The implementation of the Transparency Directive in Cyprus
Directive 2013/50/EU amending Directive 2004/109/EC of the European Parliament and of the Council on the harmonization of Transparency Requirements.
The Transparency Directive urges the Member States to set out rules that can lead issuers with securities admitted to trading on an EU regulated market to the disclosure of fundamental information regarding their operations. It could therefore be regarded that, transparency provides the public with a better perspective concerning a company’s fundamentals and risks of a potential investment to a company’s shares.
Followed by an adopted report on the operation of a preceding Directive 2004/09/EC, the Commission identified areas concerning the need of simplification of obligations of the issuers. Therefore, the Directive has undergone some “stern” amendments for the benefit of European issuers.
As a European Member State, Cyprus has been required to amend the national legislation by 26th November 2015 in order to comply with the Transparency Requirements (Securities Admitted to Trading on Regulated Market) Laws 2007 to 2013. The amended 2013/50/EU Directive was finally implemented in Cyprus on April 2016.
The main amendments introduced by the Transparency Directive are as follows:
Þ The definition of the “issuer” provides natural persons or legal entities whose securities are admitted to trading on a regulated market.
Þ The interim management statements are also abolished. However, under certain conditions, issuers of Member States may be required to provide additional periodic financial information.
Þ Additionally, the directive amended the deadline for issuers to publicise their half-yearly financial reports extending it to the latest of 3 months after the end of the relevant period. Also, the accessibility of annual financial reports has been extended to being available to the public from five years to ten years instead.
Þ Moreover, significant amendments concerning the notification obligation regarding substantial holding shares and entitlements to acquire shares have taken place. Major holdings that comprise of voting rights had their notification obligation extended in order to include direct and indirect holdings of financial mechanisms provided that they include the same economic effect as the holding shares
A detailed breakdown that is able to distinguish physically settled and cash-settled instrument is also required under the notification obligation.
Þ Chapter 10 of the 2013/50/EU Directive provides that, issuers that are involved in the extractive or logging industries are under the obligation to publicise annual reports on all payments of 100,000 euros or more made to the government.
Þ The law regarding breaches and earnings caused by breach of the law has been significantly increased. The Cyprus Securities and Exchange Commission may enforce administrative fines of up to 10 million euros or in case of benefits earned by the breach; the fine could reach twice the amount of the benefitted earnings. Such decisions taken by CySEC regarding administrative sanctions, may be published on its website.