The European Single Electronic Format (ESEF) is the new standard for digital financial reporting by companies admitted to trading on EU and UK regulated markets.
ESEF introduces a structured format for Annual Financial Reports (AFR), including the ability to ‘tag’ (i.e. label) individual disclosures in the AFR according to a published taxonomy. Compared to an unstructured format (such as *.pdf), structured files allow the contents of an AFR to be readable using specialist software tools and improve the accessibility, analysis and comparability of the information. In the long term, this will make capital markets more efficient and could therefore help lower the cost of capital for issuers.
Under the ESEF initiative, companies in scope will publish their AFRs in a XHTML web browser format, replacing the current PDF format, for financial years starting on or after 1 January 2021, for publication from 1 January 2022.
Issuers who prepare consolidated accounts in line with EU IFRS will also use that capability to mark up those financial statements with digital tags selected from a published taxonomy.
Background to the reform
ESEF comes from the move to align and update financial reporting across the EU. In 2013, the Transparency Directive Amending Directive (TDAD), a key amendment to the Transparency Directive (the EU law governing financial reporting to EU regulated markets), introduced the requirement for issuers to prepare their AFRs in a single electronic reporting format.
The precise electronic reporting format was subsequently specified in a Regulatory Technical Standard (RTS). This RTS has been developed by the EU Commission and ESMA involving collaboration across multiple states, agencies and firms, including us.
The UK has now left the European Union. However, we and other UK agencies remain fully committed to delivering the ESEF reform and to fulfilling its significant long-term potential.
The UK’s new ESEF Timetable
ESEF applies in the EU and the UK. In the UK, we have revised the timetable for implementation to relieve burdens on companies during the coronavirus (Covid-19) pandemic.
The UK’s ESEF timetable is now as follows:
Voluntary ESEF filing can begin
|Financial years starting on or after 1 January 2020.|
The first phase of mandatory ESEF requirements comes into force
Financial years starting on or after 1 January 2021.
Publication from 1 January 2022.
The next phase of mandatory ESEF requirements comes into force
Financial years starting on or after 1 January 2022.
Publication from 1 January 2023
Any issuer who is ready, and who wants can publish and file their AFRs in ESEF voluntarily with our National Storage Mechanism (NSM). We encourage those issuers who are able to do this, to do so.
Companies in scope of the ESEF reform
Companies in scope of the UK’s ESEF requirements are issuers with transferable securities admitted to trading on UK regulated markets.
Issuers in scope of the UK’s ESEF requirements are required to publish and file their AFRs in XHTML web browser format, replacing the current PDF format, for financial years starting on or after 1 January 2021, for publication from 1 January 2022.
Although the XHTML obligation applies to all issuers in scope of the UK’s ESEF requirements, tagging requirements only apply to in scope issuers who prepare consolidated AFRs in accordance with International Financial Reporting Standards (IFRS). These issuers:
- will be required to tag basic financial information for financial years starting on or after 1 January 2021, for publication from 1 January 2022
- will also be required to tag notes to the financial statements for financial years starting on or after 1 January 2022, for publication from 1 January 2023
Application of the Disclosure Guidance and Transparency Rules (DTRs)
DTR 6.2.2R requires issuers in scope to file their AFRs with us for publication on our NSM.
DTR 6.2.3G, which allows issuers to meet their DTR 6.2.2R filing obligation by using a Primary Information Provider (PIP) to disseminate information, does not apply to the filing of ESEF-prepared AFRs.
FCA getting ready for ESEF
We have amended the DTRs to implement ESEF.
We’re also upgrading the NSM to accept ESEF filings.
See more on the forthcoming changes to the NSM, including information for companies submitting AFRs to the NSM in the ESEF standard, and details of how to do this. The page will be updated as the project progresses.