The features of the Universal Registration Document (URD)
Every company listed on the EU regulated market has a duty of transparency. They are required to produce financial reports at regular intervals, namely a half-yearly and an annual financial report.
In addition, they can provide a Universal Registration Document. As of 2019, it has replaced the French-model reference document, from which it is largely inspired. Although it is optional in theory, in practice, this summary document on company activity is quite common.
The new regulation in Europe aims to enable investors to easily and accurately assess the most significant risks associated with their investment and make informed decisions. Issuers are therefore required to provide more precise and clearer financial and extra-financial information on strategy and risk management.
Intended for shareholders, investors and financial analysts, the content of the URD has been enriched and developed to improve the readability of extra-financial and strategic data and to simplify the presentation of risk factors.
Did you know… A revision of PRIIPS (Packaged Retail and Insurance-based Investment Products), introduced to improve the protection of European investors, will come into force from January 2022. Find out about the upcoming changes now.
The minimum information required
While the minimum information required for the URD varies from company to company, depending on its area of activity, it is the same as that required for the old reference document.
This may include data on property and equipment, cash flows and capital, profit forecasts, shareholdings, and administrative, management and supervisory bodies.
Other information to be provided includes the financial situation and results of the company: financial statements, history of the last 3 years, dividend distribution policy, etc. The Extra-Financial Performance Declaration (EFPD) can be included in the URD. It reports on the issuer’s CSR (Corporate Social Responsibility) policy.
New data to be entered in the URD
More comprehensive and comprehensible information is now required in the URD on strategy, risk factors and non-financial data. They take into account the recommendations of the AMF (Autorité des Marchés Financiers) and ESMA (European Securities and Markets Authority).
For example, regarding risk factors, the issuer must select and present them in a new way:
- Assessment of the importance of risk factors in terms of likelihood of occurrence and negative impact. A qualitative scale can indicate whether the risk is high, intermediate or low.
- Presentation of risk factors in a limited number of categories (maximum 10) according to their nature
- Ranking of risk factors in each category in order of severity. The most important ones should be mentioned first.
- A precise description of each risk factor to explain how it affects the issuer or the securities offered for trading.
Presentation and publication of the URD
The format of the universal registration document is defined by the regulations in force. The AMF provides issuers with a guide to preparing the URD. This should include a cover page and a table of contents followed by extra-financial, strategic and other data. Risk factors should be clearly identifiable in a separate section.
It can be presented in the form of a specific document including the annual financial report. It can also be prepared as a supplement to the regular financial reports. Note: the European Union imposes standards on all listed companies from member states. They are required to produce financial reports in accordance with International Financial Reporting Standards (IFRS).
The AMF conducts a review of the URD for 2 consecutive years. The following year, it will be registered without requiring prior approval. The issuer may then publish it without first submitting it to a review procedure.
In theory, the regulations do not impose any particular deadline for the publication of the URD. In practice, however, it takes place before the Annual General Meeting and within 4 months after the end of the financial year.
Good to know: the universal registration document can be updated at any time by way of amendment, especially if the document is not part of an already approved prospectus. The issuer may file an amendment to the Universal Registration Document with the authority that approved the URD or with which it was filed.
ESEF: the new universal registration document format
As for its format, the rules will change. Previously, the reference document was made available in pdf format for the public to download. From now on, all URDs (acting as annual financial reports) closed on 31 December 2021 must be published in the ESEF format (European Single Electronic Format).
So from 1 January 2022, all Universal Registration Documents and financial reports will have to adopt this single European electronic format. The online information will be available in XHTML, so it will be readable by humans. But they will include tags (XBRL format) to enable them to be read by robots. This will make them easily analysable and comparable.
Specialised translation agencies: an indispensable partner for translating URD’s
The Universal Registration Document is a key source of information on the international scene. To meet the needs of international shareholders and investors and to ensure equality between them, the URD must be translated into English. Its translation is published almost simultaneously with the original version.
For this complex task, it is imperative to call on the services of a translation agency specialising in this field. It would be risky to entrust the translation of the URD to an untrained provider. The length and complexity of the document requires the intervention of an expert in the management of this type of translation. A single mistake could cause the company to lose the support of an important investor for the development of the business!
A specialised agency provides a number of advantages for the successful completion of this translation project:
- A team of native translators who are experts in financial and legal translations. Their linguistic expertise in the financial and legal sector enables them to guarantee 100% accuracy and reliability of the translated data.
- A thorough knowledge of new regulations. Thanks to their constant monitoring, the translators in charge of the file are aware of the standards in force. This will ensure that the translated URD complies with the requirements of the competent authorities.
- Experience in the management of this type of voluminous and complex file. Thanks to a proven organisation and tools (translation memories and glossaries, Computer Assisted Translation tools, etc.) that facilitate the process, a translation agency can guarantee that delivery deadlines are met. This ensures that the listed company can publish its translated URD in a timely manner.
The Universal Registration Document (URD) is an essential financial and extra-financial communication tool for any company listed on a regulated market. The latest regulatory developments aim to simplify understanding and analysis. The objective is simple: to enable international investors to better understand the possible risks and to increase the transparency of the data disseminated. If issuers are still unsure about the content to be provided, one thing is certain: the translation of this complex, high-stakes document should be entrusted to a translation agency specialising in this field. This is a guarantee of reliability on the international scene.
Find out more about the new European regulations that affect financial sector players, discover the main features of the Disclosure Regulation.