In a circular issued on 27th March 2020, the Listing Authority provided welcome guidance to listed companies, investors and the financial market at large as to the interplay between financial reporting deadlines under the EU Transparency Directive and the material uncertainties that listed companies are having to grapple with in the wake of the outbreak of the COVID-19 pandemic. Echoing the statement issued by the European Securities Markets Authority (‘ESMA’), the Listing Authority highlighted its expectations for listed companies as the financial reporting deadline inches closer.
ESMA recommendations on relaxation of reporting deadlines under the Transparency Directive
Cognisant of the practical challenges and the evolving landscape within which listed companies - and their auditors - are expected to draw up and verify the annual financial statements for the financial year ended on or after 31 December 2019, ESMA has pronounced its view that, whilst issuers are expected to exert their best efforts to prepare and publish annual financial statements within prescribed statutory deadlines, where listed companies are prevented from satisfying reporting deadlines due to measures taken in response to, and more generally the state of flux and uncertainty spawned from, COVID-19, ESMA expects national competent authorities (locally, the Listing Authority), to ease off from a strict application and enforcement of its supervisory powers over issuers which are unable to meet their reporting deadlines. Specifically, ESMA has recommended that supervisory measures be alleviated for:
- a period of 2 months from the reporting deadline in the case of annual financial reports
- a period of 1 month from the reporting deadline in the case of interim financial reports
On its part, the Listing Authority remarked that it is in the process of engaging with local issuers to evaluate expectations on the timing of the publication of annual financial statements due to be published by 30th April 2020 (applicable to all issuers having a 31 December financial year end). In this respect, and with reference to ESMA’s recommendations outlined above, the Listing Authority has indicated that it is currently (re)considering the literal enforcement of the reporting deadlines in light of the prevailing circumstances and intends to issue an ad-hoc statement on its final position in due course, following its analysis of feedback received from local issuers.
What should listed companies do if they expect publication of annual financial statements to be delayed?
Where listed companies reasonably anticipate the publication of their respective annual financial statements and reports to be delayed beyond the upcoming statutory deadline of 30th April 2020, the Listing Authority has urged, and expects, listed companies to follow the recommendations formulated by ESMA, that is:
i. to inform the Listing Authority of the expected delay;
ii. to inform the market by way of a Company Announcement,
in each case, setting out the reasons for such delay and, to the extent possible, the estimated publication date.
Reporting deadlines for guarantors and publication of financial analysis summaries
In a related circular, the Listing Authority has also announced the following measures:
i. Guarantors of listed companies: applications for extensions of publication of annual financial statements by guarantors of listed companies will be assessed on a case-by-case basis;
ii. Financial Analysis Summary: an extension of two months has been granted. In this respect, issuers and sponsors are nevertheless expected to act on a best effort basis to provide the market with the best available information, including projections.
Reporting deadlines for Prospects MTF issuers and guarantors
On its part, the Prospects MTF Committee of the Malta Stock Exchange announced that it has extended the deadline for the submission and publication of the annual report and annual financial statements applicable to issuers and guarantors under its Prospects MTF Rules, as follows:
i. 2-month extension for Prospects MTF issuers: extended from the applicable four-month deadline; and
ii. 3-month extension for guarantors of Prospects MTF issuers: extended from the applicable three-month deadline.
Issuers seeking to avail themselves of the extension are expected to issue a Company Announcement ahead of the existing deadline, duly notifying the market of such an extension and the expected publication date.
Ongoing disclosure and MAR obligations
With the above in mind, the Listing Authority, the Prospects MTF Committee, as well as ESMA, each highlighted the need for issuers to adhere to their obligations under the Market Abuse Regulation (‘MAR’) concerning the disclosure of inside information to investors and the market without undue delay, unless such delay is justifiable in accordance with the provisions of the MAR. Reiterating the Listing Authority’s call in an earlier Circular to Listed Entities in reaction to Coronavirus (COVID-19), and given the fluidity of the macro- and micro-economic circumstances within which listed companies currently find themselves operating in, issuers are urged to pro-actively monitor their financial performance, condition and outlook, and to continuously (re)assess whether inside information needs to be disclosed to the public to protect market integrity, financial stability and investor confidence.
For more information on the impact of COVID-19 on capital markets and the conduct expected of issuers, kindly contact Louis de Gabriele on firstname.lastname@example.org or Malcolm Falzon on email@example.com.
 Directive 2013/50/EU of the European Parliament and of the Council of 22 October 2013 amending Directive 2004/109/EC of the European Parliament and of the Council on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market.
 Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC(OJ L 173, 12.6.2014, p. 1)