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Law360, London (March 27, 2020, 10:20 AM GMT) -- Companies listed on European Union stock exchanges have been given more time to submit financial reports, the bloc's markets regulator said Friday, in a move designed to ease pressure on securities issuers and auditors during the COVID-19 crisis.
Companies with securities traded on the bloc's regulated markets will have another two months to publish year-end audited financial results. (AP)
Listed companies typically submit audited financial information to stock exchanges within four months of the end of their fiscal year, under the bloc's 2004 Transparency Directive. Businesses with a December year-end publish statements by April, and this must include audited results.
Issuers of shares must also make their half-year results public within three months of the end of the six-month period. The measures are designed to ensure that investors have access to reliable information about companies and ensures a minimum level of transparency in the EU's capital markets.
ESMA said Friday it is aware that listed companies and auditors may find it hard to meet the deadlines set by the directive because of the economic upheaval created by the coronavirus pandemic.
The regulator said it has instructed national watchdogs "not to prioritize" taking action against companies that publish their accounts within the extended timeframe it has set out. But listed businesses must inform national authorities and shareholders if their results will be delayed beyond the deadline set out in the directive.
"ESMA acknowledges that the COVID-19 outbreak brings significant challenges for issuers and auditors as an increasing number of member states impose unprecedented national measures," the EU authority said in a statement on Friday. "ESMA appreciates that, due to these measures, issuers are faced with constraints which may substantially impair the ability of issuers to publish their financial reports within the [Transparency Directive] deadlines."
The EU watchdog said that financial reports are an "important anchor" for investors as they make decisions and that companies should continue to prepare them in line with the bloc's rules. This should ensure investors are protected and markets can function properly.
Tim Cant, regulatory partner at law firm Ashurst LLP, said the move was "an attempt by European authorities to create a harmonized response to relaxing financial reporting obligations on listed companies.
"The key point for listed companies is that even in the absence of providing a financial report, they are expected to update the market as to why they have been delayed or their progress in doing so," Cant added.
The latest measures follow a similar announcement by Britain on Thursday. The Financial Conduct Authority said it will give listed companies two extra months to publish their audited annual financial reports. The audited statements are usually published within four months.
The British government on Wednesday granted the 4.3 billion unlisted U.K. businesses the option of applying for a three- month extension to file their annual accounts to Companies House, the government's registrar of businesses.
--Editing by Ed Harris.
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