In the framework of its mission to supervise securities markets, the CSSF is responsible for the control of financial information published by issuers of securities. This activity, generally referred to as enforcement, aims to ensure compliance of financial information with applicable accounting standards.

The CSSF fulfils its enforcement diligences in accordance with the Transparency Law conferring upon the CSSF the power to control financial information published by issuers of securities governed by said law. Enforcement is, thus, a control ex post of financial information published by issuers.

The powers and penalties available to the CSSF as regards enforcement are set out in Articles 22, 25 and 26 of the Transparency Law.

Beyond the legal and regulatory requirements, the examination of the financial information contributes to the investors’ protection and confidence in the financial markets.

The enforcement process set up by the CSSF and which complies with ESMA guidelines specifies the implemented selection methods and examination types as well as the characteristics of the decisions available to the CSSF.

Enforcement process: selection method

The enforcement process begins with the selection of the issuers which will be examined in the context of enforcement. The selection model applied is based on a mixed model whereby a risk-based approach is combined with a sampling and rotation approach. The risk-based approach adopted by the CSSF considers the risk of misstatements and the possible impact of such a misstatement on the financial markets.

Enforcement process: types of examinations

In the context of its examination process, the CSSF identifies the most efficient way to enforce financial information. The examination programme, defined every year for the selected issuers, includes:

  • unlimited scope examinations: evaluation of the entire content of the financial information of an issuer in order to identify issues/areas that need further analysis and to assess whether the financial information is compliant with the relevant financial reporting framework;
  • focussed scope examinations: evaluation of pre-defined issues in the financial information of an issuer and the assessment of whether the financial information is compliant with the relevant financial reporting framework in respect of those issues. This type of examination covers, in particular, thematic examinations during which the CSSF reviews the practices followed by a sample of issuers concerning specific issues; and
  • follow-up examinations during which the CSSF ensures that the decisions taken in relation to the different misstatements identified during the previous examinations were taken into account by the issuers concerned.

These examinations include direct and repeated contacts (meetings, exchange of mails and conference calls) with representatives of the issuer and/or its external auditor in order to analyse the most sensitive problems and issues and obtain information, documents and other objective evidence required to perform the examination. Some examinations may also lead to on-site inspections at the issuers concerned.

Enforcement process: types of decisions

Following the examinations described above, the CSSF may conclude that a specific accounting treatment does not comply with the relevant financial reporting framework. The CSSF must then determine whether the misstatement is a material or immaterial departure from the financial reporting framework and if any relevant enforcement decisions should be taken accordingly. In case of a material misstatement, the CSSF may take one of the following measures, as laid down in Article 22 of the Transparency Law:

  • require a reissuance of the regulated information;
  • require a corrective note; or
  • require a correction in future regulated information with restatement of the comparatives, where relevant.

The CSSF notifies its decisions to the issuer appropriately, namely in the form of injunctions, recommendations and follow-up measures of the corrections or improvements of financial information proposed by the issuer itself.

Documentation

Laws, regulations and directives

Circulars

Other reference texts

Guidance

Publications

  • 30 April 2020 Population concerned by the enforcement
    Other statistics
  • 02 April 2020 ESMA Report “24rd Extract from the EECS’s Database of Enforcement”
    ESMA32-63-845
    Studies and reports
  • 02 April 2020 ESMA 2019 report on enforcement of corporate disclosure
    ESMA71-99-1308
    Studies and reports
  • 17 February 2020 Examination of non-financial information published by certain issuers for 2018 financial year
    Communiqué
  • 17 February 2020 Results of the enforcement of the 2018 financial information published by issuers subject to the Transparency Law
    Press release 20/06
    Press release
  • 19 December 2019 2019 financial information published by issuers subject to the Transparency Law
    Communiqué
  • 10 January 2019 Examination of non-financial and diversity information published by certain issuers in 2018
    Communiqué
  • 10 January 2019 Enforcement of the 2018 financial information published by issuers subject to the Transparency Law
    Press release 19/02
    Press release
  • 15 December 2017 Enforcement of the 2017 Financial Information Published by issuers subject to the transparency Law
    Press release 17/43
    Press release
  • 03 August 2017 CSSF findings related to the ESMA Guidelines on Alternative Performance Measures
    Press release 17/28
    Press release
  • 22 December 2016 Compliance of the issuers with ESMA Guidelines on Alternative Performance Measures and Circular CSSF 16/636
    Press release 16/46
    Press release
  • 24 June 2016 ESMA Guidelines on Alternative Performance Measures: new Circular CSSF 16/636
    Press release 16/29
    Press release
  • 11 January 2016 Enforcement of the 2015 financial information published by issuers of securities subject to the Transparency Law
    Press release 16/02
    Press release

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Last update: 04 May 2020