EU Regulatory Update

Author: Clerkin Lynch LLP

Date Published 07/07/2022

ESMA actions in light of the war in Ukraine

The European Securities and Markets Authority (“ESMA”) has been closely monitoring the situation in the Ukraine in light of the Russian invasion and has issued some related statements and guidance.

In a press release issued on 14th March 2022 ESMA noted that it was acting in coordination with National Competent Authorities (NCAs) from across the EU and is prepared to use its relevant tools to ensure the orderly functioning of markets, financial stability and investor protection as part of the European Union’s overall response to the invasion.

  • On May 13th 2022 ESMA released a statement on the implications of the invasion of Ukraine on half-yearly financial reports. This statement provides guidance to issuers and auditors including:
     A reminder of the main IFRS requirements which may be applicable in this context e.g., impairment of assets and loss of control;
  •  Expectations regarding disclosures in financial statements e.g., judgements made, significant uncertainties and going concern risks; as well as in interim management reports.
  • A reminder of issuers’ obligations vis-à-vis the Market Abuse Regulation.
    ESMA issued another public statement on 16th May 2022 on the impact of Russia’s invasion of Ukraine on investment fund portfolios reminding fund managers of their obligations to investors amid the war in Ukraine.

ESMA recognises the significant challenges to business activities and effects on the global economic and financial system posed by this invasion. The statement provides high level guidance to fund managers on related matters, including on:

  • appropriate action in case of exposures to Russian, Belarusian and Ukrainian assets, given valuation and liquidity uncertainties;
  • the process fund managers to be followed when evaluating these assets; and;
  • whether side pockets or similar arrangements may be used to segregate these assets.


ESMA notes that it will continue to closely monitor the situation and take or recommend any measures necessary to mitigate the impact of these events on investment funds. ESMA anticipates investment funds with exposures to relevant assets facing liquidity issues to assess whether a fair value of these assets can still be determined and adapt the valuation without undue delay.

The aim of all of this guidance is to promote investor protection and convergence across the EU in terms of related responses.