European Single Electronic Format (ESEF)

With the advent of Act no. 20/2021 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 database can be found on the www.oam.is website.

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.

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, the wording of Article 10 of Act no. 22/2021 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.

Practical information

• News from the Central Bank of Iceland on the Act on the Disclosure Obligations of Issuers of Securities (dated 30 April 2021 - Icelandic)

• Act no. 20/2021 on the disclosure obligation of issuers of securities and major shareholding notification requirement (Icelandic)

• Act on the regular and ongoing Disclosure Obligations of Issuers of Securities (Icelandic)

• EU Transparency Directive no. 2004/109 on which Act no. 20/2021 is based

• ESEF Regulation of the European Union

• ESMA's website discusses ESEF in detail

• ESMA has published an ESEF manual for issuers and distributors of ESEF technological solution

• Regulation no. 1470/2021 of the Central Bank of Iceland on the disclosure obligation of issuers of securities (Icelandic)

• Further information about ESEF can be found on the ESMA website

• The ESEF Regulation was implemented with Regulation no. 1470/2021 of the Central Bank of Iceland on the disclosure obligation of issuers of securities (Icelandic)