What Is a Disclosure Committee?

A disclosure committee assists the CEO, CFO and the audit committee in preparing official disclosure statements.

Disclosure committees typically report to the full board. They assess the company’s internal control systems and procedures to ensure that disclosures are handled according to the prevailing rules and regulations.

Composition of the disclosure committee

Disclosure committees often consist of between two and six members. A management-level disclosure committee will feature individuals selected from specific areas of business associated with generating disclosures. This includes individuals with legal and financial expertise, communication heads and those with extensive operational backgrounds.

A board-level disclosure committee is likely to feature the chief financial officer, general counsel, investor relations director and other such roles. 

Responsibilities of the committee

The responsibilities of a disclosure committee often depend on the other committees established by the company. However, general duties include:

Reviewing and validating financial statements

The committee is in charge of evaluating and verifying the accuracy of all financial statements before filing or releasing them to the public, including balance sheets, cashflow records and income statements.

Ensuring compliance with IFRS

Disclosure committees must ensure that all information presented in financial reports is accurate, complete and complies with the International Financial Reporting Standards (IFRS). The reports covered by the disclosure committee include preliminary result announcements, annual and quarterly reports, trading updates and other routine reports.

Monitoring compliance with EU regulations

The committee should also ensure compliance with the Transparency Directive and the EU Market Abuse Regulation (MAR). This includes identifying inside information and assessing whether the requirements for delays and selective disclosure are met. They must also periodically review and approve the execution and assessment of related control systems.

Assessing and disclosing material risks

An important duty of the committee is to identify and disclose all financial and non-financial risks and events that could affect the accuracy and completeness of financial disclosures.

The disclosure committee and inside information

MAR enforces specific obligations for handling and announcing inside information that serve as guidelines for disclosure committees. It outlines the importance of identifying inside information and determining when and how it should be released to the public. This includes coordinating with relevant departments to ensure timely and accurate disclosure. In addition, the committee must also ensure that insider lists — names and details of individuals with access to inside information — are created and maintained in compliance with MAR.