EN    EN EN 
EN    EN  EUROPEAN COMMISSION 
Brussels, 27.5.2010 
COM(2010)243 final 
  
REPORT FROM THE COMMISSION TO  THE COUNCIL, THE EUROPEAN 
PARLIAMENT, THE EUROPEAN EC ONOMIC AND SOCIAL COMMITTEE AND 
THE COMMITTEE OF THE REGIONS 
Operation of Directive 2004/109/EC on the ha rmonisation of transparency requirements 
in relation to information about issuers whos e securities are admitted to trading on a 
regulated market 
SEC(2010)611 
EN 2   EN REPORT FROM THE COMMISSION TO  THE COUNCIL, THE EUROPEAN 
PARLIAMENT, THE EUROPEAN EC ONOMIC AND SOCIAL COMMITTEE AND 
THE COMMITTEE OF THE REGIONS 
Operation of Directive 2004/109/EC on the ha rmonisation of transparency requirements 
in relation to information about issuers whos e securities are admitted to trading on a 
regulated market 
1. INTRODUCTION  
1. This report reviews the opera tion of Directive 2004/109/EC1 on the harmonisation of 
transparency requirements in relation to in formation about issuers whose securities 
are admitted to trading on a regulated market (hereinafter the "Transparency Directive"), in accordance with Article 33 of that Directive.  
2. The Transparency Directive requires issuers of securities in regulated markets within 
the EU to ensure appropriate transparency  for investors through the disclosure of 
regulated information and its dissemina tion to the public throughout the EU. Such 
information consists of financial reports , information on major holdings of voting 
rights and information disclosed pursuant to  Article 6 of the Directive 2003/6/EC on 
insider dealing and market manipulation (market abuse)
2. 
3. The objectives pursued by the Transparency  Directive are important to financial 
markets and recognised by international stan dard setting bodies, such as IOSCO or 
the OECD. The current financial crisis demons trates that the disclosure of accurate, 
comprehensive and timely information about secu rities issuers is essential in order to 
allow an informed assessment of their business performance and assets and consequently to build sustained inve stor confidence in capital markets. 
4. This report describes the impact of the Transparency Directive and how it has been 
complied with (section 2); identifies the ma in issues emerging from the application 
of the Transparency Directive (section 3) and draws a number of conclusions 
(section 4). This report is completed by a Commission staff working paper which 
provides further detail on the issues desc ribed as well as on how information has 
been collected. 
2. I
MPACT OF AND COMPLIANCE WITH THE TRANSPARENCY DIRECTIVE  
5. The External Study on the application of  the Transparency Directive conducted on 
behalf of the Commission3 (hereinafter "the External Study") reflects that a strong 
                                                 
1 Directive 2004/109/EC of the Eu ropean Parliament and of the Co uncil of 15 December 2004 on the 
harmonisation of transparency requirements in relati on to information about issuers whose securities are 
admitted to trading on a regulated market and amending Directive 2001/34/EC, OJ L 390 of 
31.12.2004, p.38. See: www.ec.europa.eu/internal_market/s ecurities/transparency/index_en.htm  
2 OJ L 96, 12.4.2003, p.16. 
3 Mazars (December 2009), Study on the application of selected obligations of directive 2004/109/EC on 
the harmonisation of transparency requirements in relation to information about issuers whose 
EN 3   EN majority of the stakeholders who participated in the survey consider the 
Transparency Directive to be useful for the proper and efficient functioning of the 
market. Stakeholders generally consider that regulated information disclosed by 
issuers reaches investors, except perhaps for the case of information disclosed by 
smaller listed companies.  
6. In terms of economic impacts of the Tran sparency Directive on financial markets, 
research conducted so far is not conclusive . It seems rather that the Transparency 
Directive is neutral: while perceived as a simplifying factor for primary market 
issuance, there is a lack of empirical  evidence to back up this perception.  
7. A review of issuers' practices shows that  issuers generally comply with financial 
reporting obligations and that this is also the perception of stakeholders. Financial 
information disclosed is considered useful  and sufficient for investment purposes. 
Also, the simplification of language requi rements for disclosure of financial 
information introduced in 2004 has been particularly welcome.  
8. The cost of compliance with the obligat ions of the Transparency Directive4 does not 
appear, prima facie , particularly high5. This is also the perception of issuers, 
although small and medium sized listed co mpanies are more concerned about the 
cost of compliance. The introductio n of the "Home Member State rule"6 as well as 
the simplification of the langua ge regime for financial di sclosures in 2004 should, in 
principle, have contributed to reducing issuers' costs. However, there are increased 
costs for cross-border i nvestors resulting from the insufficiently harmonised 
requirements of the Transparency Directive.  
3. THE REVIEW OF THE OPERATION OF THE DIRECTIVE : EMERGING ISSUES  
9. A number of issues emerge from the revi ew of the operation of the Transparency 
Directive (see the Commission staff worki ng document accompanying this report for 
further detail).  
10. First and foremost, the debate is raised as to whether the transpar ency rules should be 
specifically adapted to smaller listed compan ies with a view to maintaining and also 
increasing the attractiveness of regulate d markets for this category of issuers7. While 
                                                                                                                                                         
securities are admitted to trading on a regulated market . Available at: 
http://ec.europa.eu/internal_market/company/ecgforum/index_en.htm   
4 It should be noted that the bulk of the requiremen ts on the content (e.g. accounting standards) of annual 
and half-yearly financial reports are not co ntained in the Transparency Directive. 
5 See Europe Economics (2008), Study on the cost of complian ce with selected FSAP measures . 
Available at: www.ec.europa.eu/internal_market/finances/actionplan/index_en.htm  
6 According to the "Home Member State Rule" (cf. Article 3(1)), issuers are only subject to the 
obligations set out by their Home Member State (normally the one of incorporation) but not to those of the Host Member State. This "Home Member State Rule" should avoid the dual (or multiple) 
application of rules to issuers.  
7 It should be underlined that there are alternative markets to the 'regulated ma rkets' (within the meaning 
of the Transparency Directive) wh ere issuers may have their securitie s traded. Those alternative markets 
qualify as multilateral trading facilities (MTFs) w ithin the sense of Directive 2004/39/EC. The 
Transparency Directive rules do no t apply to those alternative mark ets and according to the External 
Study, there is no stakeholder support for extendin g the application of this directive to those non-
regulated markets. The Commission does not intend at this stage to propose extending the scope of the 
EN 4   EN the scope for simplification of the Transparency Directive rules for smaller listed 
companies, and therefore achieving savi ngs, is limited, there are specific 
simplification measures which could be envisaged, without undermining investor 
protection, such as for instance: (i) providi ng for more flexible  deadlines to the 
disclosure of financial repor ts; (ii) alleviating the ob ligation to publish quarterly 
financial information; (iii) harmonising th e maximum content of reports; or (iv) 
facilitating cross border visi bility of smaller listed companies towards potential 
investors and/or information intermediaries such as financial analysts8, therefore 
increasing their attractiveness.  
11. Secondly, although the requirement to pr oduce quarterly financial information 
introduced in 2004 by the Transp arency Directive could cont ribute to a certain short-
term vision of the issuer s' performance by investors9, it is generally well perceived 
by market participants. Also, alleviatin g the obligation to disclose quarterly 
information would most likely only benefit smaller listed companies, since the large 
companies would presumably continue to  publish quarterly information. On the 
contrary, there is market demand for more  detailed rules regard ing the content of 
interim management statements so as to facilitate issuers' compliance and to allow for predictability of the in formation to be disclosed.  
12. Thirdly, the minimum harmonisation character of the Transparency Directive allows 
Member States to adopt mo re stringent requirements
10. Thus the transposition of the 
Transparency Directive is relatively uneven as  a result of different national regimes. 
More stringent national requirements, in particular regarding the notification of 
major holdings of voting righ ts, are perceived as problem atic by stakeholders. This 
results in real and costly implementation problems. This raises the question as to 
whether the current regime (i.e. minimum harmonisation) is appr opriate to achieve 
an effective level of harmonisation of transparency requirements in the EU.  
13. Fourthly, it appears that the Transparency Di rective's obligations need to be adapted 
to innovation in financial markets and incr eased transparency requirements should be 
introduced with regard to certain types of  instruments. In particular, insufficient 
disclosure of stock lending practices seem  to have increased the risk of "empty 
                                                                                                                                                         
Transparency Directive to MTFs. A more detailed explanation is proposed in the Commission staff 
working document attached to the present report. 
8 See for instance, F. Demarigny, An EU-Listing Small Business Act , March 2010, available at: 
www.eurocapitalmarkets.org . According to this report, " on average, 93% of trading volumes on 
regulated markets are concentrated on 7% of the total number of companies listed in the EU ".  
9 Such short-term effect is at od ds with recent Commission initiatives encouraging financial institutions 
and issuers to establish incentives for a longer-term vision. The European Commission has, for instance, 
recommended that remuneration of directors in issuers and financial institutions takes into account the long term behaviour of companies: see European Commission Recommendation 2009/384/EC of 
30.4.2009 on remuneration policies in the financial services sector  (OJ L 120, 15.5.2009, p. 22) and 
Commission Recommendation 2009/385/EC of 30.4.2009 complementing Recommendations 
2004/913/EC and 2005/162/EC as regards the regime for the remuneration of directors of listed 
companies  (OJ L 120, 15.5.2009, p. 28).  
10 The Commission staff examined th e question of more stringent national requirements in 2008 and 
produced a specific document with detailed information on this matter, which should be regarded as a 
complement to this report. See Commission staff working document, Report on more stringent national 
measures concerning Directive 2004/109/EC on the harmonisation of transparency requirements in 
relation to information about issuers whose securities are admitted to trading on a regulated market , 
SEC(2008)3033, 10.12.2008. 
EN 5   EN voting" and lack of disclosure regarding cas h-settled derivatives has led to increased 
problem of "hidden ownership". Concerni ng the disclosure of information for 
corporate governance purposes , associations representing  issuers in the EU are 
favourable to the introduction of mechan isms allowing issuers to identify the 
ultimate investor so as to be able to enga ge into real shareholders-issuers dialogue. 
Additionally, even when shareholders with major holdings of voting rights are well 
known, calls are being made to enhance the disclosure requirements for significant 
holdings. In some Member Stat es, large investors are already requested to disclose 
their intentions as regards their holdings and how they financed their acquisition. The 
question of whether large (in particular institutional) inve stors should disclose their 
voting policies in listed companie s is related to this issue too. 
14. Fifthly, in addition to the di sclosure of financial reports  required by the Transparency 
Directive, EU law also requires (or, as a ppropriate, recommends) listed companies to 
make some periodic non-financial (but co rporate governance-rela ted) disclosures, 
generally in connection with  the annual financial report , such as the so-called 
Corporate Governance Statement11. The issue has been raised as to whether the 
disclosure of non-financial information shoul d be integrated into the Transparency 
Directive regime in order to simplify the existing requirements.  
15. A related issue concerns disclosure of Environmental, Social and Governance 
(ESG)12 data made by listed companies. So me stakeholders (non-governmental 
organisations, some investor organisations ) are regularly reques ting to improve and 
strengthen European legislation regard ing ESG disclosure. In their view, the 
Transparency Directive could be an appropria te vehicle to integrate such disclosures 
alongside financial reporting ob ligations of listed companies, and to address some of 
the perceived short-comings of current  ESG disclosure rules and practice. 
16. Sixthly, the progress towards th e establishment of a pan-Eu ropean system of storage 
of regulated information, with a view to f acilitate investors' acce ss to information, is 
slow13 and the impact of the Directive in this  area has been insufficient: interested 
parties need to go through 27 different natio nal databases and the electronic network 
interconnecting them is only at an initial stage with rather modest results so far. This 
raises the question as to whether the Directive storage mechanisms, as currently designed, are able to fulfil the role of "gate" to historical financial information on listed companies at pan-European level.  
                                                
 
11 Article 46a of Fourth Council Directive 78/660/EEC of 25 July 1978 on the annual accounts of certain 
types of companies, as amended by Directive 2006/46/EC (OJ L 224, 16.8.2006, p.1).  
12 There is neither a precise definition of ESG for regu latory purposes, nor a clear delineation of its scope. 
It appears nevertheless that ESG disclosures would fit within the larger debate on Corporate Social 
Responsibility (CSR). CSR has been defined by the Commission as " a concept whereby companies 
integrate social and environmental concerns in their business operations and in their interaction with 
their stakeholders on a voluntary basis ." See Communication from the Commission to the European 
Parliament, the Council and the European Economic and Social Committee – Implementing the 
Partnership for Growth and Jobs: Making Europe a Pole of Excellence on Corporate Social 
Responsibility , COM(2006) 136 final, 22.3.2006. 
13 See the Commission Recommendation 2007/657/EC of 11 October 2007 on the electronic network of 
officially appointed mechanisms for the central storage of regulated in formation referred to in Directive 
2004/109/Ec of the European Parliament and of the Council, OJ L 267, 12.10.2007, p.16.  
EN 6   EN 17. Finally, while there are no major complian ce problems, the revi ew of the operation 
of the Transparency Directive shows that so me technical adjustments to the text of 
the Directive would be beneficial in  the interest of improved clarity.  
4. CONCLUSIONS  
18. This review of the operation of the Transpar ency Directive shows that there are areas 
where the regime created by this Directive could be improved, notably in relation to 
the simplification of the rules applicable to  smaller listed companies with a view to 
making capital markets more attractive to them. The cross-borde r visibility of 
smaller listed companies towards potential investors and analysts  also needs to be 
improved with a view to ultimately achieve higher levels of trading on the securities of these smaller issuers. There are possible measures in the framework of the Transparency Directive which could contri bute to this goal: e.g. providing for more 
flexible deadlines to the disclosure of financial reports by small issuers would enhance their visibility sin ce they would no longer inform about their performance at 
the same time as large issuers; harmonising the maximum content and presentation of reports would facilitate reading and comparability by investors and analysts. In 
this context, the review of the operation of the Transparency Directive also shows 
that it would be desirable, in order to increase the visibility and attractiveness of 
smaller listed companies, to further f acilitate access by potential investors and 
information intermediaries at a pan-European level to financial information disclosed by small issuers and stored in the officially appointed mechanisms for the storage of regulated information. 
19. Additionally, the review of the operation of the Transparency Directive shows the 
need for greater convergence of the rules on the disclosure of major holdings of 
voting rights and of financial instruments giving access to voting rights (including 
cash-settled derivatives) as well as the opportunity to simplify the reporting 
requirements for issuers in the broader corporate governance context. In this 
connection, this report also id entified the concerns of so me stakeholders regarding 
the disclosure of environmental and social information. 
20.