Issuers having securities admitted to trading on European Union Regulated Markets ("EU Regulated Markets") are reminded that annual financial reports for the financial years commencing on or after 1 January 2020 are to be prepared using the European Single Electronic Format ("ESEF"). The ESEF applies to both EU or third-country issuers (and not guarantors) having instruments listed on EU Regulated Markets and aims to bring European Union Capital Markets into the digital information age by requiring reports to be machine readable whilst making it easier to discover specific information. Ultimately ESEF reporting will make submission for issuers easier whilst facilitating accessibility, analysis and comparability for investors and regulators.

Issuers are to note that an off the shelf ESEF software package does not exist and should thus choose a software provider in order to be able to successfully implement the ESEF reporting requirement.

The European Securities and Markets Authority ("ESMA") has published a Reporting Manual which aims to facilitate compliance with the ESEF by assisting issuers of securities and software providers to create Inline XBRL ("iXBRL") documents.

ESEF requires that annual financial reports are to be prepared in XHTML or Extensible Hypertext Markup Language. Furthermore, annual financial reports containing IFRS financial statements are to be marked-up using XBRL tags. XBRL or eXtensible Business Reporting Language is an open end therefore non-proprietary international standard for digital business reporting.

XBRL 'tags' are embedded in the XHTML document using the iXBRL technology which permits that the XBRL tags are encapsulated within the XHTML documents with a single document set. Electronic reporting using XBRL requires the existence of a taxonomy which gives a hierarchal structure to classify information.

The advantage of a XBRL report is that such report can be opened with any web browser whereby information is not treated as a block of text, whilst the XBRL taxonomy provides an identifying tag for each individual item. Financial information reported in XBRL can be easily extracted and used in other reports, analytical software and databases whilst retaining its original context.

Issuers are to note that disclosure and filing requirements under the ESEF reporting mechanism remain the same and thus such regulated information must still be; i) disclosed to the media; ii) filed with the Malta Stock Exchange; and iii) made available on the issuer's website. Timing of the filing obligations as stipulated under the Transparency Directive remain unchanged.

Originally published July 13, 2020.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.