Lower House approves bill to implement Transparency Directive

The Lower House of the Dutch Parliament recently approved a bill to implement the European Transparency Directive. That directive aims to improve the provision of information by listed companies within the European Union.

The Transparency Directive will introduce a common system within the EU for the disclosure of financial information by listed companies. The bill proposes changes to the existing periodic financial reporting requirements, including the obligation to publish the annual accounts within four (as opposed to the current six) months of the close of the financial year, and to provide interim (quarterly) financial information. The bill also introduces various new occasional obligations as regards information, for example disclosure of any changes in the rights attaching to securities they have issued.

Basically, a securities-issuing institution must comply with the information obligations set by the Member State where it originates. For an institution that has issued shares or bonds with a nominal value of less than EUR 1000, that means the Member State where it has its registered office. If the nominal value of its bonds is more than EUR 1000, the institution can select as the country of origin either the Member State where it has its registered office or the Member State where the bonds are listed on the stock exchange. That choice remains valid for at least three years.

Earlier this year, the bill was amended in line with the new legislation to implement the EU’s Markets in Financial Instruments Directive (MiFID) and the European Commission’s regulation establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities (no. 1569/2007). The amendments mean, for one thing, that – in order to prevent “double” supervision – the Minister of Finance can designate countries that are not EU Member States but where supervision of compliance with the accounting standards is adequate. If its own country is designated as such, a securities-issuing institution that chooses the Netherlands as the country of origin will not be subject to the provisions of the Financial Reporting (Supervision) Act [Wet toezicht financiële verslaggeving].

The bill is expected to become law on 1 January 2009.

For more information, please contact Roel Botter, Banking & Finance Practice.

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