EC proposes draft Transparency Obligations Directive

Adrian Cartwright and Simon Thomas, Clifford Chance, London

As part of its Financial Services Action Plan, the European Commission has presented proposals in a draft Directive to harmonise the minimum transparency requirements for companies with debt or equity securities traded on a regulated market in the European Union. The aim is for the Transparency Obligations Directive (the Directive) to be implemented by Member States by 2005. In conjunction with other proposed legislation (such as the draft Prospectus Directive and the draft regulations on the application of International Accounting Standards), the draft Directive is intended to assist the further integration of securities markets in the EU by harmonising ongoing disclosure requirements for all issuers whose securities are publicly traded in the EU. In addition, the Directive is intended as an EU response to developments in the United States to strengthen investor protection, such as the adoption in 2002 of the Sarbanes-Oxley Act.