EN    EN EN 
 
EN    EN  EUROPEAN COMMISSION 
Brussels, 27.5.2010 
SEC(2009) 611 
  
COMMISSION STAFF WORKING DOCUMENT 
The review of the operation of Dire ctive 2004/109/EC: emerging issues 
  
Accompanying document to the 
  
Report from the Commission to the Council, the European Parliament, the European 
Economic and Social Committee a nd 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 
COM(2010)243 
 
EN 2   EN Table of contents 
Introduction ................................................................................................................... ............. 3 
1. The transposition of the Transparency Directive: impact and compliance.................. 3 
1.1. Impact of the Transparency Directive.......................................................................... 3 1.2. Compliance with the Transparen cy Directive requirements........................................ 5 
2. The review of the operation of the Directive: emerging issues ................................... 6 
2.1. Smaller listed companies and disclosure requirements................................................ 7 2.2. Financial disclosures: do quarterly disc losures contribute to  short-termism? ........... 10 
2.3. Information about major holdings of voting rights: maximum harmonisation?........ 11 
2.4. Information about major holdings of voting rights: specific issues........................... 14 2.5. Corporate governance-related, non-financ ial and other disclosure obligations......... 16 
2.6. Access to information on listed companies: storage of "regulated information"....... 17 2.7. Non-regulated markets and disclosure requirements ................................................. 19 2.8. Issues for clarification and/ or technical adjustments ................................................. 20 
Annex 1 – The Transparency Directive and its importance for financial markets................... 21 
Annex 2 – Methodology for this report.................................................................................... 31 Annex 3 – The Transposition of th e Transparency Directive .................................................. 35 
Annex 4 – The use by the Commission of implementing powers ........................................... 39 
Annex 5 – Cost of compliance with the Directive ................................................................... 46 Annex 6 – Issues for technical adjustments in the Directive ................................................... 54 Annex 7 – Aggregation of holdings of voti ng rights and financial instruments? .................... 59 
Annex 8 – Lowering of thresholds for the notification of major holdings .............................. 63 
Annex 9 – Disclosure of holdings of cash-settled derivatives ................................................. 68 Annex 10 – The question of stock lending and empty voting.................................................. 80 Annex 12 – Enhanced disclosure requirements for significant holdings ................................. 95 Annex 13 – Alternative systems for the notification of major holdings of voting rights ...... 100 
Annex 14 – Corporate governance-related  and Non-financial disclosures............................ 103 
Annex 15 – Access to and storage of information on listed companies ................................ 108 
 
 
EN 3   EN INTRODUCTION  
1. This Commission staff working documen t reviews the opera tion of Directive 
2004/109/EC1 on the harmonisation of transparency requirements in relation to 
information about issuers whose securities are admitted to trading on a regulated 
market (hereinafter the "Transparency Dire ctive"). It supplements the Report from 
the Commission on the operation of this 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 disclose d pursuant to Article 6 of the Market Abuse Directive. 
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 dem onstrates that the di sclosure of  accurate, 
comprehensive and timely information about secu rities issuers is essential in order to 
build sustained investor confidence and allow an informed assessment of their 
business performance and assets (see Annex 1 for further detail on the Transparency 
Directive and its importance for financial markets). 
3. This Commission staff working document2 is based in part on external studies 
conducted for the Commission and information collected from stakeholders and other external s ources (see Annex 2
 for further detail on the methodology of this 
report). This document (1) describes the im pact of the Transparency Directive and 
how it has been complied with; and (2) pres ents the main issues emerging from the 
application of the Directiv e. This document is completed by several annexes. 
1. THE TRANSPOSITION OF THE TRANSPARENCY DIRECTIVE : IMPACT AND 
COMPLIANCE  
1.1. Impact of the Transparency Directive 
4. The External Study on the application of  the Transparency Directive conducted on 
behalf of the Commission (herei nafter "the External Study")3 reflects that a strong 
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. About two thirds of those stakehol ders consider that the provisions of the 
Directive are appropriate to achieving its objectives of providing accurate, 
comprehensive and timely information to the market
4. The stakeholders' perception is 
                                                 
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 This document does not reflect the views of the Co mmission as such, but rather those of its staff only. 
3 Mazars (2009). See Annex 2  of this paper for further information on the External Study.  
4 See Mazars (2009), section 1. 7 (suitability of the provis ions of the Directive).  
 
EN 4   EN also that the main obligations the Tran sparency Directive are sufficiently clear5. 
Concerning the provisions regarding the dissemination of regulated information, 
stakeholders' perception is that this is sa tisfactory and they ge nerally believe that 
regulated information disclosed by issuers reaches investors, except perhaps in the 
case of information disclosed by smaller listed companies6.  
5. In terms of economic impacts of the Di rective on financial markets, research 
conducted so far is not conclusive7. It seems rather that the Transparency Directive is 
neutral: while perceived as a simplifying fact or for primary market issuance, there is 
a lack of empirical evidence to back up the perception. As concerns listings in 
regulated markets, the Directive does crea te neither obstacles, nor incentives. Other 
rules (e.g. the Prospectus Directive) are c onsidered more importa nt in this regard. 
Also, there is no economic evidence of the impact of the Directive with regard to 
making comparable information available to the market, resulting in particular from 
the low harmonisation achieved8.  
6. Two points have been frequently made re garding the general architecture of the 
Directive in the su rvey conducted by the External Study. Firstly, the minimum 
harmonisation character of th e Transparency Directive allows Member States to 
adopt more stringent requirements9. Thus the transposit ion of the Directive10 is 
relatively uneven as a result of diffe rent national requirements (see Annex 3  for more 
detail on the transposition process and Annex 4  regarding the use of implementing 
powers by the Commission). More stringent national requirements, in particular 
regarding the notification of major holdi ngs of voting rights, are perceived as 
problematic by stakeholders11. This results in real and costly implementation 
                                                 
5 Ibid., section 1.4 (clarity of obligations).  
6 Ibid., sections 4.1 and 4.3 (dissemination of regulated information). See in particular section 4.3.2.5 
(access to financial information on a cross-border basis of mid and small caps) about the poor cross-
border dissemination of regulated information by smaller listed companies and the low interest shown 
by analysts and investors in those companies (referred to as the "black hole" problem). 
7 See Mazars (2009), section 1.5 (impact of the direc tive). See also another recen t external study recently 
conducted for the European Commission (CRA Internat ional (2009)). The aim of this study was to 
evaluate the economic impact of the whole Financia l Services Action Plan of 1999. The impact of the 
Transparency Directive was evalua ted together with other so-called information measures aiming at 
harmonising information disclosure and increasing market confidence. Overall, information disclosure 
measures within the FSAP were assessed  to have a mixed impact on the market. 
8 See CRA International (2009), p.173. According to  this study, participants representing institutional 
investors indicated the importance of the availability of comparative information as investors are then 
able to systematically compare information between companies. This includes the ability to take 
information that is available in co mparable electronic form and apply internal models to assess whether 
the companies meet investment objectives. In particular, interviewees made reference to the ability to 
more easily monitor investments that are made - bo th because accounting information is comparable 
and also because it is more freely available than in the past. Interviewees also drew attention to the 
benefits to risk management from the additional information available since this enables them to 
understand the risks involved with the investments they were making.  
9 The Commission staff examined th e question of more stringent national requirements in 2008 and 
produced a specific report with detailed information on this matter, which should be regarded as a 
complement to this paper. See European Commission (December 2008). 
10 In 2008 CESR conducted a compre hensive mapping of the national re quirements by each Member State 
pursuant to the Transparency Dir ective. See CESR (September 2008). 
11 See generally Europe Economics (2009); and M azars (2009), sections 1. 3, 1.4.3 an d 3.3.7.  
 
EN 5   EN problems12. This raises the question as to whether the current regime (i.e. a minimum 
harmonisation directive) is the appropriate tool to achieve an effective level harmonisation of transparen cy requirements in the EU
13.  
Secondly, the absence of more flexible rules for smaller listed companies makes 
requirements too demanding and costly accord ing to such companies, thus creating 
market inefficiency14.  
7. Additionally, it appears that the Directive' s obligations need to be adapted to 
innovation in financial markets. In particul ar, insufficient disclo sure of stock lending 
practices seemed to have increased the risk  of empty voting and lack of disclosure 
regarding cash-settled derivatives has led to problems with "hidden ownership"15. 
Finally, 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 
slow16 and the impact of the Directive in this area has been insufficient17.  
1.2. Compliance with the Transparency Directive requirements 
8. A review of issuers' practices shows that  issuers generally comply with financial 
reporting obligations and that this is  also the perception of stakeholders18. Moreover, 
issuers appear to voluntarily publish more information than the minimum 
requirements regarding half-yearly and qua rterly financial information. Financial 
information disclosed is considered usef ul and sufficient fo r investment purposes19. 
Also, the simplification of language requi rements for disclosure of financial 
information introduced in 2004 has been particularly welcome20.  
9. The cost of compliance with the obliga tions of the Transparency Directive21 does not 
appear, prima facie , particularly high22. Concerning issuers' expenditure, more than 
two thirds of stakeholders su rveyed in the External Study23 did not consider the 
compliance cost with disclosure of fina ncial information for issuers to be too 
onerous, albeit small and medium sized list ed companies are more sensitive to the 
                                                 
12 Mazars (2009), section 1.8 (lev el of harmonisation). See also European Commission (December 2008) 
and Annex 5 – Section D  of this paper. See as well European Parliament (September 2008), recital J. 
13 The fact that no harmonisation has yet been achieved is confirmed by another study conducted for the 
Commission, which explains that although the Transparency Directive has made progress towards 
harmonisation " there remain numerous differences between Member States which would need to be 
overcome in order to see impacts through this channel and hence no harmonisation impact has yet been 
achieved ". See CRA International (2009), p. 173-174 and 182. 
14 Mazars (2009), sectio n 1.9 (SMEs and non regulated markets).  
15 Ibid., section 3.6 (financial innovation) 
16 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.  
17 Mazars (2009), section 4.4 (storage of regu lated information), in particular p. 137. 
18 Ibid., section 2.3 (compliance review). 
19 Ibid., section 2.4 (suitability of periodic information disclosed). 
20 Ibid., executive summary, point 5..  
21 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. 
22 See Europe Economics (2009), a recent study cond ucted for the European Commission on cost of 
compliance with selected financial services directives (see Annex 5  of this paper for further detail on 
this study). This study survey the costs incurred by some categories of financial institutions. 
23 Mazars (2009), section 2. 3.5 (compliance cost). 
 
EN 6   EN cost of compliance. The introduction of the "Home Member State rule" as well as the 
simplification of the language regime for financial disclosures in 2004) should, in 
principle, have contributed to reducing issuers' costs24.  
However, the situation is different for inve stors. There are increased costs for cross-
border investors resulting from the insu fficiently harmonised requirements of the 
Directive25: some larger asset managers view  the Transparency Directive as 
something of a missed opportunity to  reduce costs due to the minimum 
harmonisation approach adopt ed in its implementation26.  
2. THE REVIEW OF THE OPERATION OF THE DIRECTIVE : EMERGING ISSUES  
10. A number of issues emerge from the revi ew of the operation of the Transparency 
Directive. First and foremost, the debate is  raised as to whether the transparency 
rules should be specifically adapted to smaller listed companies with a view to maintaining and also increasing the attrac tiveness of regulated markets for this 
category of issuers (see Section 2.1
)27. 
Other important emerging issues concerni ng the scope of the Directive are: the 
usefulness of quarterly financial disclosures (see Section 2.2 ); the need for greater 
harmonisation of the rules on not ification of major holdings28 (see Section 2.3 ); the 
need for greater sophistication of the Directiv e rules so as to cover market trends and 
innovations29 (see Sections 2.4 to 2.6 ); or the question of the transparency rules in 
the non-regulated markets (see Section 2.7 ). These issues are equally related to the 
possibility to reduce the costs of  compliance with the Directive30, notably those 
associated to notific ation of major holdings31 and those incurred by smaller listed 
companies. 
                                                 
24 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. See European Commission (December 2008), §§ 7 and 8. Nevertheless, 
according to the External Study, co mpanies not listed in their Member  State of incorporation have 
expressed frustration as the Home Member State pr inciple was to simplify matters, whereas in reality, 
they do not feel that this is the case – dual repor ting and compliance with two different sets of rules 
would continue to exist due to supervisors' practi ces going beyond what is required by the Directive. 
See Mazars (2009), section 1.1. 
25 See above §6  of this paper. See generally European Commission (2008), and in particular §9.  
26 Europe Economics (2009), in particular p. 76. See also CRA International (2009) p.175 on this point: 
"In the case of the Transparency Directive, a lack of harmonisation, means gains from this source are 
limited compared to those which could potentially be achieved. " See also European Commission 
(December 2008), §§ 11 to 13 in relation to increas ed costs associated to more stringent national 
measures. Mazars (2009) also su pports these conclusions, see s ection 1.1 of the Study report. 
27 See for instance M azars (2009), Possible Im provements 2 and 4. 
28 See for instance Mazars (2009), Possible Improvements 1, 5 an d 7. See also European Commission 
(December 2008).  
29 See for instance Mazar s (2009), Possible Improv ements 6 and 8 to 14. 
30 Reduction of administrative burden for EU businesses is an important objective of the European 
Commission. See European Commission (January 2007). See also: 
http://ec.europa.eu/enterprise/policies/better-regulation/administrative-burdens/index_en.htm  and 
http://ec.europa.eu/governance/better_regulation/admin_costs_en.htm   
31 For instance, the Commission has recently proposed that powers are granted to the future European 
Securities Markets Authority with a view to develop a standard form to be used for the notification of 
 
EN 7   EN 11. Finally, while there are no major complian ce problems, the revi ew of the operation 
of the Directive shows that some adjustment s to the text of th e Directive would be 
beneficial in the inte rest of improved clarity32 (see Section 2.8 ).  
2.1. Smaller listed companies and disclosure requirements 
12. An important recurrent issue is how to  make access to regulated market more 
attractive33 for small and medium-sized ente rprises (SMEs). The argument is 
regularly advanced to the Commission staffs  that the rules appear to be designed 
primarily for the "blue-chip" companies in the first place and that, for SMEs or smaller listed companies
34, the costs of being listed are proportionally higher35. In the 
External Study36, stakeholders’ views37 are in favour of a distinct transparency 
regime for SMEs (understood as smaller listed companies )38, in particular those of 
financial analysts, retail i nvestors and issuers of shares (especially mid- and small 
caps)39. Stock exchanges and institutional inve stors are however more reluctant to 
                                                                                                                                                         
major holdings of voting rights and financial instruments, with a view to simplify the application of the 
rules by cross-border investors. See draft Article 7 of the Commission Proposal of 26.10.2009 for a Directive of the European Par liament and of the Council amending Directives 1998/26/EC, 
2002/87/EC, 2003/6/EC, 2003/41/EC, 2003/71/EC, 2004/39/EC, 2004/109/EC, 2005/60/EC, 
2006/48/EC, 2006/49/EC, and 2009/65/EC in respect of the powers of the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets 
Authority; COM(2009 )576final. See also Mazars (2009), reco mmendation 13, which also supports the 
need for a single e-notification form. 
32 See for instance, Mazars (2009), section 1.4.3 (assessment of the le gal clarity for the operational 
functioning of the Directive). 
33 In order to raise capital at competitive cost, the main alternatives to listing shares in regulated markets 
would be private equity, banking loans, acceding altern ative (non-regulated) mark ets or issuing debt. It 
should be noted however that issuers of debt secur ities admitted to trading in regulated markets are also 
subject to the obligations of the Transparency Directive. 
34 The concept of ‘smaller listed companies’ has not been defined for the purposes of this paper, but 
would encompass larger companies than SMEs (a s traditionally defined in EU law). Recently, the 
European Commission, when referring to this category of listed companies, used the expression "issuers 
with reduced market capitalisation" in  a proposal for directive (Proposa l for a Directive of the European 
Parliament and of the Council amending Directives 20 03/71/EC on the prospectus to be published when 
securities are offered to the public or admitted to trading and 2004/109/EC on the harmonisation of 
transparency requirements in relation to informat ion about issuers whose securities are admitted to 
trading on a regulated market; 23.9.2009; COM(2009) 491 final. See in particular recital 11). In this paper, the less technical expression "sma ller listed companies" will be preferred. 
35 Interestingly, anecdotal informat ion collected in 2008 suggests that  the costs associated with the 
Transparency Directive oblig ations do not seem to be the main driver for issuers' choice on non-
regulated markets as opposed to regulated markets. See European Commission (December 2008), 
Annex 7.  
36 Mazars (2009), section 1.9.1. 
37 Of the 14 EU MS surveyed, a strong opinion in favo ur of a specific regime is expressed in ES, FR, IT, 
LU and SK. 
38 In Mazars (2009), refere nce is made to market capitalisation (between €250 M and €1 billion) and not 
the turnover, nor the number of employees, as the relevant criterion for defining smaller listed 
companies in this context. 
39 On this issue, see also the recent report prepared at the request of the French Ministry of Economics: 
Demarigny (March 2010). This report explains that th e EU Directives have set requirements, applicable 
to all issuers irrespective of their size, representing a barrier too high for small and medium companies in terms of compliance and costs. In addition, it explains that the trading and the liquidity has 
concentrated on major listed companies of the lead ing indexes: on average, 93% of listed companies 
that are not in the largest market capitalisations benefit from less than 7% of the liquidity. This reports 
 
EN 8   EN this. For Exchanges, in particular, the di fferentiation line should be made between 
regulated markets on the one hand and Excha nge regulated or alternative markets on 
the other hand, for which rules should be much lighter (see Section  2.7 of this 
paper)40. 
 
According to that External Study, “ a specific regime for SMEs, limited to well-
identified measures, would create a more favourable en vironment for listing and […] 
it would contribute to the ef ficiency of the market. […] .”41 
The scope for simplification of the Transparency Directive rules for smaller listed 
companies, and therefore achieving savings, is however limited42 – which leads those 
who oppose a specific regime for smaller listed companies to argue that the requirements are not too demanding and that if  a company is not able to meet them it 
should not be listed at all.  
13. However there are specific simplificati on measures which could be envisaged, 
without undermining investor pr otection, such as for instan ce: (i) providing for more 
flexible deadlines to the disclosure of fina ncial reports; (ii) alleviating the obligation 
to publish quarterly financial information;  (iii) harmonising the maximum content of 
reports; or (iv) facilitating cross border visibility of smaller listed companies.  
                                                                                                                                                        
 
pleads for the establishment of a proportionate regulatory and financial environment for small and 
medium-sized issuers listed in Europe. 
40 Mazars (2009), section 1.9.2. 
41 Mazars (2009), Possible Improvement n°2. 
42 The bulk of the issuers' costs asso ciated with the Transparency Directiv e relate to the preparation of the 
financial reports. However, the accounting rules, as such, are not regulated by the Transparency 
Directive but by different EU (or national) instruments. 
 There is, however, a parallel reflection within the Commission on the simplification of accounting rules 
for SMEs. The Commission’s Directorate General for Internal Market and Services published a 
consultation paper to gain an understanding of EU stakeholders' views on the International Financial Reporting Standard (IFRS) for Small and Medium-sized Entities (SMEs) issued by the International 
Accounting Standards Board on 9 July 2009. Deadline for comments: 12 March 10. See: 
http://ec.europa.eu/internal_market/consultations/2009/ifrs_for_sme_en.htm
  
 
EN 9   EN 14. (i) More flexible deadlines to th e disclosure of financial reports43. Smaller listed 
companies generally express their dissatisfa ction about the strict  two-month deadline 
for the publication of the half -yearly financial report, which is difficult for them to 
respect since they are less well-equipped or have fewer resources devoted to the 
production of financial information. The diffi culty is greater and more costing when 
half-yearly accounts should be audited by an external auditor44.  
This strict deadline also leads to an uni ntended bottleneck of disclosed half-yearly 
financial reports at the end of the second m onth – in particular fo r those issuers with 
accounting years corresponding to the calenda r year (end August). This bottleneck 
disrupts the market, and anal ysts and the financial medi a in any event focus on top 
companies. Moreover, this contributes to th e poor cross-border visibility for smaller 
listed companies (also referred to as the “black hole” problem)45 resulting from the 
disclosure of financial information46.  
15. Some smaller listed companies have trie d to overcome the difficulty by publishing 
the half-yearly reports on time and holding the analysts' meeting after the deadline. 
However, this has sometimes created artificial price movements as the judgement on the results is often different  once explanations are given by management. Therefore, 
smaller listed companies are reluctant to separate the publication from the analysts 
meeting
47. 
Spreading the publications over an extende d period of time could therefore both 
alleviate the burden for smaller listed companies and contribute to a more fluid functioning of the market. The suggestion of  having different deadlines for smaller 
listed companies is supported by an important number of stakeholders
48, has been 
recommended by IOSCO49 and is currently practiced in the US50. It is also 
recommended in the External Study in order to enhanced market efficiency51. 
16. (ii) Alleviating the obligation to publish quarterly fi nancial information.  In this 
context, the question could be asked wh ether the disclosure by smaller listed 
companies of interim management statements  (or, as appropriate , quarterly reports) 
leads to tangible benefits (see also Section 2.2 ). Possible ways forward could be to 
                                                 
43 Mazars (2009), possible improvement n°2. 
44 Additionally, the cost of such audit is pres umably higher consider ing the short deadline. 
45 While large investors seem to consider that the Directive has facilitated access to information disclosed 
by smaller listed companies, many smaller listed companies generally complain about the lack of 
interest by foreign investors. Investors and analysts  are considered to concentrate on major companies. 
As outlined by the external study, “ market players seem to be in a “catch 22” situation: SMEs regret 
the low level of cross-border interest of analysts  and investors and therefor e are reluctant to spend 
money to ensure wider dissemination (translation into English in particular). On their side, analysts and investors believe that they do not receive suffic ient information from non domestic SMEs, and 
therefore are reluctant to invest in those companies .” See Mazars (2009) , section 4.3.2.5. 
46 In some Member States the cost of publication of regulated information in printed press is invoked as a 
particular problem for smaller listed companies. Smaller listed companies expressed the view that 
posting information on their website should be sufficient to comply with the dissemination obligation of 
the Directive. See Mazars (2009), section 4.3.1.1. 
47 See generally Mazars (2 009), sectio n 2.5.1. 
48 Although a majority would oppose. See Mazars (2009), section 2.5.2. 
49 IOSCO (February 2010), p.23. 
50 See Mazars (2009), section 6. 
51 Ibid., Possible Improvement n°4. 
 
EN 10   EN reduce substantially the information to be  provided by those companies in those 
interim management statements or to rem ove that obligation, at least temporarily52.  
17. (iii) Harmonising the maximum content of reports. It has also been suggested that 
obligations for listed companies could be ma de simpler if the content of the annual 
financial report was subject to maximu m harmonisation regulation at EU level53. 
Such rationalisation could also integrat e disclosures of corporate governance and 
non-financial nature (see Section 2.5 ). This point could at least be considered in 
relation to smaller listed companies. 
18. (iv) Facilitating cross border visibility of smaller listed companies.  Finally, 
regarding the poor cross-border visibility issue, improvements on the mechanisms to 
access regulated information over time could be a means of increasing interest of 
investors in smaller listed companies (see Section 2.6 ).  
2.2. Financial disclosures: do quarterly disc losures contribute to short-termism? 
19. The short-term vision of both issuers of secu rities and investors has been criticised 
by many voices reacting to  the financial crisis54. In this context, one could wonder to 
what extent the requirement for issuers of shares to provide quarterly financial information
55 contributes to such short-termism: indeed, investors ta ke this quarterly 
information into account for maki ng their investment decisions. 
20. Removing the Transparency Directive requi rement to publish quarterly financial 
information would therefore appear, at fi rst sight, as allevia ting the short-term 
pressure on issuers of shares56 and would therefore be coherent with recent 
Commission initiatives encouraging financia l institutions and issuers to establish 
incentives for a longer-term vision57. In practice, however, it  could be anticipated 
                                                 
52 Mazars (2009) suggests considering exempting issuers from selected di sclosure obligations during an 
initial period after listing. See Mazars (2009), possible improvement  n°2, p. XIII and p. 13. 
53 On a related issue, see the recommendation of  a recent external study regarding the possible 
harmonisation of the content of corporate governance statements in a harmonised standard form. See 
Riskmetrics (2009), p. 181 and seq. 
 This issue is largely linked to the question of the corporate-governance related disclosures that are 
included in the annual financial report (see Annex 14 ). It is also linked to the scope of application of 
Article 8(2) of Directive 2001/34/EC (see Annex 6 ; see also European Commission (December 2008), 
Annex 4). 
54 For instance, recent research related to risk-takin g and compensation schemes in the financial sector 
suggests that short term investors (including institutional investors) incentivize (or put pressure on) management using short-term incentives (such as compensation schemes) to take large bets on risky 
propositions with a view to meeting, inter alia, quarterly targets. See Cheng, Hong & Scheinkman 
(2009), section IV.E. 
55 Either quarterly financial reports or interim management statements as defined in Article 6 of the 
Transparency Directive. This requ irement does only apply to issuers of shares. Concerning the national 
transposition of Article 6, see Eu ropean Commission (December 2008), notes to table 4 in pp. 30-31 
and CESR (September 2008), replies to questions 95-97.  
56 It should however be noted that pursuant to the Market Abuse Directive, issuers of shares (among 
others) are expected to immediately disclose to the market any inside information that could have a 
significant effect on th e price of the share. 
57 The European Commission has, for instance, recommended that remuneration of directors in issuers and 
financial institutions takes into account the lo ng 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 
 
EN 11   EN that many issuers (in particular large ones)  would continue to disclose quarterly 
financial information even in the abse nce of a legal obligation in EU law58, so such 
removal would most likely only benefit smalle r listed companies and certainly have a 
cost reduction effect for them59. 
Additionally, transparen cy of quarterly financial info rmation is well perceived by 
market participants, which generally find su ch information valuable and think that it 
enhances the transparency and efficiency of markets60. This requirement was indeed 
one of the most important changes brought by the Transparency Directive in 2004.  
21. A related problem is whether the level of detail of the Transparency Directive rules 
on disclosure of quarterly financial information is sufficient to facilitate issuers' compliance and to allow for predictability of the information to be disclosed. There is a market demand for more detailed rules in  this regard, in part icular regarding the 
content of interim management statements: " issuers and users of information 
expressed a desire of a more detailed de finition of the content of the interim 
management statements (Article 6(1 )) to ensure more predictability and 
comparability (over time, cross-border and across-sector). However, there is a 
balance to be found, to  let issuers decide which info rmation is most relevant and 
pertinent ant to avoi d a box ticking exercise "
61.  
2.3. Information about major holdings of voting rights: maximum harmonisation? 
22. As mentioned in Section 1.2  above, the uneven transposit ion of the obligations on 
information about major holdings62 results in compliance difficulties for investors. 
                                                                                                                                                         
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. See also European 
Commission (April 2009).  
58 The suppression of the obligation in EU law does not automatically entail the suppression of such 
obligation in national law, which may maintain more stringent requirements. Additionally, many large 
companies are also listed in the US, where the requirement for disclosure of quarterly reports would remain. Moreover, some regulated markets require the publication of quarterly financial reports, 
irrespective of what the law says (e.g. in Sweden). Finally, experience shows that when the market is 
used to a certain level of transparency, issuers (at least large ones) would continue to provide such transparency even when legal oblig ations are suppressed. See for inst ance the experience in the United 
Kingdom with regard to th e "preliminary statements" in  Mazars (2009), section 1.7 in fine . 
59 See §§ 13-16  of this paper. Smaller companies will be facing a chicken & egg dilemma: since I do not 
attract investors' interest to my company, why spen ding money in preparing quarterly information?; at 
the same time, if I do not disclose quarterly information, how can I attract the interest of investors? 
60 Mazars (2009), sections  2.6.3 and 2.6.4.  
61 Mazars (2009), section 2.6.5. See also section 1. 8.1 of that Study. See additionally CESR (February 
2008), p. 3, where respondents to a CESR's call for evidence on possible level 3 work on this Directive 
identified the need to establish " principles to prepare interim management statements ". See also CESR 
(October 2009), questions 3 to 9, which try to clarif y part of the requirements of Article 6 of the 
Transparency Directive. On the question of comparability, see also Ernst & Young (2009). 
62 The absence of maximum harmonisation for the disclosure of financial reports is of lesser importance, 
as a result of the home Member Stat e rule: issuers are no longer subject to duplicity of obligations in 
case of double listing; while invest ors face multiple different national rules when complying with their 
obligations on information on major holdings. See European Commission (December 2008), in 
particular §§4-9 and Annex 4. 
 However, the External Study on the operation of the Di rective underlines that stakeholders also point at 
the lack of harmonisation in relation to the requirements on the content of the Interim Management 
Statement (as well as to the practical functioning of the officially appointed mechanisms for the storage 
of regulated in formation). See Mazars ( 2009), section 1.8.1. 
 
EN 12   EN The provisions of the Directive on this issue are considered to be the most 
problematic according to the perception of st akeholders and the legal analysis made 
in the External Study63. The fundamental principles  are not questioned: the 
information disclosed is consider ed useful for investment purposes64 and the 
obligations are, in principl e, not an unreasonable burden65. However, in practice, it 
appears that holdings are calculated in a different manner from country to country 
because of divergences in definitions, sc ope of the obligations, exemptions and 
thresholds66. As a result the question is raised as to whether the current regime (i.e. a 
minimum harmonisation directive67) on information about major holdings is the 
appropriate tool to achieve an effective harmonisation of  transparency requirements 
in the EU.  
23. The stakeholders surveyed in the External  Study are largely in favour of single EU 
rules (without national differences) for disclosures of major holdings, without 
significant geographical di fferences. Supervisors do not follow this trend68. 
 
24. Several arguments are advanced in suppor t of maximum harmonisation requirements 
in this area. Firstly, one rule at EU le vel would facilitate compliance by investors 
with cross-border investments69, as well as diminishing their compliance costs70. 
National specificities, even those connected  to contract law or  company law, would 
not be insurmountable71 and convergence in this ar ea should be possible without 
                                                 
63 See Mazars (2009), section 3.1.. 
64 Ibid. section 3.3.1. 
65 Ibid. section 3.3.2. 
66 Ibid., sections 1.8.1 and 3.3.7 and seq. On the question of more stringent requirements, see generally, 
European Commission (December 2 008), Europe Economics (2009) an d Mazars (2009), section 1.3.  
67 It should be noted that the traditional counterbalance to minimum harmonisation, namely regulatory 
competition, does not work for issuers of shares in th is area as a result of the Home Member State rule: 
issuers of shares are regulated by the rules of the Member State where their re gistered office is located 
irrespective of whether their shares are listed in a regulated market of that Member State or not. 
68 Mazars (2009), s ection 3.8.3.1. 
69 For instance, according to Mazars (2009), few stakeholders believe th at the Directive has facilitated the 
cross-border declaration of thresholds (see section 3.3.4 of that Study).  
70 See generally Section 1.2  and Annex 5 – Section D  of this paper. 
71 The main difficulty in this rega rds appears to be the qu estion of when the “acquisition” (or “disposal”) 
of the voting rights becomes effective, which would th en trigger the notification obligation. However, a 
solution to this issue was included in Article 9 of Commission Directive 2007/14/EC regarding the 
interpretation of Article 12(2) of  the Transparency Directive. 
 
EN 13   EN losing transparency72. Furthermore, rules of maximum harmonisation nature would 
facilitate the convergence towards a single rule book in the securities area73.  
25. The External Study concludes that the Tran sparency Directive has not succeeded in 
simplifying the notification of  major holdings in the EU so far and that maximum 
harmonisation is desirable in  this area. For this study, the ma ximum harmonisation 
could include: " the definition of the category of fi nancial instruments or products to 
be included in the calculation of the threshold74, the exemptions, the timelines for 
notification and disclosures as well as the threshold levels (initial and subsequent) 
and the content of the notification ".75  
26. If full harmonisation is not be possible or desirable76, a reinforced harmonisation 
might also be a possible opt ion: this would entail at  a minimum a substantial 
convergence on a maximum number of issues77; voluntary limitation on the adoption 
of more stringent requirements78; strongly coordinated common application policy 
through CESR79 (including guidance80) and development of fa cilitation tools for the 
private sector (such as electronic standa rd forms for the notification of major 
holdings81). It should be noted that the Commi ssion has recently proposed to entrust 
                                                 
72 On the contrary, the trend is toward s more transparency. See Section 2.4  of this paper.  
73 See for instance, the Presidency Conclusions of 18/19 June 2009 European Council meeting, Council 
document 11225/2/09 REV 2, §20. 
74 The existing regime lacks consistency regarding the calculation of the thresholds triggering the 
disclosure obligations, leading to transparency gaps. The Directive establishes an obligation to disclose 
major holdings on the one hand, and an obligation to disclose holdings of financial instruments, on the 
other hand. As a result, an investor holding 4,9% of voting rights in shares and an option to call 4,9% of 
voting rights through the holding of financial instruments covered by Article 13 is not required to 
disclose any of these positions to the market unde r the Transparency Directive rules. The Commission 
had proposed in 2003 the aggregation of these two categories of holdings for the purposes of calculating whether the thresholds were reached or crossed. However, the Council and Parliament did not follow 
the Commission’s views. It should be noted however, that in some Member States, holdings of voting 
rights and of financial instruments are aggregated for the purposes of calculating whether the notification obligation is triggered. For a deta iled description of this issue, see Annex 7.
 
75 Mazars (2009), possible improvement  n°7 and generally section 3. 
76 It may be possible that convergence is only possibl e for certain issues, but not for all. Alternatively, it 
might be considered necessary to grant flexibility at national level in order to swiftly address new issues 
raised by financial innovation. See for instance,  European Commission (Decem ber 2008), footnote 52, 
where it is underlined that more stringent nationa l measures may be a driver of possible future 
convergence.  
77 When asked on this question separately from the one on the single rules, the majority of the 
stakeholders surveyed in the extern al study on the operation of the Di rective were also largely (about 
two thirds) favourable to a reduction of the national differences on the notification of major holdings. 
Mazars (2009), s ection 3.3.2. 
78 See European Commission (December 2008),  §§22-24. 
79 In the future, through the soon to-be-created European Securities Markets Authority and its new 
powers, such as the possibility to develop binding technical standards. 
80 See European Commission (Decembe r 2008), §§25-27 and Mazars (200 9), Possible Improvement n°3. 
81 Ibid. European Commission (December 2008), §27. A common electronic standard form for the 
notification of major holdings is la rgely supported by the stakeholders surveyed in the External Study: 
despite some doubts expressed by supervisors, a clear majority (above 60%) favours the use of such 
form. Indeed, this study also recommends the creation of a single e-notification form. According to this 
study, " considerable simplification can be obtained by making a common electronic notification form 
for the EU mandatory especially if additional harmonisation is successfu lly introduced in the Directive. 
Specificities in national company law could be taken into account in subsections of the common form. 
The electronic form could be conceived in such a way that basic error would be signalled prior to 
 
EN 14   EN the future European Securities Markets Au thority with the development of technical 
standards for an electronic standard fo rm for the notifica tion of major holdings82.  
2.4. Information about major holdings of  voting rights: specific issues 
27. Whether maximum or reinforced harmonisa tion of the obligations on information 
about major holdings is desirable, the revi ew of the operation of the Directive has 
revealed a number of specific issues  which deserve closer examination. 
28. The Transparency Directive obligations on information about major holdings of 
voting rights have a dual obj ective: on the one hand, they provide the market with 
information about significan t transactions and trends, therefore contributing to 
making informed investment decisions, to  the prevention of market abuse and 
ultimately to market efficiency; on the other hand, they facilitate the identification of major shareholders for company law or, more recently, corporate governance 
purposes
83. There seems indeed to be an evolut ion towards facilitating the interaction 
between issuers and their shareholders. Ho wever, there are doubts as to whether the 
current rules capture all the relevant mark et movements and also allow issuers to 
effectively know who their shareholders are. 
29. In the first place, the existing regime lack s consistency regarding the application of 
the thresholds triggering the disclosure obligations84, leading to an uneven 
application of the rules. Additionally, the ex isting thresholds are considered by many 
to be too high to capture relevant sharehol ders movements. In some Member States 
(accounting for around 60% of total market capitalisation in the EU), the initial 
disclosure threshold of the Directive (5%) has been lowered to 2% or 3%.  The 
European Parliament85 and market experts86 are in favour of setting a 3% threshold in 
the Directive.  However, the External Study explains  that stakeholders views, as 
expressed in the survey conducted, are mi xed on the need to lower the initial 
disclosure threshold to 3% (or to 2%)87. While there are arguments in favour of88 and 
against89 the lowering the initial disclosure threshold, the External Study concludes 
                                                                                                                                                         
validation, and the form routed to the relevant issuer and competent authority ." See Mazars (2009), 
Possible Improvement n°13. 
82 European Commission Proposal for a Directive of the European Parliament and of the Council 
amending Directives 1998/26/EC, 2002/87/EC, 2003/6/EC, 2003/41/EC, 2003/71/EC, 2004/39/EC, 2004/109/EC, 2005/60/EC, 2006/48/EC, 2006/49/EC, and 2009/65/EC in respect of the powers of the 
European Banking Authority, the European Insura nce and Occupational Pensions Authority and the 
European Securities and Markets Authority; COM(2009)0576 final of 26 October 2009. See draft Article 7 modifying Articles 12, 13 and 25 of the Transparency Directive. 
83 See European Commission (December 1985), §2 and European Commission (March 2003), section 
4.5.1. See also generally Schouten (2009).  
84 See also footnote 74  and Annex 7 . 
85 The European Parliament called on the Commission in 2008 to prepare legislation lowering the 
threshold for the disclosure of major holdings to 3%. See European Parliament (September 2008), Annex to the Resolution.  
86 Although warning about setting too lower disclosure levels, ESME expressed an opinion in favour of 
setting the 3% threshold. See ESME (December 2007), p.5. 
87 Mazars (2009), section 3.4.1. 
88 Such as such as better capturing shareholders' movements of interest to the market or facilitating 
shareholders' activism. See Mazars (2009), ibid. and European Commission  (December 2008), §15. 
89 Notably the impact on the market  of corporate control. See Eu ropean Commission (December 2008), 
§§16 and 21. 
 
EN 15   EN that lowering the initial threshold to 3%  could be a possible improvement to the 
Directive, to the extent that such m easure permits maximum harmonisation without 
disrupting the market90. See also Annex 8 . 
30. Moreover, the rules of the Transparency Directive do not adequa tely respond to new 
market developments resulting from financ ial innovation. Disclosure of cash-settled 
financial instruments is not re quired by the Directive, despite the fact that they may 
be used with a view to ac quire control of voting rights91. Some Member States have 
already reacted to this risk by introducing legislation requiring di sclosure of holdings 
of voting rights. Supervisors92 and market experts93 are calling for an EU regime in 
this area. Market particip ants would also be favourab le to the introduction of 
disclosure obligations regarding cash-settled financial instruments94. The External 
Study also recommends requiring disclosure of cash-settled equity  swaps or similar 
financial products95. For more detail on this issue, see Annex 9 .  
There are also calls to reduce the risk of “empty voting”96 resulting, in particular, 
from the use of securities lending schemes97. This problem is also connected to the 
so-called “record date capture” issue98. The External Study shows a large stakeholder 
support to introduce measures to prevent “empty voting”99 and suggest limiting 
empty voting practices100. The study describes differe nt ways to address this 
problem: from the request for more transp arency to the restriction or even the 
prohibition of empty voting. For more detail on this issue, see Annex 10 . 
31. Thirdly, issuers associations argue that  the possible transparency improvements 
described in the precedent paragraphs would not be sufficient for corporate 
governance purposes. They favour the introduc tion of mechanisms allowing them to 
identify the ultimate investor (with smaller hol dings) so as to be able to engage into 
real shareholders-issuers dialogue. Thes e mechanisms would result in enhanced 
transparency towards the issuer but not necessarily towards the market. For more detail on this issue, see Annex 11
.  
                                                 
90 Mazars (2009), possible improve ment n°8, pp. XIV and 77. 
91 The so-called “hidden ownership” problem (use of equity derivatives to con ceal economic ownership of 
shares). See generally Schouten (2009) as well as Hu & Black (2006) and Hu & Black (2007). 
92 CESR (January 2010).  
93 ESME (November 2009) 
94 According to the external study on the operation of th e Directive, 90% of the stakeholders expressing an 
opinion on this issue favour the inclusion of cas h-settled equity swaps or cash-settled contracts for 
differences in the calculation of th resholds (fully or above a cert ain threshold). See Mazars (2009), 
sections 3.1 and 3.6.3. 
95 Mazars (2009), Possib le Improvement n°11. 
96 “Empty voting” is the reverse situation to “hidden ownership”: the exercise of voting power without 
corresponding economic interest. See generally Schouten (2009) as well as Hu & Black (2006) and Hu 
& Black (2007). 
97 On the treatment of securities lending by the Directive, see Annex 10 .  
98 The situation in which the investor identified as sh areholder on the record date sells his shares between 
such date and the date of the general meeting, but remains legally entitled to vote although it has no 
longer an economic interest n the issuer. If the selling transaction ta kes place two/three days before the 
general meeting, the market will not necessarily be informed of such trans action before the general 
meeting. 
99 See Mazars (2009), section 3.6.2. 
100 Mazars (2009), Possib le Improvement n°10. 
 
EN 16   EN 32. Furthermore, 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. 
There is some support for extending su ch obligations across EU countries101. At the 
same time, it should be noted that such e nhanced transparency requirements may also 
have adverse consequences, in particular  in the market for corporate control102. In 
any event, the External Study conclude s by recommending the introduction of 
enhanced disclosure requirements for significant holdings103. 
Additionally, the question of whether large investors should disclose their voting 
policies remains on the table. For more  detail on these issues, see Annex 12.  
33. Finally, the comparison with the regime on major holdings disclosures in selected 
third countries shows the existe nce of alternative approaches104. Annex 13  provides a 
summary description of the most interesti ng features of third countries regimes. 
2.5. Corporate governance-related, non-financia l and other disclosure obligations  
34. In addition to the disclosure of financ ial 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. This relates in particular to the so-called Corporate Governance Statement
105; the Report under Article 10 of the 
Takeover Bids Directive (w hen not included into th e Corporate Governance 
Statement) or the disclosures related to  the remuneration po licy of the company106. 
                                                 
101 According to the external  study on the operation of the Directive,  more than 50% of the stakeholders 
surveyed support that investors acquiring a certain significant holding of voting rights (such as 
10%,15% or 20%) should be required to provide more  detailed information than under the current rules. 
See Mazars (2009), section 3.7. 
102 See European Commissi on (December 2008), §21. 
103 “ 12. Introduce enhanced disclosure requirements for significant holdings: the applicable thresholds 
should be significant enough to be meaningful (for example 10% and 20%). Information could include a statement regarding the investor’s intent (regarding the potential acquisition of control, the desire to  
continue to buy shares, the willingne ss to change the composition of the Board, the intention to modify 
the strategy of the company), if possible some information on the sources of finance and the time horizon of the investment, and the status of the investo r (fully exposed to the eco nomic risk of the shares 
or not). ” Mazars (2009), Possibl e Improvement n°12. 
104 In China and the US, a more complex system takes into account the relative position of the shareholder 
or its intent. For instance, in China, investors’ di sclosure obligations are different depending on their 
relative position within the issuer. In the US, simplifie d requirements are applicable to passive investors 
(not seeking to acquire or influence control of the issuer) and obligations are different depending on whether the investor makes a first disclosure for that  issuer or an update on a previous disclosure. In 
Switzerland, the thresholds for the disclosure votin g rights and of financial instruments given access to 
voting rights are not combined for the purposes of triggering the notification obligation. However, the 
moment a threshold is crossed, full information sha ll be disclosed on all positions. See generally Mazars 
(2009), section 6. See also IOSCO (June 2009a), Annex A. 
105 Article 46a of the 4th Company Law Directive. 
106 See Commission Recommendation 2004/913/EC and Commission Recommendation 2009/385/EC.  
 See also recital 13 of the Transpar ency Directive, where it is stated that the European  Parliament and 
the Council welcomed the Commission's commitment (in 2004) to consider enhancing the transparency 
on remuneration issues as well as the Commission's intention to make a Recommendation on this topic 
in the future (which eventually become Recommendation 2004/913). 
 
EN 17   EN The issue has been raised as to whethe r these disclosure re quirements should be 
integrated into the Transparency  Directive regime. See Annex 14  for more detail.  
35. A related issue concerns disclosure of E nvironmental, Social and Governance (ESG) 
data made by listed companie s. Article 46(1)(b) of the 4th Company Law Directive 
and 36(1) of the 7th Company Law Directive107 requires companies to include 
information relating to environmental and em ployee matters in their annual report to 
the extent necessary for an understa nding of the company's development, 
performance or position. Rec ital 14 of the Transparency Di rective also contains an 
indirect reference to disclosure of th is kind (on disclosures by oil and mining 
companies of payments to governments). A number of stakeholders are regularly 
requesting to improve and strengthen European legislation regarding ESG disclosures. In their view, the Transp arency Directive appears as a possible 
appropriate vehicle to integrate such di sclosures alongside financial reporting 
obligations of listed companies, and to a ddress some of the perceived short-comings 
of current ESG disclosure rules and practice. See Annex 14
 for more detail.  
36. Finally, debate regarding disclosures in relation to short selling has led to the 
consideration of the possible application of the dissemination and storage rules of the 
Directive to certain types of short selling-related disclosures, which could become 
caught by the definition of "r egulated information" in th e same manner as certain 
disclosures requested under the Market Abuse Directive are caught108. 
2.6. Access to information on listed companies:  storage of "regulated information" 
37. The External Study shows that the dissemina tion rules of the Di rective requiring the 
pushing of regulated information to  media are positively perceived109. The poor 
cross-border dissemination of regulated in formation by smaller listed companies and 
the low interest shown by analysts and investors in  such information (and a fortiori  
in those companies) remains, however, an issue (the so-called "black hole" 
problem110). It has also been outlined that some Member States still require a paper-
based publication of some regulated info rmation in newspapers, which would go 
against the modernisation spirit of the Directive111. 
38. The impact of the Directive rules on storag e of regulated information is however less 
encouraging (for more detail on access to regulated information, see Annex 15 ). 
Access to historical informa tion on listed companies on a pan-European scale has not 
been simplified: interested parties n eed to go through 27 different national 
                                                 
107 Article 4(5) of the Transparency Directive requires that the annual management report is drawn up in 
accordance with Article 46 of the 4th Company Law Directive and, if th e issuer is required to prepare 
consolidated accounts, in accordance with Article 36 of the 7th Company Law Directive.  
108 See the consultation paper issued by CESR in 2009 (CESR (July 2009b), pp.5-6, 9 and 14), although its 
final report of March 2010 leaves the question open (CESR (March 2010), p. 10). On the short selling 
issue, see generally IOSCO (June 2009b). 
109 Mazars (2009), section 4.3. Interes tingly, this Study outlines that even  if practices are very diverse in 
Member States, the way companies comply with the obligation to disseminate their Regulated 
information has not radically changed with the Directive. It also provides some information explaining that no enforcement by supervisors of the obligation to publish on an "EU wide" basis is happening. 
110 Mazars (2009), sections 4.3. 2.5 and 4.3.2.6. See also §14  of this Report. 
111 Mazars (2009), section 4. 3.1.1. However, see also recital 8 of the Transparency Directive. 
 
EN 18   EN databases112 and the electronic network interconnecting them is only at an initial 
stage with rather modest results so far (see Annex 15 ). If compared with the US, 
where a single electronic database exists113, the EU situation is not positive. 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
114.  
39. A more centralised storage system115 would certainly be able do so by facilitating the 
work of financial intermediaries and analysts on a wider EU scale116. It would also 
allow to address the black hole problem in a longer perspective. This is also the 
Commission's long term vision, as descri bed in its 2008 Recommendation on storage 
of regulated information117, as well as IOSCO's recommendation118.  
Enhancing the network of nationa l storage mechanisms (or the ex novo  creation of a 
centralised storage system) would require solving governance issues, in particular 
who should take responsibility for enhanc ing such network: actors such as the 
European Securities Market Authorities119, the network of European business 
registries120, the European Central Bank121 or the Office for the Harmonisation of the 
Internal Market122 could a priori  be concerned. Decisions on costs, notably regarding 
the initial123 investment, would also need to be taken124. The Commission will be 
                                                 
112 In the Directive, these databases are referred to as " officially appointed mechanism for the central 
storage of regulated information " (cf. Article 21(2)). Additiona lly, according to Mazars (2009), 
stakeholders complaint about the lack of harmonisation on the practical functioning of these databases (see section 1.8.1 of that Study). 
113 Mazars (2009), sections 4. 4.3.5 and 6.4.3. See also http://www.sec.gov/edgar.shtml  
114 According to Mazars (2009), stak eholders would use the companies'  websites as primary source of 
information rather than the storage mechanism, although they would trust more the latter. See section 
4.4.3 of that Study. 
115 This would require, as minimum, a single point of access (not necessa rily a single database) and some 
harmonisation of input standards: e.g. electronic standard forms for the notification of major holdings 
and of other disclosed information; use of interactiv e data (such as XBRL) etc. It would also require 
some interaction with other databases on securitie s (e.g. CESR's mifid data base, ECB's centralised 
securities database etc.). 
116 See Mazars (2009), section 4.4.3.6. 
117 Commission Recommendation 2007/657/EC of 11 October 2007 on the electronic network of officially 
appointed mechanisms for the cent ral storage of regulated informat ion referred to in Directive 
2004/109/EC of the European Parliament and of the Council, OJ L 267, 12.10.2007, p.16. See in particular §22. 
118 IOSCO (February 2010), p.25. 
119 ESMA will be CESR successor. CESR should prepare guidelines in 2010 regarding the future 
development of the electronic network of storage mechanisms (cf. Recommendation 2007/657 of the 
European Commission, §§21 and 22). CESR is also running the so-called Mifid database and is 
currently providing a temporary initial netw ork of storage mechanism. See Annex 15  of this paper. 
120 See www.ebr.org   
121 The European Central Bank runs a "centralised securities database" which could have the potential to 
integrate regulated information on issues. See European Central Bank (February 2010).  
122 OHIM is an EU agency that manages the EU trademark registry. As such, it has the know-how to keep 
registries and could potentially be an alternative to develop a pan-European storage system. See 
http://oami.europa.eu   
123 Understood as one-off costs as opposed to regular on-going costs. 
124 See in this regard Decision No 716/2009/EC of the European Parliament and of the Council of 16 
September 2009 establishing a Community programme to support specific activities in the field of 
financial services, financial reporting and auditing, OJ L253, 25.9.2009, p.8. In principle this Decision 
allows for EU (partial) financing of, inter alia , certain CESR activities, including information 
 
EN 19   EN launching in 2010 a feas ibility study on the developmen t of a pan-European storage 
system for regulated information, which should be addressing those issues.  
40. Should a more centralised storage system ne ither be possible nor desirable, certain 
stakeholders appear in favour of a simple r (and radical) solution: imposing minimum 
standards for issuers to store re gulated information on their website125 and inviting 
the users of financial information to use Internet search facilities126. This 
decentralisation would eliminate the storage mechanisms as such127. 
2.7. Non-regulated markets and disclosure requirements 
41. The rules of the Transparency Directive do not apply to non-regulated markets (also 
known as alternative or exchange-regulate d markets) and Member States have 
generally not extended the applicability of th e detailed rules of the Directive to those 
markets128. At the same time, lighter transparen cy rules are generally applicable to 
issuers of securities traded in those markets129. This situation is well accepted by 
stakeholders and, according to the External  Study, there is no support for extending 
the Transparency Directive requirements to issuers whose securities are traded on 
such exchange-regulated or alternative markets130. Stock exchanges, in particular, see 
those markets with lighter rules and lower compliance costs as an attractive 
possibility for smaller companies to ge t access to capital markets (see Section  2.1).  
Concerning the facilitation tools131 linked to the Transparency Directive, it is 
however conceivable to make them available to market participants in the non-regulated markets
132. 
                                                                                                                                                         
technology projects of EU dimension. See also Decision No 922/2009/EC of the European Parliament 
and of the Council of 16 September 2009 on interoperability solutions for European public 
administrations (ISA), OJ L 206, 3.10.2009, p.20. 
125 Storage of regulated information on the website of the issuer is already com pulsory in several Member 
States. Disclosure of corporate governance related in formation on the issuers websites is also requested 
by the Shareholders Rights Directive.  In any event, stakeholders woul d already be using the companies' 
websites as primary source of informati on. See Mazars (2009) , section 4.4.3. 
126 Mazars (2009), s ection 4.4.3.6, in fine . 
127 The External Study seems to sugg est a middle solution: a single EU access point at CESR level with a 
direct Internet link to a compulsory and harmonised section of the issuers’ website where the information would be stored. See Mazar s (2009), Possible Improvement n°14. 
128 The application of the Transparency Directive rules to alternative markets would imply higher 
compliance costs for issuers of securities traded on th ose markets. Those costs would in particular result 
from the need to present financial statements in IFRS and its related auditing and legal costs. The 
disseminations rules would also imply higher compliance costs for issuers. 
129 See European Commission (December 2008), Annex 7. Those lighter rules generally request issuers to 
disclose at least an annual financial report, although not necessarily presenting the financial statements 
in IFRS.  
130 Mazars (2009), section 1.9.2. 
131 E.g. possible use of (adapted) electronic standard forms for notification of major holdings (see Section 
2.3) or of the storage mechanism (see Section 2.6 ) 
132 For instance, the Belgian officially appointed mechanism for the storage of regulated information will 
soon be in a position to include information on comp anies whose securities are tr aded in an alternative 
market in Belgium. 
 
EN 20   EN 2.8. Issues for clarification and/ or technical adjustments  
42. The review of the operation of  the Transparency Directiv e shows that some of its 
requirements are not always clear, leading to  uncertainty as regards those obligations. 
For instance, CESR regularly publishes inte rpretative documents, in a "questions-
and-answers" format, regard ing the Directive obligations133. The External Study also 
identified some requirements that would benefit from further clarity134. As a result, 
some technical adjustments to the text of the Directive would possibly be beneficial 
with a view to clarif ying its obligations. 
Annex 6  to this report provides a detailed de scription of number of these clarity 
issues135. This Annex also addresses the ques tion of the possible prolongation of the 
exemption in Article 30(4). 
                                                 
133 CESR (October 2009). 
134 Mazars (2009), see sections 1.4.3 (on definitions); 2.4.7 (on financial repor ting); 2.6.5 (content of 
interim management statements); 3.3.7 (on major ho ldings notifications); 3.6.1.4 (on stock lending); 
and 3.6.3.2 (on financial instruments) of that study. At the same time, it should be noted that the 
stakeholders' perception about the overall clarity of th e Directive is positive and that, in case of lack of 
clarity, stakeholders tend to attri bute such lack of clarity to nationa l laws, guidance or market practices 
more often than to the Directive itself (see sections 1.4.1 and 1.4.2 of that study).  
135 Annex 7  also provides a description of anot her not-sufficiently clear requirement. 
 
EN 21   EN ANNEX 1 – THE TRANSPARENCY DIRECTIVE AND ITS IMPORTANCE FOR FINANCIAL 
MARKETS  
1. Annex 
1.1. This Annex presents: 
• A) a description of the Transparency Directive; 
• B) the changes introduced to the Transparency Directive since 2004; and 
• C) the importance of the Transparen cy Directive for financial markets 
A) Description of the Transparency Directive  
1.2. Directive 2004/109/EC136 (the "Transparency Direct ive") requires issuers of 
securities in regulated markets within the EU to ensure appropriate transparency for 
investors through a regular flow of info rmation by disclosing periodic and on-going 
regulated information and by disseminating such information to the public throughout the Community. Regulated inform ation consists of financial reports, 
information on major holdings of voting right s and information disclosed pursuant to 
the Market Abuse Directive. For this, sh areholders, or natural persons or legal 
entities holding voting rights or financial instru ments that result in an entitlement to 
acquire existing shares with  voting rights, should also  inform issuers of the 
acquisition of or other changes in major holdi ngs in companies so that the latter are 
in a position to keep the public informed.  
1.3. Whilst it is not a revolutionary legal text, the Transparency Directive is an important 
instrument for the modernisation of the EU financial markets
137 (see also Section C 
of this Annex  on the importance of the Transparency Directive for financial 
markets). It builds on the transparency requirements previously established in Directive 2001/34/EC
138. As a result of the modifi cation of Directive 2001/34/EC, 
new rules on transparency requirements apply to  the issuers of securities in regulated 
markets within the Community while at th e same time leaving freedom to Member 
States as to the requirements that should be  applicable in the a lternative markets.  
1.4. The Transparency Directive contains rules on: disclosure of information (such as 
deadlines, content, formats, language etc); dissemination of information to the public 
and the competent authorities; storage of disclosed information by the officially 
                                                 
136 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. The text of the directive is available at: 
http://www.ec.europa.eu/internal_marke t/securities/transparency/index_en.htm
 
137 See generally the European Financial integration report 2007 and previous similar reports, at: 
http://www.ec.europa.eu/internal _market/finances/fim/index_en.htm  
138 Directive 2001/34/EC of the European Parliament and of the Council of 28 May 2001 on the admission 
of securities to official stock exch ange listing and on information to be  published on those securities, OJ 
L 184, 6.7.2001, p. 1. Directive 2001/34/EC is itself a codification of previous directives, see recital 1 
of that Directive. 
 
EN 22   EN appointed storage mechanisms; liability of issuer s regarding disclosed information; 
supervision by competent authorities and penalties for lack of compliance. The 
Directive determines which national law is applicable, irrespective of place of listing of the issuer: the so-called home/host Member  State rule. The Directive also contains 
some provisions regarding the treatme nt of issuers from third country. 
1.5. The main novelties of the Transparency Dire ctive, compared to the previous regime 
under Directive 2001/34/EC, are: 
– The so-called home/host Member State rule and its consequences regarding the 
applicable law and the supervisory powers  of competent authorities (Article 3); 
– The shortening of the deadlines for the di sclosure of annual financial report and 
half-yearly financial repo rts (Articles 4 and 5); 
– The requirement to disclose quarterly fi nancial reports or "interim management 
statements" (Article 6); 
– The modernisation of the rules regarding disclosure of holdings of voting rights 
(Article 10) and the requirement to disclo se holdings of financial instruments that 
may allow to control voti ng rights (Article 13); 
– The obligation on the dissemination of regulat ed information to the public (Article 
21 of the methods of disseminati on; Article 20 on the language); 
– The rules on supervision by the compet ent authorities (A rticles 19 and 24). 
1.6. The transposition deadline of the Tran sparency Directive was 20 January 2007. 
1.7. The Transparency Directive was completed by Commission Directive 2007/14/EC
139, 
to be transposed by 8 March 2008. Co mmission Directive 2007/14/EC contains 
implementing measures adopted pursuant to  the Transparency Directive mandate in 
order to complete the legal framework esta blished by the Transparency Directive. In 
adopting these implementing measures, the Commission took into account the advice provided by CESR (Committee of Europ ean Securities Regulators). See Annex 4
 for 
more detail on the use of implementing powers. 
1.8. The Transparency Directive is further supplemented by soft-law. This notably 
includes: (i) the Commission recommendation on storage of regulated information140; 
(ii) the standard form141 developed by the Commission serv ices for the notification of 
                                                 
139 Commission Directive of 8 March 2007 laying down detailed rules for the implementation of certain 
provisions of Directive 2004/109/EC on the harmonisa tion of transparency requirements in relation to 
information about issuers whose securities are admitt ed to trading on a regulated market; OJ L 69, 
9.3.2007, p. 27. The text of the directive is available at: 
www.ec.europa.eu/internal_market/s ecurities/transparency/index_en.htm  
140 Commission Recommendation of 11 October 2007 on the electronic network of officially appointed 
mechanisms for the central storage of regulated information referred to  in Directive 2004/109/EC of the 
European Parliament and of the Council, OJ L267, 12.10.2007, p.16. The text of the recommendation is available at: www.ec.europa.eu/internal_market/s ecurities/transparency/index_en.htm
 
141 The text of the standard form is available at: 
http://www.ec.europa.eu/internal_marke t/securities/transparency/index_en.htm  
 
EN 23   EN major holdings; and (iii) the interpretative work undertaken by CESR  with regard to 
the alignment of the exercise of supe rvisory powers by the national competent 
authorities (see in particular the " Frequently Asked Questions regarding the 
Transparency Directive: common pos itions agreed by CESR members "142). 
1.9. The Transparency Directive obligations are often closely connected to obligations set 
out in other Community texts, either in the corporate governance/company law field 
or in the financial markets/securities field.  
– Firstly, the Transparency Directive covers fields that may be directly related to 
other EU legal instruments, such as  the Shareholders Rights Directive143 or the 
accounting rules144.  
– Secondly, other EU instruments, such as the Prospectus Directive145, the 2006 
modification to the accounting directives146 or the Takeover Bids Directive147 may 
also include disclosure requirements which e ither form part of or are very close to 
the core area of the Transparency Directive obligations.  
– Thirdly, the Transparency Directive is th e instrument for implementing disclosure 
obligations under other directives, su ch as the Market Abuse Directive148.  
                                                 
142 Latest version from October 2009, www.cesr.eu  
143 See Articles 17 and 18 of the Transparency Direc tive, concerning the relation between issuers of 
securities and the securities holders. Directive 2007 /36/EC of the European Parliament and of the 
Council of 11 July 2007 on the exercise of certain rights of shareholders in listed companies, OJ L 184, 
14.7.2007, p.17. See: www.ec.europa.eu/internal_market/company/shareholders/indexa_en.htm  
144 See Articles 4 to 7 of the Transp arency Directive, concerning fina ncial reporting. Accounting Rules: 
Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards, OJ L 243, 11.9.2002, p. 1; Fourth Council Directive 
78/660/EEC of 25 July 1978 on the annual accounts of certain types of companies, OJ L 222, 
14.8.1978, p. 11 (directive as last amended by Directive 2006/46/EC
144); Seventh Council Directive 
83/349/EEC of 13 June 1983 on co nsolidated accounts, OJ L 193, 18.7.1983, p. 1 (directive as last 
amended by Directive 2006/46/EC).  
See: www.ec.europa.eu/internal_market/accounting/officialdocs_en.htm  
145 See in particular Article 10 of the Prospectus Directive regarding the production of an annual summary 
of information disclosed. Directive 2003/71/EC of the European Parliament and of the Council of 4 
November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC, OJ L 345, 31.12.2003, p. 64. 
See: www.ec.europa.eu/internal_market/securities/prospectus/index_en.htm
. See also ESME (June 
2008), Position on Article 10 of the Prospectus Directive in relation to the Transparency Directive , 
available at: www.ec.europa.eu/internal_mar ket/securities/esme/index_en.htm  
146 See, for instance, Articles Article 46a of the F ourth Company Law Directive and Article 36 of 7th 
Company Law Directive, as amended by Directive 2006/46/EC regarding the disclosure of the 
corporate governance statement.  
147 See in particular Article 10 of the Takeover Bids Directive which imposes some disclosure 
requirements on issuers regarding th e content of the annual report. See also Articles 15 and 16 of that 
Directive on the squeeze-out and se ll-out rights. For the exercise of  these rights, kn owledge of the 
upwards crossing of the 90% threshold is needed. Directive 2004/25/EC of the European Parliament 
and of the Council of 21 April 2004 on Takeover bids. OJ L142, 30.4.2004, p.12.  
See: www.ec.europa.eu/internal_market/company/takeoverbids/index_en.htm  
148 See in particular Article 6 of Directive 2003/06/EC of 28 January 2003 on insider dealing and market 
manipulation (market abuse); OJ L 96, 12.4.2003, p. 16; and Article 2 of the Commission Directive 
2003/124/EC of 22 Decembe r 2003 implementing Direc tive 2003/6/EC of  the European Parliament and 
of the Council as regards the definition and public disclosure of inside information and the definition of 
 
EN 24   EN – Finally, the Transparency Directive is  also a "distant cousin" of the 1st Company 
Law Directive149 which also contains disclosu re obligations, although not limited 
to listed companies. 
B) The changes introduced to th e Transparency Directive since 2004  
1.10. Since its adoption in 2004, the Transparency Directive has been a stable text. It was 
modified once, in order to align the procedure for the exercise of implementing powers conferred on the European Commissi on to the new regulatory procedure with 
scrutiny
150.  
1.11. In September and October 2009, the European Commission has tabled two draft 
directives which include draft amendments to certain Articles of the Transparency Directive.  
1.12. The first proposal concerns the review  of Directive 2003/ 71/EC (Prospectus 
Directive)
151, which would impact on the definiti on of home Member State in the 
Transparency Directive. The proposed cha nges to the Prospectus  Directive notably 
include removing the limitation on the determ ination of the home Member State for 
issues of non-equity securities with a denom ination below EUR 1.000152. As a 
consequence of this proposal, all issuers w ill be allowed to choose, for the purposes 
of the Prospectus Directive, the home Member State for all non-equity security 
independently of the denomination. This ch ange would trigger the need to make a 
corresponding adjustment to the mechanis m for the determination of the home and 
the host Member States in Article 2(1) (i)(i) of the Transparency Directive 
2004/109/EC. 
1.13. In addition, the draft directiv e modifying the Prospectus Directive also proposes to 
repeal Article 10 of such Directive153. The proposal to repeal Article 10 also impacts 
                                                                                                                                                         
market manipulation, OJ L 339, 24.12.2003, p.70.  
See: www.ec.europa.eu/internal_marke t/securities/abuse/index_en.htm  
149 First Council Directive 68/151/EEC of 9 March 1968 on co-ordination of safeguards which, for the 
protection of the interests of members and others, are required by Member States  of companies, within 
the meaning of the second paragraph of Article 58 of the Treaty, with a view to making such safeguards 
equivalent throughout the Community, OJ L 65, 14.3. 1968, p.8. This Directive was last amended by 
Directive 2003/58/EC of the European Parliament and of the Council of 15 July 2003 amending Council Directive 68/151/EEC, as regards disclosu re requirements in respect of certain types of 
companies, OJ L 221, 4.9.2003, p.13.  
See: www.ec.europa.eu/internal_market/company/official/index_en.htm
 
150 Directive 2008/22/EC of the European Parliament and of the Council of 11 March 2008 amending 
Directive 2004/109/EC on the harmonisation of transparency requirements in relation to information 
about issuers whose securities are admitted to tr ading on a regulated market, as regards the 
implementing powers conferred on the Commission; OJ L 76, 19.3.2008, p. 50–53  
151 Proposal for a Directive of the European Parliament and of the Council amending directives 
2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to 
trading and 2004/109/EC on the harmonisation of tran sparency requirements in relation to information 
about issuers whose securities are admitted to trading on a regulated market; COM(2009)0491 final of 
23 September 2009. See draft Article 2, modifying Article 2(1)(i) of the Transparency Directive. 
152 See proposed changes to Article 2(1)(m)(ii). 
153 As a consequence of the entry into  force of the Transparency Directiv e, the obligation in the Prospectus 
Directive for the issuer to provid e annually a document containing or referring to all information 
published in the twelve months preceding the issuan ce of the prospectus has become a dual obligation 
and obsolete. As a consequence, a registration document, instead of being updated in accordance with 
 
EN 25   EN on the determination of home Member Stat es under the Transparency Directive for 
issuers of shares (and of low value debt s ecurities) incorporated in a third country, 
since reference was made to that Article for the determination of the home Member State. As a result, a technical adjustment is  needed in order to avoid a legal vacuum. 
As a result, the reference to Article 10 of  the Prospectus Directive is replaced by a 
reference to point (iii) of Article 2( 1)(m) of the Prospectus Directive. 
1.14. The second proposal relates to the gran ting of powers to the future European 
Securities Markets Authority
154. The proposal for a Regulation establishing a 
European Securities and Markets Aut hority adopted by the Commission on 23 
September 2009155 provides that the Authority may develop draft technical standards 
in the securities markets ar ea. The draft directive propos ed by the Commission on 26 
October 2009 identifies areas for technical st andards in relation to  several directives. 
Concerning the Transparency Directive, Article 7 of that draft directives foresees that 
the Authority may develop technical standard s in relation to a standard form to be 
used for the notification of major holdi ngs of voting rights and of financial 
instruments giving access to voting rights156 (cf. Articles 12 and 13 of the 
Transparency Directive). This is an issu e of technical nature  not involving policy 
decisions, since the content of the notification obligation is determined by the 
Transparency Directive and its implementing measures. 
1.15. Additionally, the draft direc tive also proposes to make clear that communication of 
information from national supervisory author ities to the future European Securities 
Markets Authority shall not be considered to be a bre ach of professional secrecy (cf. 
Article 25 of the Transparency Directiv e). This proposed amendment aims at 
ensuring that there are no legal obstacles to the information sharing obligations 
included in the Regulations establishing the Authorities. Indeed, the new supervisory 
architecture will require national supervisory authorities to coopera te closely with the 
European Supervisory Authorities. In pa rticular, these should receive sufficient 
information from the national supervisory authorities in order to be able to discharge their duties under the regulation. 
                                                                                                                                                        
 
Article 10, should be suppleme nted in accordance with  the normal proce dure to supplement 
prospectuses. See recital 14 Proposa l for a Directive of the European  Parliament and of the Council 
amending directives 2003/71/EC on the prospectus to  be published when securities are offered to the 
public or admitted to trading and 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; 
COM(2009)0491 final of 23 September 2009. See also the opinion of ESME regarding Article 10 of the Prospectus Directive, ESME (June 2008).  
154 European Commission Proposal for a Directive of the European Parliament and of the Council 
amending Directives 1998/26/EC, 2002/87/EC, 2003/6/EC, 2003/41/EC, 2003/71/EC, 2004/39/EC, 2004/109/EC, 2005/60/EC, 2006/48/EC, 2006/49/EC, and 2009/65/EC in respect of the powers of the 
European Banking Authority, the European Insura nce and Occupational Pensions Authority and the 
European Securities and Markets Authority; COM(2009)0576 final of 26 October 2009. See draft Article 7 modifying Articles 12, 13 and 25 of  the Transparency Directive. Available at: 
http://ec.europa.eu/internal_market/finances/committees/index_en.htm
  
155 European Commission Proposal for a Regulation of the European Parliament and of the Council 
establishing a European Securities and Markets Au thority, COM(2009)503 final of 23 September 2009. 
Available at: http://ec.europa.eu/internal_market/finances/committees/index_en.htm   
156 Financial instruments that result in an entitlement to acquire, on such holder's own initiative alone, 
under a formal agreement, shares to  which voting rights are attached, al ready issued of an issuer whose 
shares are admitted to trading on a regulated market 
 
EN 26   EN 1.16. These two draft Directives are currently being discusse d by Council and Parliament. 
1.17. Finally, it must be also underlined that  in 2006, the European Commission also 
proposed to modify Article 17 of the Transparency Directive in the context of the proposal for a new directive on the exer cise of voting rights by shareholders
157. The 
objective of this proposed amendment was to avoid duplication of obligations 
without repealing the Article  in its entirety, as such Article deals not only with 
information to be provided in the context of General Meetings but also, more broadly, with all information to be made  available to shareholders and persons 
referred to in Article 10 of the Transpar ency Directive. This proposed amendment 
was eventually not taken in the final text of the new Directive on the exercise of shareholders rights
158. 
C) The importance of the Transparency Directive for the financial markets  
1.18. Section C) of this Annex presents: 
• C1) The objective of the Transparency Directive 
• C2) Existing international standards and third country transparency regimes 
• C3) Move for an enhanced transparency in the context of the recent financial 
crisis 
• C4) Enhanced transparency as a tool to restore market confidence 
C1) The objective of the Transparency Directive 
1.19. In March 2000 the Lisbon European Council decided that a single financial market 
would be a key factor in promoting th e competitiveness of the European economy 
and that an integrated market, properly regulated and prudentially sound, will lower the cost of capital for companies of all size s, deliver major benef its to consumers and 
contribute to developing str onger economic and social c ohesion throughout Europe.  
1.20. Transparency of information about securi ties issuers enhances both investor 
protection and market efficiency and thus contributes to growth and job creation by 
better allocation of capital and by reduc ing costs. On the other hand, lack of 
transparency with regard to such inform ation could hinder investor confidence and 
affect market resilience, reducing in vestment and slowing economic growth. 
1.21. The current financial crisis demonstrat ed that the disclosure of accurate, 
comprehensive and timely information about s ecurities issuers was essential in order 
to build sustained investor confidence a nd allow an informed assessment of their 
business performance and assets.  
                                                
 
157 Proposal for a Directive of  the European Parliament and of the Co uncil on the exercise of voting rights 
by shareholders of companies having their register ed office in a Member State and whose shares are 
admitted to trading on a regulated market and amending Directive 2004/109/EC; COM(2005) 685 final of 5 January 2006. See in particular draft Article 17. 
158 Directive 2007/36/EC of the European Parliament and of the Council of 11 July 2007 on the exercise of 
certain rights of shareholders in listed companies, OJ L 184, 14.7.2007, p. 17. 
 
EN 27   EN 1.22. The Transparency Directive comes within the scope of this objective. Its main 
purpose is to promote transparency in EU  capital markets and to ensure grater 
investor protection throughout  the Community by prescrib ing rules for securities 
traded on EU regulated markets and the issuers of such securities159. 
C2) Existing international standards and third country transparency regimes 
1.23. The provisions of the Transparency Directiv e are in line and c onsistent with the 
existing international standards on ongoing di sclosure of information, in particular 
the IOSCO Principles for Ongoing Disclosure160, a body of high level principles for 
ongoing disclosure and material developm ent disclosure by a ll listed entities. 
However, these principles cover mostly th e ongoing disclosure of  material events 
and do not contain specific guidelines on th e disclosure of periodic information. 
1.24. The 2004 OECD principles of corporate gove rnance also request that the corporate 
governance framework should ensure that timel y and accurate disclosure is made on 
all material matters regarding the corporation, including the financial situation, performance, ownership, a nd governance of the company
161.  
1.25. In July 2009 IOSCO publis hed a consultation report162 on the principles for periodic 
disclosure which sets out specific guidan ce on the disclosure of annual and other 
periodic interim reports as well as on the disclosure of  securities ownership. The 
Final Report of IOSCO, toge ther with the feedback st atement to the consultation, 
was disclosed in February 2010. In the in troduction to this Report, the IOSCO 
recognises that disclosure of material events  on an ad hoc basis alone is not sufficient 
for investors to be able to make invest ment decisions. Even though issuers may be 
required to disclose material events to the public shortly after they occur, these 
disclosures are ad hoc and i nvestors are not able to make investment decisions on 
these types of disclosures alone. For this r eason, issuers should be required to make 
certain periodic reports, such as annual re ports and other interim reports, in which 
certain prescribed disclosures must be pr ovided at regular inte rvals to the public. 
These periodic reports facilitate invest or decision-making and monitoring of the 
markets by making it possible for investors to  compare the performance of the same 
company over regular intervals, and by enabling investors to make useful 
comparisons among different companies163. 
1.26. Major third countries, such as US, China,  Switzerland and Japan, apply similar rules 
with regard to the publication of financial informa tion, including the publication of 
the annual, half-yearly and other interim reports, and the disclosure of major 
holdings164. 
C3) Move for an enhanced transparency in th e context of the recent financial crisis 
                                                 
159 See recitals 1 and 2 of the Transparency Directive. 
160 IOSCO (2002). 
161 OECD (2004), p.22-23 and 49 and seq. 
162 IOSCO (July 2009). 
163 IOSCO (February 2010), p. 4. 
164 See for instance, Schouten & Siems (2009).  
 
EN 28   EN 1.27. The current financial crisis highlighted on ce again the importance of transparency 
across the financial markets. In the conc lusions to the G20 Summits 2009 in London 
and Pittsburgh, G20 leaders called upon grat er transparency, accountability and 
integrity of global financial markets165, and in particular for enhanced disclosure of 
financial information. Also, the G20 Working Group166 recommended in its report to 
find solutions in order to promote transp arency of economic results in financial 
reports.  
1.28. On EU side, in the context of the measures for financial recovery167, improving 
access to up-to-date and official informati on on companies can be seen as a means to 
restore confidence in the markets al l over Europe. De Larosière report168 identified 
the lack of transparency as one of the fact ors which contributes to and aggravated the 
financial crisis and recommended to enha nce transparency in different areas of 
financial markets, in particular with re gard to financial information provided to 
investors.  
1.29. Following this call from the European and wo rld leaders, international organisation, 
national authorities and industry have unde rtaken significant work in order to 
improve transparency and disclosure of financial information by companies. In 
September 2009, IOSCO published a consu ltation report on Transparency of 
Structured Finance Products169 which provides guidance to market authorities on 
enhancing post-trade transparency of structured finance products in their 
jurisdictions. 
1.30. In October 2009, CEBS released a consu ltation paper Disclosure Guidelines: Lessons 
Learnt from the Financial Crisis , which serves as guide to financial institutions in 
providing adequate public di sclosure. The guidelines ta ke the form of high-level 
principles and address both the form and c ontent of disclosures while also providing 
guidance on presentational aspects. 
1.31. Also in October 2009, the British Bankers’ Association (BBA) released its Code for 
Financial Reporting Disclosure170 to correspond with th e UK FSA publication of 
Discussion Paper 09/5, Enhancing Financial Disc losures by UK Credit 
Institutions171. This code commits BBA members to  a “regular dialogue on financial 
statement disclosures” with their supe rvisors to “enhance comparability and 
understanding” and to combine quantitative disclosures with “sufficient qualitative 
narrative to meaningfully explain [their] significance.” 
1.32. Other initiatives were undertaken on na tional and international level and the 
European Commission is currently working on measures with rega rd to disclosure 
mechanisms of different financial products and derivatives.  
C4) Enhanced transparency as a tool to restore market confidence 
                                                 
165 See G-20 (April 2009), together G-20 (March 2009). See also G-20 (September 2009). 
166 See G-20 (March 2009) 
167 European Commission (March 2009). 
168 De Larosière High Level Group (2009).  
169 IOSCO (September 2009). 
170 BBA (October 2009).  
171 UK FSA (October 2009). 
 
EN 29   EN 1.33. Transparency is key for robust, well f unctioning markets provi ding reliable price 
discovery mechanisms. The recent period of  market turmoil and illiquidity has 
highlighted the importance to market conf idence of reliable and useful financial 
disclosures. Financial repor ting permits the measurement of the financial condition 
and performance of companies and is the cornerstone of a well-functioning financial 
system. Sound disclosure, accounting and valu ation practices are essential to achieve 
transparency, to maintain market conf idence and to promote effective market 
discipline172. 
1.34. When announcing the launch by the Europ ean Commission of a public consultation 
on possible ways to enhance co-operation between business registers, Commissioner 
McCreevy said: " The current financial crisis highlighted once again the importance 
of transparency across the financial mar kets. Improving access to up-to-date and 
official information on companies for cr editors, business partners and consumers 
could serve as means to rest ore confidence in the markets "173. 
1.35. In the post-crisis environment, the transparency needs of the new global marketplace, 
with its heightened pruden tial and conduct-of-business re gulation and its new macro-
prudential and systemic oversight, will continue to evolve. Regulatory reforms are 
developing transparency requirements a nd guidelines on product transparency and 
disclosure. While these reforms are not  yet complete, among the regulatory 
requirements, industry guidance, market demand, and evolving practice there can be no doubt that the overa ll trend in product transparency  and companies disclosures 
will be dramatically different in the near future compared with that before 2007. Also, the interconnectedness of the global financial system suggests a need for 
greater systemic exposure and product tran sparency to help mitigate systemic risk
174. 
1.36. From the EU perspective, companies increasingly expand beyond national borders 
using the opportunities offered by the Single Market. Cr oss-border groups as well as 
a high number of restructuring operations, such as mergers and divisions involve 
companies from different Member States of the EU. Furthermore, over the past decade the jurisprudence of the Europ ean Court of Justice has opened up the 
possibility for businesses to incorporat e in one Member St ate and conduct their 
business activity partly or entirely in another.  
1.37. In this context, there is an increasing demand for access to information on 
companies, either for commercial purposes or to facilitate access to justice. However, 
while official information on companies is easily available in the country of their 
registration, access to the same information from another Member State may be hindered by technical or  language barriers.  
1.38. In these circumstances, facilitating cross- border access to official and reliable 
company information for creditors, business partners and consumers is necessary to 
ensure an appropriate degree of transparen cy and legal certainty in the markets all 
over the EU. To achieve this , the Commission services ar e currently working on the 
ways to improve access to information on companies across EU, in particular by 
                                                
 
172 See for instance, Financial Stability Forum (2008). 
173 European Commission IP/09/1677. 
174 See, for instance, Institute of International Finance (2009). 
 
EN 30   EN exploring ways to enhance the co operation of business registries175 and to create a 
single point of access to regulated informati on and a European electronic network for 
storage of information on listed companies (see Annex 15 ). 
                                                 
175 See European Commission (November 2009a).  
 
EN 31   EN ANNEX 2 – METHODOLOGY FOR THIS REPORT  
2. Annex 
2.1. The Transparency Directive lays down 3 reporting obligations on the Commission: 
– Article 33 requires the Comm ission to, by 30 June 2009, " report on the operation 
of this Directive to the European Pa rliament and to the Council including the 
appropriateness of ending the exemption for existing debt securities after the 10-year period as provided for by Artic le 30(4) and its poten tial impact on the 
European financial markets ". 
– Article 27(3) requires the Commission to, by December 2010, " review the 
provisions concerning its implementi ng powers and present a report to the 
European Parliament and to the Council on the functioning of those powers. The 
report shall examine, in particular, the need to propose ame ndments to this 
Directive in order to ensure the appr opriate scope of the implementing powers 
conferred on the Commission. The conclusi on as to whether or not amendment is 
necessary shall be accompanied by a deta iled statement of reasons. If necessary, 
the report shall be accompanied by a legi slative proposal to amend the provisions 
conferring implementing powers on the Commission ". 
– Article 6(3) requires the Commission to " provide a report to the European 
Parliament and the Council by 20 January 2010 on the transparency of quarterly 
financial reporting and statem ents by the management of issuers to examine 
whether the information prov ided meets the objective of allowing investors to 
make an informed assessment of the financ ial position of the issuer. Such a report 
shall include an impact assessment on areas where the Commission considers 
proposing amendments to this Article ".  
2.2. This Commission staff working documen t integrates these three reporting 
requirements into a single consolidated re port. For the preparat ion of this working 
document, the Commission staff used different sources of information. 
2.3. Firstly, the Commission sta ff prepared in 2008 a report on more stringent national 
measures concerning the Transparency Directive
176. The report on more stringent 
national measures was a preparatory step in the preparation of the present report. It 
(1) presented the more stringent nati onal rules in relation to the minimum 
harmonisation nature of the Transparency Di rective; (2) describe d their main impact 
in terms of negative perception, increased costs but al so enhanced transparency; and 
(3) outlined the initiatives being taken to  address such more  stringent national 
measures (such as voluntar y regulatory convergence or the facilitation of cross-
border compliance with different nationa l rules). The 2008 report concluded that 
while the flexibility offered by the Direct ive results on more transparency in the 
market, there are also practical difficulties for investors' complying with their obligations and may have adve rse effects on the market for corporate control. Annex 
2 to the 2008 report described the sources of information used for the preparation of 
                                                
 
176 European Commission (December 2008). 
 
EN 32   EN that paper, including consultations with  national competent authorities, CESR, 
ESME and an information gathering exercise  with selected stakeholders (namely, 
ABI (Association of British insurers),  BusinessEurope (EU industry), CCBE 
(Association of European bars and law so cieties), Deminor (small investors), EBF 
(European Banking Federation), EcoDA (Eur opean Confederation of Directors' 
Associations), EFAMA (asset managers ), EuropeanIssuers (issuers), FESE 
(Federation of European Stock Exchange s) and SIFMA/ICMA (Securities Industry 
and Financial Markets Association)) 
2.4. Secondly, three complementary external studies conducted for the Commission in 
2008 and 2009 addressed different aspects of the Transparency Directive. A first 
study on the economic impacts of the Financial Services Action Plan177 establishes 
the causal links between the 42 measures FSAP measures (including the Transparency Directive) analysed in th e study and their original policy objectives 
and the resulting market impacts across the relevant segments of the market. The 
findings are divided into 3 key sectors – the banking, insurance and securities 
sectors. The study is both quantitative, based on a wide range of indicators and 
available data sets, and qualitative, by dr awing on interviews w ith the industry and 
regulators in 10 selected Member States. A second study dealt with the cost of 
compliance with six selected FSAP me asures (including the Transparency 
Directive)
178. This study examines where the ma jor costs are in terms of the 
implementation and ongoing costs for firm s of complying with the measures 
selected. The cost of compliance was defi ned as a "net change to companies' 
operational expenses due to implementation of  the selected EU regulatory measures". 
This definition requires that all other fact ors which could impact on these costs have 
been removed from this analysis. The study is based on information provided directly 
to the consultants through su rveys and interviews with companies of varying size 
across a broad range of Member States. 
2.5. Last but not least, a study on the applicati on of selected obligations of the Directive 
was conducted in 2009179. The 2009 specific study on th e application of the 
Transparency Directive evaluates the percepti on of stakeholders with regard to the 
Directive; examines the operation of the direc tive with regard to some selected issues 
and compares the directive with similar oblig ations in third countries. It also provides 
some conclusions and practical recommendations for improvement. 
2.6. Thirdly, substantial information was collected  from Member States authorities during 
the transposition of the Directive: e.g. in the context of the transposition meetings 
organised with Member States authorities, from bilateral contacts or in relation to the report on more stringent national measures (above). Also, useful information arose 
from consultation papers issued by national authorities in the area covered by the Directive, in particular regarding nati onal evolutions (e.g. the UK FSA consultation 
on cash-settled derivatives or the French AMF report on major holdings notifications 
and notifications of intentions).  
                                                
 
177 CRA International (2009). 
178 Europe Economics (2009). 
179 Mazars (2009). 
 
EN 33   EN 2.7. Since the adoption of the Directive, CESR180 has provided an invaluable contribution 
to the Commission services with a view to  develop the EU legal framework in this 
area and to facilitate its smooth applicati on. A first expert group on the Transparency 
Directive within CESR prepared CE SR's opinions on the development of 
implementing legislation by the Commission (see also Annex 4 ). The European 
Securities Committee181 was also involved in this process. A second expert group 
within CESR took over in 2007 (or 2008). It carries out level 3 work with a view to provide supervisory convergence in the da y-to-day implementation across the EU 
and clarity for market participants. In th is context, CESR mapped out the way this 
Directive is transposed  by national legislation
182. CESR also regularly discloses a 
clarification document on "Frequently aske d questions" regarding this Directive183. 
Upon invitation by the Commission, CESR also prepared a report mapping out 
national supervisory and sanctioni ng powers under this Directive184. Commission 
staff participated in the work carried out by  CESR in this field. Both the information 
collected in the meetings of the expert gr oups and the results of CESR's work have 
been of particular importance for the preparation of this report. 
2.8. Fourthly, experts groups advisi ng the Commission, such as ESME185 and European 
Corporate Governance Forum (ECGF)186, made important contributions by 
identifying areas where legi slation would need to be improved or which deserved 
being regulated. ESME was i nvited to conduct selective wo rk in the area covered by 
the Directive. This resulted in f our different papers produced by ESME187 which 
address different areas: (1) First report on the Tr ansparency Directive  (December 
2007) which focused on major holdi ngs notification obligations; (2) Preliminary 
views on The definition of "acting in con cert" between the Transparency Directive 
and the Takeover Bids Directive  (December 2008), on the applicability of Article 
10(a) of the Transparency Directive; (3) Opinion on Disaggregation of 
Shareholdings  (June 2009), in connection to the major holdings notification 
obligations; and (4) Views on the issue of transparency of holdings of cash-settled 
derivatives (November 2009), concerning the possibi lity to require disclosure of 
large holdings of cash- settled derivatives.  
2.9. ESME prepared other papers regarding fina ncial markets which are indirectly related 
to the Transparency Directive, such as: the Report on MiFID and admission of 
                                                 
180 The Committee of European Securities Regulator s (CESR) was created by Commission Decision 
2001/527/EC of 6 June 2001 establishing the Committee of European Securities Regulators , OJ L 191, 
13.7.2001, p.43. See: www.cesr.eu   
181 The European Securities Committee (ESC) was cr eated by Commission Decision 2001/528/EC of 6 
June 2001 establishing the European Securities Committee , OJ L 191, 13.7.2001, p. 45. For information 
on the activities of the ESC, see: http://ec.europa.eu/internal_market/securities/esc/index_en.htm   
182 CESR (September 2008). 
183 CESR (October 2009). 
184 CESR (July 2009). 
185 A group of market experts advising the Commission in the field of securities law. It was created by 
Commission Decision 2006/288/EC of 30 March 2006 setting up a European Securities Markets Expert 
Group to provide legal and economic advice on the application of the EU securities Directives , OJ L 
106, 19/04/2006, p. 14. See: www.ec.europa.eu/internal_market/securities/esme/index_en.htm   
186 The European Corporate Governance Forum (ECGF) was created by Commission Decision 
2004/706/EC of 15 October 2004 establishing the European Corporate Governance Forum , OJ L 321, 
22.10.2004, p. 53. For information on the activities of the ECGF, see: 
http://ec.europa.eu/internal_market/company/ecgforum/index_en.htm   
187 ESME papers are available at: http://ec.europa.eu/internal_market/securities/esme/index_en.htm   
 
EN 34   EN securities to official stock exchange listing  (December 2007), which addresses 
Directive 2001/34/EC; F inancial instruments impact of  definitions on the perimeter 
of FSAP directives  (March 2008); Report on Competent Au thority pertaining to 
Issuers Publication of Regulated Information  (March 2008); or the Position on 
Article 10 of the Prospectus  Directive in relation to the Transparency Directive 
(June 2008), which suggested repealing Ar ticle 10 of the Prospectus Directive 
considering the disclosure a nd storage requirements in the Transparency Directive.  
2.10. The ECGF focused on corporate governance issues for listed companies, some of 
which are indirectly related to the Transparen cy Directive in so far as they relate to 
disclosure obligations: e.g. Statement of the European Corporate Governance Forum 
on Cross-border issues of Corporate Governance Codes  (March 2009), Statement of 
the European Corporate Governance Forum on Director Remuneration  (March 
2009) and the Statement of the European Corporate Gove rnance Forum on empty 
voting  (February 2010 ). 
2.11. Fifthly, during the past years the Commi ssion services have received views of 
relevant private sector stakeholders on th e operation of the Di rective at different 
occasions, primarily, in the context of the survey on more stringent requirements and 
of the three external studies mentioned above. Bilateral contacts with major 
European stakeholders' associations (e .g. FESE, EFAMA, EuropeanIssuers etc), 
national associations (e.g. Observatoire de la Communication Financière  in France) 
or individual companies (e.g. i nvestors, issuers, service provi ders etc) have also been 
held where necessary.  
2.12. Finally, other external sources of information or academic research188 have been used 
where appropriate.  
2.13. See References  for further detail on papers mentioned. 
                                                 
188 See References  for a selection of academic papers. 
 
EN 35   EN ANNEX 3 – THE TRANSPOSITION OF THE TRANSPARENCY DIRECTIVE  
3. Annex 
3.1. Few Member States transposed the Transpar ency Directive on time: i.e. before 20 
January 2007: only DE notified to the Co mmission of the adoption of the national 
measures before the deadline and other 5 Member States shortly afterwards: RO, 
UK, FI, LT and BG.  
3.2. Most Member States were, however, delaye d in their transposition process. Such 
delay is largely explained by the differen t transposition deadline of the Commission 
implementing measures (Directive 2007/14/ EC), which was 8 March 2008. Several 
Member States transposed both Directiv es in one set, being late with the 
transposition of the Transparency Dir ective but were on time as regards the 
implementing measures: DK, SE, ES, PT, EE, LU, CY and BE. 
3.3. Other factors also affected the transpositi on process. For instance, some countries 
informed the Commission of difficulties to cope with the transposition of several EU directives in the securities field at the sa me time, due to insufficient capacity to deal 
with several changes at the same time
189. The problem of the sequencing of level 1 
and level 2 measures has also been raised in this context190. For instance, the 
Directive modifying the date of tran sposition of MiFID explained that: "It is also 
necessary that Directive 2004/39/EC and its  implementing measures be transposed 
into national law or apply directly in Member States simultaneously for the Directive 
to produce its full effect".191 
3.4. Beyond spring 2008, a significant delay in the transposition of the Transparency 
Directive and of Directive 2007/14/EC remained only with regard to four countries 
(Hungary, Netherlands, Poland and the Czech Republic). As a result, the Commission decided to tighten  its enforcement action against these four countries 
and sent reasoned opinions on 8 May 2008. Th e Commission decided to refer to the 
European Court of justice three Member States, the Netherlands on 18 September 2008, Poland on 29 January 2009 and the Czech Republic on 25 June 2009. These 
                                                
 
189 For instance, the parallel transposition of the soph isticated MiFID, due by 31 January 2007, which was 
undertaken as a matter of priority in some Memb er States and took availa ble resources. MiFID was 
originally due to be transposed by April 2006, but due to difficulties in its transposition, the 
transposition deadline was extended until 31 January 2007 with an additional 9-month period for firms to adapt their systems to MiFID changes (until 1 November 2007). See Directive 2006/31/EC of the 
European Parliament and of the Council of 5 April 2006 amending directive 2004/39/EC on markets in 
financial instruments, as regards certain deadlines OJ L 114, 27.4.2006, p. 60 
190 According to Commission research, it appears that the sequencing of the negotiations and adoption of 
framework co-decision legislation (Level 1) with implementing measures (Level 2) has resulted in some 
bottlenecks and unrealistic timetables. In practice, a si gnificant portion of the transposition period set in 
Level 1 legislation is taken up with the preparation of implementing measures, without which Member 
States cannot effectively proceed w ith their transposition. It is, howe ver, hazardous to estimate the 
duration of the negotiation process at Level 2 at the time of adoption of the framework legislation. See 
European Commission (November 2007), section 3.2.  
191 See recital 4 to Directive 2006/31/EC, cited in footnote 189 . 
 
EN 36   EN referrals were eventually withdrawn as  Member States communicated national 
measures shortly after192.  
3.5. In the case of France and Italy, the main national laws were in place, but the 
supplementary decrees and orde rs to be prepared  by the securities regulators (AMF 
and CONSOB) were adopted with significant delays. The lengthy consultation 
processes followed by both AMF and CONSOB also added to the delay. This affected the overall application of the re gulatory framework and was reflected in the 
transposition record of  Directive 2007/14/EC. The Commission also pursued 
infringement proceedings against France and Italy for failure to communicate all the transposition measures of Di rective 2007/14/EC within the re levant deadline and sent 
reasoned opinions on 2 February 2009
193. National transposition measures were 
notified before the procedure could have reached the stage of court referral.  
3.6. The following charts provide an overall view on the transposition process of the 
Transparency Directive and Directive 2007/ 14/EC as well as of the enforcement 
action taken by the Commission194 (dates in the charts refer to the date of 
notification, not of entry into force of the legislation).  
Length of implementation of the Transparecny Directive 2004/109/EC
-20002004006008001000
DE
Deadline 20/01/2007
RO 
UK Fi
LTBGLVATELFRDK IESEMTESPTEE SIITSKLUCYBEHUNLPLCZ
Member Stateday
Referral / Court procedure
RO
LFN
Open procedure
notification 
                                                 
192 See IP/08/692 of 6.5.2008; IP/08/1368 of 18 September 2008; IP/08/1519 of 16.10.2008; IP/09/176 of 
29 January 2009; IP/09/2009 of 19 February 2009 and IP/09/1005 of 25 June 2009. While the 
Commission also opened infringement proceedings by sending letters of formal notice to other Member 
States, it decided not to send reasoned opinions un til after 8 March 2009 – therefore granting Member 
States a grace period until the end of the tr ansposition period of Directive 2007/14/EC. 
193 See IP/08/692 of 6.5.2008; IP/08/1368 of 18 September 2008; IP/08/1519 of 16.10.2008; IP/09/176 of 
29 January 2009; IP/09/2009 of 19 February 2009 and IP/09/1005 of 25 June 2009. 
194 Although some of the cases agains t the HU, NL, PL, CZ, FR and IT we re brought before the European 
Court of Justice, transposition was comple ted before the Court took any decision. 
 
EN 37   EN Length of transposition of Directive 2007/14/EC
-300-200-1000100200300400500600
FIDKUK SEES ELPTEELUCYIEBEBG
Deadline 08/03/2008SK LTRO DE AT SILVMT NLHU PLITCZFR
Member Stateday
Referral / Court procedure
RO
LFN
Open procedure
notification
 
3.7. Transposition delays did not, however, lead  to a general regul atory vacuum: there 
was national law in place pur suant to Directive 2001/34/EC  – and to the previous 
directives – addressing most of the Directive requirements. However, late 
transposition affected the entr y into force of some of the Directive novelties, such as: 
the requirement to disclose quarterly fi nancial reports or "i nterim management 
statements" (Article 6); the requirement to disclose holdings of financial instruments 
that may allow to control voting rights (A rticle 13); or th e obligation on the 
dissemination of regulated information to th e public (Article 21 of the methods of 
dissemination). 
3.8. The application of the home Member State principle (Article 3) and the new rules on 
languages (Article 20) were also important nove lties of the Directive in so far as they 
prevented a host Member State to impose th eir national requiremen ts on issuers with 
securities listed in that Member State but incorporated in a different Member State. 
However, even in the case of absence of transposition of the Directive, issuers could 
prevail themselves of the Directive rules on  this issue as a result of the so-called 
direct effect doctrine. Therefore the re strictions to host Member States were 
operational from the first day. 
However, the late transposition of the Directive in some countries led to a few 
awkward transitional situations where companies listed in one Member State (having 
transposed the Directive) but incorporated  in another Member State (not having 
transposed the Directive) were not regulated  by either of them as a result of the 
application of the Home/Host Member State pr inciple. This result was due to the fact 
that the criterion for the application of th e older legislation in the home Member 
State was the fact of being listed in that Member State rather than the incorporation 
principle retained in the Directive. These rather anecdotal cases were solved through 
supervisory cooperation and voluntary comp liance by the companies concerned. In 
any event, these cases was transitional in nature and, technically  speaking, should not 
happen in the future unless the general rule s on the Home Member State are changed.  
 
EN 38   EN 3.9. It should be finally noted that the Commissi on did not receive any official complaint 
for breach of Community law by Member  States concerning the Transparency 
Directive in the period followi ng its adoption. This absence of complaints indirectly 
showed that market participants were not  disrupted by the late  transposition of the 
measures in some Member States. 
 
EN 39   EN ANNEX 4 – THE USE BY THE COMMISSION OF IMPLEMENTING POWERS  
4. Annex 
4.1. Introduction . The Transparency Directive is a Lamfalussy process directive195. In 
this context, implementing powers were granted by Council and Parliament to the 
Commission in a number of areas under th e Transparency Di rective (see below 
tables 4.1 and 4.2 ). 
The procedural rules for the exercise of th ese powers were foreseen in Article 27 of 
the Directive, by reference to the so-called comitology Decision196. These procedural 
rules in the Directive were changed in 2008197, in order to align them to the 
regulatory procedure with scrutiny intr oduced in the Comitology Decision in 
2006198199. Concerning the Transparency Direc tive, most of th e empowerments for 
implemented measures became subject to  the new regulatory procedure with 
scrutiny. 
4.2. Request for a report . Article 27(3) of the Transparen cy Directive, as modified in 
the 2008 review, requires the Commission to, by December 2010, " review the 
provisions concerning its implementing pow ers and present a report to the European 
Parliament and to the Council on the functi oning of those powers. The report shall 
examine, in particular, the need to propose am endments to this Directive in order to 
ensure the appropriate scope of the implementing powers conferred on the Commission. The conclusion as to whether or  not amendment is necessary shall be 
accompanied by a detailed statement of reasons. If necessary, the report shall be accompanied by a legislative proposal to amend the provisions conferring 
implementing powers on the Commission ". This annex replies to this invitation.  
                                                
 
195 The launch of the Lamfalussy pr ocess in 2001 aimed at putting in pl ace an efficient mechanism to begin 
converging European financial supervisory practice and enable Community financial services legislation to respond rapidly and flexibly to developments in financial markets. Under this approach, 
financial regulation is passed in two levels: (i) at "level 1", framework legislation setting out the core 
principles and defining implementing powers is adopted by co-decision; and (ii) the technical details are formally adopted by the Commission as implementi ng measures at "level 2", after a vote of the 
competent regulatory Committee – in this case,  the European Securities Committee – and taking 
account of the European Parliament's position. Fo r the technical preparation of the implementing 
measures in the securities area, the Commission is advised by the Committee of European Securities 
Regulators (CESR), made up of representatives of national supervisory bodies – also referred to as a 
"level 3" committee. For further information on the Lamfalussy process, see generally Commission (November 2007). 
196 Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of 
implementing powers conferred on the Commission, OJ L 184 of 17.7.1999, p.23. 
197 Directive 2008/22/EC of the European Parliament and of the Council of 11 March 2008 amending 
Directive 2004/109/EC on the harmonisation of transparency requirements in relation to information 
about issuers whose securities are admitted to tr ading on a regulated market, as regards the 
implementing powers conferred on the Commission, OJ L 76 of 19.3.2008, p.50. 
198 See Council Decision 2006/512/EC of 17 July 2006, amending Decision 1999/468/EC laying down the 
procedures for the exercise of implementing powers conferred on the Commission, OJ L 200 of 
22.7.2006, p.11, as amended by Decision 2006/512/EC (OJ L 200, 22.7.2006) which introduced the 
regulatory procedure with scrutiny for the adoption of measures of general scope and designed to amend non-essential elements of a basic instrument.. 
199 This paper does not address the impact of the entr y into force of the Lisbon  Treaty on the procedural 
rules concerning comitology. 
 
EN 40   EN 4.3. The use of the implementing powers by the Commission . Pursuant to the 
implementing powers conferred on it, the Commission adopted in 2007 a directive200 
laying down detailed rules for the implem entation of several provisions of the 
Transparency Directive. The provision s concerned by Directive 2007/14/EC were: 
Table 4.1 – Implementing powers exercised (Directive 2007/14/EC) 
 
Empowerment 
(Directive 2004/109) Articles concerned 
(Directive 2004/109)Subject  
Article 2(3)(a) Article 2(1)(ii) Procedural  arrangements for the choice of the home 
Member State 
Article 5(6)(c) Article 5(3), second 
subparagraph Minimum content of the half-yearly non-
consolidated financial statements 
Article 5(6), first 
subparagraph Article 5(4), second 
sentence Major related parties' transactions 
Article 9(7) Article 9(4) Maximum length of the usual 'short settlement cycle' 
Article 9(7) Article 9(5) Control m echanisms by competent authorities as 
regards market makers 
Article 12(8)(b) 
Article 14(2) Article 12(2) and (6) 
Article 14(1) Calendar of trading days 
Article 12(8)(c) Article 12(2) Shareholders and natural persons or legal entities 
referred to in Article 10 of the Transparency 
Directive required to make the notification of major 
holdings 
Article 12(8)(d) Article 12(2)  Circumst ances under which the notifying person 
should have learned of acquisition or disposal or of 
the possibility to exercise voting rights 
Article 12(8)(e) Article 12(4), first 
subparagraph Article 12(5), first 
subparagraph Conditions of independence to be complied with by 
management companies and investment firms involved in individual portfolio management 
Article 13(2) Article 13(1) Types of financial instruments that result in an 
entitlement to acquire, on the holder's own initiative alone, shares to which vo ting rights are attached 
Article 21(4)(a) Article 21(1) Minimum standards for the dissemination of 
regulated information 
Article 23(4)(ii) Article 23(1) Requirements equivalent to Article 4(2)(b) 
Article 23(4)(ii) Article 23(1) Requirements equivalent to Article 5(4) 
Article 23(4)(ii) Article 23(1) Requirements equivalent to Articles 4(2) and 5(2)(c) 
Article 23(4)(ii) Article 23(1) Requirements equivalent to Article 6 
Article 23(4)(ii) Article 23(1) Requirements equivalent to Article 4(3) 
Article 23(4)(ii) Article 23(1) Requirements equivalent to Article 4(3), second 
subparagraph 
Article 23(4)(ii) Article 23(1) Requirements equivalent to Article 12(6) 
Article 23(4)(ii) Article 23(1) Requirements equivalent to Article 14 
Article 23(4)(ii) Article 23(1) Requirements equivalent to Article 15 
Article 23(4)(ii) Article 23(1) Requireme nts equivalent to Articles 17(2)(a) and 
18(2)(a)  
Article 23(7) Article 23(6) Equivalence in relation to the test of independence 
for parent undertakings of management companies and investment firms 
 
                                                 
200 Commission Directive 2007/14/EC of 8 March 2007 laying down detailed rules for the implementation 
of certain provisions of 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; OJ 
L 69, 9.3.2007, p. 27. 
 
EN 41   EN 4.4. In the specific area of equi valence of accounting standard s, the Commission has also 
adopted three legal texts on the ba sis of its implementing powers:  
– Commission Decision 2006/891/EC of 4 December 2006 on the use by third 
country issuers of securities of info rmation prepared under internationally 
accepted accounting standards201. This Decision was re pealed by Commission 
Decision 2008/961/EC, below. 
– Commission Regulation (EC)  No 1569/2007 of 21 December 2007 establishing a 
mechanism for the determination of equi valence of accounting standards applied 
by third country issuers of securities  pursuant to Directives 2003/71/EC and 
2004/109/EC of the European Parliament and of the Council202. This Regulation, 
adopted pursuant to Article 23( 4)(i) of the Transparency Directive, set out the way 
on which third-country Generally Accepte d Accounting Principles (GAAPs) can 
be found equivalent to In ternational Financial Repor ting Standards (IFRS) which 
are adopted by the EU203. 
– Commission Decision 2008/961/EC of 12 December 2008 on the use by third 
countries’ issuers of securities of cer tain third country’s national accounting 
standards and International Financial Reporting Standards to prepare their 
consolidated financial statements204. This decision, adopted pursuant to Article 
23(4) of the Transparency Directive, dete rmines that the GAAPs) of US and Japan 
are found to be equivalent to Interna tional Financial Reporting Standards (IFRS) 
as adopted by the EU. Also, third country  issuers are permitted to prepare their 
financial statements in accordance with the GAAPs of China, Canada, South Korea and India. The Comm ission will review the situation of some of these 
countries (China, Canada, South Ko rea, India) by 2011 at the latest
205.  
4.5. All the exercised implementing powers follo wed the regulatory procedure foreseen 
when the Directive was adopted in 2004. The regulatory procedure with scrutiny introduced in 2008 has not yet been used as  regards the Transparency Directive. 
4.6. Areas where the implementing powers  have not been used so far . Although 
Directive 2007/14/EC was rather comprehe nsive, the Commission has not exercised 
all its implementing powers concerning the Tr ansparency Directive. This concerns 
the following provisions: 
Table 4.2 – Specific implemen ting powers NOT exercised 
 
Specific 
Empowerment Articles concerned Subject 
Article 2(3)(b) Article 2(1)(i)(ii) Adjustment  of the 3-year period for the choice of the 
Home Member State by third country issuers 
Article 2(3)(c) Article 2(1)(l) Indicative list of means which are not to be 
considered as electronic means 
Article 4(6) Article 4(1) Conditions on the availab ility to the public of the 
annual financial report 
                                                 
201 OJ L 343 of 8.12.2006, p. 96 
202 OJ L 340 of 22.12.2007, p.66. 
203 IP/80/20 of 8.1.2008. 
204 OJ L 340 of 19.12.2008, p.112 
205 See IP/08/1962 of 12 December 2008. 
 
EN 42   EN Article 4(6) in fine * Article 4(1) Adaptation of the 5-y ear period for the availability to 
the public 
Article 5(6)(a) Article 5(1) Conditions on  the availability to  the public of the 
half-yearly financial report 
Article 5(6) in fine * Article 5(1) Adaptation of the 5-y ear period for the availability to 
the public 
Article 5(6)(b) Article 5(1) Na ture of the auditors' review 
Article 12(8)(a) Article 12(1) Standard form  for the notification of major holdings 
Article 13(2)(c), in 
fine Article 13(1) Standard form for the notification of financial 
instruments 
Article 17(4) Article 17(2)(c) Type of financial institution 
Article 18(5) Article 18(2)(c) Type of financial institution 
Article 19(4) Article 19(1) Filing of information with the competent authority 
Article 21(4)(b) Article 21(2) Minimum standards for the central storage 
mechanism 
Article 21(4), last sentence Article 21(1) List of media for the dissemination of information to 
the public 
Article 22(2)* Articles 19(1) and 
21(2) Network of central storage mechanisms 
Article 23(5)* Article 23(2) Type of info rmation disclosed in a third country that 
is of importance to the public in the Community 
Since the 2008 amendment, many of th ese empowerments ar e subject to the 
regulatory procedure with scrutiny (i.e. all but the empowerments in  Articles 2(3)(c), 
4(6)206, 5(6)(a) and 22(2)). It s hould also be noted that th e degree of compulsion of 
the empowerments market with an asterisk (*) appears lower because of the use of 
the word "may" instead of "sha ll" in the Directive text.  
4.7. Nevertheless, the Commission services ha ve undertaken specifi c preparatory work 
with regard to some of these implementing powers207. This relates in particular to the 
development of a standard form for the not ification of major holdings and to the 
question of the central storage of regul ated information. The empowerments in 
Articles 4(6), 4(6) in fine, 5(6), 5(6) in fine, 12(8)(a),  12(2)(c), 19(4), 21(4)(b) and 
22(2) are directly or indirectly linked to these areas.  
4.8. The specific case of the standard forms fo r the notification of  major holdings of 
voting rights and financial instruments . The aim of the Directive was to establish 
standard forms to be used throughout th e Community for the purposes of notifying 
the required information on major holdi ngs of voting rights and of financial 
instruments as well as for filing such information with the national competent 
authority. Upon request of th e Commission, CESR delivered its advice on this point 
in 2005208. In November 2005, DG Internal Market  and Services consulted the public 
on the possible content of the implemen ting measures to the Transparency 
Directive209. Part II of the consultation docu ment presented a possible draft 
recommendation on the use of the standard forms, which would accompany the future Commission implementing measur es. The main reason for consulting 
stakeholders on a possible non-biding text was the difficulty to impose a form in 
                                                
 
206 Interestingly, adapting the five-year period during which the financial reports should remain available to 
the public is subject to two different procedures depending if it is the annual report (regulatory 
procedure) or the half-yearly report (regulatory procedure with scrutiny). 
207 The empowerments in Articles 17(4) and 18(5) are related to the Directive on Shareholder Rights. 
208 CESR (June 2005), p.47 and seq. 
209 See http://ec.europa.eu/internal_market/secur ities/transparency/index_en.htm#mesures   
 
EN 43   EN isolation from the development of the ne twork of central storage mechanisms. 
Discussions with Member States within  the European Securities Committee also 
showed the difficulty to establish a si ngle form, considering different national 
requirements associated to the disclosure of major holdings. As a result, in March 
2007, at the moment of the adoption of  the Commission implementing measures 
(Directive 2007/14/EC), the Co mmissioner responsible for internal market called on 
CESR members to perform a market test on the voluntary use of  forms developed by 
the Commission services210. In appears that in the vast majority of Member States a 
form for the notification of major holdings is being used, in ma ny cases built up on 
the model developed by the Commission services but often adopted to national specificities
211. 
4.9. In this context, CESR has recently undertak en some work with a view to converge 
into a single electronic no tification form capable of integrating the different 
additional national requirements. Considering the evolution of this work as well as 
the fact that the development of the form is  an issue of technical nature not involving 
policy choices (i.e. the content of the notif ications requirements are established in 
Article 12 of Directive 2004/109/EC and in Article 11 of Directive 2007/14/EC), the 
Commission has recently proposed that the European Securities Markets Authority 
should be entitled to develop technical standards in relation to these forms212. If 
Council and Parliament accept such proposal, the empowerments in Articles 12(8)(a) 
and 13(2)(c) in fine  for the adoption of Commission' s implementing measures would 
be repealed (see also Annex 1 – Section B , above). 
4.10. The specific case of the central storage of regulated information (see also Annex 
15). The Directive requires Member States to set up (at least) one " officially 
appointed mechanism for the central storage of regulated information "213. It foresees 
as well the possibility for the Commi ssion to adopt implementing measures 
specifying the minimum standards for the cen tral storage of regulated information214. 
As a second step, the Directive encourages the creation of an electronic network (or a 
platform of electronic networks) of storage mechanisms across Member States215. 
Implementing powers are also foreseen for the Commission in this regard, after having reviewed the guidelines prepared by CESR on this issue. The Directive also 
provides for implementing powers on issues closely connected to  the storage of 
regulated information: (i) the technical  conditions under wh ich a published (annual 
                                                
 
210 See the letter of Commissioner McCreevy to CESR of 5.3.2007, available at: 
http://ec.europa.eu/internal_market/secur ities/transparency/index_en.htm#mesures   
211 See European Commission (December 2008), p.15: " In 23 of the Member States the use of a form for 
the notification of major holdings of voting rights is recommended (in the case of Spain, the form is 
compulsory). Only in AT, MT, PL and SK is a fo rm not yet recommended. The standard form developed 
by the Commission services is used in many of the 23 Member States, although it has often been 
adapted to national specificities, notably in order to accommodate the more stringent requirements ." 
212 Proposal for a Directive of the European Parliament and of the Council amending Directives 
1998/26/EC, 2002/87/EC, 2003/6/EC, 2003/41/EC, 2003/71/EC, 2004/39/EC, 2004/109/EC, 
2005/60/EC, 2006/48/EC, 2006/49/EC, and 2009/65/EC in respect of the powers of the European 
Banking Authority, the European Insurance and Occupational Pensions Authority and the European 
Securities and Markets Authority; COM(2009)0576 fi nal of 26 October 2009. See draft Article 7 
modifying Articles 12, 13 and 25 of the Transparency Directive. 
213 Cf. Article 21(2). 
214 Cf. Article 21(4). 
215 Cf. Article 22. 
 
EN 44   EN or half-yearly) financial report is to remain available to the public for 5 years, 
(including the possible adaptation of the five-year period)216 and (ii) filing of 
disclosed regulated information with the competent authority in the home Member State by electronic means
217. In both cases, a working storage mechanism would be 
the reply to the problem. 
4.11. Upon request of the Commission, CESR prepared in 2005 a progress report218 on this 
issue and later in 2006 a formal advi ce on possible implementing measures on 
storage of regulated information a nd filing with the competent authority219.  
Building on CESR advice, DG Internal Mark et and Services consulted the public on 
this issue in March 2007. The consultation document220 contained: (i) draft minimum 
quality standards for the central storage and (ii) draft minimum conditions for a pan-European network of national central stor age mechanisms. Preliminary discussions 
with Member States within the Europ ean Securities Committee were also held: 
preference was expressed for continuing the work toward the development of a pan-
European network of central storage mech anisms without limiting the flexibility of 
the national mechanism in this proce ss through the enactment of Commission's 
implementing measures on minimum quality standards. The issues of governance of 
a pan-European network and the quest ion of Information and Communication 
Technology convergence appeared as priori ty issues compared to the quality 
standards.  
4.12. As a result the Commission adopt ed a non-binding Recommendation
221 with a view 
to give support to work undertaken by CE SR regarding the pa n-European network 
and to its suggested way forward: the so-called Model C222. The recommendation 
also contains suggestions on minimum quality standards. CESR is currently 
developing Model C. In the recommendation, the Commission also invited CESR to 
draw up, by 30 September 2010 appropriate guidelines for the future development of the electronic network beyond Model C. Th e possible exercise of implementing 
powers under Articles 4(6), 5(6) , 19(4), 21(2) and 22(2) shou ld be considered at that 
time (see also Annex 15
 on this issue). 
4.13. The new developments . It should be noted that in  September 2009, the Commission 
proposed the creation of a European Securi ties Markets Authority that would replace 
CESR (see above Annex 1 – Section B ). This new Authority will be empowered to 
develop draft technical standa rds, to be formally adopt ed by the Commission, in the 
                                                 
216 Cf. Articles 4(6) and 5(6). 
217 Cf. Article 19(4). 
218 CESR (March 2005). 
219 CESR (June 2006). 
220 See http://ec.europa.eu/internal_market/secur ities/transparency/index_en.htm#storage   
221 Commission Recommendation 2007/657/EC of 11 October 2007 on the electronic network of officially 
appointed mechanisms for the cent ral storage of regulated informat ion referred to in Directive 
2004/109/EC of the European Parliament and of the Council, OJ L267, 12.10. 2007, p.16. The text of 
the recommendation is available at: 
www.ec.europa.eu/internal_market/s ecurities/transparency/index_en.htm  
222 Under Model C, the pan-European network would be accessed via a common interface which would 
contain a list of all EU listed companies. By clicki ng on the name of the relevant company, the user 
would be directed to the site of the relevant storag e mechanism. The data would remain at national level 
and the only common element would be the list of listed companies.  
 
EN 45   EN securities markets area. Those technical standards will be binding and should clarify 
the conditions of application of a Directive or, as appropriate, of its implementing measures. As underlined before, the Co mmission has proposed that its current 
implementing powers on the development of the standard forms for the notification 
of voting rights and of fina ncial instruments be repealed and transformed into EMSA 
powers to develop technical standards on this issue.  
4.14. The Commission is not precluding from propos ing in the future that ESMA receives 
additional powers with a view to devel oping technical standards on other issues 
connected to the Transparency Directive. 
4.15. Conclusions . This Annex shows that there is a need to maintain the empowerments 
for Commission's implementing measures re garding the areas in which they have 
been used, in case adjustments are needed in the future. Also, there is a need to maintain the empowerments directly and i ndirectly linked to st orage of regulated 
information and filing with national authority since work on this issue is still in progress (see Annex 15
). The empowerments in relation to articles 17 & 18 could be 
maintained too since their future use will depend on the impact of the Directive on 
shareholder rights.  
4.16. The creation of ESMA opens the possibi lity for transferring some of these 
empowerments to ESMA, so that it deve lops technical standa rds on some areas. 
Possible areas for this transfer could be the empowerment for establishing the list of 
electronic means or the cond itions for the availability of the financial reports.  
 
EN 46   EN ANNEX 5 – COST OF COMPLIANCE WITH THE DIRECTIVE  
5. Annex 
5.1. This Annex: 
• A) introduces the scope and methodology of an external study on cost of 
compliance with, inter alia, the Transparency Directive; 
• B) describes the findings of the study  with regard to the one-off costs; 
• C) equally for the on-going costs; and 
• D) shows the impact of the minimum ha rmonisation nature of the Transparency 
Directive. 
A) The external study on cost of compliance 
5.2. A recent external study has examined fo r the Commission the cost impact of 
compliance for certain types of firms within  the financial industry with six key EU 
directives in the financial services ar ea, including the Transparency Directive223. The 
survey concentrated on firms from four sect ors within the financ ial services industry 
in the EU: banks and financial conglomerates, asset managers, investment banks and financial markets. 
5.3. The study focuses on the so-called ‘incre mental compliance costs’ caused by 
regulation, not on the total costs of activities  that happens to cont ribute to regulatory 
compliance
224.  
5.4. The study identifies sepa rately cost impacts that are of one-off nature (i.e. those costs 
that only have to be incurred once in maki ng the transition, such as IT investment 
and the re-shaping of business processes) from  those that are recurring in nature (on-
going costs as a result of regulation). Th e ongoing costs of compliance for any given 
firm are typically lower than the one-off costs. Looking at the different sectors 
surveyed, recurring costs are mostly  between 15 and 20 per cent of the 
implementation cost record ed (with some exceptions)225. 
5.5. This study shows that firms have adopted different strategies in approaching the 
implementation of the Directive both re garding one-off (in particular, in their 
willingness to put maximum reliance upon th e automation of processes) and ongoing 
costs. The dispersion in the ongoing co sts — and general bus iness experience — 
                                                 
223 Europe Economics (2009). The six directives concerned are the so-called Prospectus Directive, the 
Financial Conglomerates Directive, the Capital Requirements Directive, the Transparency Directive, the 
Markets in Financial Instruments Directive – MiFID and the Anti-Money Laundering Directive. These 
measures were part of the Commission’s Financial Services Action Plan (FSAP) of 1999 (the so-called 
3rd AML Directive of 2005 replaced in the meantime the precedent, second, AML Directive of 2001 
which was the measure addressed in the FSAP). 
224 Ibid., §2.14. For an explanation of the methodology of that study, see: section 2; the introductions to 
sections 4 and 5; as well as Appendix 1 of the final report. 
225 Ibid., §15 and seq. 
 
EN 47   EN suggest that firms have experienced diffe ring levels of success in achieving this 
objective. Indeed the stu dy shows a wide dispersi on of results. Figures 5.1  and 5.2  
illustrate this divergence in scale, by showing the dispersion of the results obtained for the Transparency Directive. 
Figure 5.1: Dispersion of the one-off costs of the Transparency Directive by firm size (asset managers), 
expressed as a percentage of 2007 operating expenses 
Small Large0.00.10.20.30.40.5One-off costs of compliance (as a % of operating costs)
 
Source: Europe Economics (2009), figure 4.10.  
Figure 5.2: Dispersion of the on-going costs of the Transparency Directive by firm size (asset managers), 
expressed as a percentage of 2007 operating expenses . 
Small Large0.000.050.100.150.200.25Ongoing costs of compliance (as a % of operating costs)
 
Source: Europe Economics (2009), figure 5.9.  
 
EN 48   EN B) The one-off costs of compliance 
5.6. Concerning the one-off cost s of compliance (see Table  5.1) for banks, financial 
conglomerates and investment banks226 compliance with the Transparency Directive 
roughly accounts for 1% of all their financial services regulatory costs227. If a 
comparison is done with the costs of compliance for asset managers, Table  5.1 shows 
that the one-off costs of compliance with the Transparency Directive take a higher proportion of asset managers’ total costs
228. 
TABLE 5.1 – AML Directive – One-off costs of compliance 
 Banks & 
financial 
conglomerates Investment 
banks Asset 
managers Financial 
markets
229 
Mean230 (percentage of 2007 operating expenses) 0.03% 0.01% 0.22% 0.44% 
Median231 (percentage of 2007 operating expenses) 0.01% 0.04% 0.02% 0.09% 
Total financial services regulatory compliance costs
232 (percentage of 2007 operating expenses) 2.90% 2.25% 1.58% 3.40% 
     
Mean: average absolute value of the incremental 
cost changes, per firm (€000s) 425 319 353 89 
Total financial services regulatory compliance costs 
(€000s)  45,149 24,569 5,565 694 
Average of operating costs ( €000s) 1,558,072 1,030,071 384,582 20,403 
Source: Europe Economics (2009), tables 4.1, 4.2 and 4.3. 
5.7. Out of the six directives examined by th e study, the Transparency Directive comes 
fourth in terms of cost impact for banks , financial conglomerates, investment banks 
and asset managers, well behind the Capita l Requirements Directive, MiFID and the 
Anti-Money Laundering Directive. These thr ee other directives represented the most 
important regulatory changes in this area in  recent times and th eir compliance costs 
are significantly higher233: e.g. the Capital Requirements Directive accounted for 
more than half of the total financial services regulatory compliance costs for banks, financial conglomerates and investment banks . For this institutions, the Transparency 
Directive impact is ten times lower that that of the AML Directive. In the case of asset managers the impact of MiFID e quals that of the Capital Requirements 
Directive: both together acc ount for around two thirds of costs. However, the cost 
                                                
 
226 The study also provides further breakdowns of costs, per size and geographical origin concerning banks 
(and financial conglomerates) and investment banks. See Ibid. §4.20 to 4.25 and 4.93 to 4.94. 
227 The non-EU regulation costs are reflected in the st udy, on an aggregated basis, in the total costs. 
228 The study also provides further breakdowns of costs, per size and geographical origin concerning asset 
managers. See Ibid. §4.64 to 4.68. 
229 Financial markets (e.g. stock exchanges operators) are not directly subject to the obligations of the 
Transparency Directive, but they incurred in some cost s such as: the re-writing of the Exchange's 
rulebooks and some re-training of relevant surveillance staff. In order to allow for comparisons, their 
costs are also shown in Table  6.1. See also Ibid., §4.108 and seq.. 
230 The middle value in a series of data points arrang ed sequentially. The sequence from which this median 
has been selected is based upon the estimated one-off costs of compliance expressed as a percentage of 
the relevant firm’s more recent operating expenditure.  
231 Aggregate one-off costs of compliance expressed as a percentage of the relevant firms’ aggregated most 
recent operating expenditure. This implies that the experience of th e larger firms will carry more weight 
in the sample presented. 
232 Including other FSAP measures and other financial services regulation, whether EU, nationally or extra-
territorially derived. 
233 Ibid., tables 4.1, 4.2 and 4.3.  
 
EN 49   EN gap between the AML Directive (third) and the Transparency Directive (fourth) is 
smaller than for banks234. 
5.8. Concerning the possibilities for financial in stitutions to achieve synergies between 
application of the Transpar ency Directive requirements and those of the other 
measures mentioned above, it should be ge nerally noted that very few businesses 
surveyed by the study believed that any si gnificant cost-reducing synergies had been 
achieved in the implementation of the various measures: the variation in the implementation dates was the most fr equently cited factor behind this
235. Another 
component to this problem was that firms felt that the detail necessary to properly 
prepare for IT changes was not always forthcoming from the implementing authorities in a sufficiently timely manner. In any event, no s ynergies in connection 
to the Transparency Directive were identified . 
5.9. The main source of Transparency Direct ive related compliance spending for banks, 
investment banks and financial conglomerates (see Table
 5.2 for banks and financial 
conglomerates and Table  5.3 for investment banks) is  investment in/updating IT236 
(similarly high IT costs appear for almost a ll the directives covered in the study). In 
any event, this Directive wa s not typically a major source of cost to banks although 
the innovation of parent company reporting introduced some additional cost to 
affected banks (i.e. largely those w ith asset management subsidiaries) 237. 
TABLE 5.2 – Cost drivers of the sel ected directives (banks  and financial conglomerates) – one-off costs 
Directive Prospectus FCD CRD Transparency MiFID 3AMLD
Familiarisation with Directive 49% 15% 2% 13% 3% 3%
Consultancy fees 5% 11% 20% 5% 13% 11%
Legal advice 23% 5% 5% 5% 7% 1%
Training 13% 8% 5% 11% 15% 22%
Staff recruitment costs 0% 2% 4% 1% 2% 2%
Investment in/updating IT 2% 47% 57% 63% 52% 54%
Project management 8% 9% 8% 3% 7% 7%
Other 0% 2% 0% 0% 0% 0%  
Source: Europe Economics (2009), table 4.10. 
TABLE 5.3 – Cost drivers of the selected dire ctives (investment banks) – one-off costs  
Directive Prospectus FCD CRD Transparency MiFID 3AMLD
Familiarisation with Directive 9% 7% 3% 7% 6% 5%
Consultancy fees 13% 0% 19% 10% 16% 12%
Legal advice 18% 10% 2% 4% 4% 6%
Training 14% 15% 2% 4% 10% 13%
Staff recruitment costs 4% 0% 1% 10% 1% 0%
Investment/ updating IT 27% 39% 62% 36% 49% 53%
Project management 14% 29% 10% 29% 14% 12%
Other 0% 0% 1% 0% 1% 0%  
Source: Europe Economics (2009), table 4.27. 
                                                 
234 Ibid., tables 4.1., 4.2 and 4.3. 
235 Ibid., §§4.14 to 4.17. 
236 The ex ante  impact assessment conducted in the UK for th e transposition of the Transparency Directive 
indicated an expected cost to a ba nk of adapting its existing systems to be around €365,000 to €731,000 
in the UK. Based on the average operating cost of all the banks and financial conglomerates in the study 
sample, this would represent between 0.02 and 0.04 per cent of operating costs. The results of the study analysis show a lower one-off cost of 0.01 per cent of operating costs across all participating banks 
(with the median result below this). See Ibid., §4.44. See also UK Treasu ry (2005) on cost issues.  
237 Ibid., §4.43. 
 
EN 50   EN 5.10. For asset managers the cost breakdown is different, with legal advice and 
consultancy fees involving si milar or higher costs than IT  related expenditure (see 
Table  5.4 for asset managers)238.  
TABLE 5.4 – Cost drivers of the selected di rectives (asset managers) – one-off costs  
Directive Prospectus FCD CRD Transparency MiFID 3AMLD
Familiarisation with Directive 6% 53% 5% 2% 6% 4%
Consultancy fees 30% 0% 19% 25% 16% 9%
Legal advice 2 1 %0 %0 % 3 2 %4 %4 %
Training 0% 2% 0% 0% 9% 17%
Staff recruitment costs 0% 0% 2% 0% 3% 3%
Investment/updating IT 24% 0% 62% 23% 48% 51%
Project management 19% 45% 11% 19% 14% 12%
Other 0% 0% 0% 0% 0% 0%  
Source: Europe Economics (2009), table 4.19. 
5.11. In terms of asset managers IT spending239, the requirement for parent company 
reporting meant that for some asset managers a large IT project was or is required in 
order to allow such an aggr egation of holdings across all portfolios. Specific issues 
identified within such projects for flaggi ng share-holdings include: (i) the total actual 
outstanding shares in companies is not held within a single database (this information 
is required for the denominators in calculating an asset manager’s positions). The requirement to look across various databases incurs direct costs (through data licenses on both a one-off and ongoing basi s) and as a potential trigger to 
establishing data warehousi ng facilities; (ii) where th e disclosure threshold was 
previously five per cent and is now lower, this has magnified the importance of such 
flagging as share-holdings on such a scal e are markedly more commonplace; and (iii) 
the need to consider derivative po sitions is a further complication.  
C) The ongoing cost of compliance 
5.12. Concerning the ongoing cost of compliance (see Table
 5.5), for banks, financial 
conglomerates and investment banks, comp liance with the Transparency Directive 
roughly accounts for 2% of all th eir financial services regula tory costs in the case of 
banks, while the percentages increase s to roughly 5% for asset managers240. This is 
partially explained because for asset mana gers, the on-going cost of compliance with 
the AML Directive take a lower propor tion of asset managers’ total costs241. 
5.13. In relative terms, these costs are slightly higher than the one-off cost of compliance, 
possibly explained by the re latively lower on going costs of compliance with the 
Capital Requirements Directive and MiFID. In any event, as for the one-off costs, these two other directives bear the bulk of the compliance costs, with the AML 
Directive ranking third and the Transparen cy Directive fourth (except for asset 
managers, for which the Prospectus Directiv e involves more complia nce costs) out of 
the six directives examined by the study. 
                                                
 
238 See generally, Ibid., §§4.79 to 4.81 (for asset managers) 
239 Ibid., §§4.79 and 4.80. 
240 The study also provides further breakdowns of costs, per size and geographical origin. See §§5.12 to 
5.17 (for banks), 5.42 to 5.45 (for asset managers) and 5.62 (for investment banks). 
241 Financial markets (e.g. stock exchanges operators) are not directly subject to the obligations of the 
Transparency Directive. But in order to allow for comparisons, their costs are also shown in Table  5.5. 
 
EN 51   EN  
TABLE 5.5 – Transparency Directive – Ongoing cost of compliance 
 Banks & 
financial 
conglomerates Investment 
banks Asset 
managers Financial 
markets 
Mean242 (percentage of 2007 operating expenses) 0.01% 0.03% 0.08% 0.33% 
Median243 (percentage of 2007 operating expenses) 0.00% 0.00% 0.01% 0.00% 
Total financial services regulatory compliance 
costs244 (percentage of 2007 operating expenses) 0.59% 0.38% 0.85% 1.70% 
     
Mean: average absolute value of the ongoing costs 
incurred, per firm (€000s) 147 245 127 67 
Total financial services regulatory compliance costs 
(€000s)  8,540 3,807 2,532 347 
Average of operating costs ( €000s) 1,558,072 1,030,071 384,582 20,403 
Source: Europe Economics (2009), tables 5.1, 5.2 and 5.3. 
5.14. The most important ongoing costs of complian ce with the Transparency Directive for 
banks, investment banks and financial conglomerates concern IT expenditure, 
additional staff costs and audit costs (see Table  5.6 for banks and financial 
conglomerates and Table  5.7 for investment banks).  
TABLE 5.6 – Cost drivers of the sel ected directives (banks  and financial conglomerates) – ongoing cost 
Prospectus FCD CRD Transparency MiFID 3AMLD
Additional staff 37% 6% 43% 15% 35% 37%
Internal reporting 2% 7% 8% 4% 7% 4%
IT 15% 6% 26% 49% 28% 31%
External reporting 16% 65% 10% 8% 10% 5%
Training 1 9 %4 %6 %8 % 1 0 % 1 3 %
Audit 10% 11% 7% 15% 9% 10%
Other 0% 0% 0% 0% 0% 0%  
Source: Europe Economics (2009), table 5.10. 
TABLE 5.7 – Cost drivers of the selected di rectives (investment banks) – ongoing cost 
Directive Prospectus FCD CRD Transparency MiFID 3AMLD
Additional staff 0% 0% 34% 33% 26% 23%
Internal reporting 0 % 2 3 %7 %7 %6 % 1 2 %
IT 1% 35% 32% 19% 45% 29%
External reporting 48% 12% 10% 8% 13% 9%
Training 47% 31% 6% 12% 6% 16%
Monitoring/audit 3% 0% 10% 21% 4% 10%
Other 0% 0% 0% 0% 0% 0%  
Source: Europe Economics (2009), table 5.27. 
5.15. Concerning asset managers (see Table  5.8), most of the on-going costs relate from 
additional staff. Even for those who made  specific IT investment in order to 
automate their ongoing disclosure requi rements, typically there has been a 
                                                 
242 The middle value in a series of data points arrang ed sequentially. The sequence from which this median 
has been selected is based upon the estimated ongoing costs of compliance expressed as a percentage of 
the relevant firm’s more recent operating expenditure.  
243 Aggregate ongoing costs of complia nce expressed as a percentage of the relevant firms’ aggregated 
most recent annual operating expenditure . This implies that the experience  of the larger firms will carry 
more weight in the sample presented. 
244 Including other FSAP measures and other fi nancial services regulation, whether EU, nationally or extra-territorially 
derived.  
 
EN 52   EN requirement to increase staffing levels in order to maintain such systems and ensure 
some oversight of them245. Some larger asset managers view the Transparency 
Directive as something of a missed opportuni ty to reduce costs due to the minimum 
harmonisation approach adopted in its impl ementation. The key issue encountered is 
the need to keep an eye on the local implementation which has not (in many cases) reduced the number of share-holding limits that a transnational business needs to be 
aware of
246. 
TABLE 5.8 – Cost drivers of the selected di rectives (asset managers) – ongoing cost 
Directive Prospectus FCD CRD Transparency MiFID 3AMLD
Additional staff 50% 0% 25% 69% 20% 13%
Internal reporting 0% 3% 6% 0% 12% 3%
IT 50% 0% 13% 17% 28% 27%
External reporting 0% 97% 30% 1% 17% 14%
Training 0% 0% 11% 1% 7% 22%
Audit 0% 0% 15% 12% 16% 21%
Other 0% 0% 0% 0% 0% 0%  
Source: Europe Economics (2009), table 5.18.  
D) The impact of the minimum harmonisatio n nature of the Transparency Directive 
5.16. The external study also identifies some co sts issues resulting from the adoption of 
more strigent national measures when im plementing the Transparency Directive. 
More precisely, the study considered the ongoing and one-off incremental costs of complying with the Transparency Direct ive for the asset managers surveyed, 
comparing the results for transnational asset managers with those that largely operate in just one Member State. The results were  notably different. Th e latter consistently 
had a lower cost of compliance with the Tr ansparency Directive. This analysis is 
summarised in the following box. 
BOX 5.1 – The impact of minimum harmonisation on asset managers 
The approach adopted for the impl ementation of the Transparency Directive has been of minimum 
harmonisation. A number of the asset managers surveyed operate in multiple jurisdictions and 
therefore need to monitor the local implementation in  each of the countries in which they operate. 
Indeed, some of the larger, transnational asset managers participating in our study view the Directive 
as something of a “missed opportunity” to reduce costs for this reason. 
There are three broad areas of the implementation of the Transparency Dir ective which vary across 
the Member States247. First, the initial threshold for disclosure of the major holdings of voting rights 
by investors. The Directive states that investors should declare when the proportion of voting rights 
reaches, exceeds or falls below the thresholds of 5 per cent, 10 per cent, 15 per cent, 20 per cent, 25 
per cent, 30 per cent, 50 per cent and 75 per cent. With regards to the initial disclosure Italy and 
Portugal have imposed a lower threshold of two per cent, and Germany, Ireland, Spain and the UK 
have adopted three per cent. Whilst Belgium and France are at the Directive level of five per cent, 
they allow issuers to set a lower threshold in their own articles of association. 
Second, the deadlines for reporting major holdings of voting rights by investors vary. The Directive 
states that investors should report major holdings of voting rights as soon as possible after they have 
crossed the aforementioned thresholds, but no later than four days. Some Member States have 
imposed more stringent timetables:  both Greece and Romania have set a limit of three days; Austria, 
                                                 
245 Ibid., §5.47. 
246 Ibid., §5.48. See also the example provided in relation to aggregation of voting rights within a group of 
companies in Germany (§§ 5.49 to 5.50). 
247 See European Commission (December 2008) 
 
EN 53   EN Hungary, Ireland and the UK have imposed a deadline of two days; Cyprus, Denmark and Sweden 
have opted for just one day, with Fi nland requiring reporting without delay. 
A further source of differentiation in implementati on is with regards to the calculation of group 
holdings — voting rights are not aggregated in a si milar fashion in all Member States. In Germany, 
for example, group exemptions to re port just at the parent level only apply to share-holdings and not 
voting rights; thus, each legal entity in a group is requir ed to file in respect of what are essentially the 
same voting rights. This issue of aggregation is complicated by the treatment of derivative positions 
and is further clouded by the different approaches to this matter in different Member States. 
Looking at both the ongoing and one-off incremental costs of complying with the Transparency 
Directive for the asset managers surveyed, the resu lts for transnational asset managers compared to 
those that largely operate in just one Member State are markedly different. The latter consistently had 
a lower cost of compliance with the Transparency Directive. The mean ongoing cost of compliance 
with the Transparency Directive was 0.05 per cent (of total operating expenses) more for transnational 
asset managers compared to asset managers that operate largely in just one country. The one-off 
incremental costs were 0.12 per cent (of operating expenses) higher . Looking at the medians, the 
results are consistent (in the sense that transnatio nal players have higher costs) but are geared more 
towards a higher differential in the one-off costs — where the gap is 0.23 per cent of operating costs. 
However, the median difference in ongoing costs is lower, at just 0.02 per cent. 
Looking at the kind of costs incurred, the differentiated implementation across the EU27 must have 
complicated the design and management of the IT pr ojects required to meet th e flagging requirements 
after aggregating holdings across all portfolios. These systems tend not to be fully automated so that 
an ongoing incremental cost exists also. 
Although it is not possible to quantify how much of the additional cost impact experienced by 
transnational asset managers has been driven by a minimum rather than maximum harmonisation 
approach, it is clear that there has been some contribution to the level of cost experienced by 
transnational asset managers due to this effect. This  point was directly confirmed to us by at least 
some of the affected participants. 
Source: Europe Economics (2009), box 4.1. 
5.17. Similar conclusions are found on anot her study conducted for the Commission248, 
which outlines the lack of harmonisation impact of the Transparency Directive. 
Many interviewees in that study raised c oncerns that the implementation of the 
Transparency Directive had brought considerable systems costs. Some of them indicated that there were not-insignificant ongoing monitoring costs that were incurred because of the national differen ces. This means that companies need to 
continually monitor the local rules in ea ch member state that they invest in. 
Interestingly, interviewees did not believe  that investment decisions were being 
distorted by this monitoring cost, but rather this was seen as increasing the fixed cost 
of doing business. 
                                                
 
248 CRA International (2009), p.173 and seq. 
 
EN 54   EN ANNEX 6 – ISSUES FOR TECHNICAL ADJUSTMENTS IN THE DIRECTIVE  
6. Annex 
6.1. The review of the operation of  the Transparency Directiv e shows that some of its 
requirements are not always clear, leading to  uncertainty as regards those obligations. 
For instance, CESR regularly publishes inte rpretative documents, in a "questions-
and-answers" format, regarding the Directive obligations249. Also, stakeholders 
identified some clarification issues in thei r replies to a call for evidence launched by 
CESR in 2007. The feedback statement publ ished by CESR provides details on those 
issues250. The External Study also identified some requirements that would benefit 
from further clarity251.  
6.2. Some technical adjustments to the text of the Directive would possibly be beneficial 
with a view to clarifying its obligations. The following issues have been identified: 
– Choice of Home Member Stat e for third country issuer s. The choice of third 
country issuers is valid fo r 3 years. However, this leads to practical problems 
when such issuer is no longer listed in the regulated market of the Home Member 
State and only remains listed in one host Member State252. 
– Definition of " shareholder ". Interested parties explai n that there is a possible 
contradiction between the definition of  shareholder in Article 2(1)(e)(ii)253 and the 
case included in Article 10 (g)254. 
– Definition of " issuer "255.  
– Definition of " financial institution " in Articles 17 and 18256. 
– Treatment of global depository receipt s when the underlyi ng shares are not 
admitted to trading in a regulated market  within the EU/EEA. The scope of the 
Directive rules is not fully clear on these cases. 
                                                 
249 CESR (October 2009). 
250 CESR (February 2008). 
251 Mazars (2009), see sections 1.4.3 (on definitions); 2.4.7 (on financial repor ting); 2.6.5 (content of 
interim management statements); 3.3.7 (on major ho ldings notifications); 3.6.1.4 (on stock lending); 
and 3.6.3.2 (on financial instruments) of that study. At the same time, it should be noted that the 
stakeholders' perception about the overall clarity of th e Directive is positive and that, in case of lack of 
clarity, stakeholders tend to attri bute such lack of clarity to nationa l laws, guidance or market practices 
more often than to the Directive itself (see sections 1.4.1 and 1.4.2 of that study).  
252 CESR (October 2009), question 1. 
253 " 'shareholder' means any natural person or legal entity governed by private or public law, who holds, 
directly or indirectly: […] (ii) shares of the issuer in its own name, but on behalf of another natural 
person or legal entity ." 
254 " The notification requirements defined in paragraphs 1 and 2 of Article 9 shall apply to a natural 
person or legal entity to the extent it is entitled to acquire, to dispose of, or to exercise voting rights in 
any of  the following cases or a combination of them: […] (g) voting rights held by a third party in its 
own name on behalf of that person or entity ." 
255 Mazars (2009), section 1.4.3. 
256 Mazars (2009), section 1.4.3. 
 
EN 55   EN – Deadline for the publication of annual fina ncial reports and half-yearly financial 
reports. The text of the Dir ective is not clear as regard s whether the reports to be 
disclosed within the Directive deadline are those approved by the board or by the 
general meeting. 
– The use of similar terms (" material events " and " important events ") in Articles 5 
and 6257.  
– Meaning of " true and fair view " in Article 5258. 
– Content of interim management statements in Article 6259. 
– Disclosure of holdings per cl ass of share (Article 9(1))260. 
– Notion of "acting in concert" in Article 10(a). Interested parties require the 
clarification of some elements of the definition in Article 10 (a), namely, what does " lasting common policy towards the management of the issuer " or 
"agreement " mean?
261 Also, clarification of the situations of joint investors' 
accounts has also been requested262. 
– Who should notify in the situation of joint control over a controlled 
undertaking263. 
– The rules on aggregation/dissaggregati on of holdings between parent company 
and subsidiary264. Interested parties invoke that  such rules could be made 
clearer265. The link between the disclosure obligations in the Transparency 
Directive and the rules in the Directive on takeover bids has also been raised266. 
– The extension of the exemption of Artic le 12(4) to non-UCITS asset management 
firms267. 
– The rules on calculation on thresholds268. Interested partie s explain that the 
exceptions to the aggregation of holdings when calculating whether thresholds are 
reached or crossed could be made clearer. In particular, reference has been made 
to the exceptions for underwriters in cas e of public offering , the trading book, the 
market makers exemptions or the netti ng of long and short positions in financial 
                                                 
257 Mazars (2009), section 1.4.3. 
258 Mazars (2009), section 2.4.7. 
259 Mazars (2009), section 2.6.5. See additionally CESR (February 2008),  p. 3, where respondents to a 
CESR's call for evidence on possible level 3 work on this Directive identified the need to establish "principles to prepare interim management statements ". See also CESR (October 2009), questions 3 to 
9, which try to clarify part of  the requirements of Article 6 of the Transparency Directive. 
260 CESR (October 2009), question 10. 
261 ESME (November 2008), pp. 2 and 5.  
262 CESR (October 2009), question 12. 
263 Mazars (2009), section 3.3.7. 
264 CESR (February 2008), p. 3. 
265 See for instance, CESR (October 2009), question 11. 
266 ESME (June 2009). 
267 Mazars (2009), section 3.3.7. 
268 See generally, CESR (February 2008), p. 3. 
 
EN 56   EN instruments269. Other questions have  also been raised270 such as the treatment of 
the voting caps and the total number of voting rights for the denominator when 
up-to-date figures are publicly known befo re the disclosure by the issuer under 
Article 15 of the Directive. 
– The treatment of stock lending under Article 10(b) (see Annex 10 )271.  
– The liability of issuers for false disclosu res on major holdings. Issuers disclose to 
the market the notification of major holdings they rece ive. While they have no 
means to control that such notifications are correct, they are forced to disclose 
them to the market and may incur in liability issues272.  
– The definition of new loan  issues in Article 16(3)273. Interested part ies invoke that 
"new loan issues" is an unclear term. 
– The responsibility of home and host Member  States when the issuer's securities 
are not admitted to trading in the home Member States (Article 21(3)) and the filing of information with the authorit y of the home Member State (Article 
19(3))
274. In accordance with Article 21(3), where securities are admitted to 
trading in the host Member  State and not in the hom e Member State, the host 
Member State shall ensure disclosure of  regulated information in accordance with 
Article 21(1). However, Article 19(3) requires the filing of information with the 
competent authority of the home Member St ate. Some host Member States require 
filing of information also with  their competent authority.  
– The scope of Article 8(2) of Directive 2001/34/EC. The scope of Article 8(2) of 
Directive 2001/34/EC rega rding issuers disclosure  of periodic and on-going 
regulated information is unclear and seems to open the door to double requirements against the spirit of the Home Member State rule of the Transparency Directive
275.  
The Article 30(4) exemption for bond issuers 
6.3. Article 33 of the Transparency Directive requires the Commission to report, among 
others, on the appropriateness of ending th e exemption for existing debt securities 
after the 10-year period as pr ovided for by Article 30(4).  
6.4. In accordance with Article 5 of the Transparen cy Directive, issuers of debt securities 
are required to make public half-yearly fi nancial reports. Howe ver, Article 30(4) 
allows Member States to exempt large debt  issuers, during a transitional period of 10 
years, from the obligation to disclose half -yearly financial reports, provided certain 
conditions were met.  
                                                 
269 CESR (October 2009), question 13. 
270 Mazars (2009), section 3.3.7. 
271 CESR (February 2008), p. 2. 
272 Mazars (2009), section 3.3.1. 
273 Mazars (2009), section 2.4.7. Also, CESR (F ebruary 2008), p. 3. 
274 CESR (October 2009), question 16. 
275 European Commission (December 2008), Annex 4, in particular footnote 90. See also European 
Corporate Governance Fo rum (March 2009a).  
 
EN 57   EN 
 
The exemption could only be granted by Me mber States in respect of those debt 
securities admitted to trading on a regulat ed market prior to 1 January 2005 which 
may be purchased by professional investors only276. 
6.5. At the time of preparing the Transparency Directive, stakeholders feared extensive 
delisting by issuers of debt securities, and possible losse s to investors thereby, if 
issuers were not in a position to meet the new disclosure requirements of the Transparency Directive. Furthermore, issuers had applied for the admission to listing of their large debt securities prior to 1
st January 2005 on the basi s of the then existing 
disclosure regulatory framework. Theref ore, the Commission proposed a limited 
"grand-father" clause which resulted in  a temporary exemption in Article 30(4)277.  
6.6. In principle, there are a priori no comp elling reasons for extending the exemption 
granted by Article 30(4). Cor porate issuers very rarely issue long term bonds beyond 
10 years. Therefore, such transitional period should be enough for those issuers. 
However, in practice, it is conceivable that  large debt securities admitted to trading 
before 1 January 2005 could still be traded after 1st January 2015.  
The number of such debt issuer that c ould potentially have "Eurobonds" outstanding 
after 1st January 2015 is estimated to be rather low: a few tens of issuers and few 
hundreds of special purpose vehicles (SPVs)278. However, those concerned are likely 
to be a one time or specialised issuer (s uch as financing SPVs) or SMEs. For both 
categories, preparing half-yearly financ ial reports may involve substantial cost279. If 
these estimations are confirmed, it could be  conceivable to suppor t the extension of 
the exemption for an additional appropriate period, so as to avoid impacting on small issuers.  
6.7. In any case, it should be not ed that there is no market support for such exemption. In 
the External Study, the stakeholders survey ed did not express a strong opinion on the 
                                                
 
276 Article 27 of Directive 2001/34/EC stated that: " Where the application for admission to official listing 
relates to debt securities nearly all of which, becaus e of their nature, are normally bought and traded in 
by a limited number of investors who are particularly knowledgeable in investment matters, the 
competent authorities may allow the omission from the listing particulars of certain information provided for by Schedule B of Annex I or allow its inclusion in summary form, on conditions that such 
information is not material from the point of view of the investors concerned ."  
Article 27 of Directive 2001/34/EC was re pealed by the Prospectus Directive.  
See also recital 12 of th e Transparency Directive 
277 See European Commission (March 2003), section 5. 8.1. The transitional period proposed by the 
Commission was 3 years but the adopted Directive establish it at 10 years. 
278 Mazars (2009), section 5.3.2 in fine .  
279 Ibid.  
 
EN 58   EN opportunity to keep the exemption to publ ish half-yearly for bond issuers listed 
before 2005. When they have expressed an opinion, a small prefer ence is expressed 
in favour of ending such exemption280.  
 
6.8. Moreover, when they have expressed an opini on, a majority of stak eholders hold that 
the existence of different transparency regi mes for debt securities can create a breach 
in the level playing field281.  
 
6.9. Concerning issuers of debt securities admitted to listing after 1st of January 2005, 
they did so in full knowledge of the new di sclosure obligations. In any case, it is 
noted that in accordance to Article 8(1)(b), the obligations of Articles 4 (annual financial report), 5 (half-yearly financ ial report) and 6 (interim management 
statements) shall not apply to an issuer ex clusively of debt securities admitted to 
trading on a regulated market, the denomina tion per unit of which is at least EUR 
50 000.  
                                                
 
280 Mazars (2009), section 5.3.1. This  view is expressed in particular  by financial analysts, industry 
associations, institutional investors and even debt issuers. On the contrary, exchanges and supervisors are more in favour of keeping such exemption. 
281 Mazars (2009), section 5.3.2. This  view is however not shared by supervisors. Also debt securities 
issuers and exchanges have mixed views on the issue. 
 
EN 59   EN ANNEX 7 – AGGREGATION OF HOLDINGS OF VOTING RIGHTS AND FINANCIAL INSTRUMENTS ? 
7. Annex 
7.1. One of the novelties of the Transparency Directive in 2004 was the introduction of a 
requirement to notify to the issuer (and s ubsequently disclose to the market) the 
major holdings of certain financial instruments giving access to shares under certain circumstances
282.  
7.2. The Commission proposal for a Directive of 2003283 merged this requirement with 
the existing one on the notification of ma jor holdings of voting rights already 
existing under the rules of Directive 2001/34/EC. As a result, the holdings of voting rights and of (certain) financ ial instruments would be aggr egated for the purposes of 
triggering the notification obligation.  
The proposed Article 9 was drafted as follows: " The home Member State shall ensure 
that, where the security holder, or any nat ural person or legal entity entitled to 
exercise voting rights […] acquires or dis poses of voting rights or capital of the 
issuer, the security holder not ifies the issuer of the pr oportion of voting rights and 
capital of the issuer held by the securi ty holder as a result of the acquisition or 
disposal where that proportion reaches, exce eds or falls below the thresholds of 
[…]". 
This Article was completed by the definitio n of "security holder" in the proposed 
Article 2(1)(e): " 'security holder' means any natur al or legal entity governed by 
private or public law, who, directly or through intermedia ries, acquires or disposes 
of: […] (iv) derivative securities entitling a natural person or legal  entity to acquire, 
on its initiative or to dispose of, on the sole initiative of  a third party, shares to which 
voting rights with the issuer are attached ."
284 
7.3. Eventually, the Commission proposal wa s amended on this point by Council and 
Parliament during the negotiations. The fina l text of the Directive included a new 
Article 13 specifically addressing the holdings  of (certain) financial instruments. 
Paragraph (1) of Article 13 states the following:  
"1. The notification requiremen t laid down in Article 9 s hall also apply to a natural 
person or legal entity who hol ds, directly or indirectly , financial instruments that 
result in an entitlement to acquire, on such holder's own initiative alone, under a 
                                                 
282 Financial instruments that result in an entitlement to acquire, on such holder's own initiative alone, 
under a formal agreement, shares to  which voting rights are attached, al ready issued of an issuer whose 
shares are admitted to trading on a regulated market.  
283 European Commission (March 2003).  
284 According to the Explanatory Memorandum, the "fourth sub-paragraph extends the definition of to 
holders of derivative securities, such as convertible or exchangeable bonds (but not options […]) […]". 
See European Commission (March 2003), section 5.2.2.1. 
 The aggregation requirements appears very clearly  from the proposed Article 9(3)(a), where it is 
explained that Member States may decide to set 10% as the first threshold where the investor only  
acquire derivative securities. A contrario , this means that where the investor acquires derivative 
securities in addition to shares or voting rights, th e 5% threshold would necessarily apply. See also 
European Commission (March 2003), section 4.5.3. 
 
EN 60   EN formal agreement, shares to which voting ri ghts are attached, already issued of an 
issuer whose shares are admitted to trading on a regulated market." 
7.4. The introduction of Article 13 has resulte d, according to the Exte rnal Study, in lack 
of clarity as to the exact  scope of the obligation285.  
7.5. The question at stake is whether invest ors must aggregate their holdings of 
voting rights with their holdings of fina ncial instruments (within the meaning of 
Article 13) for the purposes of eval uating whether the relevant thresholds 
referred to in Article 9 are reached or crossed and therefore the notification 
obligation triggered. 
7.6. Member States have taken different view s when implementing the Directive into 
national law. A few of th em (AT, BG, CY, ES, LU286, IT and PL) consider that 
Article 13 enacts a notification obligation whic h is independent of that of Article 9: 
in other terms, the notificat ion obligation is triggered in dependently. On the contrary, 
in 19 Member States (BE, DE287, DK, EE, EL, FI, FR, HU, IE, LT, MT, NL, PT, SE, 
SI, SK and UK), as well as in Norway a nd Iceland, investors must aggregate their 
holdings of voting rights w ith their holdings of financ ial instruments (within the 
sense of Article 13) for the purposes of evaluating whether the relevant threshold 
referred to in Article 9 is reached or crossed.  
7.7. There are different arguments supporting th e two positions and there has never been 
a decision of the Court of Justice on this i ssue. On the one side, those in favour of 
separate notification obligations argue that  Article 13 comes after Articles 9 to 12 
(dealing with the notification obligations in relation to voting rights) which would 
show the intention of the co-legislators to establish a distinct notification procedure for the financial instruments. Article 13 cont ains a reference to Ar ticle 9 and thus, to 
the general notification thresholds contai ned therein. However Article 13 does not 
refer to Article 12, which sets the modalities for the notification mechanisms. From this perspective, if the intention of the co-legislators would have been to automatically apply the requirements of Article  12 also in the c ontext of Article 13, it 
would have been logical to include in Artic le 13 a reference not only to Article 9, but 
also to Article 12.  
Moreover, if the intention was that Article  12 would in any event apply also in the 
context of Article 13, the Commission' s implementing powers concerning 
notification modalities in Ar ticle 13 would appear redund ant. This interpretation 
would be further supported by Article  11 of Commission Directive 2007/14/EC: 
                                                
 
285 See for instance, M azars (2009), p.112: " The Directive does not specify whether holdings of shares 
should be aggregated with holdings of financial instruments. Certain Member States have taken the 
view that Articles 9 and 10 on the one hand and Article 13 on the other hand should be applied in 
parallel, whereas other Member States require investors to aggregate the holdings of shares/voting rights with the holdings of qualifying financial instruments. As a result, when no aggregation is 
required, a shareholder may potentially hold 4.99 % voting rights though shares and another 4.99 % 
through financial instruments without any notification ." 
286 In the case of LU, it is a mixed situation: the thresh old is triggered independently, but if the notification 
obligation arises, the notifying party should disclose its holdings in relation to both voting rights and financial instruments irrespective of which of  the two categories trig gered the threshold) 
287 DE changed in 2008 its initial legislation transposing the Directive on this point, so as to require 
aggregation. 
 
EN 61   EN Article 11(4) of Directive 2007/14/EC states explicitly that the notification period in 
Article 12(2) of the Transparency Directiv e shall apply. There would be no need for 
such a reference if all provisions of Article  12 would be generall y applicable in the 
context of Article 13, unless stated ot herwise in the implementing measures. 
Additionally, the Directive pr ovides in Article 12(8)(a) a nd 13(2)(c) for the adoption 
of two separate standard notification forms. If the intention of the co-legislators was that the modalities of the notification w ould be the same under Articles 9, 10 and 13, 
it would be illogical to mention the adopti on of standards forms through comitology 
in both Articles 12 and 13.  
This was also the position of CESR in 2005, which stated that " [t]he Level 1 text 
does not require aggregation between financia l instruments relevant under Article 
13 and holdings of voting right s under Article 9 or 10 "
288. From this perspective, 
imposing aggregation of voting rights and financial instruments for the purposes of 
calculating whether the thresholds are reached  or crossed would be a more stringent 
requirement than that of the Directive289. 
7.8. On the other side, other parties consider that the first sentence of Article 13(1) 
requires such aggregation290.For them, it is a matter of interpretation of the Directive 
rather than a question of whether aggreg ation is a more stringent requirement 
acceptable under Article 3(1)291.  
7.9. The discussion is not merely academic. If aggregation is require d by the Directive, 
the first group of Member States would be infringing it. If on the contrary, two 
separate notification obligations exist, while imposing aggregation would be an 
acceptable more stringent requirement under Ar ticle 3(1), the applicability of Article 
12 to the notification obligation foreseen in Article 13 would be, however, questionable. This would in particular impact on the applicability of the exemption for management companies and investment  firms to aggregate their holdings of 
financial instruments with those of thei r parent companies (see Article 12(3) to 
(5))
292. 
                                                 
288 See CESR (June 2005), §375. 
289 According to Article 3(1) of th e Directive, such more stringent requirements would be acceptable. 
290 Article 13(1) indicates that " [t]he notification requirements laid down in Article 9 shall also  apply to a 
natural person or legal entity who holds, di rectly or indirectly, financial instruments …" [emphasis 
added] 
291 See European Commissi on (December 2008), p.22. 
292 Article 12 regulates not only the question of the relations between parent and subsidiaries but also a 
number of other matters. In principle Article 12 must either be considered to be fully applicable also in 
the context of Article 13, or not applicable at all. An interpretation acco rding to which certain 
paragraphs of Article 12 could be "cheery-picked" to apply also in the context of Article 13 would not be acceptable. From this perspective,  the exemption in paragraphs (4) and (5) of Article 12 could not be 
applied to holdings of financial instruments. National measures extending this exemption would not be 
imposing more stringent requirements but rather more lenient ones.  
The other paragraphs of Article 12 would be howeve r less concerned. Requirements equivalent to those 
of Article 12(1) and (2) are already set out in Article 11(3) and (4) of Directive 2007/14/EC for the notification of financial instruments. Also, the requ irements contained in Article 12(6) and (7) could 
easily be applied in national law to financial inst ruments and would be in any event be covered by 
Article 3(1). 
 
EN 62   EN 7.10. Additionally, clarifying the appl icable rules regarding this issue would be beneficial 
in the event that notification obligations  regarding cash-settled derivatives were 
imposed at EU level293 (see Annex 9 ).  
7.11. Finally, in addition to the unclear lega l points, it should be noted that the 
implementation of Article 13 results in in sufficient harmonisation, leading to higher 
cost and burden for cross-border invest ors in the EU (see Sections 1.2 and 2.4  of this 
Report).  
                                                 
293 For instance, in the UK aggregation of cash-settled derivatives with other holdings is required for the 
purposes of calculating whether the releva nt thresholds are reached or crossed. 
 
EN 63   EN ANNEX 8 – LOWERING OF THRESHOLDS FOR THE NOTIFICATION OF MAJOR HOLDINGS  
8. Annex 
8.1. The lowest or initial threshold for the disclosure of major holdings of voting 
rights  was set at 5% by the Transparency Di rective in 2004 (cf. Article 9(1)). This 
was a novelty at the time, since Directiv e 2001/34/EEC, the precedent legal text, had 
set the initial disclosure threshold at 10% (cf. Article 89(1)). I ndeed, the disclosure 
thresholds codified in Directive 2001/ 34/EEC were shaped in a way reflecting 
national company law requireme nts: e.g. thresholds necess ary to represent blocking 
minorities on annual shareholder meetings; to achieve changes to the company's 
statutes or exercising special rights, etc294. 
The 10% threshold as an init ial threshold appeared, howev er, obsolete over time. On 
the one hand, more (and lower) disclosures were needed both for securities market transparency purposes (in par ticular from the perspective of preventing market abuse 
or market manipulation, give n the impact on pricing of de alings in major holdings) 
and for corporate governance purposes (given the increased interest  of investors in 
the company performance)
295. On the other hand, most Me mber States had already 
lowered the initial threshol d before the amendment intr oduced by the Transparency 
Directive. Indeed, the Commission explaine d in 2003 that in 12 of the then 15 EU 
Member States, the initial disclosure threshold was already set at a lower level than 10%: 2% for IT, 3% for UK and 5% for the re st. Only in LU, PT and SE the initial 
disclosure threshold was set at 10%
296. 
8.2. The Transparency Directive allowed Member States to set out (or, as applicable, to 
maintain) disclosure requirements on majo r holdings of voting rights at an earlier 
stage than 5%. As a result, other Member States joined Italy and the United 
Kingdom in establishing such lower thresholds . As of end 2009297, the following 
Member States have introduced those lower disclosure thresholds : 2% (IT, PT); 3% 
(CZ, DE, ES, IE, UK)298. It should also be noted that the initial disclosure threshold 
is also indirectly lowered in those Memb er States in which aggregation of voting 
rights and of financial instrume nts giving access to voting rights299 is required (see 
Annex 7 ).  
                                                 
294 European Commission (March 2003), section 4.5.1. 
295 When describing the proposed new regime in 2003 of what later became the Tr ansparency Directive the 
Commission was referring to the proposed rules, by contrast to those of Directive 2001/34/EEC in the 
following terms: "[…] This system would reflect not only the actual influence an investor on securities 
markets may take in a publicly traded company, but more generally its major interest in the company 
performance, business strategy and earnings. Already seven Memb er States apply such a more 
securities market directive transpar ency regime at national level. […]" . See European Commission 
(March 2003), section 4.5.1. 
296 Ibid.  
297 See European Commission (Decem ber 2008); Anne x 5, p.25.  
298 The possibility of establishing the 3% threshold as initial threshold is being considered in the 
Netherlands. A proposal has been su bmitted to the national parliament. 
299 Financial instruments that result in an entitlement to acquire, on such holder's own initiative alone, 
under a formal agreement, shares to  which voting rights are attached, al ready issued of an issuer whose 
shares are admitted to trading on a regulated market. 
 
EN 64   EN Additionally, in several Member States issuer s of shares can set lower thresholds for 
notification300 of major holdings in th eir own articles of a ssociation, either on the 
basis of an explicit authorisation in the law or in the absence of an express prohibition (in which case, freed om of contract would apply)
301. The law may 
specify which is the lowest threshold: for in stance, in FR, it can be set at 0,5% while 
in BE is can be set at 1%. Both in FR a nd BE, this is possibility is regularly used302. 
8.3. Therefore, there appears to be a convergence towards the setting of a lower 
disclosure threshold at 3% . The European Parliament called on the Commission in 
2008 to prepare legislation lowering the th reshold for the disclosure of major 
holdings to 3%303. Although warning about setting too low disclosure levels, ESME 
also expressed an opinion in favour of setting the 3% threshold304. 
This appears to be the market trend too. In  practice, the seven Member States with 
lower disclosure thresholds account for around 60% of the mark et capitalisation 
(issuers of shares) in the EU regulated markets305. 
8.4. The external study conducted for the Commission  on the operation of the 
Transparency Directive explains that stake holders views, as expr essed in the survey 
conducted, are mixed on the need to lower the initial disclosure th reshold to 3% (or 
to 2% (see Chart  8.1). 
Chart 8.1 – Views on whet her the initial threshold should be  lowered to 2% or 3%, breakdown 
per stakeholder category. Cf. Mazars (2009), p.93. 
                                                 
300 To the issuer, but not to the market. 
301 AT, BE, CY, CZ, DK, EE, FI, FR, HU, IT, LU, LV and PT. See European Commission (December 
2008); Annex 5, p.26 and CESR (September 2008), Annex 2, replies to questions 13 and 14. 
302 See for instance, the information disclosed by the Belgian supervisor on this issue: 
http://www.cbfa.be/eng/gv/ah/not/dbeginfrmemittenten.asp   
303 European Parliament (September 2008), annex to the Resolution. 
304 ESME (December 2007), p.5. 
305 Source: own elaboration with FESE data of Decem ber 2009. The regulated markets in CZ, DE, ES, IT, 
IE and UK account for 59% of market capitalisation value. The data for PT regulated market have not 
been taken into account for this calculation since FE SE only discloses Euronext aggregated data.  
 Having said this, if Euronext countries were added to this calculation (considering that in practice, in 
FR and BE lower disclosure thresholds are regularly applied by listed companies themselves, and that 
in the NL there is a legislative proposal to set a 3% threshold), the percentage of total market 
capitalisation would raise above 75%.  
 
EN 65   EN 
 
45% of stakeholders do not consider that lowering the initial threshold is necessary 
but there is some disagreement: users of  information (financial analysts and 
institutional investors) are generally in favour of lowering it; supervisors are split on 
the matter; and, on balance, issuers of sh ares do not favour a lowering of the legal 
initial threshold to 2 or 3%306. 
8.5. According to this study, how ever, during interviews issu ers were less negative on 
this possibility307 and other stakeholders were more  openly in favour of a harmonised 
lowering of the initial threshold. Ho wever, emphasis on harmonisation was 
particularly exercised: issu ers and investors made clear that full harmonisation of a 
number of provisions of the Directive is a priority for them. If the price to pay to 
have a full harmonisation of thresholds is  to lower the initial threshold, then a 
number of stakeholders would be prepared  to support this. In addition, generally, 
issuers are of the opinion that the 5% in itial threshold is too high. The most 
frequently figure mentioned for a harmoni sed initial threshold in the EU was 3%308. 
Of those against lowering the initial thresh old, the more cautious were intermediaries 
that use the “trading book” exemption309. They would be against lowering the level 
of exemptions. 
                                                 
306 Mazars (2009), section 3.4.1. 
307 It appeared that issuers were relatively neutral or have nothing against more precise requirements 
allowing them to identify their shareholders:  "It should be noted that, generally speaking, issuers are indifferent as regards the level of the initial 
threshold. The issuers’ priority is to better identify their shareholders, in order to anticipate evolutions 
that may impact the general strategy of the company. The legal thresholds are an important source of information but the level of granularity resulting from  the Directive is not considered sufficient. Issuers 
use specialised procedures or require external consultants to identify their shareholders below 5% (the 
services are often proposed by custodians and/or data disseminators). In Top Companies, this identification of shareholders is often done twice a year.  
In terms of the methodology of the study, it should be said that several issuers confessed during 
interviews that their main priority in participating in this study was to make sure that a revision of the 
Directive will not result in a new wave of requirements. In other words, they have adopted a very 
conservative attitude when responding to the on-line questionnaire. […] ".  
Ibid. 
308 Ibid.  
309 Cf. Article 9(6) of the Transparency Directive. 
 
EN 66   EN 8.6. There are arguments supporting such lowering of the threshold, such as better 
capturing shareholders' movements of inte rest to the market or facilitating 
shareholders' activism. For instance, the external study outlines that investors consider that " transparency of ownership is one of the parameters of investment 
decisions and that 'shareholder activism' can have significant impact even if those 
shareholders have less than 5% of the voting rights "
310. Indeed, in some cases, it may 
be necessary to go below such level if one wants to capture the major shareholders
311.  
According to the external study, for interm ediaries and institutional investors the 
lowering of the initial threshold would ha ve no effect on investment decision when 
the initial threshold is known. In fact, the burden to notify is not on the one that takes 
the investment decision but on a separate de partment of the intermediary or of the 
institutional investor  or on the custodian312.  
In terms of administrative burden for invest ors, establishing a new (lower) threshold 
may increase the likelihood of having to no tify holdings, but does not result in major 
difficulties. Indeed, the new threshold will be added to existing monitoring software alerting of the crossing of the relevant th reshold. The difficulty for investors would 
rather lie on the calculati on of relevant voting rights
313.  
Finally, the external study anticipates that there would not be market disruptions as a 
result of the lowering of the threshold. Indeed, interviews with supervisors in 
Member States that decided to lower the in itial threshold to 3% when transposing the 
Directive did not report any di sruptions in the market cause d by such change. It is a 
fact that they were confronted with a wave  of notifications and therefore provided for 
a transition period. The purpose of the transi tion period was to allow those investors 
holding an interest between 3% and 5% in  a company to realise that they were 
required to notify such interest. Generall y, that transition period lasted 6 months. 
Finally, they did not receive complaints from the industr y about the lowering of the 
initial threshold314. 
8.7. There are also arguments against the enhanced transparency resulting from 
lower disclosure thresholds, as already described by th e Commission staff working 
document of 2008: there is a risk that enhan ced disclosure requirements may result in 
immaterial disclosures that distract the a ttention of the market from the disclosures 
that reveal significant changes in  the structure of voting control315; thresholds for 
disclosure may act as a brake for inve stors with a non-control taking strategy316 or 
discourage those willing to discretely build a stake317. This may have an impact on 
                                                 
310 Mazars (2009), section 3.4.1. 
311 See European Commission (December 2008), §15 regarding the ownership structure of listed 
companies. At the same time, this paper was also  explaining that the "median largest block" was 
different depending of the Member State considered a nd that those differences would justify, from an 
economic perspective, different re gulation: i.e. not necessarily supporting maximum harmonisation.  
312 Mazars (2009), section 3.4.1. 
313 See Mazars (2009), sections 3.3.5; 3. 5; 3.6.2 and Possibl e Improvement N°7. 
314 Mazars (2009), section 3.4.1. 
315 ESME (December 2007), p.5. See also footnote 311  of this paper.  
316 ESME (December 2007), p. 4; and European Commissi on (December 2008), §16. 
317 ESME (December 2007), p. 2; and European Commissi on (December 2008), §16. 
 
EN 67   EN the market for corporate control, facilitati ng the defensive strategies of entrenched 
managers318.  
8.8. The external study concludes that loweri ng the initial threshold to 3% could be 
a possible improvement to the Directive , to the extent that such measure permits 
maximum harmonisation without di srupting the market (see Box 8.1 ).  
Box 8.1 - Possible improvement n°8 to the Tran sparency Directive. Cf. Mazars (2009), p. XIV 
and 77.  
 
                                                 
318 European Commission (December 2008),  §21 and ESME (December 2007), p.5. 
 
EN 68   EN ANNEX 9 – DISCLOSURE OF HOLDINGS OF CASH -SETTLED DERIVATIVES  
9. Annex 
9.1. This Annex presents: 
• A) Financial innovation and the increased use of cash-settled equity derivatives 
• B) The existing disclosure requiremen ts under the Transparency Directive 
• C) The problems regarding market transparency 
• D) Reaction of some Member States 
• E) Need for action at EU level 
• F) Content of possible disclosure regime 
• G) Alternative approaches 
A) Financial innovation and the increased use of cash-settled equity derivatives 
9.2. The equity derivatives market has grown c onsiderably over the last decade, as shown 
in the table below319. 
 
9.3. According to BIS figures, even if in the context of the financial crisis market values 
remain 16% below the level of end-y ear 2008, notional amounts of OTC traded 
equity derivatives rose by 7% to $6,6 trillion at the end of June 2009320.  
                                                 
319 IOMA (May 2009)  
320 Bank of International Settlements (2009), p. 5. Give n the financial crisis, these figures have gone down 
from a notional amount of $10,2 trillion at the end of  June 2008. See Bank of International Settlements 
(2008), p.3. 
 
EN 69   EN 
 
9.4. Due to this rapid growth and innovation in the financial markets, a number of 
financial instruments are now extensively used to acquire economic interest in shares of public listed companies wit hout acquiring direct  control over or ownership in such 
shares. 
9.5. Also, following the recent financial cris is, the increased regulatory capital 
requirements for banks may spur banks to use derivatives to fund acquisitions of 
strategic stakes. With greater focus on ba nks' core capital, banks may look for ways 
to use equity derivatives to help clients ta ke stakes in troubled companies in Europe 
and Asia
321.  
Cash-settled equity derivatives 
Cash-settled equity derivatives refer to equity linke d transactions settled by the payment of cash only 
without any physical delivery of th e underlying equity. Such transactions can include options, futures 
and swaps over a single share, an index or a basket of shares. They are usually based on the difference 
between a pre-agreed settle ment price and the then prevailing market price of the shares. Thus, 
without physically buying or selling the underlying shares, the contracting parties to a cash-settled 
equity derivative are able to acquire or dispose of  an economic interest in the shares (i.e. acquire 
exposure to equity price movements).  
9.6. This financial innovation has an impact on the notification of major holdings and 
could be seen, under certain circumstances, as  unsatisfactory with regard to market 
transparency, as new market practices or financial products can be conceived in a 
manner that they are not covered by the no tification requirements  of Transparency 
Directive. In fact, new financial instrume nts are increasingly us ed by investors in 
order to escape from the traditional categor ies of securities (i .e. ordinary shares, 
depositary receipts, etc.) that trigger an ob ligation to disclose voting rights under the 
Transparency Directive. Some practices may even come close to market abuse, when 
such financial instruments are used to s queeze the free float of the underlying shares 
and thus increase their market price. 
                                                 
321 See, for instance, Crompton (2010). 
 
EN 70   EN B) The existing disclosure requirements under the Transparency Directive 
Transparency Directive: relevant legal provisions 
Article 9(1) of the Directive 2004/109/ EC: “The home Member State shall ensure that, where a 
shareholder acquires or disposes of shares of an issuer whose shares are admitted to trading on a 
regulated market and to which voting rights are attached, such shareholder notifies the issuer of the 
proportion of voting rights of the issuer held by the shareholder as a result of the acquisition or 
disposal where that proportion reaches, exceeds or falls below the thresholds of 5 %, 10 %, 15 %, 20 
%, 25 %, 30 %, 50 % and 75%. 
Article 10 of the Directive 2004/109/EC : “The notification requirements defined in paragraphs 1 and 
2 of Article 9 shall also apply to a natural person or  legal entity to the extent it is entitled to acquire, 
to dispose of, or to exercise voting rights in any of the following cases or a combination of them: 
(a) voting rights held by a third party with whom that person or entity has concluded an agreement, 
which obliges them to ad opt, by concerted exercise of the vo ting rights they hold, a lasting common 
policy towards the management of the issuer in question; 
(b) voting rights held by a third party under an agreement concluded with that person or entity 
providing for the temporary transfer for consideration of the voting rights in question; 
(c) voting rights attaching to shares which are lodged as collateral with that person or entity, 
provided the person or entity controls the voting rights and declares its intention of exercising them; 
(d) voting rights attaching to shares in which that person or entity has the life interest; 
(e) voting rights which are held, or may be exercised within the meaning of po ints (a) to (d), by an 
undertaking controlled by that person or entity; 
(f) voting rights attaching to shares deposited with that person or entity which the person or entity can 
exercise at its discretion in the absence of specific instructions from the shareholders; 
(g) voting rights held by a third party in its own name on behalf of that person or entity; 
(h) voting rights which that person or entity may exer cise as a proxy where the person or entity can 
exercise the voting rights at its discretion in th e absence of specific instructions from the 
shareholders.” 
Article 13(1) of the Directive 2004/109/EC : “The notification requirements laid down in Article 9 
shall also apply to a natural person or legal en tity who holds, directly or indirectly, financial 
instruments that result in an entitlement to acquire, on such holder's own initiative alone, under a 
formal agreement shares to which voting rights are attached, already issued, of an issuer whose 
shares are admitted to trading on a regulated market.” 
Article 11(1) of the Directive 2007/14/EC : “Transferable securities, and options, futures, swaps, 
forward rate agreements and any other derivative contracts shall be considered to be financial 
instruments, provided that they result in an entitlement to acquire, on the holder's own initiative 
alone, under a formal agreement, shares to which voting rights are attached, already issued, of an 
issuer whose shares are admitted to trading on a re gulated market” and that “the instrument holder 
must enjoy, on maturity, either the unconditional right to acquire the underlying shares or the 
discretion as to his right to acquire such shares or not”. 
Article 11(1) of the Directive 2007/14/EC : “a formal agreement means an agreement which is 
binding under the applicable law”. 
9.7. Under the Transparency Directive, there is currently no general disclosure 
requirement in respect of economic interest s under cash-settled e quity derivatives.  
 
EN 71   EN 9.8. Article 9 of the Transparency  Directive applies only to vo ting shares in the issuer. 
According to Article 10 of the Transparen cy Directive, the notification provisions 
also apply to any person who has the right under an agreement or collateral 
arrangements to exercise the relevant voti ng rights or to direct  the holder of the 
shares as to how to exercise such rights . This provision would, therefore, only apply 
to cash-settled equity derivates if the count erparty has the right to  direct voting rights 
over the shares or is grante d collateral over the shares provided under the collateral 
arrangements. However, most cash-settle d equity derivative s do not give the 
counterparty to the transacti on the right to vote or influe nce the voting rights of the 
shares subject to them. These would th erefore fall outside the scope of the 
Transparency Directive322. Article 13 of the Transparency Directive extends 
disclosure obligations to financial instrume nts conferring the right to acquire or sell 
shares323. However, this article does not cover cash-settled equity derivatives which 
do not grant a right to the hol der to acquire or dispose of the underlying shares but 
are only settled in cash324. 
C) The problems regarding market transparency 
9.9. Although cash-settled equity de rivatives are an important source of liqui dity to the 
market and are usually used for purely economic and hedging purposes, recent cases 
in different EU Member Stat es and third countries suggest  that cash-settled equity 
derivatives can also be used in order to acquire and exerci se potential influence in a 
listed company or build a secret stake in such a company without any disclosure325. 
These cases have demonstrated the limits of the current disclosure obligations with respect to these financial instruments.
  
Recent cases in the European Union326 
Continental versus Schaeffler327 
July/August 2008: Schaeffler built an economic interest of 36% in Continental by entering equity 
swaps with some banks before it declared a public offering on the outstanding capital of Continental. 
                                                 
322 See, for instance, ESME (November 2009). In its opinion ESME states that Article 10 (g) " was not 
introduced for large positions in cash settled derivatives, but for the market practice of custodians or for situations of “at arms length” investment manage ment. The provision is rather narrowly framed to 
support a widening of disclosure rules to cash settled financial instruments ". Ibid. p. 13. 
 However, some scholars are of the view that a co ntractual scheme leads to the short party holding the 
underlying shares 'on behalf' of the long party if the latter bears the economic risk and is capable of 
influencing how voting rights are exercised. In thos e circumstances, they are of the view that Article 
10(g) should be applicable. See Zetzsche (2009), p.133. 
323 The main novelty of Article 13 has been to extend the notification requirement to " financial instruments 
that result in an entitlement to acquire, on the holder's own initiative alone, under a formal agreement, 
shares to which voting rights are attached, already issued, of an issuer whose shares are admitted to 
trading on a regulated market ".  
324 ESME underlined in its opinion that there " usually is no specific agreement on voting; it is not that 
often that there is actually a formal right to require the delivery of voting securities. Yet in reality there is often an expectation on the part of the acquirer that the counterparty to the trade would be able to 
deliver the underlying stock if asked to do so. The mere aspect of the commercial relation gives an 
incentive to the bank to listen to the opinion of the underlying client and, finally, to deliver voting 
securities in lieu of cash settlement ". See ESME (November 2009), p.11. 
325 On the issue of cash-settled equity instruments and transparency, see generally Schouten (2009) and Hu 
& Black (2007). 
326 For other cases in third countr ies, see Hu & Black (2008).  
327 See generally Zetzsche (2009). 
 
EN 72   EN Schaeffler was exempted from the lunch of a mandatory bid, since it made a voluntary public offering 
and wanted to pay a fair price. However, this fair price was lower than would have been the case if the 
control position was built by normal share acquisitions instead of by equity swaps. The German 
regulator BaFin ruled that the build-up of an economic interest by cash  settled financial instruments 
does not need to be notified under current German law. It should be noted that none of the banks 
involved held more than 3% of the shares to hedge the equity swaps so as to avoid having to notify 
themselves under the rules on holding of shares. 
Porsche versus Volkswagen 
October 2008: Porsche announces that it has built a di rect share interest of 42,5% in its competitor 
Volkswagen. Porsche discloses an additional economic interest of 31,5% by cash settled options. 
There were discussions if the “free float’ in shar es of Volkswagen was effectively reduced to 5,8% 
since the land of Low Saxony held an interest of 20,1% in Volkswag en company. Market parties had 
not taken into account the existence of such a large economic interest with only one pa rty. They had 
speculated on a share price fall and were short fo r about 13% of outstanding shares. The closing of 
these positions led to a price explosion of the Volkswagen shares. In order to improve liquidity, 
Porsche settled 5% of its position into cash and ther eby apparently profited from the market disorder 
caused by itself. 
SGL Carbon / Susanne Klatten / SKion GmbH 
March 2009: according to an ad hoc announcement pursuant to § 15 WpHG dated 16 March 2009, 
SGL Carbon notified that the “Board of Management of SGL Carbon SE was informed that SKion, 
the investment company of Mrs. Susanne Klatten, has acquired an equity stake of 7.92% in SGL 
Carbon SE. According to their notification, SKion is interested  in further purchases of additional SGL 
Carbon SE shares; will however remain below the th reshold of 25% of voting rights. SKion has built 
positions within this percentage scope through derivative capital market instruments.” Different 
business journals (e.g. Handelsblatt,  Manager Magazin) reported that SKion had followed the example 
of Porsche by entering into cash settled equity swaps. On 8 April 2008, SKion notified SGL Carbon 
that the voting interest in SGL Carbon AG has exceeded the thresholds of 10% and 15%. At this time 
the stake of SKion amounted to 16.48%. All voting rights of SKion are to be attributed to Susanne 
Klatten. 
Fiat328 
April 2005: EXOR, a company controlled by the Agnelli family (controlling, through IFIL, FIAT at 
the time with around 30% of the voting rights, through a pyramid structure) enters  into an equity swap 
agreement for around 7% of the shares, which remains undisclosed until executed. While the 
originally equity swap agreement would be settled in cash, the agreement was eventually modified in 
August 2005 to allow physical settlement in shar es. Physical delivery of the shares to the Agnelli 
family took place on the date in which a group of ba nks were executing a conv ertible loan agreement 
not being repaid in cash by FIAT and therefore dilu ting the Agnelli's original stake to 23%. The equity 
swap allowed the Agnelli family to keep their shareh oldings in FIAT constant at 30% and with it the 
attached control rights intact without having to launch a takeover bid for the remaining of the capital. 
For reporting obligations, Italian law takes into account the way financial derivatives may be settled: 
only in cash or possibly in underlying physical instruments.   
9.10. Indeed, cash-settled equity de rivatives do not trigger notifi cation duties to the extent 
that they do not entitle th e holder/the buyer to acquire th e underlying shares. But in 
practice, cash-settled options ma y facilitate the localization of blocks of shares at a 
later point in time, even though a legal enti tlement to purchase such shares does not 
exist. In fact, the seller of a long equity derivative, usually a bank, will have a strong 
economic incentive to acquire a matching nu mber of physical securities at the 
beginning of the equity derivative period to  hedge its position. When the holder of 
the derivative/the buyer closes its position, the seller has an economic incentive to sell the hedge shares simultaneously at the equity derivative settlement price. The holder of the derivative/the buyer will normally be aware of the iden tity of the seller 
                                                
 
328 See also Kirchmaier et al. (2009), p.12. 
 
EN 73   EN and when the seller will be likely to dis pose of the shares. The holder/the buyer is 
therefore in a privileged position to acqui re the hedge shares when the contract 
ends329.  
9.11. This situation can also arise from the fact that the seller promises to the buyer of a 
cash-settled derivative via a side agreemen t to sell the shares it has purchased to 
hedge its exposure from the sale of the contract on to the buyer once the contract 
expires330. 
9.12. Also, the holder of long derivatives position/the buyer could influence the voting of 
the actual shares by exerting pressure on the holder of the corresponding short 
position/the seller who holds the underlying shares331. It is argued that the bank that 
holds the shares for hedging purposes a nd relating voting ri ghts without any 
economic interest in the underlying company could use such "empty " voting rights in 
a way which suits the holder of the economic  interest/the buyer, i.e. by following the 
voting instructions of the buyer, in order to attract future business. 
D) Reaction of some Member States 
9.13. Some EU Member States have decided to generally extend major notification 
requirements to cash settled deriva tives or are planning to do so.  
9.14. The United Kingdom332 has introduced a new regime that  requires the disclosure of 
(gross) long positions on cash settle d derivatives from 1 June 2009 onwards333. It 
requires reporting once the th reshold of 3% has been reached, aggregating both the 
derivative transactions and any actua l holdings of the voting shares.  
The UK FSA position on cash-settled derivatives 
In its consultation paper of 2007334, the UK regulator (Financial Serv ices Authority, FSA) considered 
the question of whether the regime as set out in the Transparency Directive was open to abuse and 
whether specific rules should be introduced to legislate for the potential loopholes. The FSA 
considered that cash settled contracts for diffe rence (CFD) and similar instruments were not 
disclosable under the terms of the Transparency Directive (as implemented by UK rules) given that 
they do not constitute a legal right to acquire the underlying share. 
                                                 
329 For example, in Continental/Schaeffl er case, Schaeffler was a holder of  a total return equity swap on 
Continental shares sold by Merrill Lynch (the writer of  the total return equity swap), who, with other 
investment banks, held the underlying Continental shares to hedge its position. Although Schaeffler did not have any legal right to purchase the underlying shares, after the termination of the swap contract 
Merrill Lynch and other banks had to sell the underlying shares which they no longer needed. 
Schaeffler should be the likely buyer as the only  commercially reasonable way for Merrill Lynch and 
other investment banks to dispose of the shares is to sell them to Schaeffler, because otherwise the sale 
of the block of the shares on the market in such a large amount would overwhelm the market and 
potentially depress the share price. 
330 Depending on the content of the agreement this situation could be caught by Article 13 of the 
Transparency Directive. 
331 See footnote 322  on the discussion on the applicability of Article 10(g) of the Transparency Directive. 
332 In the United Kingdom, the UK Takeover Code already required the disclosure of economic interest 
during the offer periods: see Rule 8(3). In Ireland, similar rules were contained in the Irish Takeover 
Code. 
333 See UK FSA (March 2009). 
334 UK FSA (2007). 
 
EN 74   EN The FSA noted the 2 main problems with this position being: 
1) The issuer of the CFD will almost always seek to hedge its position on the derivative by acquiring 
the underlying share; and 
2) Those with a pure economic interest in the shares of a company may still seek to influence its 
management. 
This resulted in the following potential problems335 for market transparency: 
• The situation where a CFD, although intended to be  cash settled, is in fact physically settled. By this 
route the person taking the derivative could instantly take ownership of a substantial percentage of the 
shares in the company with no disclosures having  been made during the building of the stake. 
• The majority of issuers of CFDs cl aim that they do not exercise the votes attaching to the shares they 
hold for hedging purposes and, specifically, do not follow the instructions of those holding the 
relevant CFDs. However, there is widespread recogn ition that, where issuers have no real interest in 
the affairs of the company whose shares they hold, th ey can easily be influenced  by the holder of the 
CFD. 
• Even if the issuer of the CFD does not vote its he dged shares, this can take  a large proportion of the 
votes out of the voting pool, effectively in creasing the significance of other holders. 
• The cost in management time of investigating enquiries and demands from those who claim to hold 
an interest in the company to verify their equity with little information.  
In its consultation paper, the FSA also put the arguments for the opposing view, that the rules should 
remain unchanged. The principal points of this argument being: 
• The majority of issuers state that they do not  settle CFDs by physical delivery of the shares; 
• The majority of issuers state th at they do not vote shares which they hold in relation to hedge 
positions and do not allow themselves to be influenced in this regard by the holders of CFDs; 
• Too much disclosure can cause problems for market participants in their understanding of the true 
position in relation to control of companies and can, therefore, harm transparency. Specifically the 
disclosure could lead to: 
- confusion of the investor community as to who holds underlying interests and the motives behind 
acquisitions and disposals; 
- complex situations where the community tries to  second guess potential shareholdings creating a 
false feeling of interest/disinterest in the market; 
- increasing volatility in the market; and 
- the additional costs associated w ith the extra disclosure burden. 
The FSA clearly saw the merit in many of these ar guments. However, it was ultimately convinced by 
the view in the market that, what ever CFD issuers may imply about their practices, taking positions in 
CFDs is an effective and widespread method for building a stake in a company without the burden of 
disclosure. This was a clear loophole that the FSA s ought to close. This resulted in the FSA revising 
the applicable rules to include CFDs and similar instruments in the obligation to notify interests. 
                                                 
335 See also Schouten (2009), p. 40 and seq. for a summary assessment of why hidden ownership is 
problematic. 
 
EN 75   EN 9.15. In France, new rules came into force on 1 November 2009. These rules require that 
once a threshold has been crossed by holdings of shares and options, gross long positions held through financial instrument s of similar economic effect to holding 
shares also need to be reported. Ther e is no separate threshold for financial 
instruments of similar economic effect to holding shares. 
9.16. In Portugal, the supervisor  (CMVM) has published draft rules for public consultation 
requiring the disclosure of a ll instruments of similar econom ic effect to the holding 
of shares
336. According to the proposal, all instru ments would need to be aggregated 
towards the existing thresholds. The introduc tion of additional thresholds is also 
under consideration. 
9.17. In the Netherlands, the Ministry of Fi nance has published draft legislation for 
consultation in 2009. The draft law would cr eate the presumption that the holder of 
an instrument which creates an economic long position but is not settled in shares, controls the underlying shares. Such instrument s would have to be aggregated to with 
shares and entitlements to acquire shares. 
9.18. In Italy, the national author ity Consob issued a public c onsultation in October 2009 
on the topic
337.  
9.19. The Germany regulator (BaFin) has experien ced a lot of public pressure to modify 
regulation. Finance directors of some la rge German listed companies have asked 
BaFin to change notification rules.  
9.20. Outside the EU, Switzerland, Hong Kong a nd Australia have also taken action 
– The Swiss regulator has extended the scope  of notification rules at end of 2007. 
Disclosures on cash settled derivatives only are seldom, in many cases such 
disclosures are done in connection with disclosures on othe r participations 
(shares) in the respective companies. Th e disclosures have become more complex 
by expanding the disclosure requirements to cash settled derivatives, but the disclosures contain more information. 
– In Hong Kong, all types of equity instrume nts of similar economic effect to the 
holdings of shares are in scope of the significant holdings regime. A person 
holding, writing or issuing instruments of similar economic effect is taken to be 
interested in the underlying shares. Thes e interests must be aggregated with 
physical holdings on a gross basis. 
– The Australian Treasury has started a co nsultation to determine whether equity 
instruments of similar economic effect should be included in the definition of substantial holding, and, if so, on what ba sis they should be in cluded. It considers 
that while equity in struments of similar economic e ffect give economic interests 
but not voting rights, they may give a degree of effective control over the 
referenced shares. 
                                                
 
336 http://www.cmvm.pt/NR/exeres/9ADECEA 9-1A6C-47FD-9526-5A9E9664D7F8.htm   
337
 http://www.consob.it/main/documenti/Regolamentazione/lavori_preparatori/position_paper_derivati_
20091008.htm?hkeywords=&docid=2&page=0&hits=10  
 
EN 76   EN 9.21. China and India do not require specific disclo sure, which is mostly due to the lack of 
general regulation regarding cash-settle d derivatives. Japan does not require 
disclosure either. Canada, has also been c onsidering amending the existing rules, but 
has not done so yet. 
The US, which traditionally did not require disclosure, is now in an intermediate 
position, as a court ruled that cash-settled derivatives could not be used to avoid 
notification requirements (see be low Section G of this Annex ).  
E) Need for action at EU level? 
9.22. In its opinion on cash settled derivatives, ESME stressed the importance of having a 
fully harmonized and regulated regime fo r disclosure of cash-settled equity 
derivatives on a European level, based on the experience related to the operation of 
the current disclosure regime of major holdings and its implementation by Member 
States338. The same conclusion results from the External Study which says that 
"based on the magnitude of the loophole, which clearly goes against the very 
principles of the Directive and has perm itted the development of improper conduct in 
several highly visible cases involving major companies, and in consideration of the position taken by the respondents to our  questionnaire, we believe the loophole 
should be closed ".
339 
9.23. In its Consultation paper to extend major sh areholding notifications to instruments of 
similar economic effect to holding shar es and entitlements to acquire shares340, 
CESR argues that the scope of major shar eholding disclosure should include all 
instruments that give similar economic effect  to holding shares or entitlements to 
acquire shares, irrespective of whether such  an instrument is settled in cash or 
physically. Consequently, CESR considers that the scope of the Transparency 
Directive should be extended to  instruments of similar econo mic effect to holdings of 
shares and entitlements to acquire shares becau se it is likely that an investor with a 
significant economic long interest will seek to  influence the issuer . CESR also argues 
that a pan-European approach would limit the required systems changes and thereby reduce the associated costs compared to  diverging national approaches. A pan-
European approach would also improve lega l certainty as to wh ich instruments need 
to be included across the EU. 
9.24. However, it is also argued that systematic  disclosure of economic interest could be 
problematic and cumbersome in practice an d result in an overflow of extraneous 
information to the public that could have  an adverse impact on the efficient 
functioning of the markets. Because the info rmation could appear duplicative or even 
contradictory, this would hinder transparen cy rather than promote it and therefore 
damage the liquidity of cash settled deri vatives. It could also be seen as an 
                                                
 
338 Given that the notification requirements of major holdings of the Transparency Directive are minimum 
harmonisation rules and that the present differences in  implementation of the Transparency Directive in 
all member states lead to administrative costs for asset management companies operating on a cross 
border scale, ESME pleads for a reporting obligation that is general and harmonized at EU level and 
therefore separate from reporting of normal  shares. See ESME (November 2009), p.11. 
339 Mazars (2009), section 3.6.3.2 in fine .  
340 See CESR (January 2010). 
 
EN 77   EN unnecessary intrusion into the privacy of market particip ants and overprotective of 
the issuer at the expense of a dyna mic market for corporate control341.  
9.25. According to the External Study342, the final decision on whether cash-settled 
derivatives should fall within the disc losure requirements should depend on an 
assessment of the following criteria : 
– whether it is acceptable to keep such a significant loophole in the notification 
regime provided by the Transparency Directive,  in particular in view of Recital 18 
which states that “ The public should be informed of  changes to majo r holdings in 
issuers whose shares are traded on a regu lated market situated in or operating 
within the Community. This information should enable investors to acquire or 
dispose of shares in full knowledge of  the changes in voting structure; it should 
also enhance effective contro l of share issuers and over all market transparency of 
important capital movements ”. 
– whether imposing disclosure would have an  adverse impact on contestability of 
control and would outweigh the benefit of an increased transparency. It has been 
argued, for instance, that during a takeover bid, the obligation to disclose interests 
in derivatives at an early stage could detr imentally increase the price of shares in 
the target company, rendering it unviable, and that if the target company is on 
notice, it may wish to defend the bid. 
F) Content of possible disclosure regime 
9.26. According to the External Study343 and to CESR344, if a disclosure regime for cash-
settled equity derivatives were to be adopted345, the following five issues should be 
considered:  
9.27. The first issue relates to the scope of the disclosure.  Notification requirements could 
be extended to all instruments of similar economic effect to holding shares and entitlements to acquire shares, or it may be  limited to include only instruments that 
do not contractually preclude access to voti ng rights. An extension to all instruments 
would mean a holder needs to include all inst ruments that give him, in effect, a long 
economic exposure to an issuer. At the same ti me this raises the issue of the need for 
exemptions as it is likely to yi eld a large number of disclosures. 
9.28. An alternative to a general approach comb ined with exemptions, is to prescribe a 
limitative approach. Such an approach would be based on contractual terms that 
                                                
 
341 See, for instance, ISDA's response to the UK FSA consultation paper CP06/4 on the Implementation of 
the Transparency Directive, 29 June 2006: Available at: 
https://www.isdadocs. org/conf/agm2006/index_agm2006agenda.html . See also ESME (November 
2009), p.10. 
342 Mazars (2009), section 3.6.3.2 in fine .  
343 Ibid.  
344 CESR (January 2010), pp. 10 and seq. 
345 The analysis conducted in Schouten (2009) concludes that the Transparency Directive in its present 
form does not effectively prevent hidden ownership, and that hidden ownership severely undermines the mechanisms through which ownership disclosure improves market efficiency and corporate 
governance. For this scholar, " this strongly suggests that the Commission should consider expanding 
the scope of the disclosure rules ". See Schouten (2009), p.52. 
 
EN 78   EN preclude the possibility of the holder obtaining the voting rights or influencing their 
exercise.  
9.29. However, even if robust contractual agre ements were created regarding explicit 
influence over voting rights and disposal  of shares, it would be possible to 
circumvent the purposes of the disclosure obligation346 simply by changing the 
contract terms of the instrument immedi ately prior to the c ontract being closed347. 
Also, such a regime would be partly base d on the intention of  the holder of the 
instrument. This means that even if holders  might comply strictly with the terms of 
contractual arrangements, it would not w ith certainty prevent the building up of 
stakes on an undisclosed basis. 
9.30. CESR and ESME consider in their respectiv e analyses that such an approach that 
creates a ‘safe harbour’ for certain type s of contractual agreements would be 
unworkable in practice. 
9.31. The second issue  relates to aggregation of shares with derivatives : The most 
transparent system would be to provide fo r full aggregation: the number of shares 
corresponding to the derivatives  is aggregated with the nu mber of shares held by the 
same investor, as in the UK system. However,  this means that a full harmonisation of 
notification requirements will not be possible, as the existing rules for notification of 
holdings of shares under the Transparen cy Directive are minimum harmonisation 
rules348. A less transparent system would be to  provide for a separation of the two 
notification requirements: when a threshold is  crossed in shares or  in derivatives, a 
notification is required. The least transpar ent system would provide for information 
on cash-settled derivatives only when a thre shold in shares is crossed, as in the 
French system. This would allow a full ha rmonisation of notification of derivative 
instruments. However, it could be mislead ing, as any further acquisition or disposal 
of derivatives would not be notified. If no update is required, the market would 
remain with outdated information. 
9.32. The third issue  is whether specific thresholds  should be applied to cash-settled 
derivatives. As there are many transacti ons on derivatives (f or instance, it is 
estimated that up to 40% of trading in th e UK regulated market has been carried out 
through similar derivatives), a significant num ber of which may have little interest 
for the market, it may make sense to provi de for a safe harbour using specific 
thresholds. The regime could be such that , below a certain threshold, no notification 
                                                 
346 Concerning the limitations of securities laws on this  issue and the risk of circumvention, see Schouten 
(2009), p. 54. 
347 This was, for instance, the experience in the Fiat  case described above. See Ki rchmaier et al. (2009), 
p. 14. 
348 For example, ESME pleads for a uniform reporting obligation of large positive and negative positions 
in synthetic instruments, separate from the reporting of positions in the underlying shares, because the 
reporting arrangements for those positions is diffus e and continues to be not harmonized. Although the 
ultimate goal could be aggregation of share and derivatives positions into one reporting requirement, 
ESME concludes that it cannot be implemented in a fully harmonized way within  the foreseeable future. 
See ESME (November 2009), p. 13. 
 
EN 79   EN is required, provided appropria te rules are laid down to avoid any fraudulent use of 
the safe harbour349.  
9.33. The fourth is sue is how the equivalence between the cash-settled de rivatives and the 
number of underlying shares should be established. In the United Kingdom, the 
computation is made on a “delta-adjuste d” basis, which takes into account the 
potential variations in the hedging position a nd allows for a netting of long and short 
positions. In France, the notional amount of th e referenced number of shares is used, 
which is simpler but leads to disclo sure of a higher number of shares350. The netting 
of long and short positions is also an issue with regard to the calculation of thresholds
351. 
9.34. The last issue  relates to derivatives us ing a basket of securities . When the basket is a 
standard, well-diversified one, there is no issue: no notificati on should be required. 
However, if the basket includes only a lim ited number of securi ties, specific rules 
should be applicable. Technical provisions ha ve been implemented in this respect in 
France and the United Kingdom. 
G) Alternative approaches 
9.35. The External Study352 argues that there is also anot her way to address cash-settled 
derivatives. 
In the US, in a case involving the use of  cash-settled derivatives to avoid a 
notification requirement, it ha s been held that this c onduct was fraudulent (CSX/TCI 
case353). A way to address the issue would be  to have a broad anti-fraud provision 
stating, in substance, that cash settled deri vatives may not be used when the purpose 
or effect of such use is to  avoid the applicable notifica tion requirements. Under such 
provision, the courts would be left with th e task to decide, on a case by case basis, 
which conduct is acceptable or not. This may act as a potentially strong deterrent against sophisticated fraudulent practices but may not serve best the transparency 
requirements of the market.  
9.36. It should however be noted that Member St ates that have not introduced specific 
legislation regarding cash-settled derivatives  have not been able to rely on general 
principles or fraud theories  to curb practices such as described above. This is 
particularly the case in Germany where th e BaFin, after inves tigating, did not find 
that Porsche or Schaeffler were in vi olation of their disclosure requirements
354.  
                                                 
349 For example, according to ESME, th e disclosure obligation threshold fo r cash settled derivatives should 
not be set too low (at least 5% or 10%), because in the majority of cases positions in these instruments are never intended to hide ownership and/or make unethical price gains and are mostly used for risk 
management purposes and to improve liquidity. See ESME (November 2009), pp. 9 and 12. 
350 CESR in its consultation paper also discusses this  problem and notes that calculation of thresholds 
based on a nominal amount is in line with the current wording of Article 13 instrument of the 
Transparency Directive. CESR (January 2010), p. 10. 
351 ESME recommends to notify large positive and larg e negative positions separately and not on a net 
basis in order to achieve true transparency on the potential of hidden ownership and in order to avoid 
double-counting of positions. See ESME (November 2009), p. 13. 
352 Mazars (2009), s ection 3.6.3.2. 
353 For a description of this case,  see Schouten (2009), p. 35. 
354 See press release from BaFin of 21 August 2008. 
 
EN 80   EN ANNEX 10 – THE QUESTION OF STOCK LENDING AND EMPTY VOTING  
10. Annex 
10.1. Another issue linked to the disclosure of major holdings has been recently identified 
as leading to difficulties for market transp arency and shareholder identification. This 
issue concerns (i) stock lending carried out by banks and investment firms; and (ii) 
the possibility granted to in termediaries under MiFID355, to use clients' instruments 
for their own account or for the account of other clients (Article 19 of the MiFID 
Implementing Directive356). Though the usefulness of such practices for the efficient 
functioning of markets is recognised357, they may create difficulties – especially in 
the case of intermediaries' chains – in reconstructing in a timely manner the identity of shareholders or in locating voting righ ts correctly. For instance, at the time of 
annual shareholders’ meetings, specific parties may borrow specific securities for the 
primary purpose of participating and voting at an annual general meeting. Also, in 
some cases lenders and borrowers may both report major holdings in respect of the 
same shares and there are occasions when the total number of shareholders that consider that they are eligible to vote at a general meeting would exceed 100% of the 
total outstanding capital of the issuer. Since these issues are not MiFID-specific, they 
have not been addressed unde r this directive, which focuses on the safeguarding of 
clients rights when the use of their financial instruments is allowed (clients consent, information requirement and r ecord-keeping obl igations).  
A) Stock lending and the Transparency Directive 
10.2. The External Study on the application of the Transparency Dire ctive shows that a 
majority of stakeholders (55.9%) believe that  the lending of shar es should be made 
transparent and consider that voting right s obtained through the borrowing of shares 
should be included in the calculati on of the notifi cation threshold
358. 
 
                                                 
355 Directive 2004/39/EC 
356 Directive 2006/73/EC. 
357 See, for instance, ESME (December 2007). 
358 See generally Mazars (2 009), Sectio n 3.6.1. 
 
EN 81   EN 10.3. The way the Transparency Directive addre sses stock lending is, however, not fully 
clear to all parties. Accordi ng to the External Study, in all 14 Member States covered 
by the review, typical stock lend ing agreements lead to a tr ansfer of ownership of the 
lent shares from the lender to the borrower359. This principle is applicable to shares in 
bearer form and to nominative shar es. Therefore, it would appear that, prima facie , 
Article 9 of the Transparency Directive should be applicable. This would lead to a notification obligation imposed  on both the lender and th e borrower when relevant 
thresholds are reached or crossed. Alte rnatively, as advanced by the External 
Study
360, stock lending would be caught by Ar ticle 10(b) of the Directive: 
Article 10: “The notification requirements defined in  paragraphs 1 and 2 of Article 9 shall also apply 
to a natural person or legal entity to the extent it is entitled to acquire, to dispose of, or to exercise 
voting rights in any of the following cases or a combination of them: 
… (b) voting rights held by a third party under an agreement concluded with that person or entity 
providing for the temporary transfer for consideration of the voting rights in question.” 
10.4. However, the Directive has not been implemented in the same manner in all Member 
States. For instance, accor ding to the External Study361: 
– In the United Kingdom, the position has been that only the borrower has to 
disclose the transaction. The logic is  that, under a standard stock lending 
arrangement, whereby the lender maintains a right to call for redelivery of the shares, there is a simultaneous disposal of rights in the shares and acquisition of a corresponding right to reacquir e them. The lender under such an 
arrangement is permitted to "net off" the disposal and acquisition and, therefore, not consider the transaction as triggering disclosure obligations. On 
the other hand, as the right to call back the shares on notice is at the lender's 
initiative, there is no immediate corresponding dis posal by the borrower and 
therefore the two positions cannot be netted off, tri ggering the ob ligation for 
the borrower to notify the transaction. 
– In France, the law used to be interp reted in a way that made notification 
compulsory for lenders. However, it seems that the French transposition of the 
Transparency Directive has introduced so me confusion in this respect, and the 
current interpretation of applicable rules tends now to be the reverse. 
– Recent case law in Germany provides that the duty to notify is imposed on the 
lender only if it has transfe rred the voting rights to the borrower. In this case, 
both the lender and the borrower need to disclose the transaction. If control 
over the voting right is retained by the lender, then only the borrower needs to 
notify.  
– Luxembourg has a similar system to Germ any, where the transfer of the voting 
rights to the borrower triggers a noti fication requirement for both the lender 
and the borrower.  
                                                
 
359 See Mazars (2009), Section 3.6.1.4. 
360 Ibid.  
361 Ibid. See also CESR (September 2008), replies to questions 21 to 25. 
 
EN 82   EN 10.5. The rationale behind a non-notification by the lender is a concern th at disclosure on 
both sides of the transactio n would lead to confusing and conflicting disclosures 
which may harm the market information362. In particular, due to the number of stock 
lending transactions, systematic notificatio n by lenders may swamp the market with 
useless information, making material inform ation less easy to identify. In addition, 
when stock lending is used by banks to hedge  positions of activist shareholders in the 
setting of influence- seeking transactions, imposing notif ication requirements to such 
banks may result in both providing an a dvance warning to the target issuer and 
creating business issues for the bank in its relationship with the target issuer. Finally, there is a risk that placing a disclosure obligation on all stock lenders may affect 
liquidity in the lending arena
363. 
10.6. The reverse position, in favour of transparency for the both the lender and the 
borrower, is supported by the need to have a full picture of the situation at any time. 
The only way to provide complete and consis tent information to the market is to 
have the transaction declared both by the lender (who would disc lose his move from 
full owner to holder of a righ t to re-acquire the shares ) and the borrower (who would 
declare his status of owner and his obligati on to return the shar es). There would be 
no risk of confusion in such a case. On th e contrary, it would eliminate the risk of 
double counting the shares (a first time fo r the lender and a second time for the 
borrower, which is misleading). The system would also be simple, as the same rule 
would apply to all stock lending transacti ons, irrespective of specific contractual 
terms (whose complexity may always lead to diverging interpretations)364.  
10.7. According to the External St udy, the correct applic ation of article 9 of the Directive 
leads to a notification requirement by the lender and the borrower. Consequently, the 
External Study recommends that the applica tion of this principle should be enforced; 
subject however to specific exemptions, such  as the exemptions for very short term 
transactions applicable in some Member States (borrowed shares which are on loan 
by close of business the next day) (see Box 10.1 ). A specific exemption for 
transactions below a certain percen tage could also be provided for. 
Box 10.1 – Possible improvement n°9 to the Transp arency Directive. Cf. Maza rs (2009), p. XIV.  
 
                                                 
362 See Mazars (2009), Section 3.6.1.4. 
363 See ESME (December 2007). 
364 See Mazars (2009), Section 3.6.1.4. 
 
EN 83   EN B) Empty voting 
10.8. “Empty voting”, i.e. voting without the economic exposure us ually attached to 
shares, such as voting with borrowed shares, is a subject which has received much 
attention in recent years365.  
10.9. It is usually considered that company law confers voting power to the shareholders in 
view of the fact that they will bear the positive and negative consequences of their 
decisions. On the contrary, “empty voting” in cludes the possibility to exert influence 
on companies without financial consequences for the investors. In other words, the 
person who exercises the voting rights is not  the one who bears the consequences of 
the decision. As a result, d ecisions detrimental to other investors and to the issuer 
could be taken, in particular in a situati on where the holder of the voting rights finds 
himself in a conflict of interest, e.g. b ecause he has an economic interest in a 
competing company366. 
10.10.  A number of high profile cases have shown the potential for abuse resulting from 
empty voting. Among the most famous ar e the Laxey case in the UK, the OMV / 
MOL case in Hungary, the Perry/Mylan case367 in the US and the Henderson Land 
case in Hong Kong.  
10.11.  As described in the External Study, the position taken by a number of financial 
industry representatives shows that the c oncern regarding empty voting is widely 
shared. For instance: 
– In the United Kingdom, the Shareholde r Voting Working Group stated in 2004 
that " borrowing of shares for the pur pose of voting is not appropriate ".368  
– In July 2005, the International Securiti es Lending Association stated that " the 
practice of borrowing shares specif ically to vote is unacceptable ".369  
– The International Corporate Governance Network (ICGN) also stated that " the 
exercise of a vote by a borrower, who has, by private contract, only a 
temporary interest in the shares, can di stort the result of general meetings, 
bring the governance process into disrepute and ultimately undermine 
confidence in the market "370. As a result, according to the ICGN, " the 
borrowing of shares for the primary pur pose of exerting influence or gaining 
control of a company without sharing the risks of ownership is a violation of 
best practice" and "the borrowing of shares fo r the purpose of exercising the 
right of the shareholder's vote is  to be discouraged by all lenders ".  
                                                 
365 See generally Schouten (2009), Hu & Black (2006), Hu & Black (2007) and European Parliament 
(December 2009). 
366 See also Schouten (2009), p. 50 and seq. for a summary assessment of why empty voting is 
problematic. 
367 See a summary description in Schouten (2009), p.46. 
368 "Review of impediment to voting UK shares", the "Myners Report", January 2004. 
369 ISLA (2005). 
370 International Corporate Governance Network (2007), pp. 5 and 9.  
 
EN 84   EN 10.12.  The French financial supervisor ( Autorité des Marchés Financiers ) set up in 2007 a 
working group whose report (the “Mansi on Report”) proposed improved disclosure 
of empty voting and suggested the need of an outright ban371. 
10.13.  In 2007, the European Commission therefore co nsulted interested parties on the need 
to deal with stock lending and empty voting. A majority of respondents considered at 
the time that the EU should address these is sues in order to prevent an abuse. In 
particular measures enhancing transparen cy met with general support. However, 
many respondents highlighted the importance of stock lending in ensuring market 
liquidity and warned of measures that could reduce the attractiveness of stock 
lending altogether. Respondents were furthermore opposed to the suggestion that borrowers of stock should only vote if they obtain voting instructions from the lenders of stock
372. At the same time, the empirical evidence that stock lending abuse 
was taking place on a wide scale could not be gathered through the consultation and 
subsequent inquiries. The main findings we re rather that borrowers of shares 
refrained from voting altogether thus contributing to low general meeting 
participation rates. 
10.14.  Although it is not possible to have statistica l data to quantify precisely the use of 
empty voting as empty voting is not disclosed, there is still significant anecdotal 
evidence and a general feeling that  this practice is regularly used373. Also the 
External Study has shown that a clear majo rity among the stakeholders is in favour 
of preventing further development of “emp ty voting” practices by the Transparency 
Directive.  
 
                                                 
371 AMF (2008). 
372 See European Commission (September 2007), p. 6-10. See also Schouten (2009), p. 47. 
373 See generally Mazars (2 009), Sectio n 3.6.2. 
 
EN 85   EN 10.15.  Empty voting, and more in particular the phenomenon of "record date capture"374 are 
one of the arguments in favour of sh areholder identification (see Annex 11 ). 
However, shareholder identification is no t the only way to deal  with the problem. 
Thus, the External Study recommends to in troduce a requirement that any sale of 
shares above a certain thres hold (or other reduction in the net economic exposure of 
a shareholder of record ) between the record date and the date of the general meeting 
should be immediately notified to  the issuer and to the market in such a way that the 
relevant information is fully disclosed prio r to the date of the general meeting (see 
Box 10.2 ). 
Box 10.2 – Possible improvement n°10 to the Tran sparency Directive. Cf. Mazars (2009), p. XIV 
and 78.  
 
10.16.  As advanced in the External Study, there are also arguments that are being voiced 
against the regulation of "empty voting" practice. Some argue that empty voting 
makes shareholder activism easier and thus promotes a stronger control by 
shareholders on the management of compan ies. Also, as empty voting is mostly 
based on stock lending, regulating the former should not result in an impediment for 
the latter. In particular, when  stock lending is used for “t ax optimization” purposes at 
the time dividends are paid, there is a fear voiced by banks promoting this 
optimization that any regulation in this ar ea may jeopardize their interest. Generally 
speaking, there is also a view, mostly voiced  by financial interm ediaries, that more 
disclosure is not necessary better disclosure. 
10.17.  It should be noted that, in the United Ki ngdom, in 2009 the Takeover Panel issued a 
consultation paper in which it reached the conclusion that no further regulation was 
required, for the time being, on this issue375. 
                                                 
374 "Record date capture" is a specific type of empty voting, which may be described as follows: an 
investor purchases shares on the record date of a general meeting of shareholders and sells them 
immediately thereafter; at the general meeting, this shareholder is legally entitled to vote although it has 
no longer any economic interest in th e issuer; if the sale takes place shortly before the general meeting, 
the other shareholders will not be aware of the situ ation – this may be the case, for instance, if the 
shares are sold two days before the general meeting and notification is made the day after the meeting. 
 For a long time, the issue of the record date captu re was mostly a concern in the United States, where 
the practice of the record date has been well esta blished for a long time. The Shareholders’ Rights 
Directive, which mandates the use of record dates and prohibits any blocking of shares between the record date and the date of the general meeting, makes it possible, at least in theory, to capture the 
record date of all EU companies listed on a regul ated market. See Mazars (2 009), section 3.6.2.3. 
375 UK Takeover Panel (2009).  
 
EN 86   EN 10.18.  According to the External St udy, if "empty voting" practi ce were to be regulated, two 
different options seem to be possible: (i) an improved transparency system; and (ii) a 
ban on empty voting376. 
10.19.  (i) Improved transparency system . The first option would be an improved 
transparency system, allowing for a clear id entification of “empty  voters” in general 
meetings. As shown above (§ 10.15 ), this could be done by amending the 
Transparency Directive377. It could, for instance, be  required that the borrower 
specifies that it holds its shares as bo rrower (or, more generally, under a temporary 
transfer agreement). This would be simp le but would not address all empty voting 
issues. 
10.20.  It could also be required th at, within a certain period of  time before and up to a 
general meeting of shareholde rs (for instance, during th e 30 days preceding a general 
meeting), the shareholders notify immediatel y any change (above a certain threshold) 
in their net economic exposure. This requ irement would provide a complete picture 
of the shareholder base at the time when the information is most meaningful. This 
system would be comprehensive but may be viewed as burdensome. 
10.21.  Another way to improve transparency woul d be to require – as proposed in the 
External Study (see above, box 10.2 ) - that the economic exposure of all shareholders 
(above a certain threshold) be notified on th e day of the record date, to the extent 
such net economic exposure was not disclosed pursuant to a previ ous notification (no 
double notification should be required if it does not provide new information). This 
system would be comprehensive and woul d not be very burdensome as only one 
extra notification would be required (subject to updates, which should be limited). 
10.22.  Finally, the European Corporate Governan ce Forum proposes in its statement of 
February 2010378 as a first step to deal with empt y voting that the borrower of shares 
should notify the company prior to the general meeting that he does not have the full financial interest in the shares (only) if he intends to exercise  the voting rights on the 
shares. According to the Forum, this duty to notify should apply to positions that correspond to a certain threshold, for example,  1 % or more of the outstanding shares 
with voting rights. Any false or omitted statem ent in this context should be dealt with 
under the national rules on misleading in formation. Furthermore, the Forum 
recommends the introduction of a rule that the company and its subsidiaries may only lend the company’s own shares if the lending contract stipulates these shares 
will not be voted upon by the borrower. The company should disclose prior to the general meeting to what extent it and its subsidiaries have lent the company’s own 
shares to third parties.  
10.23.  (ii) Ban on empty voting
. However, disclosing empty voting would make it more 
apparent but, if it is consid ered an improper practice, w ould not provide an adequate 
                                                 
376 Mazars (2009), s ection 3.6.2.3, in fine .  
377 The analysis conducted in Schout en (2009) concludes that the " Transparency Directive sheds virtually 
no light on empty voting ", and that empty voting severely undermines the mechanisms through which 
ownership disclosure improves market efficiency  and corporate governance. For this scholar, " this 
strongly suggests that the Commission should consider expanding the scope of the disclosure rules ". 
See Schouten (2009), p.54. 
378 European Corporate Govern ance Forum (February 2010). 
 
EN 87   EN remedy. According to the External Study, th e second option would therefore be to 
restrict or ban “empty voting”, based on a ppropriate disclosure obligations, although 
the legislative instrument to achieve this result would not be the Transparency Directive
379. 
10.24.  There are two main ways to restrict or ban empty voting. A classical proposal would 
be to require shareholders who have lent their shares to recall them before any 
general meeting. However, it is generally c onsidered burdensome, may go too far, as 
it would prevent stock lending at the time of  the general meeting, whereas it is not 
the stock lending per se which is wrong but ra ther the use of borro wed shares to vote, 
and this option would only address empty voting based on stock lending and would 
thus be limited in scope. 
10.25.  A more radical system would be to prohib it voting with borrowed shares (or shares 
held under a temporary transfer agreement or pursuant to a scheme having a similar impact). According to the External Study
380, this would be the most simple and clear 
solution and also the one which could appear  the most consistent in view of the 
principles at stake; but would raise consider able issues regarding the enforcement of 
any such rule. 
                                                 
379 Mazars (2009), s ection 3.6.2.3, in fine .  
380 Ibid. 
 
EN 88   EN ANNEX 11 – THE IDENTIFICATION OF SHAREHOLDERS BY ISSUERS  
11. Annex 
A) The problem 
11.1. One of the objectives of the rules of the Transparency Directive on disclosure of 
major holdings is to provide transparency to the issuer and to the market about 
holdings relevant for some company la w/corporate governan ce purposes: e.g. 
holdings resulting in possible blocking minor ities on annual shareholders meetings; 
holdings allowing to presume a signi ficant influence on the company etc381.  
11.2. In recent times, however, there have been  demands for EU action to increase the 
level of investor transparency towards issu ers of shares. In the field of corporate 
governance, the adoption of the Shareholde rs Rights Directive has modified the 
situation. It obliges Member States to pr ovide that the rights of a shareholder to 
participate in a general meeting and to vote in respect of his shares shall be 
determined with respect to the shares he ld by him on a specified date prior to the 
general meeting (record date). The proof of qualification, howev er, shall be limited 
to requirements that are necessary and pr oportionate to ensure the identity of 
shareholders (cf. Article 7(4)). 
11.3. Listed companies in particular argue in this  context that they have an interest, for 
their corporate governance purposes, to know  who ultimately owns the shares and 
who their "real" investors are.  
Such identification is not always easy. Shar eholders and issuer can be separated by a 
chain of intermediaries, which are some times recognised as shareholders by the 
applicable national law. On other occasions , intermediaries may act like or give the 
appearance of a shareholder. Due to the number of intermediaries in the chain, 
identification of the real shareholder can be burdensome if not impossible for issuers 
and questions arise as to who is ultimately entitled to control the voting right. Even 
companies using registered shares could not  necessarily rely on the register as the 
ultimate investor does not in all cases have to be identical with the legal shareholder.  
11.4. Considering this evolution in the corporat e governance area, the que stion that arises 
is whether the Transparency Directive's rule s on disclosure of holdings are adequate. 
The Commission services had already aske d interested parties in an open 
consultation in 2007382 whether more work was needed to create more transparency 
of the investors' side. In the past, a number  of stakeholders had taken the view that 
the Transparency Directive puts in place a comprehensive framework, which should give issuers a fairly precise picture of th e breakdown of voting rights. A majority of 
respondents had accordingly answered that the implementation of the Transparency 
Directive should be reviewed before a ny further action was to be envisaged
383. 
                                                 
381 European Commission (March 2003), section 4.5.1; and European Commission (December 1985), 
section II.3.  
382 European Commission (April 2007).  
383 More than 70% of the interested parties who responded to this question (representing about 56% of the 
total number of respondents) agree that the implemen tation of the Transparency Directive should be 
 
EN 89   EN B) The existing rules in the Transparency Directive 
11.5. The Transparency Directive,  in its Articles 9 and 10, imposes on holders of voting 
rights the obligation to notify to the issuer  whenever the share of the voting rights 
they hold reaches, exceeds or falls under ce rtain thresholds. The lowest threshold is 
set at 5%. This obligation falls not onl y on shareholders, but also on depositary 
receipt holders that are entitled to direct the exercise of the voting right by the depositary and persons who otherwise contro l voting rights, e.g. as a result of a 
shareholders' agreement or by way of proxies, etc. These notifications are subsequently disclosed by issuers to the market.  
It should be added that, by virtue of Artic le 3 of the Directive, Member States may 
impose on their issuers lower disclosure thre sholds than that of 5% provided for in 
the Directive. Indeed, trans position of the Directive has resulted in a number of 
Member States establishing (or maintaining) lower (initial) thresholds for disclosure of major holdings than provided for in  the Directive and some have done so
384. This 
lower threshold has been set at either 2% or 3%. 
Additionally, the Transparency Directive does not prevent issuers from setting their 
own thresholds in their articles of associations. 13 Member States allow for this 
possibility: for instance in FR , issuers may set that threshold at 0.5% and in Belgium 
at 1% (see Annex 8 ). It should be noted  that this type of notifications are not 
disclosed to the market, only to the issuer. 
11.6. The Transparency Directive rules have some  limitations in this context: first, the 
lowest disclosure threshold, even at 2% or  3%, is generally considered too high for 
identifying shareholders in view of e ngaging into corporat e governance related 
discussions between issuer s and investors; and second, while the rules of the 
Directive will give a breakdown of holders of voting rights, issuers will only be informed where a shareholder crosses one of  the thresholds for major holdings, but 
not of other movements without crossing th e threshold (e.g. from 9% to 6% or 2,5% 
to 1%). 
According to the external study on the appl ication of the Transparency Directive, 
"issuers’ priority is to better identify th eir shareholders, in order to anticipate 
evolutions that may impact the general strate gy of the company. The legal thresholds 
are an important source of in formation but the level of gr anularity resulting from the 
Directive is not considered sufficient. Issu ers use specialised procedures or require 
external consultants to identify their shar eholders below 5% (the  services are often 
proposed by custodians and/or data di sseminators). In Top Companies, this 
identification of shareholders is often done twice a year ."
385 
                                                                                                                                                         
reviewed before any further action is undertaken at EU level. However, some of these respondents 
consider that this should not stop the Commission from exploring certain issues. This view is shared by 
a number of the respondents who consider that, precisely  for that reason, further action is needed at EU 
level. 
384 See Annex 8 , §8.2 of this Report. 
385 Mazars (2009), section 3.4.1. 
 
EN 90   EN Similar views are expressed in th e 2005 global Survey on Shareholder 
Transparency386, showing that the 5% threshold is  perceived as too high for the 
purposes of identifying share holders and that there is interest from companies to go 
as low as 0,1% of holdings or even below that (see Chart 8.1 ): 
Chart 8.1: Source: Internat ional Investor Relations Federation (2005), p.13. 
 
C) The requests for establishing a shareholder identification mechanism 
11.7. Given the perceived limitations of the Transparency Directive rules for the objective 
of facilitating communication between issuers and shareholders for the purposes of improving corporate governance, issuers consid er that they need different systems to 
identify their shareholders
387. The existing British and French mechanisms are often 
cited as examples of functioning systems (see Box 11.1 ).  
Box 11.1 – Existing national mechanisms388 for identifying sharehold ers: France and the United 
Kingdom. 
                                                 
386 International Investor Relations Federation (2005), p. 13. 
387 According to external surveys, there is demand by issuers for shareholde r identification reports 
regardless of the fact whether the national law provides for a mandatory or voluntary identification 
system. This is illustrated by the Global Survey on Shareholder Transparency, commissioned by the 
International Investor Relations Federation (Septe mber 2005). The results were based on interviews 
with 346 companies worldwide. In Europe, comp anies carry out surveys on a regular basis. The 
frequency of these requests is closely interrelated with their average costs. In the EU, the frequency 
ranges from 12 (UK), 8 (FI), 4 (SE), 3 (ES), 2 (DK, NL, FR) to 1 (DE). This body of data is backed up by information provided by Euroclear on SE and FR for 2008. See al so Mazars (2009), p.94. 
388 In the Netherlands, following the May 2007 advice of the Monitoring Commission Corporate 
Governance Code (Commission Frijns) a legislative proposal amending the Financial Supervision Act was prepared to introduce (among others) a system for shareholder identification. The proposal was sent 
to Parliament on 24 July 2009, after delays during 2008 due to reactions on the consultation document. 
The proposal is being discussed in Parliament.  The proposed Dutch system is inspired by the existing French system and provides for a method of 
getting the information on the ultimate investor through Euroclear and the intermediaries lower in the 
chain. Different is that companies will have the opportunity to contact the intermediaries lower in the chain themselves (so not through Euroclear) and could also outsource this. The system will cover bearer 
shares and registered shares. Another difference in re lation to the French system is that there will be a 
maximum number of identification rounds per year (although this could change in the future; the French 
system was also more limited when it started).  
Finally, the proposed Dutch system will include the possibility for companies to send relevant information directly by mail to the identified shar eholders and a possibility for shareholders to send 
information to the company, which then will distributed to the other shareholders, together with the 
information sent by the company. 
 
EN 91   EN In France , Article L 228-2 of the Code du Commerce provides for a method of getting a clear and 
detailed picture of the shareholder base through the central depository (“ dépositaire central ”), 
currently Euroclear. 
The Identifiable Bearer Securities service (" Titres au Porteur Identifiable " - TPI) is a solution for 
bearer securities held in Euroclear  France that allows issuers to receive detailed information on the 
identity of their shareholders. The TPI service was created under the Saving Law (" Loi sur 
l'Epargne ") of 17 June 1987 in order to provide, upon re quest, the list of their shareholders to issuers. 
Euroclear processes around 500 requests annually. 
Another law (" Loi de nouvelles régulations économiques " [Loi no. 2001-420 du 15 mai 2001]) allows 
issuers to ask for the identity of  foreign shareholders. In order to comply with this regulatory 
requirement, Euroclear France ha s set up a dedicated service "TPI Loi NRE" which allows the 
identification of ultimate foreign shareholders. 
In the United Kingdom , Section 793 of the Companies Act 2006 (formerly Section 212 of the 
Companies Act 1985) allows a public company to investigate who has an interest in its shares. Where 
a person fails to give the company the required information in response, the company can apply for a 
court order imposing restrictions on the shares in question389. 
A company has the right to enquire of any person whether they are in terested in the shares of the 
company, the nature of that interest and if they hold the shares on behalf of someone else and to 
provide details of that other person. The information so requested must be given within a “reasonable 
period” and if no response is received, the comp any can apply to the Cour t (s794) for imposition of 
restrictions on the shares (restriction on transfer of shares, voting rights, payment of dividends) (s797). 
There are criminal sanctions (s795). 
The whole section is very widely drafted, i.e. the inquiry of interests may go back three years, there 
just needs to be a reasonable cause for the issuer to believe the person asked has an interest in the 
company and that person does not need to be a shareholder.  
11.8. However, these national systems are also limited. Issuers believe that EU regulation 
is needed because existing na tional systems cannot extend cro ss-border, so if there is 
a cross-border element in the chain, an id entification request under existing national 
law will not produce any resu lt unless the foreign interm ediaries cooperate on a 
voluntarily basis. 
In addition to the issuers' demand, institutio nal investors gathered in the European 
Sustainable Investment Forum (Eurosif)390 recommend that the Commission 
proposes measures to allow issuers to know who their shareholders are at any 
moment so that they can comm unicate with them efficiently. 
11.9. Issuers' views have been upheld by the Eu ropean Parliament in a resolution of 
23 September 2008, which suggested the intr oduction or implementation of a more 
horizontal system of EU-wid e shareholder identification391.  
D) Arguments in favour of and against action in this area 
                                                 
389 It should be noted that the UK system was copied  by the majority of Commonwealth countries, which 
use the British Companies Act as their model with the important difference that the register is not 
available for public scrutiny as in the UK, only to the company or its appointed agent. 
390 Eurosif regroups about 80 member affiliates incl uding mainstream institutional investors such as 
pension funds and asset managers representing a ssets of over EUR 1 trillio n. See Eurosif (2009). 
391 European Parliament (September 2008). In this resolution, the European Parliament asked the 
Commission to establish rules that enhance the transparency of voting policies of hedge funds. The 
resolution was based on an own-initiative report by Mr Klaus-Heiner Lehne. 
 
EN 92   EN 11.10.  Several arguments in favour of establishing an EU-wide shareholder 
identification mechanism are advanced. The possibility to engage with investors 
throughout the year to keep them informed of  activities and to receive their feedback 
is identified as a key advantage. 
Other possible benefits outlined are the possibilities to: 
– better analyse the type of investor who is  interested in the company, which allows 
the company to adapt their strategies bett er to the needs and interests of that 
population ; 
– detect, at an early stage, stake building including outside the general meeting and 
thus avoid surprises and contentious discussions dur ing the general meeting; 
– extend incentive arrangements for retail  shareholders to those in omnibus 
accounts which currently cannot be identified; 
– increase participation of shareholde rs in general meetings. Although the 
Shareholders' rights Directive has improve d the conditions for shareholders to 
participate, issuers consider that establis hing a direct contact with the shareholders 
would improve and accelerate the ways to provide them with information on the general meeting and allow issuers to enc ourage their shareholders actively to 
make use of their voting rights; 
– testing whether there is likel y to be shareholders' suppor t for draft resolutions to 
be submitted to the general meeting; 
– increase the transparency and integrity of the voting process (by avoiding double 
voting, loss of votes, record date  capture, possibly empty voting)
392; and 
– facilitate engagement of shareholders in environmental and social governance 
(within a wider corporate so cial responsibility policy)393. 
11.11.  Furthermore, current developments in secu rities markets infrastructures are advanced 
as a further argument supporting the deve lopment of an EU -wide shareholder 
identification mechanism. Thus, issuers are concerned that the T2S project394 which 
will provide a common platform for settle ment services to Central Securities 
Depositories could impact on the functio ning of the current national systems for 
identification of shareholders and render the situati on even more opaque395.  
                                                 
392 On the problems related to empty voting and record date capture, see Annex 10.  
393 See Annex 14 . 
394 The TARGET2-Securities (T2S) project steered by th e European Central Bank seeks to contribute to 
deliver a single integrated securities market for fi nancial services and to bring forward the Code of 
Conduct on Clearing and Settlement and the harmonisation efforts through the Giovannini process. T2S 
will provide a single, borderless p ool of pan-European securities, as well as a neutral settlement 
process. Market users will be able  to access these assets through Cent ral Securities Depositories (CSDs) 
in a way which should accommodate national and regional differences.  
395 There is a concern that, by adding extra holding layers and introducing more omnibus accounts, 
identification would be encumbered even for issu ers located in those Member States where an 
identification system currently exists under national law. There is a task force hosted by the ECB, 
which should propose measures to ensure that T2S does not negatively affect existing identification 
 
EN 93   EN 11.12.  At the same time, there are arguments against the deve lopment of an EU-wide 
shareholder identification mechanism . In the first place, some consider that 
existing rules may be enough for transparency purposes. For instance, the introduction of a "record date" system by the Shareholder Rights Directive already 
increases transparency and integrity of th e voting process. Also, the means that the 
Directive offers to facilitates the participat ion in general meetings  and the exercise of 
shareholder rights are considered sufficien t (electronic means – if offered by the 
company, proxy voting, minimum convocation pe riods). Shareholders interested in 
making their voice heard should henceforth have  the necessary tools at their disposal, 
also in a cross-border context
396.  
Furthermore, if issuers want to inform sh areholders, they can contact them through 
their websites and their invest or relations departments. Li sted companies are required 
to inform the public at large of their performance and strate gy and not only their 
current shareholders397. Enhancing company communicati on with a selected group of 
existing shareholders could conf lict with this principle. Also, it should be noted that 
any price-sensitive information would need to be disclosed to the public anyway 
(under the Market Abuse Directive). Mo reover, contacts between issuers and 
shareholders should be enhance through the possibility to introduce a uniform 
shareholder certificate as proof of entitleme nt in the future proposal for a Directive 
on legal certainty of securiti es holding and transactions398. 
The possibility for listed companies to voluntarily introduce specific disclosure 
thresholds at company level in the comp any's articles of association should be 
highlighted as another existing possibility, at  least in half of the Member States, for 
identifying shareholders beyond the Tran sparency Directive requirements (see 
Annex 8 ). In this context, an alternative solution to the mandatory (for the investor) 
shareholder identification mechanism of the type in place in France or the United 
Kingdom (see Box 11.1  above) could be that nationa l law provides for voluntary 
disclosures to the issuers by investors holding voting rights above a predefined low 
threshold (e.g. 0,1%). Those voluntary disc losures could be structured along the 
Transparency Directive requirements. 
11.13.  Secondly, technical difficulties for the en acting of a sharehol der identification 
mechanism of the type in place in Fr ance or the United Kingdom should not be 
underestimated. For instance, there is no wide agreement on a definition of the “ultimate investor”. Where does the chain e nd and which kind of investor is to be 
made more transparent?
399  
                                                                                                                                                         
practices (i.e. in particular for registered shares), but instead contributes to the identification of the end 
holders of bearer shares.  
396 The deadline for the transposition of the Shareholders Rights Directive into national law was 3 August 
2009.  
397 It should be kept in mind in this regard that liste d companies are open companies, so investors can join 
at any time as well as quit the co mpany – market liquidity is a principle in regulated markets and 
investors also vote with their feet.  
398 See http://ec.europa.eu/internal_market/finan cial-markets/securities-law/index_en.htm   
399 At the same time they may not be insurmountable. In the meantime, the UNIDROIT Diplomatic 
Conference which had been working on the harmonisati on of substantive rules regarding securities held 
with an intermediary has achieved considerable  progress in this respect. The draft UNIDROIT 
Convention on Substantive Rules regarding Intermediated Securities adopted in Geneva on 9 October 
 
EN 94   EN 11.14.  Moreover, there are other possible draw backs from a mandatory shareholder 
identification mechanism. Shareholder dial ogue could be a pretext for management 
entrenchment. Early detection of  stake building (see above, §11.10 ) allows in 
particular reinforcing takeover defences400. Also, shareholders are the owners of the 
listed companies. If anybody, it is the shar eholders who should be  entitled to a high 
level of transparency. Any obligation to disclose a financial position or the investor's intention interferes with the investor's  investment strategy which may privilege 
anonymity/discretion (also for cost reasons), as well as with his/ her privacy and also 
property rights. Any interference woul d need to be carefully justified. 
11.15.  Any new (mandatory) measure will entail costs
401. Ultimately, shareholders will be 
required to pay for the system , either through intermediary  fees or th rough a cut in 
their dividends. It has to be said, though, th at issuers even today make use of all 
available resources to gather this ki nd of information and pay for the costs402. In 
Europe, the amount spent on a yearly basi s ranges from an average EUR 9,000 (DK) 
to EUR 36,000 (ES). The total average amount spent comes down to EUR 26,000 per year
403. 
                                                                                                                                                         
2009 gives a definition of the "account holder" whic h could perhaps be used for the purposes of any 
initiative on shareholder identification. 
400 For the impact of enhanced transp arency of major holdings of voting rights on the market for corporate 
control, see European Comm ission (December 2008), §21. 
401 The requests will have to be managed and processed,  the data will have to be gathered and treated and 
reliable (multilingual) systems for the transfer of data  will have to be established. The burden of cost 
will have to be attributed. 
402 The Global Survey on Shareholder Transparency shows the different sources of information issuers use 
today to get a better picture of their shareholder base. There are considerable differences as to the means 
used which depend largely on the geographical origin of the companies. See International Investor 
Relations Federation (2005), p. 9. 
403 Cf. International Investor Relations Federation (2005), based on figures gathered from UK, FI, DK, SE, 
ES, DE, NL and FR. The original figures mentioned in the study are based on USD, and they have been 
converted for this paper on the basis of the currency rates of 16 September 2005. 
 
EN 95   EN ANNEX 12 – ENHANCED DISCLOSURE REQUIREMENTS FOR SIGNIFICANT HOLDINGS  
12. Annex 
12.1. Debate has arisen in recent times regard ing whether investors holding major interests 
in EU issuers of shares should be requested  to provide to the issuer and the market 
qualitative information currently not request ed by the Transparency Directive and, if 
so, under which circumstances. This applies in particular to the information on the 
intentions with holdings (a nd the financing of their acqui sition) or to information 
regarding the voting policies  of major investors.  
A) Disclosures on intentions with holdings  (and the financing of their acquisition) 
12.2. While the Transparency Directive does not contain any obligation regarding 
disclosure on intentions with holdings, such an obligation is  not unknown within the 
EU. Disclosure on intentions with holdi ngs is already requested in France and 
Germany (see Box 12.1 ) and its possible application ha s been considered in other 
Member States404. However, the vast majority of Member States have not imposed 
such a requirement405. It should be noted that disclo sure on intentions with holdings 
also bears some similarity with the US disclosure system, which requires filing of 
extensive information on Schedule 13 D when thresholds of 5% and each additional 
1% are crossed. In China, information a bout investors' intentions may also be 
required406. 
Box 12.1 – Disclosure on intentions  with holdings: France and Germany  
In France , pursuant to a longstanding regime, which has been tightened in 2009, enhanced disclosure 
is required when certain thresholds are met, i. e. 10%, 15%, 20% and 25%. The information to be 
disclosed includes how the acquisition of the shareh olding is being financed, guarantees given in this 
respect and the acquirer’s planned strategy with rega rd to the issuer. The in vestor needs also to 
disclose whether the shares are held in full ownership or through stock lending. The declaration is 
made to the company and to the French competent authority within 10 working days. Then, it is made 
public. 
Under the new regime, declaring investors are now allowed to file an updated version of their 
declaration if their intent has changed; this update is no longer subject to material changes in the 
economic environment, situation or ownership of th e entities concerned, but simply to the filing of a 
new declaration that runs for another 6 months. This unconditional right to update the filing is the 
counterparty to the new requirement that more precise information be given. 
In Germany , the Risk limitation Act of 2008 introduced similar requirements although they are only 
applicable since May 2009. Investors reaching or exceeding the 10% threshold (or a higher threshold) 
of voting rights in a listed company must disclose the intentions they pursue with this investment 
within 20 trading days following their reaching or exceeding such  threshold (unless the threshold is 
only crossed temporarily for a short period). Investors are in particular requested to disclose whether: 
(1) the acquisition is for the purpose of implementing strategic objectives or achieving trading profits; 
                                                 
404 For instance, in the NL.  
405 See also CESR (September 2008), Annex 2, replie s to question 71. Interestingly, the former Belgian 
legislation provided for a requirement to disclose intentions when the investor reached or crossed the 20% threshold. This requirement has disappeared from the new legislation transposing the 
Transparency Directive. 
406 See Mazars (2009), sec tion 6.3.1 an d 6.3.2. 
 
EN 96   EN (2) they intend to acquire further voting rights in the following 12 months; (3) they intend to exercise 
any influence on the administrative, management or supervisory bodies of the issuer; (4) they seek a 
material change in the cap ital structure of the company, in partic ular in relation to the ration between 
debt financing and equity; and (5) they seek a major change in the dividend policy. In addition, 
investors will need to provide information on the origin of the funds used for acquiring such shares by 
indicating whether the funds used to acquire the voting rights are debt or equity. 
If the objectives change, the investor in question is required to update its previous statement. The 
deadline is also 20 trading days. There are some exceptions to the notification for certain types of 
companies. Also, issuers may waive (in their article s of association) this notification obligation. 
Issuers should disclose the notifications r eceived (or the failure to have done so).  
12.3. Those in favour of requesting qualified inve stors to disclose th eir intentions with 
holdings (as well as other related informati on) generally underlin e the benefits of 
enhanced transparency for improving co rporate governance:  such enhanced 
transparency would help in building at be tter relationship between management and 
qualified shareholders as well as between shareholders.  
12.4. The majority of stakeholders surveyed in  the external study on the operation of the 
Directive407 appear to be in favour of request ing qualified investors (those acquiring 
a significant holding of voting rights such as 10%, 15% or 20%) to provide more detailed information on the intention pur sued with the investment (see Chart 12.1
)408, 
although views differed significantly de pending on the geographical location409. In 
any event, views were also expressed that , if implemented, such  requirement should 
be accompanied by a clear statement that declarations of intent should not be used by national authorities as a protectionist tool. 
Chart 12.1 – Views on whether qualified investors should provide information on intentions 
with holdings. Cf. Mazars (2009), p.117. 
 
12.5. Concerning the type of information that could be disclosed, this study410 shows that 
stakeholders would favour the following info rmation, by order of priority (see Chart 
12.2): (1) intent to acquire control (20%); (2) intent to continue to buy shares 
                                                 
407 Mazars (2009), section 3.7.  
408 Nevertheless, industry associations have mixed views. Ibid. section 3.7.1. 
409 The idea would be strongly supported by stakeholders from Ireland, Germany, France, Spain, Italy, 
Hungary, Slovakia, Poland, Romania and Austria. However, a majority of stakeholders would not 
support the idea in Luxem bourg, Sweden and the UK. Ibid. 
410 Ibid. section 3.7.2. 
 
EN 97   EN (16.4%); (3) intent to request the appoint ment or the removal of board members 
(15.8%); (4) intent to request changes in th e issuers’ strategy (15%); (5) time horizon 
of the investment (12.3%); (6) intent to request specific transactions or decisions 
(11.4%); and (7) details on the financing sources (8.2%). It can be noted that 
supervisors and, to a lesser extent, institu tional investors consid er the “intent to 
request change of strategy” and the “int ent to acquire control” to be equally 
important. For retail invest ors associations, the inform ation on the “source of 
financing” is considered of high importance.  
Chart 12.1 – Information  to be disclosed when acquiring  certain significant holdings. Cf. 
Mazars (2009), p.118.  
 
12.6. The study411 outlines that stakeholders (in interviews) consider that declarations of 
intent are considered useful . Although these declarations may be worded in such a 
way as to preserve some flexibility fo r the declaring invest or, it is generally 
acknowledged that they provide  some valuable information. It is considered that the 
declaring investor must be re asonably serious in its declar ation and consistent in its 
subsequent behaviour. This declaration is seen as important information for 
investment purposes, because they give an  indication to existing shareholder on the 
likelihood of a take-overbid and, to potential shareholders , on the estimated future 
value of the company. 
12.7. However, as explained by the Commi ssion staff working document of 2008, 
enhanced transparency requirements may also have adverse consequences, in 
particular in the market for corporate control412. Indeed, the obliga tion to disclose 
information regarding the intention to acqui re control in a comp any (i.e. anticipating 
on a forthcoming takeover bid) at an earlier stage may increase the price of the target 
                                                 
411 Ibid. 
412 See European Commissi on (December 2008), §21. 
 
EN 98   EN company's shares and could therefore increas e the price of a future bid (which could 
render it unattractive). Furthermore, such disclosure gives the management of the 
target company an "early warning signal" of a potential bid, which allows it to take defensive measures in an attempt to frustrate the bid. The surprise effect of the takeover is key, however, in terms of its su ccess. The notification of intentions at a 
10% level takes this surprise effect away. As  a result, future bids are more difficult or 
costly. An additional effect of the declarati on is that, when an investor declares he 
has no intention of acquiring control, he may be prevented from launching a bid in 
the immediate period (unless a new declaration is made), thereby significantly limiting the contestability of c ontrol. Finally, in order to avoid having to declare their 
intentions, potential bidders are discourag ed from acquiring hol dings above the set 
threshold (generally 10%) or from reaching a higher notification threshold as long as 
they are not prepared to launch a takeover bid. 
12.8. ESME also outlines that requesting disclosure  on intentions may not give the desired 
effect: recent cases show that the quest ion whether a party wants to disclose 
significant holdings, depends on the intention behind the building of these positions. As a result, the investment community is somewhat sceptical about the effectiveness 
of declaration of intentions . Besides, ESME underlines that there is the fundamental 
concern that there are no obj ective criteria to judge invest ors’ intentions (one cannot 
blame people on their intentions)
413. 
12.9. The external study on the ope ration of the Transparency  Directive concludes by 
recommending the introduction of enhanced disclosure requirements for significant 
holdings (see Box 12.2 ) 
Box 12.2 - Possible improvement n°12 to the Tran sparency Directive. Cf. Mazars (2009), p. XV 
and 78.  
 
12.10.  The European Parliament al so called in 2006 and 2008 for en acting legislation in this 
area414. 
B) Information on major investors' voting policies 
12.11.  The European Commission Company Law and Corporate Governance Action Plan 
had already suggested as early  as 2003 that institutional investors should be obliged 
to disclose their investment policy and their policy with respect to the exercise of 
voting rights in companies in which they i nvest and to disclose to their beneficial 
holders at their request how these rights have been used in a particular case. In the Action Plan, the Commission's intention was expressed to propose a Directive in the 
                                                
 
413 ESME (November 2009), p.10. 
414 European Parliament (June 2006), §43, in relation to institutional investors; and European Parliament 
(September 2008), annex to the Resolution. 
 
EN 99   EN mid-term period of 2006-2008415. Although the suggestion fou nd large support as to 
its objective, the idea of dealing with it in a Directive was much more cautiously 
received by respondents416. 
12.12.  When the Directorate General for Intern al Market and Services on 20 December 
2005 launched a public consultation on future priorities for the Action Plan on the 
Modernisation of Company Law and Cor porate Governance to adapt it to the 
economic and societal changes,  it came back on the question417 and received similar 
reactions as in 2003418. 
12.13.  More recently, the European Parliament in its Resolution on transparency of 
institutional investors419 asked for an obligation to be imposed on hedge funds and 
private equity to disclose and explain vis-à-vis the co mpanies whose shares they 
acquire or own, retail and institutional inve stors, prime brokers and supervisors their 
investment policy and associated risks. 
                                                 
415 European Commission (May 2003), p.13. 
416 European Commission (November 2003), p. 9-10.  
417 European Commission (December 2005b), p.7-8. 
418 European Commission (May 2006), p. 12-13.  
419 European Parliament (September 2008). The European Parliament had previously recalled that 
"transparency is needed with regard to " voting policy " of institutional investors, see European 
Parliament (June 2006), §43. 
 
EN 100   EN ANNEX 13 – ALTERNATIVE SYSTEMS FOR THE NOTIFICATION OF MAJOR HOLDINGS OF 
VOTING RIGHTS  
13. Annex 
13.1. In the general context of a fi nancial crisis related in part to insufficient transparency 
from investors and market players (see Anne x 2), useful lessons may be drawn from 
international comparisons on disclosure of material shareholdings, in particular the 
existing regimes in US, China, Japan and Switzerland. 
A) Thresholds  
13.2. In case of acquisition or disposals of major holdings, notifications are usually 
required upon crossing thresholds in most jurisdictions. They are computed on the 
basis of both increases and decreases of shares and voting rights, except in Switzerland where only voting ri ghts are taken into account. The initial threshold is 
set at 5% in all jurisdictions, except Switzerland  (where it is set at 3%). It should be 
noted that it is often authorized for co mpanies to impose lower thresholds (for 
instance in China), although doing so  is not a market practice. 
13.3. The subsequent notification thresholds may be either every 5% (China and 
Switzerland) or every 1% above 5% (Japan  and US). In the US, notification may 
even be required for moves smaller th an 1%, if it is ot herwise significant. 
B) The overall notification system 
13.4. It is interesting to describe in particular  the notification regimes in China and in the 
US which have sophisticated systems that take into account the relative position of the shareholder or its intent.  
13.5. In the US, notification requirements are different for the initial reporting and for the 
subsequent amendment to the initial notification. 
Notifications in the US 
Initial Reporting  
A person (or a group of persons) that acquires beneficial ownership of more than 5% of a class of 
voting equity securities must report such acquisition to (i) the SEC), (ii) any stock exchange on which 
the securities are listed,  and (iii) the issuer. 
A person is deemed to be a beneficial owner of any equity security of such person or group has or 
shares: 
(i) voting power (including the power to vote, or to direct the voting of, the security) or 
(ii) investment power (including the power to dispose, or to direct the disposition of, the security). 
In addition, a person is deemed the beneficial owner of any equity security underlying other equity 
linked instruments if: 
(a) such instruments were acquired with the purpose or effect of changing or influencing control of the 
issuer or 
 
EN 101   EN (b) their holder has the right to acquire the underlying equity security within 60 days through the 
exercise or conversion of such instruments; provided  that the exercise or c onversion of the equity-
linked instruments is not subject to a material contingency outside the control of the holder of the 
instruments. 
Any person acquiring beneficial ownership of more than 5% must report it by filing a form with the 
SEC under cover of Schedule 13D , with the exception of certain speci fied categories of investors who 
may instead file a simpler form under cover of Schedule 13G . 
Any person acquiring beneficial ownership must notify, inter alia, the source and amount of funds  
used to acquire the securities, the purpose of the acquisition, including any plans or proposals of the 
acquirer for future purchases or sales of issuer’s st ock or for any changes in the issuer’s management 
or board of directors or any major corporate tran saction affecting control of the issuer and any 
arrangements to which the acquirer is a party relating to the issuer’s securities (including debt 
securities and securities not regist ered under the Exchange Act). 
Passive investors, i.e. any persons not seeking to acquire or influence control of the issuer who own 
less than 20% of a registered class of the issuer’s securities are subject to simpler notification 
requirements. 
Amendments to previous filings  
Upon the occurrence of any material change in the information included in a previously filed report 
including the acquisition or disposition by such reporting person of 1% or more of the relevant class 
of equity securities, such information should be amended. 
13.6. The Chinese notification system is worth mentioning because it provides for different 
requirements depending on the act ual situation of the investor  acquiring an interest in 
the issuer. 
Notification in China 
If an investor and its concerted parties are not the largest shareholder or actual controller of a listed 
company, and they together hold shares more than 5% but less than 20% of the issued shares of a 
listed company, they shall file a standard report on the change of equities. If the aforesaid investor and 
concerted parties (holding more than 5% but less than 20% of the shares) are the largest shareholder 
or actual controller of a listed company, they shall file a detailed report. 
If the shares held by an investor and its concerte d parties reach or exceed 20% but do not exceed 30% 
of the issued shares of a listed company, they shall also file a detailed report on the change of equities. 
If such investors are the largest shareholders or actual  controllers of such listed  company, they shall in 
addition provide independent third party verification. 
The triggering event of the notifica tion is an increase or decrease of 5% in the number of shares or 
voting rights within the two bands. 
The system may thus be summarized as follows: 
 
 Percentage above 5% and 
below 20% Percentage at least 20% but below 
30% 
Investor is not largest nor 
controlling shareholder Standard notification 
 Detailed notification 
 
Investor is largest or 
controlling shareholder  
 Detailed notification 
 
 Detailed notification with 
independent third party verification 
 
C) Content of the disclosure 
 
EN 102   EN 13.7. In addition to the percentage of voting rights held and number of shares, the 
percentage of capital held, mo st of the jurisdictions requi re the description of chain 
of control, the date of the transaction and the identity of the shareholder. 
13.8. In the US, the sources of funding of th e investor for the acquisition must be 
disclosed, which, in some cases, may provide useful information about short term or 
long term investment strategy of the holde r (short term active investors are often 
highly leveraged). The US system also requ ires the disclosure of the purpose of the 
acquisition420, including any plans or proposals of  the acquirer for future purchases 
or sales of issuer’s stock or for any change s in the issuer’s mana gement or board of 
directors as well as the f iling of supporting documents (such as contracts) which 
allow almost simultaneous verification of the accuracy of the statements made by investors.  
13.9. In China, in the standard declaration the investor must notify purposes for 
shareholding, whether the investor and concerted parties intend to continuously 
increase their equities in the listed comp any within the next 12 months and brief 
information on the purchase and sale of th e shares of the said company through the 
securities transactions at the stock exchange within th e preceding 6 months of the 
change of equities. When investors become  significant (holding of more than 20%), 
the identity of controlling shareholders an d actual controllers of the investor and 
concerted parties, the struct ure chart on their equity c ontrol relationship should be 
disclosed, the prices, necessary capital,  sources of capital or other payment 
arrangements for acquiring relevant shares , as well as other information. If the 
investor is the controlling shareholder, the information provided in the notification must be verified by an independent third part y. In this case, the investor needs to hire 
a financial consultant to issue verification opinions concerning the contents disclosed 
in the report on the change of equities.  
                                                
 
420 It should be noted that some jurisdictions within  the EU (such as Germany and France) also require 
disclosure of intent when certain thresholds are crossed. 
 
EN 103   EN ANNEX 14 – CORPORATE GOVERNANCE -RELATED AND NON-FINANCIAL DISCLOSURES  
14. Annex 
A) Corporate governance-related disclosures 
14.1. In addition to the disclosure of financ ial 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-rel ated) disclosures, 
generally in connection with the annual financ ial report. This relates in particular to: 
(i) the Corporate Governance Statement; (ii) the Report under Article 10 of the 
Takeover Bids Directive (when not incl uded into the Corporate Governance 
Statement); (iii) the disclosures related to the remuneration policy of the company; or 
(iv) the disclosures connected to  the independence of directors. 
14.2. The Corporate Governance Statement421: must contain:  
– "(a) a reference to:(i) the corporate gove rnance code to wh ich the company is 
subject, and/or (ii) the corporate gove rnance code which the company may have 
voluntarily decided to apply, and/or (iii ) all relevant information about the 
corporate governance practices applie d beyond the requirements under national 
law. Where points (i) and (ii) apply, th e company shall also  indicate where the 
relevant texts are publicly av ailable; where point (iii) applies, the company shall 
make its corporate governance practices publicly available; 
– (b) to the extent to which a company, in accordance with national law, departs 
from a corporate governance code referr ed to under points (a)(i) or (ii), an 
explanation by the company as to which pa rts of the corporate governance code it 
departs from and the reasons for doing so. Where the company has decided not to apply any provisions of a corporate govern ance code referred to under points 
(a)(i) or (ii), it shall explain its reasons for doing so; 
– (c) a description of the main features of  the company's internal control and risk 
management systems in relation to  the financial reporting process; 
– (d) the information required by Article 10(1) , points (c), (d), (f), (h) and (i) of 
Directive 2004/25/EC of the European Parliament and of  the Council of 21 April 
2004 on takeover bids, where the company is subject to that Directive; 
– (e) unless the information is already fully provided for in national laws or 
regulations, the operation of the sharehol der meeting and its key powers, and a 
description of shareholders’ rights and how they can be exercised; 
– (f) the composition and ope ration of the administrative, management and 
supervisory bodies and their committees." 
                                                
 
421 Article 46a of the 4th Company Law Directive. 
 
EN 104   EN Depending on national legislation, the Co rporate Governance Statement may be 
included in the annual report or be a separate report (but published together with the 
annual report).  
A recent external study conducted for the Co mmission provides an overview of the 
various monitoring and enforcement mechanisms in the Member States of the European Union concerning corporate governa nce rules that are laid down in codes 
of corporate governance. It assesses the le vel of compliance of companies with the 
provisions of corporate govern ance codes and examines th e availability and quality 
of explanations for deviations from thes e codes for a sample of 270 listed companies 
from 18 Member States. Two surveys were  conducted in the framework of this 
Study. They aimed at evaluating the percep tion of corporate governance codes by 
director institutes and business associations  on the one side, and EU shareholders on 
the other side. On this basis, the Study ev aluates the effectiveness of the different 
monitoring and enforcement systems and pr esents suggestions to improve their 
effectiveness
422. 
14.3. Article 10 of the Takeover Bids Directive requires disclosure by i ssuers of shares of 
some corporate governance related information, such as: the structur e of their capital, 
restrictions on the tran sfer of securities, significant di rect and indirect shareholdings, 
agreements between shareholders, powers of board members, etc.  
14.4. Concerning the remuneration policy of the company423, the Commission 
Recommendation 2004/913/EC424 recommends that listed  companies disclose a 
statement of the remuneration policy of the company, as part of a remuneration report or the annual report, and publish th e statement on its website. The statement 
should focus on the structure of director s´ remuneration policy for the following 
financial year and contain an overview of  the implementation of the remuneration 
policy in the previous financ ial year. A number of elements, such as information on 
variable remuneration, pe rformance criteria and termination payments, are 
recommended to be included in the statemen t. It is also recommended to disclose 
information on the decision making process as regards the remuneration policy, including information on the Remunera tion Committee. Furthermore, listed 
companies should disclose the total rem uneration and other benefits granted to 
individual directors in deta il in the annual accounts or the remuneration report. In 
this respect, a number of possible remuneration elements, such as bonuses, termination payments or share based remuneration, are recommended to be disclosed. Commission Recommendation 2009/385/EC
425, which complements the 
abovementioned Recommendation, contains additional elements that should be 
included in the remuneration statement,  such as information on long term 
performance criteria, methods applied to  determine whether performance criteria 
                                                 
422 Riskmetrics (2009).  
423 On this issue, see also European Corporate Governance Forum (March 2009b). 
424 Commission Recommendation 2004/91 3/EC of 14 December 2004 fostering an appropriate regime for 
the remuneration of directors of listed companies , OJ L 385, 29.12.2004, p. 55. Available at: 
 http://ec.europa.eu/internal_market/c ompany/directors-remun/index_en.htm   
425 Commission Recommendation 2009/385/EC of 30 April 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. See also European Commission (April 2009). 
 
EN 105   EN have been fulfilled and deferment and vesting periods for variable and share-based 
remuneration. 
14.5. Regarding the independence of dire ctors, Commission Recommendation 
2005/162/EC recommends that the board (o f listed companies) makes public " at 
least once a year (as part of the informa tion disclosed by the company annually on 
its corporate governance structures and pr actices) adequate information about its 
internal organisation and the procedures applicable to its acti vities, including an 
indication of the extent to which the self- evaluation performed by the (supervisory) 
board has lead to any material change ". It also recommends that the (supervisory) 
board should ensure that shareholders are pr operly informed as regards the affairs of 
the company, its strategic approach, and th e management of risk s and conflicts of 
interest426. 
14.6. The issue has been raised as to whethe r these disclosure re quirements should be 
integrated into the Transparency Directive regime.  
14.7. Some of the possible consequen ces of such integration could, inter alia , be:  
– (i) facilitating listed companies' comp liance with all periodic disclosure 
obligations, including through the full appl ication of the home Member State 
principle of the Transparency Directive; or 
– (ii) providing more clarity on the relati on between such disclosures and the annual 
financial report427.  
B) Other non-financial disclosures 
14.8. Disclosures of non-financial character made  by listed companies in connection to 
Environmental, Social a nd Governance (ESG) issues428 also appear as an important 
area of debate.  
14.9. There are some related provisions in EU law. For instance, Article 46(1)(b) of the 4th 
Company Law Directive re quires since 1 January 2005 companies to include 
information relating to environmental and employee matters in th eir annual report to 
the extent necessary for an understanding of the company's development, performance or position. Considering the additional administrative burden such reporting may place on companies of certain si ze, Member States have the option to 
exempt small- and medium sized companies from those provisions. Similar non-
                                                
 
426 Commission Recommendation 2005/162/EC of 15 February 2005 on the role of non-executive or 
supervisory directors of listed companies and on the committees of the (supervisory) board , OJ L 52, 
25.2.2005, p. 51. See in particular §§ 9.1 and 9.2. Available at: http://ec.europa.eu/internal_market/company/independence/index_en.htm
  
427 This could also facilitate some content harmonisation of these reports (see also §17)  of this Paper. 
428 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 ." For more information on CS R, see European Commission 
(March 2006). 
 
EN 106   EN financial reporting rules apply in rela tion to the consolidated annual reports429. The 
provisions concerning non-financial disclo sures are consistent with Commission 
Recommendation 2001/453/EC430 dealing with environmental issues in companies' 
financial reports. Some Member States ha ve ESG disclosure requirements that go 
significantly beyond the requirements of the 4th Company Law Directive431. 
14.10.  A number of stakeholders (non-governme ntal organisations , some investor 
organisations, some individual enterprises)432, as well as the European Parliament433 
and some Member States governments, are regularly requesting to include further 
provisions regarding ESG disclosures in EU legislation applying, at least, to listed 
companies. They call for harmonisation and propose to put a European framework of 
non-financial reporting in place. Some woul d favour such a framework to become 
mandatory and/or being integrated into the financial reports of companies.  
14.11.  Better and more widespread disclosure of ESG information could potentially: help to 
improve the accountability of business; he lp enterprises themselves to better 
integrate sustainability issues into operati ons and strategy; and c ontribute to a more 
efficient allocation of capital and to the reduction of systemic risks. 
14.12.  The European Commission has recently hosted a series of multistakeholder 
workshops on ESG disclosure434. Stakeholders frequently state the need for ESG 
disclosure to be: comparable (between companies of the same sector and over time); material (relevant to the particular ci rcumstances and strategy of the individual 
company); credible and accurate (so probably assured by a 3
rd party or subject to 
scrutiny by stakeholders); forward-l ooking (so addressing future risks and 
opportunities); and cost effective (s o avoiding unnecessary costs falling on 
enterprises). Much ESG disclosure is curre ntly not perceived to  correspond to these 
characteristics. Some non-governmental orga nisations also stress the need for a legal 
“right to know”, allowing communities pot entially affected by actual or future 
company activities to access relevant in formation on demand. Employers federations 
argue that a “one-size-fits-all” framework for ESG disclosure should not be imposed 
on enterprises.  
14.13.  There is on-going work regard ing non-financial reporting at different levels, such as 
the Global Reporting Initiativ e (GRI), the draft ISO 26000 standard on social 
responsibility, the OECD guidelines for Mu ltinational Enterpri ses, the UN Global 
Compact, the Association of Chartered Certified Accountan ts (ACCA) Guide to Best 
Practice in Environmental, Social a nd Sustainability Reporting, the European 
                                                 
429 See Article 36 (1) of the 7th Company Law Directive. 
430 European Commission Recommendation 2001/453 of 30 May 2001 on the recognition, measurement 
and disclosure of environmental issues in the annual accounts and annual reports of companies , OJ L 
156, 13/06/2001, p.33. 
431 The French Loi sur les Nouvelles Régulations Economiques  (2001) requires public listed companies to 
report against a set of social and sustainability i ssues. In December 2008 Denmark passed a law making 
it mandatory, on a comply or explain basis, for the 1000 largest Danish enterprises, listed companies 
and state-owned enterprises to report on corporat e social responsibility in their annual reports.  
432 E.g. European Coalition for Corporate Justice (ECCJ), European Sustainable Investment Forum 
(Eurosif), European Federation of Fi nancial Analysts Societies (EFFAS). 
433 European Parliament (March 2007), §27. 
434 See summaries of discussions here: http://ec.europa.eu/enterprise/policies/sustainable-
business/corporate-social-responsibility/reportin g-disclosure/swedish-presidency/index_en.htm   
 
EN 107   EN Federation of Financial Analysts Societie s (EFFAS), and the EU Eco-Management 
and Audit Scheme (EMAS) in addition to c ountry-level guidelines and obligations in 
place.  
14.14.  There is growing interest in the concept of integrated repor ting financial and non-
financial reporting435. An International Connected Reporting Committee (ICRC) is 
due to be established by the end of 2010, to oversee the development of a connected 
and integrated reporting model that covers financial and sustainability information.  
14.15.  TheTransparency Directive could be an appropr iate vehicle to addre ss, with regard to 
listed companies, some of the perceived short-comings of current ESG disclosure 
rules and practice.  
14.16.  A specific issue concerns Recital 14 of th e Transparency Directive, which contains 
an indirect reference to th is type of disclosure. This recital states that the " home 
Member State should encourage issuers whose shares are admitted to trading on a 
regulated market and whose principal activ ities lie in the ext ractive industry to 
disclose payments to governments in their annual financial report. The home 
Member State should also encourage an in crease in the transparency of such 
payments within the framework established at various international financial fora ." 
The main objective of such disclosure is  to contribute to the transparency of 
budgetary resources in devel oping countries which depe nd on the exploitation of 
natural resources. 
14.17.  So far, none of the EU Member State ha s transposed the recommendation of recital 
14 into national binding legisl ation. Some of the issuers concerned by recital 14 are 
voluntarily reporting on payments to gove rnments under certain circumstances. 
Cooperation between issuers and governments is taking place in some international 
fora such as the Extractive I ndustries Transparency Initiative436.  
                                                 
435 See Eccles & Krzus (2010) 
436 www.eiti.org   
 
EN 108   EN ANNEX 15 – ACCESS TO AND STORAGE OF INFORMATION ON LISTED COMPANIES  
15. Annex 
15.1. This Annex: 
• A) introduces the EU legislative fram ework concerning the information about 
listed companies which should remain av ailable or disclosed to the public; 
• B) explains the vision of the Transparency  Directive regarding access to regulated 
information and how such vision has been implemented; 
• C) describes the first steps taken towards the interconnection of Officially 
Appointed Storage Mechanisms (OASMs);  
• D) provides a comparison with the third country systems; 
• E) presents the issues for further reflec tion in terms of enhanced interconnection 
(E1) and common input formats (E2); and 
• F) explains the parallel process on the interconnection of business registries.  
A) Relevant information about listed companie s available or disclosed to the public 
15.2. Companies whose securities are listed in EU  regulated markets are subject to several 
disclosure requirements under EU law (as well as under national law not necessarily 
connected to EU law). These obligations us ually require that disclosed information 
remain available to the public or to intere sted parties. However, the way in which the 
information should remain available is not fully harmonised: 
– The 1st and 11th Company Law Directives (which apply also to non-listed limited 
companies) require companies to file cer tain documents and pa rticulars (such as 
annual accounts, statutes/art icles of associations et c.) with the business (or 
commercial) registries; 
– The Shareholders Rights Directive (which applies only to listed companies) 
requires listed companies to communicate certain information (essentially in relation to the organisation of general mee tings) to shareholders and to keep such 
information available in their websites. This directive is partially linked to 
Articles 17 and 18 in the Tr ansparency Directive; 
– The Directive on Takeover Bids foresees (Article 8) that the bid documents 
should be "available" to  shareholders but it is  silent on the means; 
– The Prospectus Directive requ ires that the pros pectuses are available to the public. 
Different means are foreseen (as alternativ es): newspapers, printed form available 
at the premises of the issuer or the regulated market; issu er's website (and 
financial intermediaries' websites); website of the regulated market; or website of the competent authority; 
 
EN 109   EN – The Market Abuse Directive (Article 6(2 )) requires issuers to, without prejudice 
to the measures taken to comply with the obligation to inform the public of inside 
information, post on their Internet sites all inside information that they are required to disclose publicly. 
– The Transparency Directive (Article 21) requires that 'regulated information' 
(essentially, disclosures on major holdings , on financial reporting and certain 
disclosures pursuant to the Market Abuse Di rective) is filed with a registry (so-
called "storage mechanism") where it would remain available to market participants. 
15.3. The resulting situation is not attractive fo r users of financial information which need 
to produce quality financial research. The Tr ansparency Directive has been a step in 
facilitating access to financial information, and recognised as such. Users of financial 
information surveyed in the External St udy believe that the Directive has improved 
or not changed the quality of informati on necessary to produce quality financial 
research (although some financial analysts are of the opinion that the quality of this 
research has declined
437.  
 
15.4. However, easing access for users of information would require additional steps, such 
as establishing (at a minimum) a single ac tion access point to disclosed information, 
comprehensive databases, electronic filing w ith straight through processing facilities 
and harmonisation of input standards so as to make information comparable. This is 
not yet achieved today. 
B) The vision of the Directive on access to regulated information and its implementation 
B1) Immediate access to regula ted information: dissemination 
15.5. Concerning immediate access to regulated info rmation, Article 21(1) of the Directive 
requires issuers to disclose regulated information in a manner ensuring fast access to such information on a non-discriminatory basis and without char ging investors any 
specific cost for providing such informa tion. According to the Directive, the home 
Member State shall require the issuer to use such media
438 as may reasonably be 
                                                 
437 Mazars (2009), s ection 4.3.2.4. 
438 Recital 8 of the Directive clarifies that the Home Member State has the right to request the issuer to 
publish parts of or all regulated information through newspapers.  
 
EN 110   EN relied upon for the effective disseminati on of information to the public throughout 
the EU, but may not impose an obligation to use only media whose operators are 
established in its territor y. Article 12 of Directive 2007/ 14/EC set out some minimum 
technical standards in this regard. 
15.6. The external survey conducted for the Commission shows that the dissemination 
rules of the Directive requiring the pushing of regulated information to media are 
positively perceived439.  
Interestingly, this external study outlines that even if pr actices are very diverse in 
Member States, the way companies comply with the obligation to disseminate their Regulated information has not radi cally changed with the Directive
440: 70% of 
stakeholders using the information believe that issuers use the appropriate media to 
disseminate the financial information that they produce441; 45% do not believe that 
the Directive has changed the way fi nancial information is made public442 and 50% 
of users of financial information feel that the information easily reaches the 
investor443.  
15.7. The study outlines nevertheless that no enfor cement by supervisors of the obligation 
to publish on an "EU wide" basis is happening444. 
15.8. The poor cross-border disse mination of regulated info rmation by smaller listed 
companies and the low interest shown by analysts and investors in such information (and a fortiori  in those companies) remains, however, an issue (the so-called "black 
hole" problem
445).  
While large investors seem to believe that the Directive has facilitated access to 
information disclosed by smaller listed companies, many smaller listed companies 
generally complaint about the lack of inte rest by foreign invest ors: investors and 
analysts are considered to concentrate on major companies and the cross-border 
                                                 
439 See generally Mazars (2009), section 4.3.  
440 According to Mazars, in practice,  issuers continue to use data disseminators to ensure a wide 
dissemination of the regulated information. Some Memb er States have introduced  a formal procedure to 
approve data disseminators and check  their efficiency and integrity: (U K, DE). Others have put in place 
electronic systems allowing issuers, with only one “click”, to send regulated information 
simultaneously to the Supervisor, the Exchange and a data disseminator that will spread it to the press: (PL, PT and ES). In PT and ES the Supervisor acts as a disseminator. In PL, the information is also 
automatically stored. But all in all, for the dissemination of regulated information, the means put in 
place for issuers to comply with th e requirement of the Directive have  not changed and have no induced 
new costs. See Mazars (2 009), sectio n 4.3.1.3. 
441 Ibid., section 4.3.1.2. 
442 Ibid., section 4.3.1.1. 
443 Ibid., section 4.3.2.1. 
444 Ibid., section 4.3.1.3. It should be noted that in some countries (such as PT or ES) supervisors have an 
active role in disseminating regulated information. According to this study, in general supervisors in the EU confirmed their reticence to play a role in disseminating Regulated Information: they considered 
themselves not to be ill equipped to spread information. Exchanges have expressed the same view but 
they are more prepared to play a role in giving acces s, or even storing, Regulated Information. However 
major exchanges have recently sold their specialised subsidiaries offering dissemination storing and 
“added value” information services (NYSE Euronext and Deutsche Börse). Both categories of stakeholders would clearly prefer that the dissemination of Regulated Information be left to market 
forces.  
445 Mazars (2009), sections 4.3.2.5 and 4.3.2.6.  
 
EN 111   EN visibility of smaller listed companies is poor. The external study outlines that 
“market players seem to be in a “catch 22” situation: SMEs regret the low level of 
cross-border interest of Analysts and Inves tors and therefore are reluctant to spend 
money to ensure wider dissemination (trans lation into English in particular). On 
their side, analysts and inves tors believe that they do  not receive sufficient 
information from non domestic SMEs, and theref ore are reluctant to invest in those 
companies .”446 
The solution for the so-called “black hole” pr oblem is not necessar ily legislative, but 
improvements on the mechanisms to acce ss regulated information over time could 
perhaps be explored as a gateway to get in terest into smaller listed companies (see 
below, section E of this Annex ) 
15.9. It has also been outlined that some Me mber States still require a paper-based 
publication of some regulated informati on in newspapers, which would go against 
the modernisation spirit of the Directive447. The cost of publication of regulated 
information in printed press is also invoked as a particular problem for smaller listed 
companies. They expressed the view that posting information on their website should 
be sufficient to comply with the dissemination obligation of the Directive448. 
B2) Access to regulated info rmation over time: storage 
15.10.  Concerning access to regulated information over time, the Transparency Directive 
has established a specific regime providing for a publicly accessible database on 
disclosed information . Article 21(2) of the Transp arency Directive requires each 
Member State to officially appoint at least one " mechanism for the central storage of 
regulated information "449. Unlike the US model (see sub- section D1 of this Annex ) 
the Directive tries to establish some centralisation at Member State level not at European level. A certain centralis ation is also recommended by IOSCO
450. The 
Directive is, however, not prescripti ve as to the practical solutions. 
– Designation of OASMs. OASMs storing regul ated financial information are to be 
appointed nationally by Member States . There should be at least one OASM 
storing this information at the Member St ate level. Legally sp eaking, this does not 
preclude different Member States  from appointing a common OASM.  
– How is the storage to be organised in pr actice? The Directive is not prescriptive 
on this issue. It simply states that  the OASM should comply with minimum 
quality standards of security, certainty as to the information source, time recording 
and easy access by end users. The Directive foresees as well the possibility for the 
                                                 
446 Ibid, section 4.3.2.5. 
447 Mazars (2009), section 4. 3.1.1. However, see also recital 8 of the Transparency Directive. 
448 Mazars (2009), s ection 4.3.1.1. 
449 Before the enactment of the Directive, regulated financial information was already (usually partially) 
stored in many Member States and made available to the public, either by the Competent Authorities 
themselves, by Stock Exchanges, by business registries (e.g. annual accounts) or by others (issuers or 
private service providers). 
450 IOSCO (February 2010), p.25. 
 
EN 112   EN Commission to adopt implementing measur es specifying the minimum standards 
for the central storage of regulated information451.  
– Who should be in charge of operating the OASM? The Directive is silent on this. 
It is a national deci sion. It can be a publ ic authority (such as supervisors) or a 
private party (such as the stock excha nge), provided it has been officially 
appointed. In their daily work, OASMs will be supervised by the national 
Competent Authorities described in  Article 24 of the Directive.  
– Who should pay for the cost of the OASM? There is no prescription in the 
Directive as to the cost model, but recital 25 points out that " information which 
has been disseminated should be availa ble in the home Member State in a 
centralised way allowing a European network to be built up, accessible at 
affordable prices for retail investors  […] " [emphasis added] 
15.11.  One advantage  of the Directive model is that  if the development of OASMs is 
successful, it would allow investors to have  better access to information (to be 
disclosed under the Directive obligations) on issuers, including on small issuers. It 
would also allow for further cen tralisation of the storage obligations, so as to find all 
information on one company in a single place. 
15.12.  Among the disadvantages  of the Directive model is th e risk that the OASMs adopt 
divergent incompatible sta ndards and formats that woul d make further integration 
cumbersome and lengthy, preventing the users from:  
– accessing business information in a timely fashion, in the language of choice; 
– processing business information automatica lly, in a computer readable format; 
– effective use of the European regulate d information for cross-border purposes, 
either of regulatory or business nature. 
15.13.  Member States have implemented Ar ticle 21(2) in different manners . In most of 
the Member States either the competent authority (BE, BG, DK, EE, ES, HU, LV, 
NL, PL, PT, RO, SE, UK) or the stock exchange452 (CY, EL, FI, IE, IT, LT, LU, 
MT) has been appointed to the national OAS M. In three Member States, some other 
body has been appointed as OASM: AT (O esterreichische K ontrollbank AG); DE 
(Business register); and FR (Official Journal). Member States have not appointed 
common OASMs but the Finnish, Icelandic and Lithuanian OASMs are in practice 
operated in the same database453. In some Member States, the appointed OASM is an 
interim solution. 
Table 18.1 – Links to national OASMs 
 
Country Link to OASM 
                                                 
451 Cf. Article 21(4). The Commission addressed the content standards in its Recommendation on the 
network (see section C of this Annex ). 
452 Also in Iceland and Norway. 
453 This is due to the fact that the local stock exchanges belonging to the NasdaqOMX group have been 
appointed as national OASMs. Even though the le gal responsibility lies within each national stock 
exchange, the OASM system is operated at the group level. 
 
EN 113   EN Austria OeKB (central securities depository) 
http://issuerinfo.oekb.at/startpage.html 
Belgium Interim solution 
http://www.cbfa.be/eng/gv/info/links/dBeginFrmLinksWebsite.asp  
Bulgaria Competent authority 
http://www3.fsc.bg/eregnews/index.jsp?action 
Cyprus Stock exchange 
http://www.cse.com.cy/en/Announcements/Announce_Index.asp 
Czech 
Republic Competent authority 
Denmark Competent authority 
http://oasm.dfsa.dk/ 
Estonia Competent authority 
http://www.baltic.omxnor dicexchange.com  
Finland Stock exchange 
http://www.oam.fi 
France Official Journal 
http://www.info-financiere.fr 
Germany Company Register 
http://www.unternehmensregister.de 
Greece Stock exchange 
http://www.athex.gr 
Hungary Compet ent authority 
http://www.kozzetetelek.hu 
Ireland Stock exchange 
http://www.ise.ie/app/announcementList.asp 
Italy Stock exchange 
http://www.borsaitaliana.it 
Latvia Competent authority 
http://www.oricgs.lv 
Lithuania Stock exchange 
http://www.crib.lt 
Luxembourg Stock exchange 
http://www.bourse.lu 
Malta Stock exchange 
http://www.borzamalta.com.m t/announcements/default.aspx 
The 
Netherlands Competent authority 
http://www.afm.nl/publicdatabase 
Poland Competent authority 
http://www.knf.gov.pl/rynek_kapitalowy/OAM/index.html 
Portugal Compet ent authority 
http://web3.cmvm.pt/english/sdi2004/emitentes/index.cfm 
Romania Compet ent authority 
http://www.cnvmr.ro/InfoUtile/en/Rapoa rteEmitenti/RapoarteEmitenti.html 
Slovak 
Republic Competent authority 
Slovenia Stock exchange 
www.oam.si  
Spain Competent authority 
http://www.cnmv.es/english/consultas/reg_ofi_ent_emisoras/reg_ofi_ent_emi_e.htm 
Sweden Compet ent authority 
https://fiappl.fi.se/FinansCe ntralen/search/Search.aspx 
United 
Kingdom Interim solution 
http://www.fsa.gov.uk/Pages/Doi ng/UKLA/RIS/FAQ/index.shtml#sip 
Source: CESR 
15.14.  The Directive also provides for implementing powers on issues closely connected to 
the storage of regulated information: (i ) the technical cond itions under which a 
 
EN 114   EN published (annual or half -yearly) financial report is to remain available to the public 
for 5 years, (including the possible adaptation of the five-year period)454 and (ii) 
filing of disclosed regulated information with the competent authority in the home 
Member State by electronic means455. In both cases, an advanced storage mechanism 
could be a working reply to the problem.  
C) The interconnection of OASM 
C1) The Commission Recommendation as a first step 
15.15.  In addition to the creation of nationa l OASMs, the Directive encourages the 
establishment of some kind of networking across Member States456: (i) electronic 
networks at national level linking OASMs to  existing national business registers and 
(ii) the linkage of those nati onal electronic networks at Eu ropean level. However, the 
Directive is neutral as regards the arch itecture of OASMs and it does not directly 
make those networks compulsory.  
The aim of such an interlinked network(s)  would be to provide a single action point 
(or a one stop shop) for investors (and othe r interested parties) when looking for 
regulated financial information on liste d companies. The existence of such 
network(s) would also facili tate the provision of added va lue services to investors 
(e.g. processed information, comparative information etc.). 
15.16.  Implementing powers are also foreseen for the Commission in this regard, after 
having reviewed the guidelines prepared by CESR on this issue457. 
15.17.  Upon request of the Commission, CESR  prepared in 2005 a Progress Report458 on 
this issue. This Progress Report was followed by a Report on cost issues459 in 2006 
which provides estimates in relation to the cost of setting a national OASM and the 
cost of setting a European network of national OASMs. Finally, CESR delivered in 
later in 2006 a formal Advice on possible implemen ting measures on storage of 
regulated information and filing with the competent authority460. In its advice, 
CESR (i) presents 4 alternative models (A  to D) for the European network with a 
varying degree of centralisati on; (ii) suggests the minimum standards to be respected 
by each national OASM; (iii) describes th e funding implications of setting an 
operating national OASM; (iv) evaluates the role of the Competent Authority in the 
supervision of the OASM and in adapting th e standards; and (v) provides an opinion 
in relation to the filing of regulated information by electronic means with the Competent Authorities. In its advice, CESR  expressed a preference for the so-called 
                                                
 
454 Cf. Articles 4(6) and 5(6). In addition to the OASMs required by Article 21(2) of the Directive, Articles 
4(1) and 5(1) require issuers to ensure that the annual financial report and half-yearly financial report 
remain available to the public for at least 5 years. In practice, issuers comply with this requirement by 
making such reports available through their website. It should be noted that other directives also require issuers to make some information available th rough their websites (see §15.2 of this Annex). 
455 Cf. Article 19(4). According to CESR (September 2008), in most Member States filing with the OASM 
is aligned with filing with the competent authority. See replies to questions 155-156. 
456 Cf. Article 22. 
457 Cf. Article 22(2). 
458 CESR (March 2005). 
459 CESR (April 2006). 
460 CESR (June 2006). 
 
EN 115   EN Model C, a simple network model. Model C would consist of a single interface for 
end users (e.g. a website) containing a central  list of all issuers Under Model C, the 
pan-European network would consist of  a common single interface for end users 
(e.g. a website) containing a central list of  all EU listed companies with, for each 
issuer, a hyperlink to the rele vant storage system on which regulated information can 
be found. By clicking on the name of the relevant company, the user would be 
directed to the site of the relevant stor age mechanism. The data would remain at 
national level and the only common element would be the list of listed companies. CESR pushed for defining the possible netw ork as early as possible. The main 
argument was that it did not make sense to create isolated national storage 
mechanisms that would not be in a pos ition to later interlink to each other. 
15.18.  Building on CESR advice, DG Internal Market and S ervices consulted the public 
on this issue in March 2007. The consultation document
461 contained: (i) draft 
minimum quality standards for the central storage and (ii) draft minimum conditions for a pan-European network of national central storage mechanisms. Preliminary 
discussions with Member States within th e European Securities Committee were also 
held: preference was expressed for continui ng the work toward the development of a 
pan-European network of central storage m echanisms without limiting the flexibility 
of the national mechanism in this process through the enactment of Commission's implementing measures on minimum quality standards. The issues of governance of a pan-European network and the quest ion of Information and Communication 
Technology convergence appeared as priori ty issues compared  to the quality 
standards. 
15.19.  As a result the Commission adopted on 11 October 2007 a non-binding 
Recommendation
462 on the network of national mechanisms  storing regulated 
information. The main aim of the Recomme ndation was to give support to work 
undertaken by CESR regarding the pan-Eur opean network and to its suggested way 
forward: the so-called Model C. Hence, this recommendation suggests that Member 
States should take steps to set up the network model proposed by CESR.  
15.20.  A key role for CESR in the development of  the network is also foreseen in the 
Commission Recommendation. CESR has set up an initial network  by using 
CESR MiFID database463 on shares admitted to trading on EU regulated markets. In 
essence, by clicking on the shares' name displayed on that database, users are linked to corresponding OASM. This initial networ k only includes the list of issuers of 
shares, but not of other securities. While th is is a practical solution in the interim 
phase, it does not meeting the expectations that both CESR's orig inal advice and the 
Commission's recommen dations created.  
                                                
 
461 See http://ec.europa.eu/internal_market/secur ities/transparency/index_en.htm#storage   
462 Commission Recommendation 2007/657/EC of 11 October 2007 on the electronic network of officially 
appointed mechanisms for the cent ral storage of regulated informat ion referred to in Directive 
2004/109/EC of the European Parliament and of the Council, OJ L267, 12.10. 2007, p.16. The text of 
the recommendation is available at:  
www.ec.europa.eu/internal_market/s ecurities/transparency/index_en.htm  
463 http://mifiddatabase.cesr.eu .  
 
EN 116   EN 15.21.  The Commission Recommendation also contains suggestions464 on minimum 
quality standards  applicable to the national stor age mechanisms that would form 
part of the network465.  
C2) The limited results so far and the need for an evolution 
15.22.  Despite this Recommendation, the impact of the Directive rules on storage of 
regulated information is however not encouraging . Access to historical 
information on listed companies on a pan-Eu ropean scale has not been simplified: 
interested parties need to  go through 27 different OASMs466 and the electronic 
network interconnecting th em is only at an initial stage with rather modest results so 
far.  
According to the External Study stakeholders  do not see real changes in the storage 
of regulated information resulting fr om the application of the Directive467 and would 
use the companies' websites as primary source of information rather than the storage mechanism, although they w ould trust more the latter
468. However, there is a certain 
(but not conclusive) support for having access to all available information via a single point of entry
469. 
 
15.23.  These limited results  raise 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. 
                                                 
464 Under Article 21 of the Directive, the Commission is legally empowered to adopt formal implementing 
measures regarding the minimum quality standards. However, it was decided to link such minimum 
standards to the development of the network. As a result, it was preferred not to impose legally binding 
measures on the national storage mechanisms that would constrain the development of the network. 
465 According to CESR (September 2008), most of those Member States have implemented the European 
Commission’s recommendation either as mandatory or as recommendation. See replies to question 154. 
466 According to Mazars (2009), stake holders complaint about the lack of harmonisation on the practical 
functioning of these databases (see section 1.8.1 of that Study). 
467 Mazars (2009), section 4.4.2. 
468 Ibid., section 4.4.3.1. At the same time, stakeholders would not be unhappy with the national 
independent storage mechanisms. Ibid., section 4.4.2.2. 
469 Ibid., section 4.4.3.2. 
 
EN 117   EN 15.24.  It appears that there is need for an evolution. Indeed,  the Commission 
Recommendation, and its implementation by CESR (Model C), was seen by the 
Commission as a first step in achieving at  least a single point of access to regulated 
information. The Commission envisaged in the Recommendation th at the network of 
national storage mechanisms should be fu rther developed and invited CESR to 
reflect on this (see below, section E of this Annex ).  
15.25.  Positions are, however, diverse.  The External Study470 outlines that, generally 
speaking, stakeholders believe  that it would be prefer able to have a centrally 
maintained EU system to store regulated information (63% of those who have 
expressed an opinion). Only industry associ ations are against it. The most supportive 
of this idea are the users of financial in formation (Financial Analysts, Supervisors, 
Retail and Institutional Invest ors). A majority of issuers (41%) of shares are in 
favour of an EU central storage mechanism, in particular recently listed companies 
(48%). 
 
15.26.  The support, however, is not equal depending on the category of stakeholder or its 
geographical origin471. During interviews, stakeholde rs commented on detail on the 
relevance of a central storage mechanism. Some even argue against a central system 
indicating that Retail Investors prefer to  access to regulated information through the 
Internet Home page of listed companies a nd that Institutional Investors focus more 
on “added value” data vendors. This being sa id, Financial Analysts, Supervisors and 
Issuers favour an official central place fo r storage that would be a central access 
point for stored information. Whether this cen tral point should be the regulator or a 
commercial entity is much debated472.  
                                                 
470 Ibid., section 4.4.3.6. 
471 An EU storage mechanism is par ticularly supported by stakeholders in Slovakia, Romania, Spain, 
France, Luxembourg, Poland, Hungary, Germany, Austria and Italy. Views to the contrary are 
expressed in Ireland, Sweden and the UK. 
472 An often mentioned point is that the business case of an OASM is not obvious (in some Member States 
there are no applicants to beco me an OASM) and even Exchanges hesitate to apply. Exchanges 
operating on several member States also criticise the lack of harmonisation in the setting up of an 
OASM. 
 
EN 118   EN Finally, whether the central storage mechanism should be at national or at EU level is 
much discussed and the views are mixed. Even for a central EU access point, the 
underlying architecture of the system is a matter for debate (Interconnection of 
national OASM? Centralisati on? Central access only?). 
15.27.  Confronted with all these complexities and believi ng that technological development 
with the Internet ca ll for different solutions, some stakeholders propose a simpler and 
more straightforward idea: imposing mi nimum standards for issuers to store 
Regulated Information on their website and inviting the us ers of financial 
information to use Internet search faci lities to access the stored information473. This 
decentralisation would eliminate the storage mechanisms as such. 
15.28.  The External Study is favourable towards th e enactment of a single action point for 
stored information, which remains close to  the existing situatio n (Model C): a single 
EU access point at CESR level with a dire ct Internet link to a compulsory and 
harmonised section of the issuers’ websit e where the information would be stored474. 
 
D) For a comparison: how is information stored and made accessible in third countries?  
D1) United States 
15.29.  In the US, all financial information filed with the Securities and Exchanges 
Commission (SEC) remains available via the SEC’s dedicated storage website 
(EDGAR) for an indefinite period475.  
15.30.  In May 2008, after successfully implementi ng the XBRL Voluntar y Filing Program 
the US SEC published a proposed ruling in  which it phases-in mandatory use of 
XBRL (interactive data) for all publicly traded companie s filing corporate financial 
statements. SEC eventually decided in December 2008 to require public companies and mutual funds to use interactive da ta for financial information. For public 
companies, interactive data financial re porting will occur on a phased-in schedule 
beginning next year. The largest companies who file using U.S. GAAP with a public 
float above $5 billion will be required to provi de interactive data reports starting with 
their first quarterly report for fiscal periods ending on or af ter 15 June 2009. This 
will cover approximately 500 companies. Th e remaining companies who file using 
U.S. GAAP will be required to file with interactive data on a phased-in schedule over 
the next two years. Companies reporting in IFRS issued by the International 
Accounting Standards Board will be required to  provide their interactive data reports 
starting with fiscal years ending on or after 15 June 2011.Companies will be able to 
                                                
 
473 Storage of Regulated Information on the website of the issuer is already compulsory in several Member 
States. See also §15.2  of this Annex. In any event, stakeholde rs would already be using the companies’ 
websites as primary source of informati on. See Mazars (2009) , section 4.4.3.1. 
474 Mazars (2009), Possib le Improvement n°14. 
475 www.sec.gov/edgar.shtml   
 
EN 119   EN adopt interactive data earlier  than their required start da te. All U.S. public companies 
will have filed interactive data financia l information by December 2011 for use by 
investors.  
15.31.  In June 2008, US SEC announced the "21st Century Disclosure" Initiative476 to 
fundamentally rethink the way companies re port and investors acq uire information. 
This initiative has 3 phases: (1) the staff of  SEC, led by Prof. Lutz, will prepare by 
end 2008 a high-level plan to help SEC to make the transition to an interactive 
company file system based on XBRL; (2) a Federal Advisory Committee will be established in early 2009. This Committee sh ould review the high-level plan and 
make recommendations to SEC for implemen ting it; and (3) SEC would consider and 
begin acting on the Committee's recommendations. 
In August 2008 the Securities and Excha nge Commission Chairman unveiled the 
successor to the ag ency’s 1980s-era EDGAR database. IDEA
477– the new system 
will give investors far faster and easier in teractive access to key financial information 
about public companies and mutual funds. 
15.32.  According to the External Study478, the US storage mechanism (EDGAR) does not 
seem to be well known in Europe. User s of financial information (Financial 
Analysts, Retail and Institutional Invest ors) are most familiar withEDGAR and, 
when they expressed an opinion, they favour the creation of a similar system in the 
EU. A majority of Supervisor s having expressed an opinion  believe that the national 
storage mechanism is sufficient. Within Is suers of shares, Top and Recently listed 
companies are the most supportive of the cr eation of a system similar to EDGAR in 
the EU. 
 
D2) Other third countries 
15.33.  The issue as to whether a compulsory sy stem of central storage of regulated 
information is required is addressed differen tly in the other third countries. Durations 
                                                 
476 www.sec.gov/disclosureinitiative   
477 http://idea.sec.gov/  
478 Mazars (2009), s ection 4.4.3.5. 
 
EN 120   EN of storage may differ according to the type of  required storage (for instance, with the 
issuer, the regulator or a regulator designated entity) and the type of document479. 
In China , all the disclosed regulated information should be registered at the stock exchange and 
reported to the local counterparts of CSRC. Th e investors may search for the information on the 
website of the stock exchange, designated newspa pers. Issuers must provide access to the documents 
on the premises of the companies and on websites designated by CSRC for public review indefinitely. 
In Hong Kong , any document published on the issuer’s website pursuant to the listing rulesof the 
exchange remains available on the is suer’s website on a continuous ba sis for at least 5 years from the 
date of first publication. 
In India , all companies having securities listed on a recognised stock exchange, must file regulated 
information with EDIFAR in addition to the physical filing with the said exchanges or any other 
platform as may be mandated by the securities and exchange board of India (SEBI) from time to time 
(EDIFAR has been launched by SEBI in collabora tion with the National Informatics Centre). In 
addition, on January 1, 2007, National Stock Exchange, Mumbai (NSE) and Bombay Stock Exchange, 
Mumbai (BSE) jointly launched a common portal for filing and dissemination of information, which 
is jointly owned, managed and maintained by these two exchanges. Since its launch, the portal has 
become a single source to view information filed by  companies listed with NSE and / or BSE. A listed 
company would be required to file its submissions through this portal irrespective of the stock 
exchange(s) on which it is listed and the information so filed can be viewed at this portal. 
In Japan , disclosed information is physically made accessi ble at the head office of the issuer and is 
available via the EDINET system (accessible thr ough the internet). The duration of availability 
depends on the type of documents. 
In Switzerland , the SIX Swiss Exchange provides a cent ral storage system. The information is 
available to the public for one or two years. 
15.34.  Concerning XBRL, there have been also  interesting developments in other 
jurisdictions than the USA. Financial inst itutions have been reporting monthly data 
in XBRL format to the Bank of Japa n since February 2006. The Japanese FSA 
successfully completed migration of its regulated information to an XBRL-based system (EDINET) in March 2008 and is already requiring XBRL-based reports. 
A number of Asian stock exchanges (Tokyo, Korea, Shanghai) are introducing 
XBRL-based reporting by their listed companies during the course of 2008. 
Singapore has a comprehensive XBRL project to allow all companies to file only one set of financial statements that can be used by several government agencies, 
including the tax authorities.  Also the government of Aust ralia have taken a broader 
approach by creating national XBRL infr astructure to use common information 
formats for a number of administrations  and organisations in this country. 
E) Issues for further reflection: future s cenarios for the interconnection of storage 
mechanisms 
15.35.  Considering the limitations of Model C described above, the Commission invited 
CESR to draw up, by 30 September 2010 appr opriate guidelines for the future 
development of the electronic networ k beyond Model C. According to the 
                                                
 
479 See Mazars (2009), section 6.4.1. 
 
EN 121   EN Commission Recomm endation 2007/656/EC480, those guidelines should in particular 
examine the feasibility, including a cost/benefit analysis to require: 
– "(a) the use, in all the access points to  the electronic network, of harmonised 
searching facilities based on a set of  common search keys and reference data 
items, thus harmonising the methods of cl assifying and identifyi ng the information 
to store; 
– (b) the use of common input formats and standards for the submission of 
regulated information to the storage mechanisms; 
– (c) the use by the storage mechanism of  a common list of types of regulated 
information; 
– (d) the technical interconnection with th e electronic network developed by the 
national company regist ries covered by the Directive 68/151/EEC; and 
– (e) entrusting the supervision of the se rvices provided by  any legal entity 
operating the common elements of the electronic network to a single body 
composed of representatives of the compet ent authorities referred to in Article 24 
of Directive 2004/109/EC. " 
15.36.  Indeed, the main limitations of the Mode l C network is that  it does not allow 
interested parties to search in the differe nt OASMs with a single research engine (see 
below, sub-section E1 ) and does not harmonise the methodology to store 
information, e.g. by using common input  formats (see below, sub-section E2 ). Also, 
the problem of governance remains: who will take care of the developing the 
network (see bellow, sub-section E3 ). Finally the question of the link to the business 
registries is still unsolve d (see below, sub-section F ).  
15.37.  In this context, there seems to be demand for better access to reference data481 on 
securities. For instance, the European Central Ba nk runs a "centralised securities 
database" which could have the potentia l to integrate regulated information on 
issues482. Interlinking existing (or future) database s on securities reference data to the 
OASMs483 would increase transparency in the market.  
E1) The harmonised searching facilities 
15.38.  The Commission Recommendation expects CE SR to examine the feasibility of 
establishing, in all the access points to th e electronic network, harmonised searching 
facilities based on a set of common search  keys and reference data items. These 
harmonised searching facilities should at le ast provide for the possibility of making: 
– searches using common category labels attached to the regulated financial 
information when filed with the storage mechanisms, such as: issuer name; date of 
                                                 
480 Cf. §22 of the Commission Recommendation 2007/657/EC.  
481 Reference data should be understood as data describing the properties and behaviour of a security. 
482 See European Central Bank (February 2010).  
483 For instance, in a similar manner to the link be tween national OASMs and CESR Mifid database.  
 
EN 122   EN filing; country of issuer; ti tle of document; indu stry/branch of trade and type of 
regulated information; 
– dynamic or chain searches; 
– multiple-country searches with a single request. 
15.39.  The harmonised searching facilities w ould require harmonising the methods of 
classifying and identifying the information to storage. In particular, common lists 
with regard to industry/branch of trade a nd type of regulated information would be 
needed. Interlinking databases on securitie s reference data with OASMs searching 
facilities would increase transpar ency in the market (see §15.37  above). 
The common list of types of regulated information would facilitate uniform 
classification of filed inform ation and EU-wide searches of information on the basis 
of type of information. While the list woul d need to be common, this, in itself, would 
not require full harmonisation of the defi nition of regulated information in the 
different Member States. The list would rath er be a collection of anything which is 
considered to be regulated information under national law.  
E2) Common input format: XBRL and standard forms 
15.40.  The operation of the network and the future  use of the information stored would 
largely be facilitated if common input format s and standards are requested at the time 
of filing484 information. This would also faci litate "straight-th rough" processing by 
the OASMs. 
The following formats and standards deserve pa rticular attention: (i) the possible use 
of the XBRL (eXtensible Business Reporting Language485) language; and (ii) the 
possible use of electronic st andard forms for the notifi cation of major holdings of 
voting rights.  
15.41.  Concerning XBRL , there have been recent calls by EU institutions for a wider use 
of this reporting language . The Competitiveness Council  conclusions of 22-23 
November 2007 agreed to the Commissi on Communication of 10 July 2007 on the 
simplification of company law, accounting and auditing, but at the same time called 
                                                 
484 See also point 20.4 of the Commission Recommendation on storage. 
485 See www.xbrl.org/eu . XBRL (or Interactive data as it is called in the US) is a language for the 
electronic communication of business and financial data similar in function to bar codes. The idea 
behind XBRL is simple. Instead of treating financial information as a block of text - as in a standard 
internet page or a printed docume nt - it provides an identifying tag for each individual item of data. 
With every number on an income statement or balance sheet individually labelled, information about 
thousands of companies contained on thousands of forms could be easily searched on the Internet, 
downloaded into spreadsheets, reorganized in databases, and put to any number of other comparative and analytical uses by investors, analysts, journalis ts, and financial intermediaries. The introduction of 
XBRL tags enables automated processing of business information by computer software, cutting out 
laborious and costly processes of manual re-entry and comparison. XBRL is one of a family of "XML" 
languages which is becoming a standard means of communicating information between businesses and 
on the internet. XBRL is being developed by an international non-profit consortium of more than 550 major companies, organisations and government agencies. It is an open standard, free of licence fees. It 
is already being put to practical use in a number of countries and implementations of XBRL are 
growing rapidly around the world. 
 
EN 123   EN for the optimisation of the use of el ectronic means taking into account the 
possibilities offered by " available technological inst ruments and business reporting 
computer languages ". 
The European Parliament's  Resolution of 21 May 2008 on a simplified business 
environment for companies in the areas of company law, accounting and auditing486, 
notes the advantages of XBRL and ur ges the Commission to actively promote  the use 
of electronic means in rela tions between undertakings and public administrations. 
Also the European Parliament Resoluti on of 9 October 2008 on Lamfalussy follow-
up: future structur e of supervision487, calls on the L3 Committees to design common 
reporting standards, preferably in a multi purpose format such as XBRL and calls 
upon the Commission to submit adequate legislative proposals. 
15.42.  The possible use of XBRL for financial reporting purposes has appeared as a new 
issue. This use is strongly supported by th e European Parliament and its used is 
already required by some European ba nking supervisors. CEBS has developed 
XBRL taxonomies for the prudential reporting framework COREP (COmmon 
REPorting) for the new solvency ratio of cr edit institutions and investment firms, and 
for the standardised financia l reporting framework (FINREP) for credit institutions 
operating in the EU. Central banks488 have active XBRL projects, some of them 
either allow or require XBRL-compliant reporting489, following the recommendation 
of the CEBS. At the same time, there may be alternative ways other than XBRL to 
structure data. Banking superv isors in six Member States490 have however decided 
not to use XBRL. Outside the EU, the US SE C and certain other se curities regulators 
are promoting the use of XBRL. 
15.43.  The External Study is, however, more cau tious on the possible use of XBRL. It 
believes that “ more experience from countries where XBRL is used would appear 
necessary before an EU decision or  recommendation on the use of XBRL be 
made” .491 
15.44.  Concerning the electronic  standard form for the notifica tion of major holdings of 
voting rights  (and of financial instruments), cr oss-border compliance by investors 
would be facilitated, especially when they  need to make notifications to several 
issuers located in different Member States , if such a form was available and used 
across the EU492. Equally, a form of this kind woul d simplify the notification process 
for those issuers who may receive notific ations from several voting rights or 
financial instrument holders loca ted in different Member States493. Finally, filing of 
notifications in a structured format would also facilitate furt her processing of the 
information: e.g. allowing to ex tract consolidated data of holdings by issuer or by 
investor.  
                                                 
486 European Parliament (May 2008), §12. 
487 European Parliament (October 2008), Recommendation 3.2(e).  
488 In Belgium, France, Germany, Greece, Ireland, Ital y, Luxembourg, the Netherland, Poland and Spain. 
489 In particular this is the case of Belgium, Germany and Spain.  
490 Czech Republic, Estonia, Slovakia , Slovenia, Sweden and the UK. 
491 Mazars (2009), Possible improvement n°6. 
492 See European Commission (D ecember 2008), §§25-27.  
493 It should be noted that an electronic form of this kind would be able to take into account national 
legislative differences and offer different options to the users when filling the form.  
 
EN 124   EN The External Study is also favourable to  the creation of su ch a standard form494.  
 
For more information on the development of an EU standard form  for the notification 
of major holdings of voting ri ghts, see Annex 4 (§§4.8 and seq.) . 
E3) The problem of governance: who will t ake care of the developing the network. 
15.45.  Enhancing the network of nationa l storage mechanisms (or the ex novo  creation of a 
centralised storage system) is desirable. This step, however, would require solving 
governance issues, in particular who should take responsibility for enhancing such 
network: actors such as the European Securities Market Authorities495, the network 
of European business registries496, the European Central Bank497 or the Office for the 
Harmonisation of the Internal Market498 could a priori  be concerned.  
15.46.  Decisions on costs, notably regarding the initial499 investment, would also need to be 
taken. In this context, a re cent EU financing programme allows for EU (partial) 
financing of, inter alia , certain CESR activities, including information technology 
projects of EU dimension.500. Another recent EU program me also allows for EU 
funding and support of interoperability solu tions for European public administrations 
(the ISA programme)501. 
15.47.  The Commission will be launching in 2010 a feasibility study on the development of 
a pan-European storage system for regulated information, which should be addressing those issues. 
F) The parallel process on the interconnection of business registries 
                                                
 
494 Mazars (2009), Possib le Improvement n°13. 
495 ESMA will be CESR successor. CESR should prepare guidelines in 2010 regarding the future 
development of the electronic network of storage mechanisms (cf. Recommendation 2007/657 of the 
European Commission, §§21 and 22). CESR is also running the so-called Mifid database and is currently providing a temporary initial network of storage mechanism.  
496 See www.ebr.org   
497 The European Central Bank runs a "centralised securities database" which could have the potential to 
integrate regulated information on issues. See European Central Bank (February 2010).  
498 OHIM is an EU agency that manages the EU trademark registry. As such, it has the know-how to keep 
registries and could potentially be an alternative to develop a pan-European storage system. See: http://oami.europa.eu
 
499 Understood as one-off costs as opposed to regular on-going costs. 
500 See in this regard Decision No 716/2009/EC of the European Parliament and of the Council of 16 
September 2009 establishing a Community programme to support specific activities in the field of 
financial services, financial reporting and auditing, OJ L253, 25.9.2009, p.8.  
501 See also Decision No 922/2009/EC of the European Parliament and of the Council of 16 September 
2009 on interoperability solutions for European public administrations (ISA), OJ L 206, 3.10.2009, 
p.20. 
 
EN 125   EN 15.48.  The question of the interconnection betw een the OASMs and the national business 
registries also needs furthe r reflection. In this context,  the interconnection of the 
national business registries among themselves  almost appears as a pre-requisite.  
15.49.  Company/business registries store co mpany related information under some 
European company law directives and natio nal law, such as: statutes/articles of 
association, annual accounts, persons author ised to represent the company etc. A 
company file is kept on each company create d, irrespective of whether it is listed or 
not. The first company law directive requires the business registries  to accept on-line 
filings and to provide bu siness information on-line. 
15.50.  European business registries of 24 Eur opean jurisdictions (18 of which a Member 
State of the EU) set up a network to link them: so-called EBR ( European Business 
Registries )502. Through the EBR network it is alre ady possible to obtain comparable, 
official company information from the countries connected to the network.  
15.51.  EBR, together with other partners, also  launched a research project called BRITE503 . 
The main objective of the project as to ca rry out the research necessary to enable 
complete cross-border interoperability (technical, semantic and organisational) between the Business Registers at European  level. BRITE partners are currently 
working on the implementation of the resu lts of the BRITE project after March 2009. 
For instance, BRITE partners explored the pos sibility to develop this platform to 
interlink the OASMs between them and to the business registries. BRITE imagined 
reaching a level of integration so as to en able for use and aggregation of individual 
data: end-users would be able to match data  and easily make further searches at the 
level of the stored data fields
504. Such a level of integrati on would have require that 
data are stored in a predetermined format  (and possibly filed in that format too)505. 
Eventually, the BRITE project did not pursue this avenue. 
15.52.  It should be noted that the European Parl iament, in its resolution of 21 May 2008 on 
a simplified business environment for companies in the areas of company law, 
                                                 
502 www.ebr.org   
503 BRITE was a 36-month project co-financed by the European Commission (DG Information Society, 
under the IST programme, eGovernment Actions) between March 2006 and February 2009. It was led by EBR (the European grouping of Business Registries). The Commission partially funded this project.  
504 For example, a search for the major shareholders of a specific issuer would not merely return a list of 
files with the text of uploaded notifications, but would produce one single overview of all (current) 
major shareholders together with their respective percentages of voting rights/shares in the issuer. 
Clicking on a major shareholder’s name could then initia te a new search with that shareholder as search 
entry into an appropriate OASM, returning new data stored in OASMs (e.g. a overview of the major shareholders of that shareholder, when listed; a overview of the other listed companies in which that 
shareholder holds a significant holding etc.).  
A further dimension of integration could be achieved within BRITE, if the OASM network is connected to the network of business registers. This interconn ection and integration of relevant data could enable 
users of the OASM system to obtain even more company data, as stored in the relevant company 
registers, and to gather data at the level of non-listed companies (for instance, an unlisted company 
which is a shareholder of a listed company). 
505 For instance, BRITE has been work ing on a unique company identifier at world level (REID) in order 
to be able to automate processes within registri es. The company identifier could possibly follow the 
IBAN structure. REID is being developed with a view to conform to ISO standard 6523. BRITE has 
also identified XBRL as a suitable st andard for the statutory reporting. 
 
EN 126   EN accounting and auditing, called on the Co mmission to encourage the MS to 
harmonize the classification of financial in formation reporting re quirements, and to 
leverage new technologies with a view to reducing the cost of information 
obligations while preserving the benefits to market participants, policy-makers and public administrations
506. 
15.53.  In November 2009, the Commission issued a Green Paper on the Interconnection of 
business registries507 launching a public consultation on possible ways forward to 
improve access to information on businesses across the EU and more effective application of the company law directives
508. At the same time, the Commission 
published a Progress Report on the interconne ction of European business registers 
describing the current legal and factual situ ation of the access to information and co-
operation between business registers509.  
                                                 
506 European Parliament (May 2008), §20. See also §§12 and 13 on XBRL and inter-operable business 
registries. 
507 European Commission (November 2009a). 
508 The public consultation ended on 31 January 2010. See: 
http://ec.europa.eu/internal_market/consultations/ 2009/interconnection_of_business_registers_en.htm   
509 European Commission (November 2009b). 
 
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64.  
                                                 
510 www.ec.europa.eu/internal_market/company/official/index_en.htm  
511 www.ec.europa.eu/internal_market/securities/abuse/index_en.htm  
512 http://ec.europa.eu/internal_mar ket/securities/isd/index_en.htm   
513 www.ec.europa.eu/internal_market/securities/prospectus/index_en.htm  
 
EN 134   EN Seventh Company Law Directive: Seventh C ouncil Directive 83/349/EEC of 13 June 1983 on 
consolidated accounts, OJ L 193, 18.7.1983, p. 1  
Shareholders Rights Directive514: Directive 2007/36/EC of the European Parliament and of 
the Council of 11 July 2007 on the exercise of  certain rights of shareholders in listed 
companies, OJ L 184, 14.7.2007, p.17.  
Takeover Bids Directive515: Directive 2004/25/EC of the European Parliament and of the 
Council of 21 April 2004 on Takeover bids. OJ L142, 30.4.2004, p.12.  
* * * 
                                                 
514 www.ec.europa.eu/internal_market/company/shareholders/indexa_en.htm  
515 www.ec.europa.eu/internal_market/company/takeoverbids/index_en.htm