Preparation and deposit of financial statements of security issuers in European Single Electronic Format

The Association of Registrars, the Institute of Accounting and Auditing, and the Spanish Securities Exchange Commission have issued a joint statement on security issuers’ new obligation to prepare and submit their annual financial report in European Single Electronic Format.

Under Directive 2004/109/EC, on transparency, of December 15, and Commission Delegated Regulation (EU) 2018/815, of December 17, 2018, from 2020, issuers of securities admitted to trading in any European Union regulated market must prepare and submit their annual financial report in European Single Electronic Format (“ESEF”.

In this context, the Association of Registrars, the Institute of Accounting and Auditing, and the Spanish Securities Exchange Commission have issued a joint statement to answer some practical questions on the body responsible for preparing and formulating the annual financial report and on depositing  financial statements at the commercial registry.

The statement clarifies that, given that the single format is an essential, inextricable element of the content of the annual financial report, insofar as under the Spanish Companies Act (Ley de Sociedades de Capital), the Spanish Capital Markets Act (Ley del Mercado de Valores) and other implementing regulations the members of the management body are responsible for preparing and publishing the annual financial report, the management body is responsible for formulating the annual financial statements in ESEF and is liable for both their content and format.

Regarding depositing them at the commercial registry, given that the annual financial report must be prepared and formulated by the directors in the ESEF, issuers must deposit the annual report at the Commercial Registry in that electronic format rather than in hard copy, provided “there are no insurmountable technical difficulties.” Likewise, the directors and auditors must sign electronically.

Despite this, if the financial statements and directors’ report are submitted to be deposited on paper or electronically but do not include the e-signature of all the directors, the directors’ e-signatures may be replaced by a certificate from the secretary with the chair’s approval stating that the directors have prepared those financial statements and directors’ report, which are part of the annual financial statement and report in ESEF, and the certificate must be associated to the computer file of the statements and directors’ report using an unequivocal  ID code linking the certificate to the digital document to allow verification.

Finally, auditors are advised to adapt their report and issue it in electronic format.