The European Commission is currently analysing the impacts, costs and benefits stemming from the so called Transparency Directive. The EU executive is working towards its possible improvement, namely in the field of the attractiveness of regulated capital markets for smaller listed companies, holdings of voting rights and the inefficient implementation of the Directive due to diverging national rules. The availability of reliable and transparent information for stakeholders in small businesses is vital to encourage investment in and trade with such entities, but the modernisation of the transparency regime for listed companies must be consistent to bring the goal of a true single European market closer to realisation.

If the Commission’s desire to improve access to financial information for investors while reducing the burden on issuers of securities -particularly for small and medium sized ones is laudable, exempting smaller issuers from the requirement to publish quarterly information would lead to the opposite result and reduce transparency. The financial crisis has shown that they can be more risky than larger issuers and therefore merit the highest level of scrutiny and regulatory control. In this vein, a global accountancy body – ACCA (the association of Chartered Certified Accountants)- in its response to the Public consultation stresses that, as observed in the context of the abolition of audit and accounting requirements for small, medium and micro, the absence of pan-European legislation does not necessarily lead to simplification or a reduction in local administrative burdens, and is even likely to result in the creation of domestic regimes which are incompatible with each other, hence acting as a barrier to cross border transactions.

It is inconsistency, rather than the absence of guiding regulatory principles that causes the problems. The minimum harmonisation approach of the Transparency Directive has the same effect, as individual Member States can introduce (or retain) listing rules that are more onerous on issuers than required by the Directive. If investors are to have confidence to invest in businesses outside their home state then they must not only have confidence on the accuracy of the information, but must also feel comfortable with the presentation and interpretation of that information.

ACCA also warns against a definition of small listed companies based upon local factors in stressing that investors would see not simply two different types of issuer (SMILEs and “large” issuers), but up to 54 different types, with the boundary between small and large set a t a different level for each of the 27 member states.

In the context of investor requirements to notify issuers of significant interest, this level of complexity would be counterproductive, and risk increasing the perception of a fragmented European investment market from non- EU investors’ perspective

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