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An update on ESEF

Insight 30 March 2022

An update on ESEF

The latest update on the European Single Electronic Format (ESEF).

The European Single Electronic Format (“ESEF”) requires annual financial reports of publicly listed issuers on EU regulated markets to be made available in XHTML[1] format, with a further requirement for IFRS consolidated accounts to have iXBRL[2] tags.

Background

The ESEF can be traced back to the 2013 EU Transparency Directive (TD), which sets out transparency requirements for issuers whose securities are listed on EU or UK regulated markets. More specifically, Article 4(7) of the 2013 TD introduced the requirement for all Annual Financial Reports to be prepared using a single electronic format for all periods starting 1 January 2020. Due to the COVID-19 pandemic, this date was changed to 1 January 2021 for major financial centres such as Luxembourg, Ireland and the UK.

Requirements for issuers & impact for investors

The ESEF has two key requirements:

  • All Annual Financial Reports to be prepared using XHTML format,
  • IFRS consolidated financial statements to be marked up using iXBRL tags within the XHTML.

Below are the fields which currently need iXBRL tagging:

  • Name of reporting entity or other means of identification
  • Address of entity’s registered office
  • Explanation of change in name of reporting entity or other means of identification from end of preceding reporting period
  • Principal place of business
  • Domicile of entity
  • Description of nature of entity’s operations and principal activities
  • Legal form of entity
  • Name of parent entity
  • Country of incorporation
  • Name of ultimate parent of group

Timeline for iXBRL tagging requirements

The above, whilst applicable to IFRS consolidated financial statements, can be applicable to individual financial statements on a voluntary basis.

Audit requirements

Statutory auditors of companies with securities listed on EU regulated markets will have to provide an audit opinion stating:

  • whether the financial statements included in the annual financial reports give a true and fair view in accordance with the relevant financial reporting framework; and
  • whether these financial statements comply with the requirements set out in the ESEF Regulation.

The Committee of European Auditing Oversight Bodies has issued guidelines on how audits of ESEF compliance should be carried out. However, such guidance is subject to national transposition in each Member State.

A word on Brexit

The ESEF regulations were implemented into UK law before the end of the EU withdrawal period. However, certain issuers of securities on regulated markets are exempt from these requirements: Public sector issuers and issuers that exclusively issue debt securities admitted to trading, the denomination per unit of which is at least 100,000 euros (or an equivalent amount).

How Sanne can help

Sanne’s team of experts spans a global office network and has a proven track record in assisting clients and entities administered through new compliance requirements. Our service offering is orientated around the provision of a full suite of asset class specialist fund and corporate administration services, including expertise across listed and regulated fund structures, loan agency and capital market specialisms. Please reach out to Paul, Richard and Marketa directly to find out how Sanne can assist you or your business.

[1] eXtensible Hypertext Mark-up Language

[2] Inline eXtensible Business Reporting Language

Reach out to our team of experts to find out how Sanne can assist you or your business.

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Paul Séjournant Director, Product Development - United Kingdom
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