Reform of the Transparency Directive might change periodic reporting requirements in Finland

Directive 2013/50/EU amending the current Transparency Directive was adopted at the end of October 2013 (the “New Transparency Directive”). Implementation of the New Transparency Directive in Finland is expected to take place by mid-2015 and will require amendment of the Finnish Securities Markets Act and the Ministry of Finance decrees issued thereunder.

One of the main changes in the New Transparency Directive is the abolishment of the requirement that listed companies publish quarterly financial information. Member States may, however, under specific conditions require that listed companies publish additional periodic financial information on a more frequent basis than the annual or semi-annual reports required by the New Transparency Directive if, after an assessment of the impacts, it is shown that such additional requirement will not lead to an excessive focus on short-term results and performance of the issuers or to a negative impact on the access of small and medium sized companies to regulated markets. In addition, marketplaces may also require more frequent periodic reporting, and companies may decide to publish quarterly information on a voluntary basis.

The new regulation aims to find a balance between the transparency required to protect investors and a reasonable level of administrative burden for listed companies.

The abolishment of the requirement to provide quarterly financial information will possibly reduce the administrative burden of the listed companies and encourage the investors to make long term investments. However, investor protection requires that investors are able to receive up-to-date information from companies. On the other hand, it is in investors’ interest that possible obstacles to listings on the stock exchange are eliminated, and, therefore, the administrative burden on companies should be reasonable. According to the Report by the Finnish Commerce Committee (2/2012), the Helsinki stock exchange (NASDAQ OMX Helsinki Oy) estimates that the changes in the New Transparency Directive will lower the threshold for listings on the Helsinki stock exchange.

The new Finnish Securities Markets Act (“SMA”) entered into force on 1 January 2013. As part of the new SMA, the requirement that public companies include a future outlook in their financial results announcements (both annual and interim financial periods) was eliminated. However, the companies continue to be obligated to include a future outlook in the board’s annual review of the past financial period based on the Finnish Accounting Act. If the New Transparency Directive is implemented as suggested, the consequence, together with the aforementioned regulation of the new Finnish SMA, will be the limiting of information available to investors because listed companies are not required to provide quarterly financial information or future outlooks (with the exception of the annual Board review). The obvious conclusion is that the relevance of the companies’ ongoing disclosure obligation pursuant to the SMA will be emphasized.