Transparency Directive

The Transparency Directive ('TD') aims to improve the transparency of EU capital markets by enhancing the timeliness of disclosures and by requiring periodic financial reporting. The TD will cover all issuers who have securities admitted to trading on an EU regulated market. This directive came into force in January 2005, and was implemented on 20 January 2007.

The Directive deals with financial reporting, disclosure of interests in securities, and information provided to holders of shares and debt securities. Due to the QCA's extensive lobbying, the introduction of mandatory quarterly reporting for equity issuers has been withdrawn and the requirement now is for a quarterly one-page trading statement. Preliminary results statements are no longer mandatory, as formal reporting dates are tighter.

All securities issuers have to produce annual financial reports within 4 months of the financial year end and interim financial reports within 2 months of the period end. Such reports will require a confirmation statement by "persons responsible" for the management report (the Chief Executive Director and Finance Director) that the report gives a fair view of the company's overall position and the financial statements give a true and fair view.

Share ownership disclosure is an important aspect of the TD. Under the TD, notification of major shareholdings is triggered when the size of the holding exceeds a designated threshold (5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%). The FSA consulted on whether these less stringent rules should take effect, with the QCA seeing no benefit in the relaxation of shareholder disclosure. As a result, the UK has retained the existing 1985 Companies Act thresholds - holdings of 3 percent of the equity must declare that, plus declare further increases of every 1 percent.

For more information on the disclosure of significant shareholdings, click here to read a guidance note produced by the QCA's Legal Committee.

For more information on the Transparency Directive, please visit the FSA's website by clicking here.