepared in the ESEF. In other words, AFRs published in 2021 were originally meant to be prepared in XHTML. However, given the economic disruption brought about by the COVID-19 pandemic, the European Parliament and the Council agreed to allow Member States (including Malta) to delay the application of the ESEF requirements by one year.

Accordingly, the Listing Authority is shortly expected to allow Maltese issuers to delay the application of the ESEF requirements by one year, and issuers will only be required to prepare the AFR in ESEF for financial years beginning on or after 1 January 2021. Nonetheless, issuers who wish to publish their annual financial reports in ESEF, for financial years starting on or after 1 January 2020, for publication in 2021, will still be able to do so.

Updates to the Market Abuse Regulation

Regulation (EU) 2019/2115 (the SME Growth Markets Regulation) made various amendments to the Market Abuse Regulation (MAR) that began to apply from 1 January 2021. Although the stated purpose of the SME Growth Markets Regulation is "to promote the use of SME growth markets", several amendments to MAR brought about by the SME Growth Markets Regulation apply to all issuers, irrespective of whether they are listed on an SME growth market or otherwise.

The main amendments are the following2:

  • PDMR / PCA notifications – the time period for all issuers to publish the details of a transaction after receiving notification from a person discharging managerial responsibility (or person closely associated to him/her) will be increased to two business days of receipt of the notification (instead of the current three days from the date of the transaction).
  • Market soundings – the disclosure of inside information to qualified investors in connection with a private placement of bonds has now been excluded from the scope of the market sounding regime under article 11 of MAR. Issuers must still, however, ensure that the qualified investor receiving the information is aware of, and acknowledges in writing, the legal and regulatory duties entailed and is aware of the sanctions applicable to insider dealing and unlawful disclosure of inside information.
  • Insider lists – the amendments now clarify that any person acting on behalf of, or for the account of, an issuer must also produce and maintain their own insider lists.

Furthermore, MAR (as amended by the SME Growth Market Regulation) requires the     ESMA to draft new technical standards (ITS) specifying the format of the insider list that issuers admitted to trading on SME growth markets are required to provide to National Competent Authorities (such as the MFSA).3 The proposed new ITS will, however, repeal Implementing Regulation (EU) 2016/347 (being an Implementing Regulation under MAR, which lays down implementing technical standards for the precise format of insider lists and for updating insider lists – which ITS apply to all issuers). Therefore, although the stated purpose of the proposed new ITS is to specify the "format of the insider list that issuers admitted to trading on SME growth markets", these ITS will be applicable to all issuers. In fact, article 2 of the proposed new ITS provides that (all) "issuers ... or any person acting on their behalf or on their account, shall ensure that their insider list is divided into separate sections relating to different inside information and new sections shall be added to the insider list upon the identification of new inside information". The proposed new ITS also contain templates for insider lists (to be used by all issuers) which are identical to those contained in the current Regulation (EU) 2016/347).

  • Liquidity contracts – there are also changes relating to liquidity contracts, including a standard form liquidity contract contained in an annex of proposed new regulatory technical standards.

For more information about other legislative efforts to update MAR, please refer to our earlier articles entitled The times they are a-changing – amendments to the Market Abuse Regulation and ESMA publishes Final Report on MAR Review Report.

Important note: the most recent consolidated version of MAR (including amendments brought about by the SME Growth Markets Regulation) can be accessed on Eur-Lex by clicking here.


1 Please refer to the European Securities and Markets Authority's (ESMA) ESEF Reporting Manual which is designed to assist issuers in creating Inline XBRL documents that are compliant with the RTS.

2 Given that there are currently no trading venues in Malta which are recognised as 'SME growth markets', the amendments which only relate issuers whose financial instruments are listed on SME growth markets will not be dealt with in this Update.

3 The proposed new ITS can be found on page 50 of EMSA's Final Report on the amendments to the Market Abuse Regulation for the promotion of the use of SME Growth Markets.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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