Meginmál

European Single Electronic Format (ESEF)

With the advent of Act no. 20/2021 (in Icelandic) on the disclosure obligations of issuers of securities and disclosure of major holdings , the issuers of securities are required to publish their annual financial reports in a single electronic reporting format (ESEF). The obligation first applies to the financial year of 2021 and the first submission in the ESEF format was in 2022.

The single electronic reporting format data is machine-readable and it is intended to:

  • Simplify the preparation of annual financial reports by issuers of securities,
  • Make annual financial reports more accessible,
  • Facilitate the analysis and comparison of annual financial reports.

Annual financial reports in a single electronic reporting format shall be submitted to official appointed mechanisms (OAM). In Iceland that is the OMX Nordic Exchanges Group OY, which operates the database for the Central Bank of Iceland.

The plan is for all official appointed mechanisms within the EEA to be linked together over time, and the introduction of a single electronic reporting format for annual financial reports accounts is, among other things, part of that project.

OAM

The Central Bank of Iceland shall store information made public in accordance with the provisions of Article 36 of Act no. 20/2021 on the disclosure obligation of issuers of securities and Disclosure obligations of issuers and flagging requirements. The information shall be stored electronically in a Central Storage Facility System.

In order to fulfil this obligation, the Central Bank has entered into an agreement with NASDAQ Iceland regarding the use of Central Storage Facility System software. The agreement also covers services and operation of the system, which must meet the European Union's security and accessibility requirements, in accordance with the recommendation of the European Union of 11 October 2007.

Which issuers?

Issuers refer to issuers of securities that have been admitted to trading on a regulated markets and whose home state is Iceland, cf. Article 2(1) of Act no. 20/2021.

Article 3 of Act no. 20/2021 contains exemptions from the Act as a whole and specifically from Section II of the Act. Section II deals with i.a. the annual financial reports of issuers of securities and the use of a single electronic reporting format.

The Act does not apply to units or share in funds for collective investments, other than closed funds, cf. Article 3(1). The terms "units and shares" and "funds for collective investments" are further defined in Article 4 of the Act.

The Icelandic state, municipalities and international organisations are also exempted from the obligation to publish annual financial reports according to Section II of the Act.

If conditions are met, a bond issuer is exempt from Section II. These conditions are:

  • only the issuer's bonds have been admitted to trading on a regulated markets, and
  • the nominal value of the issuer's bond per unit is at least EUR 100,000 in Icelandic krónur

If the issuer's bonds were admitted to trading on a regulated securities market before the entry into force of Act no. 20/2021 on 1 May 2021 and are still outstanding, the benchmark is EUR 50,000 in Icelandic krónur. The calculation shall be based on the exchange rate when the bonds were admitted to trading on a regulated securities market.

Official supervision

The Central Bank of Iceland generally supervises the implementation of Act no. 20/2021 on the disclosure obligation of issuers of securities and disclosure of major holdings, cf. Article 38, Paragraph 1. The Register of Annual Accounts, on the other hand, examines whether the information according to Section II is prepared in compliance with the relevant accounting rules, cf. Paragraph 3 of Article 38 of the Act.

Interim Financial Statements and ESEF

Attention should be drawn to the fact that the obligation to publish annual financial reports in a single electronic reporting format applies only to annual accounts. With Act no. 55/2021 (in Icelandic), the wording of Article 10 of Act no. 20/2021 on the disclosure obligation of issuers of securities and disclosure of major holdings have been modified and the obligation has been transferred to Article 6 of the Act, but that provision only deals with annual accounts. The wording is now in accordance with the wording of EU Transparency Directive no. 2004/109 on which the law is based.

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