The Central Bank clarifies its expectations in respect of the European Single Electronic Format (ESEF) Regulation

Expectations in respect of the European Single Electronic Format (ESEF) Regulation

Under the EU Transparency Directive¹ and ESEF Regulation, annual financial reports of issuers which have securities listed on an EU regulated market must be published in accordance with the requirements of the European Single Electronic Format (ESEF) for financial years beginning on or after 1 January 2020. The ESEF requirements are designed to ensure that annual reporting takes place in a single, structured, electronic format so that the financial statements are machine-readable.

Recognising the challenges faced by issuers as a result of the COVID-19 crisis, political agreement was reached by the co-legislators permitting Member States to delay ESEF obligations by 1-year thus allowing issuers to apply the ESEF reporting requirements from financial years beginning on or after 1 January 2021 and not 1 January 2020, as set out in the original legislation.  This postponement is included in the EU’s Capital Markets Recovery Package introduced to alleviate the negative effects of the COVID-19 pandemic.

 The Department of Finance has advised that it has notified the European Commission that Ireland will opt for the one-year postponement. In light of this, the Central Bank wishes to clarify its expectations in relation to the ESEF Regulation taking into account the one-year postponement.²

The Central Bank of Ireland will continue to accept annual financial reports from Irish issuers subject to the Transparency (Directive 2004/109/EC) Regulations 2007 (S.I. No. 277 of 2007) and ESEF Regulation in PDF format for financial years beginning between 1 January 2020 and 31 December 2020.  Similarly, in examining the compliance of those financial reports from such issuers with the relevant financial reporting framework, the Irish Auditing and Accounting Supervisory Authority (IAASA) has indicated it will also accept financial statements in PDF format.

Issuers who wish to publish their annual financial reports in accordance with the ESEF Regulation in 2021 (for financial years beginning between 1 January 2020 and 31 December 2020) will still be able to proceed.  Where an issuer chooses to publish their annual financial reports in ESEF in 2021, all relevant requirements of the Transparency Regulations and the ESEF Regulation will need to be complied with.

Footnotes:

[1] Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC

[2] Article 4(7) of the Transparency Directive will be amended in order to grant Member States the option to allow their issuers to apply the ESEF requirements starting from 1 January 2022, provided that they notify the European Commission of their duly motivated intention to do so. This amendment will most likely not enter into force before March 2021. Considering that the ESEF requirements have started applying on 1 January 2021, Member States will be exceptionally allowed to opt for the ESEF postponement based on the above-mentioned political agreement.