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European Commission issues new rules to support digitalisation and transparency of companies’ financial reports

Today, the European Commission issued new rules supporting the digitalisation of corporate reporting and to achieve greater transparency of the annual information disclosed by companies listed on the EU capital markets.

This European Single Electronic Format (ESEF) will make companies’ financial records more readable and accessible. Under the new rules, for accounting periods beginning on or after 1 January 2020 all listed companies will need to finalise their annual financial reports using up-to-date digitalised business reporting systems (XHTML and iXBRL) which improve accessibility, and make the information more user-friendly.

In support of these new rules, the European Securities and Markets Authority (ESMA) has prepared an ESEF Reporting Manual and ESEF taxonomy files to help companies in their preparation. The new provisions build on financial transparency rules already agreed by European Parliament and Member States. They will be updated annually to reflect possible updates to the International Financial Reporting Standards (IFRS) taxonomy, which aims to improve communication between preparers and users of financial statements.

The European Commission has also published a Q&A on the regulatory technical standard on ESEF.