The prospect of European Union-wide rules that would force listed companies to report every three months was receding last night as a majority of EU member-states, including Ireland, backed UK proposals to make quarterly reporting optional.
The possible change to the draft European Commission directive on transparency follows widespread opposition to its proposal to oblige the 6,000 companies listed in the EU to produce summary financial reports every quarter - in line with US measures in place for over 50 years. The UK, the Netherlands, Ireland, Denmark and Austria have all fought the plan, together with key members of the European parliament (which must also approve the directive).
The Commission argues that mandatory quarterly reporting would improve investor protection. However, member-states yesterday backed UK proposals that would emphasise the quality of financial information.
The UK ideas have been endorsed by Italy, holder of the EU's revolving presidency, but France, Germany and Portugal support a move towards mandatory quarterly reporting, while Denmark and Austria want further concessions. EU finance ministers meet on Tuesday to find an agreement.
The success of the UK proposal would be welcome, following defeat over the investment services directive, which the industry feared could drive business from London.
A survey of 1,279 members of the Association for Investment Management and Research showed 86 per cent in favour of summary financial information every quarter. A total of 26 per cent said it would significantly improve information quality, while 60 per cent said it would somewhat improve it. But 89 per cent of companies on Aim, London's junior market, oppose the step because of the regulatory burden it would impose.
The Association of British Insurers, and the Association Francaise de la Gestion Financiere - which represents fund managers - have also said that Europe should not follow the "flawed" US model.
They argue that summary reporting would not significantly help investors, and did not prevent corporate scandals such as Enron and WorldCom.
The directive also aims to ensure information is easily available across borders, sets out clearer rules on changes in big shareholdings and toughens existing requirements on comprehensive half-yearly reporting.
