ARTICLE
29 December 2011

Proposed Modernisation Of Transparency Directive

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De Brauw Blackstone Westbroek N.V.

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The European Commission has published proposals for amendment of the Transparency Directive.
European Union International Law

The European Commission has published proposals for amendment of the Transparency Directive. The main changes are:

  • The requirement to publish quarterly financial reports will be abolished for all listed companies. This should lead to cost-savings and discourage short-termism on financial markets.
  • Investors will have to notify all financial instruments of similar economic effect as holdings of shares. This should prevent them from secretly building a controlling stake in a listed company ("hidden ownership"). According to the Commission, such practices can give rise to market abuse, low levels of investor confidence and misalignment of investor intentions.
  • A system of country-by-country reporting (CBCR) will be introduced to increase transparency of payments (taxes, royalties and bonuses) made by oil, gas, mining and logging industries to their host governments worldwide. The current system is based on a single set of information at a global level and does not show a company's financial impact in each host country. The new system would apply to EU privately owned large companies, or companies listed in the EU, that are active in the extraction or logging industry.
  • The new rules will also apply to trade in emission allowances.

The Transparency Directive covers only listed companies. As some of the proposed amendments are relevant to non-listed companies, the European Commission has proposed corresponding amendments of the Accounting Directives.

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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