Delay to implementation of European Single Electronic Format for annual reports

The FCA has published policy statement (PS20/14) which confirms that it intends to delay the introduction of the European Single Electronic Format (ESEF) requirements for annual reports in the UK. The delay is contingent on the Brexit transition period ending on 31 December 2020, as it is only once the transition period ends that the FCA is able to delay implementation.

Under the amended EU Transparency Directive, annual financial reports of companies which have securities listed on an EU regulated market must be published in accordance with the requirements of the ESEF for financial years beginning on or after 1 January 2020. The FCA introduced DTR4.1.14 in the Transparency Rules to implement this requirement (see our blog post at the time).

In July 2020, in light of the Covid-19 pandemic, the FCA published a consultation paper (CP20/12) containing proposals to postpone the entry into force of the ESEF requirements (see our blog post at the time).

The policy statement confirms that issuers will be required to:

• publish their annual reports in XHTML web browser format with effect from financial years beginning on or after 1 January 2021 (rather than 2020); and
• electronically tag their financial statements (if they produce consolidated annual financial statements in accordance with IFRS) with effect from financial years beginning on or after 1 January 2021 (rather than 2020); and
• electronically tag the notes to financial statements (if they produce consolidated annual financial statements in accordance with IFRS) for financial years beginning on or after 1 January 2022. Although the FCA consulted on delaying this requirement by a year in its consultation paper, the policy statement confirms that this requirement will come into force with effect from January 2022 as originally envisaged.

The National Storage Mechanism (NSM) is being upgraded to allow issuers to submit annual reports in accordance with the ESEF requirements. Issuers will be able to voluntarily submit their annual report to the NSM in ESEF format from January 2021.