1. 1 World Bank Workshop - 14 March 2006 The disclosure of financial information according to the Transparency Directive by Mina Filippa Legal Advisor/ Rapporteur for the Transparency Directive Committee of European Securities Regulators (CESR) Committee of European Securities Regulators

2. 2 Overview I. Introduction I. Introduction II. CESR and its role in the Lamfalussy Process II. CESR and its role in the Lamfalussy Process III. The Transparency Directive-General Overview III. The Transparency Directive-General Overview IV. The financial information in the context of the Transparency Directive IV. The financial information in the context of the Transparency Directive V. Concluding remarks V. Concluding remarks

3. 3 Committee of European Securities Regulators: 27 members (EU+EEA). Officially established in June 2001 by European Commission Decision  presented by a Committee of Wise Men on the Regulation of European Securities Markets  background: Lamfalussy Report presented by a Committee of Wise Men on the Regulation of European Securities Markets  Introduced a 4 level approach to the development of EU securities legislation – now extended to banking and insurance  Role for CESR at Level 2 and 3 of Lamfalussy process Independent Committee regrouping senior representatives (Chairs and Senior Officers) from national public authorities competent in the field of securities regulation Operational arrangements of CESR set out in a Charter. Exchange of confidential information among Members under signed MOU. II. CESR and its role in the context of the Lamfallussy process A. What is CESR

4. 4 B. Role of CESR and the Lamfalussy Process EU Directives and Regulations LEVEL 1 Implementing Measures LEVEL 2 Enforcement LEVEL 4 LEVEL 3 Increasing Supervisory Convergence Guidelines and Standards THE FOUR LEVEL PROCESS

5. 5 B. Role of CESR and the Lamfalussy Process LEVEL 1 = general measures ; high level objectives ( = Directives) LEVEL 2 = sets out technical requirements necessary to achieve objectives of Level 1 (=Directives or Regulations) LEVEL 3= non-binding measures intended to foster consistent and uniform implementation (developed by CESR for use by its members ) LEVEL 4 = European Commission (EC) checks Member States compliance with EU legislation and may take action against Member States in case of breach of Community Law. CESR may contribute at level 4 by supplying information to the EC

6. 6 B. Role of CESR and the Lamfalussy Process LEVEL 2 Commission Mandate to CESR CESR‘s Final Advice sent to EU Commission Proposal for Implementing Measures presented to ESC Vote by ESC within 3 months Adoption of Implementing Measures by EU Commission

7. 7 Preparation of Level 2 advices to the European Commission represented the largest part of CESR's activities until June 2004 Areas covered by CESR at Level 2: Prospectus and Transparency Directives, MiFid, Investment Management Examples of CESR’s advices for Level 2 implementing measures in the area of financial information  Prospectus implementing measures -> Regulation 809/2004 (information requirements for various types of prospectuses, publication and advertisements)  Implementing measures of Transparency Obligations Directive: dissemination of corporate information, notification of major shareholdings, various issues on interim information and equivalence of reporting duties for third country issuers  MiFID implementing measures B. Role of CESR and the Lamfalussy Process Level 2

8. 8 Level 1  The Transparency Directive (adopted: 15.12.2004, transposition deadline: 20.1.2007) Level 2:  European Commission’s Working Document (under discussion in the EU institutions) on the issues of dissemination of information, major shareholdings notifications, half-yearly financial statements and equivalence of third countries information.  CESR’s consultation paper (under public consultation until the 31 st of March) on the storage and filing of regulated information Level 3 Not yet Level 4 Not yet III. The Transparency Directive- General overview The state of the Transparency

9. 9 IV. The Financial Information in the context of the Transparency Directive Who has the obligations? All issuers of shares or debt securities whose shares or bonds are admitted to trading on a regulated market situated or operating in the EU. All issuers of shares or debt securities whose shares or bonds are admitted to trading on a regulated market situated or operating in the EU. (Exemptions for state issuers, eurobond issuers and third country issuers) Third country issuers whose securities are traded on a regulated market in the EU Third country issuers whose securities are traded on a regulated market in the EU (Except if they are subject to equivalent requirements in their own country)

10. 10 A. The four obligations of the issuer 1. To publish its financial information in accordance with the Transparency Directive 2. To file its financial information with the competent authority 3. To disseminate its financial information 4. To store its financial information in a central storage mechanism

11. 11 1. The issuer’s obligation to publish its financial information in accordance with the Transparency Directive Annual Financial Report –Audited financial statements –Management Report –Quality statement Time of publication: 4 months after the end of the preceding year Half-yearly financial report –Condensed set of financial statements (not necessarily audited) –Interim management report –Quality statement Time of publication: 2 months after the end of the semester Interim management statements –Explanation of the material events and transactions Time of publication: 10 weeks after the beginning of the quarter and six weeks before its end

12. 12 Who is responsible for the financial information At least: The issuer or The issuer or Its administrative, management and supervisory bodies Its administrative, management and supervisory bodies The persons responsible within the issuer The persons responsible within the issuer

13. 13 2. The issuer’s obligation to file its financial information with the Competent Authority The issuer must file its financial information with the competent authority of his home member- state The competent authority may decide to publish it on its website The competent authority should comply with minimum standards such as security standards and standards as to the information source (authentication) CESR encourages but not mandates the electronic filing

14. 14 3. The issuer’s obligation to disseminate its financial information The issuer shall disseminate its financial information by using the media. The issuer may use a service provider to send the information to the media. The issuer shall disseminate its financial information by using the media. The issuer may use a service provider to send the information to the media. The information should be pushed to investors The information should be pushed to investors The information should be disseminated The information should be disseminated –In a manner ensuring fast access –On a non-discriminatory basis –With the use of media that may ensure effective dissemination to the public throughout the EU –Without charging investors any specific cost

15. 15 4. The issuer‘ s obligation to make available its financial information in a central storage mechanism Member states must appoint a national storage mechanism (called the“officially appointed mechanism“- OAM) Member states must appoint a national storage mechanism (called the“officially appointed mechanism“- OAM) All the national storage mechanisms will be interconnected at the EU level All the national storage mechanisms will be interconnected at the EU level The issuer will make its information available at his national storage mechanism The issuer will make its information available at his national storage mechanism Through the EU network this information will be accessible to all EU investors irrespective of where they are situated Through the EU network this information will be accessible to all EU investors irrespective of where they are situated

16. 16 B. Other issues 1. The language of the financial information 3 cases Where the securities are admitted only in the Home member- state Where the securities are admitted only in the Home member- state –In a language accepted in the Home member state (no choice of the issuer) Where the securities are admitted in the Home and in a Host member- state Where the securities are admitted in the Home and in a Host member- state –In a language accepted in Home member-state and at the choice of the issuer –Either –Either in a language accepted in Host member state –Or in a language customary in the sphere of international finance Where the securities are admitted only in a Host member- state Where the securities are admitted only in a Host member- state at the choice of the issuer –Either in a language accepted in Host member state –Or in a language customary in the sphere of international finance

17. 17 2. Supervision and Penalties The home country control The home country control Competent authority is the authority of the issuer’s home member state (usually where its registered office is) The powers of the competent authorities The powers of the competent authorities Extended supervisory and investigatory powers including the power to ask for additional information and documents, to suspend trading and to carry out on site inspections Penalties Penalties To be provided by the national legislation but at least civil or administrative penalties. Penal sanctions are also possibe.

18. 18 Where you can find the relevant documents The Level 2 Working Document of the European Commission on dissemination, major shareholdings and equivalence of information The Level 2 Working Document of the European Commission on dissemination, major shareholdings and equivalence of information http://www.europa.eu.int/comm/internal_market/securities/transparency/i ndex_en.htm http://www.europa.eu.int/comm/internal_market/securities/transparency/i ndex_en.htm CESR’s technical advice on dissemination, major shareholdings and equivalence of information and CESR’s technical advice on dissemination, major shareholdings and equivalence of information and CESR’s consultation paper on the storage and filing of the information http://www.cesr- eu.org/index.php?page=contenu_groups&id=41&docmore=1#doc http://www.cesr- eu.org/index.php?page=contenu_groups&id=41&docmore=1#doc Further questions? Further questions? mfilippa@cesr-eu.orgmfilippa@cesr-eu.org; mfilippa@cesr-eu.org