Financial reporting constitutes the central form of reporting of stock-exchange listed companies, upon which all market participants (investors, banks, analysts and supervisory authorities) must be able to rely. Financial reporting forms the basis for drawing up of analysis reports and ratings and helps investors to reach their investment decision. The periodic disclosure obligations under the Stock Exchange Act 2018 (BörseG 2018; Börsegesetz 2018) include the publication of annual financial reports (Article 124 BörseG 2018) and half-yearly financial reports (Article 125 BörseG 2018).
The obligation to publish quarterly financial reports ceased to apply from 26 November 2015 following the transposition of the Transparency Directive 2013/50/EU into Austrian law.
Article 126 BörseG 2018 states that exchange operating companies may under certain circumstances demand the publication of quarterly reports by issuers in the market segment that has the strictest requirements. For further details, please consult Article 126 BörseG.
Announcement pursuant to Article 150 no. 1 in conjunction with Article 124 of the Stock Exchange Act 2018 (BörseG 2018; Börsegesetz 2018) on the publication of annual financial reports by securities issuers in a standard electronic form.
The FMA informs securities issuers that in the future under the rules contained in the Transparency Directive, annual financial reports for financial years beginning from 01.01.2020 will be required to be published in the European Single Electronic Format (“ESEF”). The European Commission will also provide an overview about the planned timeline for adopting the technical rules in relation to the report format as the same time as communicating a link to the draft Regulatory Technical Standards.
Mandatory publication of annual financial reports in ESEF format
Pursuant to Article 150 no. 1 of the Stock Exchange Act 2018 (BörseG 2018; Börsegesetz 2018) – subject to changes in the European and Austrian legal bases at short notice – all annual financial reports pursuant to Article 124 BörseG 2018 for financial years starting on or after 1 January 2020 are required to be drawn up in the European Single Electronic Format (“ESEF”). Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format was published in the Official Journal of the European Union, L 143, on 29 May 2019. The Regulation entered into force on the twentieth day following its publication and applies to all annual financial reports with financial statements for financial years beginning on or after 01 January 2020. The Regulation stipulated that the annual financial reports are to be published in inline XBRL (“iXBRL”) format.
The Regulation is directly applicable in European Union Member States and defines the electronic format in which annual financial reports pursuant to Article 124 BörseG 2018 are required to be published, in order to meet the transparency requirements under stock exchange law. It will thereby no longer suffice to publish the listed annual financial reports in .pdf format.
In addition, the European Commission has also published a Commission Interpretative Communication on the preparation, audit and publication of the financial statements included in the annual financial reports drawn up in accordance with Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF).
The FMA wishes to assist issuers to the best of its abilities in implementing the standards stated in the Regulation and therefore uses this opportunity to provide responses to general and current issues in relation to the application of the new rules. The following Q & As are based on the “ESEF Regulation”. They do not constitute a Regulation (under national law). The Q & As serve as guidance and reflect the FMA’s legal interpretation and the FMA’s practical recommendations for conduct. No rights and obligations beyond those stipulated in the legal provisions can be derived from these Q & As.
We would like to advise in designing the ESEF annual financial reports that in addition to the rules set out in the Regulation that in any case apply, the ESMA Reporting Manual (cf. Also the Q&As, question no. 5) as well as the general specifications for the XBRL and iXBRL formats are also to be observed. Furthermore, we would like to offer you the opportunity to address questions to the FMA that you might have about the ESEF as well as the legal standards for its application. We will collect your questions and will update the Q&A document at appropriate intervals to include your questions and responses to them. Please address your questions to: [email protected].
Q&As on the European Single Electronic Format (ESEF)
All issuers that are obliged to publish an annual financial report (AFR) under Article 124 BörseG 2018, will be required to publish their AFR in ESEF format. The definition in Article 1 no. 8 BörseG 2018 of an issuer is decisive, and is understood to mean a natural or legal person whose securities have been admitted to trading on a regulated market. In the case of certificates admitted to trading on a regulated market, the issuer shall be defined as the issuer of the securities represented, with it being irrelevant whether or not these securities have been admitted to trading on a regulated market.
The publication obligation generally applies for AFRs in relation to financial years that start on or after 01.01.2020. From this time the primary financial statements are required to be marked up with a machine readable tags in accordance with the XBRL standard (hereafter “tagged”). With regard to the Notes there is a two year transitional period, i.e. the notes are to be marked up with block tags for AFRs for financial years starting on or after 01.01.2022. The notes may however already be tagged up on a voluntary basis prior to then. During to changes to the European and national legal bases a postponement by one year of the mandatory requirement to apply this for the first time may arise.
No. The requirement to publish in the ESEF explicitly only applies for AFRs. However, it is recommended for the purpose of transparency as well as optimal investor information to proceed in a consistent manner, i.e. to also publish the half-yearly financial reports in ESEF format.
The common feature is that all financial reports are required to be published in xHTML format (“eXtensible Hyper-Text Markup Language”). For issuers that are only required to publish UGB (unconsolidated) financial reports, there are no further obligations. In contrast, issuers that prepare consolidated (IFRS) financial statements, are also required to “tag” the primary financial statements (as well as the notes from 2022 onwards) in accordance with the specific rules stated in the ESEF Regulation.
The technical rules that are required to be observed at all times are based on the ESEF Regulation. In addition, the European Securities and Markets Authority (ESMA) has produced a “Reporting Manual” which shows based on recurring issued about how the specifications in both the ESEF Regulation and XBRL are to be applied in line with the ESEF Regulation for the preparation of the ESEF AFR. The Reporting Manual is only available in English.
It is also possible to make use of an external company to prepare the ESEF report. It is necessary in doing so to remember that the deadlines set out in the BörseG 2018 (publication of the ESEF report within four months of the reporting date of the financial statement) and the conditions defined in the Disclosure and Reporting Regulation 2018 (VMV 2018; Verbreitungs- und Meldeverordnung 2018) about disclosure in the home Member State and other EU Member States as well as publication via an electronically operated system for the dissemination of information and submission to the FMA, OeKB and the Vienna Stock Exchange that are required to be observed at all times. In addition – as is the case for the “outsourcing” of legal obligations in general – errors or missing of deadlines for the preparation and dissemination of the ESEF AFR are to be ascribed to the contracting company.
The Stock Exchange Act 2018 stipulates in this case that administrative penal proceedings may be conducted by the FMA, with penalties possible of up to EUR 2 million are up to up to double the amount of the gain arising from the breach, dependent on which amount is the higher of the two, where this amount is able to be determined. This fine is also to be imposed in the case of a delayed disclosure.
No. A German annual financial report only fulfils the transparency requirements of the BörseG 2018 in conjunction with the Regulatory Technical Standards [Regulation (EU) 2019/815], where it observes all the rules stipulated in the RTS, i.e. only when it is tagged up. An English annual financial report on its only in contrast does not fulfil the requirements where it is tagged up.
The BörseG 2018 does not prescribe the publication of the AFR in an English version. Publication of an English version of the AFR in ESEF format is therefore not mandatory. It is however recommended to also make English versions in ESEF format. This does not requires a disproportionately high expense and the international public, which is interested in English versions, typically also profits form the ESEF format’s universal usability.
An AFR with an unconsolidated UGB annual financial statement must be made available in xHTML format. The xHTML file can be displayed in a standard web browser without assistance from other software. The AFR must contain the entire information in written form that was contained in the AFR in either printed form or in PDF format. The appearance of the AFR is determined by the party preparing it (formatting, page format, graphic design, use of pictures). As previously was the case of AFRs in pdf format the file may be embedded in websites with a clickable icon or made available for downloading.
An AFR with consolidated IFRS annual financial statements in then also to be prepared along with and AFR with UGB annual financial statements in xHTML format (“xHTML layer”). In addition a part of it, namely the primary financial statements and the basic information about the company like the name, registered office and legal form, must be tagged with machine readable tags in XBRL format (the “XBRL layer”). From 2022 the Notes (text blocks) will also required to be tagged using block tags. Both layers are connected by the iXBRL (inline XBRL) technology. The necessary files are to be packed into a zip file, which also contains the xHTML file. The reader may open the xHTML file and then sees the “human readable” information as with an untagged AFR (including – provided it is used by the author of the report – formatting, graphical design and pictures). Software is however required for processing the XBRL tags. Such software is called a “viewer” where it is used to display and visualise the tags and the tagged information. Furthermore there are a range of programs for automated processing of XBRL reports (e.g. calculation of key figures, comparing multiple reports or the targeted evaluation of individual items of information in the report).
ESEF does not prescribe the use of electronic signatures. Signatures are also not required to be tagged. The signatures contained in the AFR must therefore be displayed in the xHTML file. Whether the scanned signatures are inserted as graphics files or the full names of the signing parties are “printed” in xHTML (it is recommended to use the additional comment “signed by hand” (in German “e.h.”)), remains – as already is the case in PDF reports – at the issuer’s discretion.
However, it should be noted that the representation of the signatures in the xHTML document must also contain the date on which the document was signed as well as the full name of the signatories as well as their position in the case of the declarations by the legal representatives pursuant to Article 124 para. 1 no. 3 BörseG 2018. Since the signatures constitute an attested act, then the corresponding paper-based original documents are required to be retained in the case that an authority wishes to consult it.
Yes. There is no change regarding submission and publication obligations.
No. The report must also be available for download on the issuer’s website in ESEF format. While an AFR may be made available for downloading in another format (e.g. in PDF format), but the impression is not allowed to be created that the PDF version of the report would fulfil the legal requirements of the BörseG 2018.
No. The Disclosure and Reporting Regulation 2018 (VMV 2018; Verbreitungs- und Meldeverordnung 2018) stipulates that the prescribed information must be disclosed in the home Member State and in other Member States as simultaneously as possible. An annual financial report is to be disclosed in such a manner that permits the largest possible public access by the investment community. Article 123 para. 4 BörseG 2018 stipulates that the prescribed information is required to be made available in a form that ensures rapid access to it in a non-discriminatory way. Even if the AFR in PDF format does not meet the requirement for the format of the prescribed information, it would constitute a discrimination in the case of publication in PDF format were to ensure a more restricted public access than a later broad disclosure of the ESEF report.
No. The OeKB does not check the content of the submitted AFR, but just makes the reports available for retrieval.
The FMA plans to subject reports receive to a “technical validation” process in a timely manner. This means that the reports are checked to see whether they observe ESEF rules (RTS and Reporting Manual) insofar as is possible by means of software-based assistance (“validation tool”). Such a validation tool should however already exist in the software used to prepare your ESEF report, and ought to display the corresponding error messages in the case of their being technical errors that can be recognised by the tool. The creators of ESEF reports are therefore urgently recommended, to conduct the technical validation before submission and disclosure assisted by the software used, and to duly rectify the causes of any error messages that appear.
The – in-depth – “substantive validation” on the other hand is a more time-consuming process, in which specially trained accounting experts primarily check: whether (i) every piece of information in the AFR, which is required to be tagged, has duly been tagged, whether (ii) the correct tags were chosen from the ESEF taxonomy, and whether (iii) in the case of using enterprise-specific extension to the taxonomy that the extension taxonomy element was permissible and whether the extension taxonomy element was anchored in accordance with the regulations. It is not possible for the FMA to conduct an exhaustive substantive validation due to the high cost of doing so, so it is planned that the substantive validation will be conducted for a sample of reports or in the case of there being indications of errors existing.
No. An automatic response, as is typically the case for supervisory reporting by credit institutions and insurance undertakings, is not intended. However, as necessary, depending on the nature and severity of the incorrectness of the report, the FMA is required to take action, and will as a rule inform undertakings about errors that have been identified in the interests of prevention of errors and for improving the quality of reporting.
If the AFR is subjected to a review in accordance with the Financial Reporting Enforcement Act (RL-KG; Rechnungslegungskontrollgesetz), is it then also automatically subjected to a substantive validation? Is it to be assumed that where scrutinised in accordance with the RL-KG, where no grounds for complaint emerge, that the AFR conforms in ESEF terms?
No. An examination under the Financial Reporting Enforcement Act (RL-KG) or admittance of an undertaking into the sample for review does not automatically have the consequence that ESEF conformity is checked. Even when ESEF conformity is checked, in so doing not all tags are necessarily checked, and checks may also be conducted in accordance with thematic focuses.
No. Where a value that is to be tagged corresponds to an existing core taxonomy element, then this taxonomy element is required to be used. An extended taxonomy element shall only be allowed to be created in the case that the value that is to be tagged is not able to be depicted using the existing taxonomy elements.
The OeKB has made a testing environment available for this purpose, and will clarify to enterprises how it can be accessed upon request.