A 12-month grace period has been announced by the CSSF for the application of the European Single Electronic Format (ESEF) requirements in relation to annual financial reports. These requirements will therefore apply to the annual financial reports for periods beginning on or after 1 January 2021, rather than 1 January 2020.
In its press release of 20 January 2021, the CSSF notified listed issuers of their right to delay by one year the application of the European Single Electronic Format (ESEF) requirements in relation to their annual financial reports. This decision results from the agreement of the European Parliament and the Council to amend the Transparency Directive 2004/109/EC.
ESEF's requirements, which derive from the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 (the ESEF RTS) are intended to improve the accessibility, analysis and comparability of annual financial reports.
The implementation of ESEF's requirements was originally scheduled for financial years starting on or after 1 January 2020. These requirements will now mandatorily apply for financial years starting on or after 1 January 2021.
This means that issuers (for which Luxembourg is the home Member State pursuant to the amended law of 11 January 2008 on transparency requirements) can wait to implement the ESEF requirements until the filling of their financial reports for 2021 at the beginning of 2022. Reports implementing the ESEF's requirements will have to be prepared in XHTML format. Additionally, where annual financial reports include IFRS consolidated financial statements, issuers will have to mark up those consolidated financial statements using eXtensible Business Reporting Language (XBRL).
Statutory auditors have been required by the CSSF to check the compliance of financial statements with the above-mentioned requirements and to provide an audit opinion on whether the financial statements comply with these requirements.
It should nevertheless be mentioned that listed companies who wish to publish their annual reports in ESEF in 2021 are however still able to do so on a voluntary basis. As Luxembourg's Officially Appointed Mechanism (OAM), the Luxembourg Stock Exchange confirmed that its systems have been updated and are ready to welcome all financial reports in ESEF before next year's deadline.
For further information, please consult our previous Newsflash of 20 December 2019 (LuxSE prepares for ESEF) as well as the CSSF release and the LSE's press release.
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