EuropeanIssuers shares industry concerns with ESMA
28 April 2020 Brussels
Image: mpaniti/Shutterstock
EuropeanIssuers has sent a letter to the European Securities and Markets Authority (ESMA) to ensure issuers’ concerns are heard in these “trying times”, amid COVID-19 challenges.
The letter, which was sent on 25 March to ESMA’s chair, Steven Maijoor, requested more flexibility in terms of disclosing financial information, the implementation of European Single Electronic Format and on the holdings of annual general meetings (AGMs).
EuropeanIssuers said: “Several member states have taken action to address the current crisis and the impact of confinement measures on AGMs, while others have not done so. EuropeanIssuers would like to ask ESMA to recommend each member state to provide for a higher degree of flexibility, in order to allow companies alternative methods to hold their AGMs without the physical presence of shareholders, or to postpone them if considered appropriate.”
The organisation explained that in this difficult period companies are assigning enormous resources to concentrate on the handling of the crisis and their business operations, including trying to hold their AGMs.
EuropeanIssuers suggested that European companies “need to be relieved from additional regulatory requirements that would hamper their possibilities to cope with the crisis”.
It added: “In this vein, EuropeanIssuers members have expressed concern following ESMA’s recommendations on disclosing information regarding COVID-19 under the Market Abuse Regulation (MAR) regime and in the 2019 annual reports.”
In regards to the disclosure of any relevant significant information concerning the impacts of COVID-19 on the fundamentals, prospects or financial situation of issuers, EuropeanIssuers said it insists on the fact that issuers are solely responsible for determining what disclosure is necessary in accordance with the MAR.
Additionally, it noted that issuers intend to comply with the requirements of MAR but any disclosure regarding the impacts of the pandemic can only be done after a careful assessment of the potential effects in an uncertain and difficult environment.
EuropeanIssuers said: “Disclosing unreliable information could cause significant prejudice to issuers and investors.”
Elsewhere in the letter, EuropeanIssuers discussed ESMA’s recommendations which reminds issuers to provide transparency on the actual and potential impacts of COVID-19 on business activities, financial situation and economic performance in 2019 year-end financial report if these have not yet been finalised or otherwise in interim financial reporting disclosures.
According to EuropeanIssuers, the complete review of the reports is “complex, and they have no time to change the content of the reports and to present it again to the auditors. We understand that the definition of the 2019 accounts ‘if these have not yet been finalised’ applies to accounts not yet approved by the board of directors”.
With respect to COVID-19 challenges, the organisation noted that flexibility should be granted to issuers regarding the ESEF, since for many issuers the implementation of the new electronic format is on hold.
In addition to the letter, EuropeanIssuers have also addressed a letter to DG JUST asking for a temporary extension of the timeframe for postponement of general meetings of Societas Europaea.
EuropeanIssuers is a pan-European organisation positioned to represent the interests of publicly quoted companies from all sectors to the EU institutions and has members from 15 countries from across Europe.
The organisation aims to ensure that EU policy creates an environment in which companies of all sizes can easily raise capital through the public markets and deliver growth over the longer term.
The members include both national associations and companies, covering markets worth €7.6 trillion market capitalisation with approximately 8,000 companies.
SRD II
EuropeanIssuers, together with other trade associations, also asked for a 12-month delay in the implementation of the Shareholder Rights Directive II (SRD II), which would see the date move to 3 September 2021.
The letter requesting the delay was sent to the European Commission (EC); commissioner Didier Reynders, commissioner Helena Dalli, acting director-general for justice and consumers Salla Saastamoinen.
SRD II aims to improve corporate governance in EU member states and is set to establish requirements regarding the exercise of certain shareholder rights attached to voting shares of
companies.
This will apply to companies that have a registered office in the EU and shares listed
on an EU regulated market.
Amid COVID-19 pressures and challenges, however, the associations highlighted that companies across Europe need to think about other more pressing issues and implement contingency plans just to survive, which does not allow them to focus on the information ratio (IR) requirements related to SRD II.
Several companies expressed their concerns from a technical point of view, as they received feedback from intermediaries who cannot ensure a correct implementation in light of the current crisis, EuropeanIssuers explained.
Additionally, the postponement of the holding of AGM across European companies in light of COVID-19 measures has a significant impact on the timetables for putting in place all requirements set out in the IR in time for the new meetings.
According to EuropeanIssuers, without a postponement, it is very unlikely that all the operational procedures in support of the new general meetings season, expected around September, could be carried out in full compliance with SRD II.
A EuropeanIssuers spokesperson also noted that the “request of a 12-month delay finds its ratio in the necessity to avoid that the SRD II implementation coincides (with further adverse impacts on all stakeholders) with the highly active period of AGM and dividend distributions”.
In the letter, the associations explained that the delay would “provide the European financial industry with a more realistic timeline to fully comply with SRD II and the IR and achieve a higher level of convergence in the implementation practices”.
The letter to the EC requesting the delay is co-signed with European Banking Federation, Association for Financial Markets in Europe, International Securities Lending Association, Association of Global Custodians, European Central Securities Depositories Association, SMPG Securities Market Practice Group, WSBI-ESBG, Associazione Intermediari Mercati Finanziari - ASSOSIM, AFTI, and the European Association of Co-operative Banks.
The letter, which was sent on 25 March to ESMA’s chair, Steven Maijoor, requested more flexibility in terms of disclosing financial information, the implementation of European Single Electronic Format and on the holdings of annual general meetings (AGMs).
EuropeanIssuers said: “Several member states have taken action to address the current crisis and the impact of confinement measures on AGMs, while others have not done so. EuropeanIssuers would like to ask ESMA to recommend each member state to provide for a higher degree of flexibility, in order to allow companies alternative methods to hold their AGMs without the physical presence of shareholders, or to postpone them if considered appropriate.”
The organisation explained that in this difficult period companies are assigning enormous resources to concentrate on the handling of the crisis and their business operations, including trying to hold their AGMs.
EuropeanIssuers suggested that European companies “need to be relieved from additional regulatory requirements that would hamper their possibilities to cope with the crisis”.
It added: “In this vein, EuropeanIssuers members have expressed concern following ESMA’s recommendations on disclosing information regarding COVID-19 under the Market Abuse Regulation (MAR) regime and in the 2019 annual reports.”
In regards to the disclosure of any relevant significant information concerning the impacts of COVID-19 on the fundamentals, prospects or financial situation of issuers, EuropeanIssuers said it insists on the fact that issuers are solely responsible for determining what disclosure is necessary in accordance with the MAR.
Additionally, it noted that issuers intend to comply with the requirements of MAR but any disclosure regarding the impacts of the pandemic can only be done after a careful assessment of the potential effects in an uncertain and difficult environment.
EuropeanIssuers said: “Disclosing unreliable information could cause significant prejudice to issuers and investors.”
Elsewhere in the letter, EuropeanIssuers discussed ESMA’s recommendations which reminds issuers to provide transparency on the actual and potential impacts of COVID-19 on business activities, financial situation and economic performance in 2019 year-end financial report if these have not yet been finalised or otherwise in interim financial reporting disclosures.
According to EuropeanIssuers, the complete review of the reports is “complex, and they have no time to change the content of the reports and to present it again to the auditors. We understand that the definition of the 2019 accounts ‘if these have not yet been finalised’ applies to accounts not yet approved by the board of directors”.
With respect to COVID-19 challenges, the organisation noted that flexibility should be granted to issuers regarding the ESEF, since for many issuers the implementation of the new electronic format is on hold.
In addition to the letter, EuropeanIssuers have also addressed a letter to DG JUST asking for a temporary extension of the timeframe for postponement of general meetings of Societas Europaea.
EuropeanIssuers is a pan-European organisation positioned to represent the interests of publicly quoted companies from all sectors to the EU institutions and has members from 15 countries from across Europe.
The organisation aims to ensure that EU policy creates an environment in which companies of all sizes can easily raise capital through the public markets and deliver growth over the longer term.
The members include both national associations and companies, covering markets worth €7.6 trillion market capitalisation with approximately 8,000 companies.
SRD II
EuropeanIssuers, together with other trade associations, also asked for a 12-month delay in the implementation of the Shareholder Rights Directive II (SRD II), which would see the date move to 3 September 2021.
The letter requesting the delay was sent to the European Commission (EC); commissioner Didier Reynders, commissioner Helena Dalli, acting director-general for justice and consumers Salla Saastamoinen.
SRD II aims to improve corporate governance in EU member states and is set to establish requirements regarding the exercise of certain shareholder rights attached to voting shares of
companies.
This will apply to companies that have a registered office in the EU and shares listed
on an EU regulated market.
Amid COVID-19 pressures and challenges, however, the associations highlighted that companies across Europe need to think about other more pressing issues and implement contingency plans just to survive, which does not allow them to focus on the information ratio (IR) requirements related to SRD II.
Several companies expressed their concerns from a technical point of view, as they received feedback from intermediaries who cannot ensure a correct implementation in light of the current crisis, EuropeanIssuers explained.
Additionally, the postponement of the holding of AGM across European companies in light of COVID-19 measures has a significant impact on the timetables for putting in place all requirements set out in the IR in time for the new meetings.
According to EuropeanIssuers, without a postponement, it is very unlikely that all the operational procedures in support of the new general meetings season, expected around September, could be carried out in full compliance with SRD II.
A EuropeanIssuers spokesperson also noted that the “request of a 12-month delay finds its ratio in the necessity to avoid that the SRD II implementation coincides (with further adverse impacts on all stakeholders) with the highly active period of AGM and dividend distributions”.
In the letter, the associations explained that the delay would “provide the European financial industry with a more realistic timeline to fully comply with SRD II and the IR and achieve a higher level of convergence in the implementation practices”.
The letter to the EC requesting the delay is co-signed with European Banking Federation, Association for Financial Markets in Europe, International Securities Lending Association, Association of Global Custodians, European Central Securities Depositories Association, SMPG Securities Market Practice Group, WSBI-ESBG, Associazione Intermediari Mercati Finanziari - ASSOSIM, AFTI, and the European Association of Co-operative Banks.
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