Directors’ duties

an indication of important events that have occurred in the first six months and their impact on the condensed financial statements, and

a description of the principal risks and uncertainties for the remaining six months of the financial year.

As with the annual financial report, a responsibility statement has to be given by the issuer and its directors and they must confirm that to the best of their knowledge:

the condensed financial statements, which have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets and liabilities, financial position and profit or loss of the issuer or the undertakings included in the consolidation as a whole, and

the interim management report includes a fair review of the information required to be included about the important events in the first six months and their impact and the principal risks and uncertainties for next six months (as described above).

The FSA’s proposals (which reflect the Directive) require equity issuers to make interim management statements which provide:

an explanation of material events and transactions that have taken place during the relevant period and their impact on the financial position of the issuer and its controlled undertakings, and

a general description of the financial position and performance of the issuer and its controlled undertakings during the relevant period.

A company which publishes quarterly financial reports does not have to produce an interim management statement as well.

A breach of the Transparency Rules (now incorporated with the previous Disclosure Rules as the Disclosure and Transparency Rules) is the same as a breach of the Listing Rules so that a company which contravenes any of the rules (and any director knowingly concerned in the breach) could be fined or otherwise sanctioned by the FSA.

Safe harbours

It is generally understood that the purpose for which accounts are prepared under the Companies Act 1985 and sent to members is to enable them to be informed in the exercise of their governance powers as shareholders. As such, directors are considered to owe a duty of care to members as a body, and not to individual shareholders or potential investors.

There is a concern that the Transparency Directive alters the current position by extending the duties of issuers and their directors in respect of the financial statements. This is because the requirement to make these reports public throughout the EU appears to support the argument that the audience for these

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