### depositary for each aif it manages , the aifm shall ensure that a depositary is appointed to fulfil , where relevant , the following tasks : receive all payments made by investors when subscribing units or shares of an aif managed by the aifm and book them on behalf of the aifm in a segregated account ; safe - keep any financial instruments which belong to the aif ; verify whether the aif or the aifm on behalf of the aif has obtained the ownership of all other assets the aif invests in . 2 . an aifm shall not act as depositary . the depositary shall act independently and solely in the interest of aif investors . 3 . the depositary shall be a credit institution having its registered office in the community and be authorised in accordance with directive 2006 / 48 / ec of the european parliament and council of 14 june 2006 relating to the taking up and pursuit of the business of credit institutions . 4 . depositaries may delegate their tasks to other depositaries . 5 . the depositary shall be liable to the aifm and the investors of the aif for any losses suffered by them as a result of its failure to perform its obligations pursuant to this directive . in case of any loss of financial instruments which the depositary safe - keeps , the depositary can only discharge itself of its liability if it can prove that it could not have avoided the loss which has occurred . liability to aif investors may be invoked either directly or indirectly through the aifm , depending on the legal nature of the relationship between the depositary , the aifm and the investors . the depositary ' s liability shall not be affected by any delegation referred to in paragraph 4 . ### depositary for each aif it manages , the aifm shall ensure that a depositary is appointed to fulfil , where relevant , the following functions : receive all payments made by investors when subscribing units or shares of an aif managed by the aifm and book them on behalf of the aifm in a segregated account ; safe - keep any financial instruments which belong to the aif , namely : hold in custody all financial instruments that can be kept and make adequate arrangements so as to safeguard the aif ' s ownership rights , especially in the event of the depositary ' s insolvency , including arrangements to ensure that those financial instruments are registered in the depositary ' s books within segregated accounts or a common segregated account for multiple aif , so that in the event of the depositary ' s default they can be clearly identified as separate from the assets of the depositary ; maintain the records to verify the ownership of financial instruments that cannot be kept on the basis of the information provided by the aifm and external evidence of transactions made . verify whether the aif or the aifm on behalf of the aif has obtained the ownership of all other assets the aif invests in . 1a . in addition to the functions referred to in paragraph 1 , the depositary shall ensure that : the sale , issue , re - purchase , redemption and cancellation of shares or units of the aif are carried out in accordance with the applicable national law and the aif rules or instruments of incorporation ; the value of the shares or units of the aif is calculated in accordance with the applicable national law and the aif rules or instruments of incorporation ; in transactions involving the assets of an aif , any consideration is remitted to it within the usual time limits ; and an aif ' s income is applied in accordance with the applicable national law and the aif rules . 2 . an aifm shall not act as depositary . the depositary shall act honestly , fairly , professionally , independently and in the interest of aif investors . 3 . the depositary shall be either : a credit institution having its registered office in the community and be authorised in accordance with directive 2006 / 48 / ec , or an investment firm authorised in accordance with directive 2004 / 39 / ce . 3a . where an aif managed by an authorised aifm is domiciled in a third country , the depositary shall have its registered office in the union , unless all of the following conditions are satisfied : the competent authorities of the home member state of the aifm and those of the third country where the aif is domiciled have signed cooperation and exchange of information agreements ; the law of the third country where the aif is domiciled is in line with the standards set by international organisations ; the third country where the aif is domiciled is the subject of a decision taken pursuant to point stating that depositaries domiciled in that country are subject to effective prudential regulation and supervision which is equivalent to the provisions laid down in union law ; the third country where the aif is domiciled is the subject of a decision taken pursuant to point stating that the standards to prevent money laundering and terrorist financing are equivalent to those laid down in union law ; the home member state of the aifm has signed an agreement with the third country where the aif is domiciled which fully complies with the standards laid down in article 26 of the oecd model tax convention and ensures an effective exchange of information in tax matters . 4 . depositaries may delegate their tasks apart from functions of monitoring and oversight over their sub - depositaries . a depositary shall not delegate its functions to the extent that it becomes a letter - box entity . such a delegation of liability shall only occur in one instance . there shall be no chain of liability . 4a . depositaries shall respect best practices and shall exercise all due skill , care and diligence in the selection and appointment , periodic review and ongoing monitoring of their performance of any third party to whom they have delegated their tasks as referred to in this paragraph . 5 . the depositary shall be liable to the aifm and the investors of the aif for any losses suffered by them as a result of its intentional or negligent failure to perform its obligations pursuant to this directive or its improper performance of them except where such loss arises as a result of force majeure . in case of any loss of financial instruments which the depositary safe - keeps , the depositary can only discharge itself of its liability if it can prove that the loss has been caused by an external event , that it was not foreseeable and that the depositary could not have avoided the loss which has occurred . the depositary ' s liability towards aifm and investors shall not be affected by the fact that it has chosen to undertake a single delegation to an authorised third party , such as a sub - depositary or a sub - custodian , a part of its tasks . therefore , in the event of any loss of financial instruments which the depositary safe - keeps , as a primary obligation , without prejudice to national law , the depositary shall return the assets to the aif without undue delay . that requirement shall apply without prejudice to any legal proceedings . liability to aif investors may be invoked directly or indirectly through the aifm . 5a . by way of exception to paragraph 5 , where a depositary is legally prevented by the law of the country where the aifm invests on behalf of the aif or is unable to exercise its custodial functions due to an unforeseeable external event , the depositary can discharge itself of its own liability , including for loss of financial instruments , if it can prove that it has performed its due diligence duties as referred to in paragraph 4a . such delegation of liability can only occur in one instance . there shall be no chain of liability . 5b . by way of exception to paragraph 5 , where the contract between the depositary and a prime broker or a sub - custodian allows for the transfer and reuse of assets in compliance with the aif ' s rules , the depositary may discharge itself of its own liability if it can prove that it has performed its due diligence duties as referred to in paragraph 4a . the contract between the aifm and the depositary shall require that the aifm be informed of any contractual term allowing the transfer and reuse of assets in compliance with the aif ' s rules before the implementation of the contract . before they invest in the aif , investors shall be informed of that clause and updated about the identity of the third party . in particular , investors shall be informed of any transfer of liability to the third party that may exist , including in the event of loss of financial instruments . in that case , the delay for restitution shall be in accordance with the terms of the contract between the depositary and the third party . 5c . the depositary shall make available on request to the competent authorities of its home member state all information which it has obtained while undertaking its duties and that may be necessary for the competent authorities to supervise the aifm . if the home member state of the aifm is different from that of the depositary , the competent authorities of the home member state of the depositary shall share the information received without delay with the competent authorities of the home member state of the aifm . 5d . the commission is empowered to adopt , in accordance with article 49 of this directive , delegated acts further specifying the duties and responsibilities of depositaries and the conditions under which an aif depositary may delegate some of its functions to a third party . 5e . any appointment of a depositary shall be subject to approval from the competent authority of the home member state of the aifm . the competent authority may permit the appointment of more than one depositary where it is satisfied that this will not interfere with the proper performance of all the obligations of the depositary set out in this directive .


### home member states shall ensure that all information received under article 24 , aggregated in respect of all aifm that it supervises , are made available to other competent authorities through the procedure set out in article 46 on supervisory co - operation . it shall , without delay , also provide information through this mechanism , and bilaterally to other member states directly concerned , if an aifm under its responsibility could potentially constitute an important source of counterparty risk to a credit institution or other systemically relevant institution in other member states . ### the competent authorities of the home member state of the aifm shall ensure that all information gathered under article 21 in respect of all aifm that they supervise is promptly conveyed to the esma and is made available to the competent authorities of the other member states and to the esrb through the procedures set out in article 46 on supervisory co - operation . they shall , without delay , also provide information through this mechanism to the esma and the esrb , and bilaterally to the competent authorities of other member states directly concerned , if the activities of an aifm under their responsibility could potentially constitute an important source of counterparty risk to a credit institution or other systemically relevant institution in those other member states , or could affect the sound functioning of financial markets .


### activities of aifm based on the use of high levels of leverage could be detrimental to the stability and efficient functioning of financial markets . it is considered necessary to allow the commission to impose limits on the level of leverage that aifm could use , in particular in those cases where aifm employ high levels of leverage on a systematic basis . the limits to the maximum amount of leverage should take into account aspects related to the source of leverage and the strategies employed by the aifm . they should also take into account the essentially dynamic nature of the management of leverage by most aifm using a high level of leverage . in this respect the limits to leverage could for example either consist in a threshold that should not be breached at any point in time or a limit on the average leverage employed during a given period . ### activities of aifm based on the use of high levels of leverage could be detrimental to the stability and efficient functioning of financial markets . leverage is a difficult concept to define . the competent authorities of the home member state of the aifm should however have the possibility of imposing limits on the level of leverage that aifm can use in times of extreme market stress . member states should inform the esma and the commission of any such measure .


### in addition to article 27 , member states shall ensure that where an aifm acquires 30 % or more of the voting rights of an issuer or a non - listed company , that aifm makes the information set out in the second and third subparagraphs available to the issuer , the non - listed company , their respective shareholders and representatives of employees or , where there are no such representatives , to the employees themselves . ### 1 in addition to article 27 , member states shall ensure that where an aifm acquires a controlling influence over a non - listed company , that aifm makes the following information available to the non - listed company concerned , its shareholders and representatives of employees :


### home member states shall ensure that all information received under article 24 , aggregated in respect of all aifm that it supervises , are made available to other competent authorities through the procedure set out in article 46 on supervisory co - operation . it shall , without delay , also provide information through this mechanism , and bilaterally to other member states directly concerned , if an aifm under its responsibility could potentially constitute an important source of counterparty risk to a credit institution or other systemically relevant institution in other member states . ### the competent authorities of the home member states shall ensure that all information gathered under article 21 , aggregated in respect of all aifm that they supervise , is made available to the competent authorities of the other member states , to esma and to esrb through the procedure set out in article 46 on supervisory co - operation . they shall , without delay , also provide information through this mechanism , and bilaterally to the competent authorities of other member states directly concerned , if an aifm under their responsibility , or an aif managed by that aifm , could potentially constitute an important source of counterparty risk to a credit institution or other systemically relevant institution in those other member states .


### for each aif it manages , the aifm shall ensure that a depositary is appointed to fulfil , where relevant , the following tasks : ### for each aif it manages , the aifm shall ensure that , where relevant , the depositary tasks are performed independently and solely in the interest of aif investors . the depositary tasks are the following :


### member states shall ensure that no aifm covered by this directive provides management services to any aif or markets shares or units thereof without prior authorisation . entities which are neither authorised in accordance with this directive nor , in case of aifm not covered by this directive , in accordance with the national law of a member state , shall not be allowed to provide management services to aif or market units or shares thereof within the community . ### member states shall ensure that no aifm covered by this directive provides management services to any aif without prior authorisation .


### in particular the commission should be empowered to adopt the measures necessary for the implementation of this directive . in this respect , the commission should be able to adopt measures determining the procedures under which aifm managing portfolios of aif whose assets under management do not exceed the threshold set out in this directive may exercise their right to be treated as aifm covered by this directive . these measures are also designed to specify the criteria to be used by competent authorities to assess whether aifm comply with their obligations as regards their conduct of business , the type of conflicts of interests aifm have to identify , as well as the reasonable steps aifm are expected to take in terms of internal and organizational procedures in order to identify , prevent , manage and disclose conflicts of interest . they are designed to specify the risk management requirements to be employed by aifm as a function of the risks which the aifm incurs on behalf of the aif that it manages as well as any arrangements needed to enable aifm to manage the particular risks associated with short selling transactions , including any relevant restrictions that might be needed to protect the aif from undue risk exposures . they are designed to specify the liquidity management requirements of this directive and in particular the minimum liquidity requirements for aif . they are designed to specify the requirements that originators of securitisation instruments have to meet in order for an aifm to be allowed to invest in such instruments issued after 1 january 2011 . they are as well designed to specify the requirements that aifm have to comply with when investing in such securitisation instruments . they are designed to specify the criteria under which a valuator can be considered independent in the meaning of this directive . they are designed to specify the conditions under which the delegation of aifm functions should be approved and the conditions under which the manager could no longer be considered to be the manager of the aif in case of excessive delegation . they are designed to specify the content and format of the annual report that aifm have to make available for each aif they manage and to specify the disclosure obligations of aifm to investors and reporting requirements to competent authorities as well as their frequency . they are designed to specify the disclosure requirements imposed on aifm as regards leverage and the frequency of reporting to competent authorities and of disclosure to investors . they are designed to setting limits to the level of leverage aifm can employ when managing aif they are designed to determine the detailed content and the way aifm acquiring controlling influence in issuers and non - listed companies should fulfil their information obligation towards issuers and non - listed companies and their respective shareholders and representatives of employees , including the information to be provided in the annual reports of the aif they manage . they are designed to specify the types of restrictions or conditions that can be imposed on the marketing of aif to professional investor in the home member state of the aifm . they are designed to specify general criteria for assessing equivalence of valuation standards of third countries where the valuator is established in a third country , the equivalence of legislation of third countries regarding depositaries and , for the purpose of the authorisation of aifm established in third countries , the equivalence of prudential regulation and ongoing supervision . they are designed to specify general criteria for assessing whether third countries grant community aifm effective market access comparable to that granted by the community to aifm from third countries . they are designed to specify the modalities , content and frequency of exchange of information regarding aifm between the competent authorities of the home member state of the aifm and other competent authorities where the aifm individually or collectively with other aifm may have an impact on the stability of systemically relevant financial institutions and the orderly functioning of markets . they are designed to specify the procedures for on - the - spot verifications and investigations . ### in particular the commission should be empowered to adopt delegated acts necessary for the implementation of this directive in accordance with article 290 of the treaty designed to specify the criteria to be used by competent authorities to assess whether aifm comply with their obligations as regards their conduct of business , the type of conflicts of interests aifm have to identify , as well as the reasonable steps aifm are expected to take in terms of internal and organisational procedures in order to identify , prevent , manage and disclose conflicts of interest . they should also be designed to specify the requirements that originators of securitisation instruments have to meet in order for an aifm to be allowed to invest in such instruments issued after 1 january 2011 . they should also be designed to specify the requirements that aifm have to comply with when investing in such securitisation instruments . they should also be designed to specify the criteria under which the valuation process can be considered independent in the meaning of this directive . they should also be designed to specify the conditions under which the manager could no longer be considered to be the manager of the aif in case of excessive delegation . they should also be designed to specify the content and format of the annual report that aifm have to make available for each aif they manage and to specify the disclosure obligations of aifm to investors and reporting requirements to competent authorities as well as their frequency . they should also be designed to specify the modalities , content and frequency of exchange of information regarding aifm between the competent authorities of the home member state of the aifm and other competent authorities where the aifm individually or collectively with other aifm may have an impact on the stability of systemically relevant financial institutions and the orderly functioning of markets . they should also be designed to specify the procedures for on - the - spot verifications and investigations .


### the commission shall adopt implementing measures further specifying the disclosure requirements with regard to leverage and the frequency of reporting to competent authorities and of disclosure to investors . those measures , designed to amend non - essential elements of this directive by supplementing it , shall be adopted in accordance with the regulatory procedure with scrutiny referred to in article 49 . ### the commission is empowered to adopt , in accordance with article 49 of this directive , delegated acts further specifying the disclosure requirements with regard to leverage and the frequency of reporting to competent authorities and of disclosure to investors .


### ‘ government’ means any national , regional or local authority of a member state or of a third country . it includes a department , agency or undertaking controlled by that authority as laid down in article 23 to of this directive . ### ' government ' means any national , regional or local authority of a member state or of a third country . it includes a department , agency or undertaking controlled by that authority as laid down in article 23 to of this directive , or any government entity or state undertaking or company belonging to government members that receives any payment of the type noted in article 38 from any constituent member of an undertaking .


### a member state shall require any large undertaking or any public interest entity active in the extractive industry or the logging of primary forests and governed by its national law to draw up a consolidated report on payments to governments in accordance with articles 37 and 38 if that parent undertaking is under the obligation to prepare consolidated financial statements as laid down in article 23 to 23 of this directive . ### a member state shall require any large undertaking or any public interest entity governed by its national law to draw up a consolidated report on payments to governments in accordance with articles 37 and 38 if that parent undertaking is under the obligation to prepare consolidated financial statements as laid down in article 23 to 23 of this directive .


### the reports should serve to facilitate governments of resource - rich countries in implementing the eiti principles and criteria and account to their citizens for payments such governments receive from undertakings active in the extractive industry or loggers of primary forests operating within their jurisdiction . the report should incorporate disclosures on a country and project basis , where a project is considered as the lowest level of operational reporting unit at which the undertaking prepares regular internal management reports , such as a concession , geographical basin , etc and where payments have been attributed to such projects . in the light of the overall objective of promoting good governance in these countries , the materiality of payments to be reported should be assessed in relation to the recipient government . various criteria on materiality could be envisaged such as payments of an absolute amount , or a percentage threshold and these can be defined through a delegated act . the reporting regime should be subject to a review and a report by the commission within five years of the entry into force of the directive . the review should consider the effectiveness of the regime and take into account international developments including issues of competitiveness and energy security . the review should also take into account the experience of preparers and users of the payments information and consider whether it would be appropriate to include additional payment information such as effective tax rates and recipient details , such as bank account information . ### the reports should serve to facilitate governments ' accountability to their citizens for payments they receive from undertakings operating within their jurisdiction . the report should incorporate disclosures on a country basis and in the case of undertakings active in the extractive industries or the logging of primary forests , the report should also specify the specific project or projects to which those payments have been attributed , a project being considered equivalent to the contract , licence , lease , concession or other legal agreement which gives rise to a company ' s tax and revenue liabilities in each country where it operates . where any payment liabilities are incurred on a different basis , reporting should be on that basis . in the light of the overall objective of promoting good governance in these countries , payments should be considered material if any one payment or set of payments of the same type amounts to more than eur 15 000 . the reporting regime should be subject to a review and a report by the commission within four years of the entry into force of the directive . the review should consider the effectiveness of the regime and take into account international developments , progress towards global standards in this area and report on the impacts of this legislation on third countries , in particular in achieving the objectives of enhanced transparency of payments to governments . the review should also take into account issues of competitiveness and energy security as well as the experience of preparers and users of the payments information and consider whether it would be appropriate to include additional payment information .


### member states shall require large undertakings and all public interest entities active in the extractive industry or the logging of primary forests to prepare and make public a report on payments made to governments on an annual basis . ### member states shall require large undertakings and all public interest entities active in the extractive industry or the logging of primary forests to prepare and make public a report on payments , including payments in kind , made to governments on an annual basis .


### the reports should serve to facilitate governments of resource - rich countries in implementing the eiti principles and criteria and account to their citizens for payments such governments receive from undertakings active in the extractive industry or loggers of primary forests operating within their jurisdiction . the report should incorporate disclosures on a country and project basis , where a project is considered as the lowest level of operational reporting unit at which the undertaking prepares regular internal management reports , such as a concession , geographical basin , etc and where payments have been attributed to such projects . in the light of the overall objective of promoting good governance in these countries , the materiality of payments to be reported should be assessed in relation to the recipient government . various criteria on materiality could be envisaged such as payments of an absolute amount , or a percentage threshold and these can be defined through a delegated act . the reporting regime should be subject to a review and a report by the commission within five years of the entry into force of the directive . the review should consider the effectiveness of the regime and take into account international developments including issues of competitiveness and energy security . the review should also take into account the experience of preparers and users of the payments information and consider whether it would be appropriate to include additional payment information such as effective tax rates and recipient details , such as bank account information . ### the reports should serve to facilitate governments of resource - rich countries in implementing the eiti principles and criteria and account to their citizens for payments such governments receive from undertakings operating within their jurisdiction . in the case of undertakings active in the extractive industry or loggers of primary forests the report should incorporate disclosures on a country and project basis , where a project is considered as contract , licence , lease or other legal agreement under which an undertaking operates , and from which its specific liabilities to government arise and where payments have been attributed to such projects . in the light of the overall objective of promoting good governance in these countries , payments to each government should be reported where the total amount of payments , including payments in kind , made within a financial year , exceeds eur 30 000 . the reporting regime should be subject to a review and a report by the commission within three years of the entry into force of the directive . the review should consider the effectiveness of the regime and take into account international developments including issues of competitiveness and energy security . the review should also take into account the experience of preparers and users of the information and consider whether it would be appropriate to include additional information such as recipient details of payment recipients , such as bank account information .


### in order to provide for enhanced transparency of payments made to governments , large undertakings and public interest entities which are active in the extractive industry or logging of primary forests should disclose in a separate report on an annual basis material payments made to governments in the countries in which they operate . such undertakings are active in countries rich in natural resources , in particular minerals , oil , natural gas as well as primary forests . the report should include types of payments comparable to those disclosed by an undertaking participating in the extractive industries transparency initiative . the initiative is also complementary to the eu flegt action plan and the timber regulation which require traders of timber products to exercise due diligence in order to prevent illegal wood from entering into the eu market . ### in order to provide for enhanced transparency of payments made to governments , large undertakings and public interest entities should disclose , as part of their annual financial statements , material payments made to governments in the countries in which they operate . such undertakings which are active in countries rich in natural resources , in particular minerals , oil , natural gas as well as primary forests should include in their annual financial statements types of payments comparable to those disclosed by an undertaking participating in the extractive industries transparency initiative . the initiative is also complementary to the eu flegt action plan and the timber regulation which require traders of timber products to exercise due diligence in order to prevent illegal wood from entering into the eu market .


### when this article is applied for the first time , the associated undertaking shall be shown in the consolidated balance sheet at an amount corresponding to the proportion of the associated undertaking ' s capital and reserves represented by the participating interest . the difference between that amount and the book value calculated in accordance chapters 2 and 3 shall be disclosed separately in the consolidated balance sheet or in the notes to the consolidated financial statements . that difference shall be calculated as at the date as at which that method is used for the first time . in addition , member states may permit or require the calculation of the difference as at the date of acquisition of the shares or , where the shares were acquired in two or more stages , as at the date on which the undertaking became an associated undertaking . ### when this article is applied for the first time , the associated undertaking shall be shown in the consolidated balance sheet either : at its book value calculated in accordance with chapters 2 and 3 . the difference between that value and the amount corresponding to the proportion of capital and reserves represented by the participating interest shall be disclosed separately in the consolidated balance sheet or in the notes to the consolidated financial statements . that difference shall be calculated as at the date as at which that method is used for the first time ; or at an amount corresponding to the proportion of the associated undertaking ' s capital and reserves represented by the participating interest . the difference between that amount and the book value calculated in accordance with chapters 2 and 3 shall be disclosed separately in the consolidated balance sheet or in the notes to the consolidated financial statements . that difference shall be calculated as at the date as at which that method is used for the first time . a member state may prescribe the application of one or other of and above . the consolidated balance sheet or the notes to the accounts must indicate whether or has been used . in addition , for the purposes of and above , member states may permit or require the calculation of the difference as at the date of acquisition of the shares or , where the shares were acquired in two or more stages , as at the date on which the undertaking became an associated undertaking .


### the reports should serve to facilitate governments of resource - rich countries in implementing the eiti principles and criteria and account to their citizens for payments such governments receive from undertakings active in the extractive industry or loggers of primary forests operating within their jurisdiction . the report should incorporate disclosures on a country and project basis , where a project is considered as the lowest level of operational reporting unit at which the undertaking prepares regular internal management reports , such as a concession , geographical basin , etc and where payments have been attributed to such projects . in the light of the overall objective of promoting good governance in these countries , the materiality of payments to be reported should be assessed in relation to the recipient government . various criteria on materiality could be envisaged such as payments of an absolute amount , or a percentage threshold and these can be defined through a delegated act . the reporting regime should be subject to a review and a report by the commission within five years of the entry into force of the directive . the review should consider the effectiveness of the regime and take into account international developments including issues of competitiveness and energy security . the review should also take into account the experience of preparers and users of the payments information and consider whether it would be appropriate to include additional payment information such as effective tax rates and recipient details , such as bank account information . ### the disclosures should serve to facilitate governments of resource - rich countries in implementing the eiti principles and criteria , amongst other voluntary reporting standards , and account to their citizens for payments such governments receive from undertakings operating within their jurisdiction . the disclosures should be on a country - by - country and project - by - project basis , where a project is considered as the lowest level of operational reporting unit , such as a contract , license , lease or other legal agreement under which an undertaking operates , which give rise to specific liabilities and where payments have been attributed to such projects , if any one payment or set of payments of the same type amount to more than 100 000 eur . the reporting regime should be subject to a review and a report by the commission within three years of the entry into force of the directive . the review should consider the effectiveness of the regime and take into account international developments including issues of competitiveness and energy security . the review should also take into account the experience of preparers and users of the payments information and consider whether it would be appropriate to include additional financial information and recipient details , such as bank account information .


### ‘ production cost’ means the purchase price of raw materials , consumables and other costs directly attributable to the item in question . a reasonable proportion of other costs indirectly attributable to the item in question may be included to the extent that they relate to the period of production . distribution costs shall not be included ; ### ‘ production cost’ means the purchase price of raw materials , consumables and other costs directly attributable to the item in question . a reasonable proportion of other costs indirectly attributable to the item in question shall be included to the extent that they relate to the period of production . distribution costs shall not be included ;


### member states shall require large undertakings and all public interest entities active in the extractive industry or the logging of primary forests to prepare and make public a report on payments made to governments on an annual basis . ### member states shall require large undertakings , including joint - venture undertakings , and all public interest entities to prepare and make public a report on payments , including payments in kind , made to governments on an annual basis as part of the annual report of financial statements . in this report , the undertaking shall also publish additional financial information regarding their activities in third countries . in particular , the report shall include activities of subsidiaries , associates , joint ventures , permanent establishments and other trading arrangements to the extent that they are consolidated in the annual financial statements of the undertaking or entity in question . the report shall be part of the notes to the financial statements .


### the commission shall review and report on the implementation and effectiveness of this chapter , in particular as regards the scope of the reporting obligations and the modalities of the reporting on a project basis . the review should also take into account international developments and consider the effects on competitiveness and security of energy supply . it should be completed at the latest five years after the date of entry into force of this directive . the report shall be submitted to the european parliament and the council , together with a legislative proposal , if appropriate . ### the commission shall review and report on the implementation and effectiveness of this chapter , in particular as regards the scope of the reporting obligations and the modalities of the reporting on a project basis . the review should also take into account international developments , progress towards global standards in this area and report on the impact of this legislation on third countries , in particular in achieving the objectives of enhanced transparency of payments to governments . the review should also consider the effects on competitiveness and security of energy supply . it should be completed at the latest four years after the date of entry into force of this directive . the report shall be submitted to the european parliament and the council , together with a legislative proposal , if appropriate .


### in order to take account of future changes to the laws of the member states and in the legislation of the union concerning company types , the commission should be empowered to adopt delegated acts in accordance with article 290 of the treaty in respect of updating the lists of undertakings contained in annexes i and ii . the use of delegated acts is also necessary to adapt the undertaking size criteria , as with the passage of time inflation will erode their real value . it is of particular importance that the commission carry out appropriate consultations during its preparatory work , including at expert level . in order to ensure a relevant and appropriate level of disclosure of payments to governments by the extractive industry and loggers of primary forests and to ensure uniform application of this directive , the commission should be empowered to adopt delegated acts in accordance with article 290 of the treaty in respect of the specification of the concept of materiality of payments . ### in order to take account of future changes to the laws of the member states and in the legislation of the union concerning company types , the commission should be empowered to adopt delegated acts in accordance with article 290 of the treaty in respect of adapting the undertaking size criteria , as with the passage of time inflation will erode their real value . it is of particular importance that the commission carry out appropriate consultations during its preparatory work , including at expert level .


### in order to provide for enhanced transparency of payments made to governments , large undertakings and public interest entities which are active in the extractive industry or logging of primary forests should disclose in a separate report on an annual basis material payments made to governments in the countries in which they operate . such undertakings are active in countries rich in natural resources , in particular minerals , oil , natural gas as well as primary forests . the report should include types of payments comparable to those disclosed by an undertaking participating in the extractive industries transparency initiative . the initiative is also complementary to the eu flegt action plan and the timber regulation which require traders of timber products to exercise due diligence in order to prevent illegal wood from entering into the eu market . ### in order to provide for enhanced transparency of payments made to governments , all large undertakings and public interest entities should disclose as part of the annual report of financial statements a report on material payments made to governments in the countries in which they operate , as well as additional financial information regarding their activities in third countries . the disclosure of these data aims at enabling investors to make better - informed decisions , improving corporate governance and accountability and contributing to containing tax evasion . the report should incorporate disclosures on a country basis . furthermore , where such undertakings are active in the extraction of natural resources , in particular minerals , oil , natural gas as well as primary forests , reporting should also specify the specific project or projects to which those payments have been attributed . the report should accordingly build upon the disclosure requirements of the extractive industries transparency initiative . the initiative is also complementary to the eu flegt action plan and the timber regulation which require traders of timber products to exercise due diligence in order to prevent illegal wood from entering into the eu market .


### in order to provide for enhanced transparency of payments made to governments , large undertakings and public interest entities which are active in the extractive industry or logging of primary forests should disclose in a separate report on an annual basis material payments made to governments in the countries in which they operate . such undertakings are active in countries rich in natural resources , in particular minerals , oil , natural gas as well as primary forests . the report should include types of payments comparable to those disclosed by an undertaking participating in the extractive industries transparency initiative . the initiative is also complementary to the eu flegt action plan and the timber regulation which require traders of timber products to exercise due diligence in order to prevent illegal wood from entering into the eu market . ### in order to provide for enhanced transparency of payments made to governments , large undertakings and public interest entities should report on an annual basis activities in each country in which they operate , including payments made to governments . the threshold for considering undertakings and public interest entities to be large should be based on double the threshold for smes in the standard eu definition . the report should be subject to statutory audit and should include types of payments comparable to those disclosed by an undertaking participating in the extractive industries transparency initiative . the initiative is also complementary to the eu flegt action plan and the timber regulation which require traders of timber products to exercise due diligence in order to prevent illegal wood from entering into the eu market .


### the member states are strongly encouraged to develop electronic publication systems that allow undertakings to file accounting data , including statutory financial statements , only once and in a form that allows multiple users to access and use the data easily . such systems should , however , not be burdensome to small and medium - sized undertakings . ### a harmonised electronic format for reporting would be very beneficial for undertakings established in the union , since it would facilitate the creation of a one - stop - shop reporting system which could also be used in other fields . the preparation of financial statements in extensible business reporting language should therefore be compulsory with effect from 1 january 2018 , following a suitable period for preparation and testing . establishing such a system should , however , not be burdensome to small and medium - sized undertakings .


### ‘ project’ is equivalent to a specific operational reporting unit at the lowest level within the undertaking at which regular internal management reports are prepared to monitor its business . ### ‘ project’ should be considered equivalent to the contract , licence , lease , concession or other legal agreement which gives rise to a company ' s tax and revenue liabilities in each country where it operates . where any payment liabilities are incurred on a different basis , reporting shall be on that basis .


### the report shall specify the following when material to the recipient government : ### the report referred to in article 37 shall specify the following :


### recognition , measurement , presentation , and disclosure in annual financial statements shall have regard to the materiality of the relevant items . ### presentation and disclosure in annual financial statements shall have regard to the materiality of the relevant items .


### eib financing operations supporting the objectives provided for in paragraph 1 shall support investment projects in the areas of transport , energy , including renewable energy , energy systems transformation enabling a switch to lower carbon intensive technologies and fuels , energy security and energy infrastructure , including for gas production and transportation to eu energy market , environmental infrastructure , including water and sanitation and green infrastructure , information and communication technology , including telecommunications and broadband network infrastructure , health and education . ### eib financing operations supporting the objectives provided for in paragraph 1 shall support investment projects in the areas of transport , energy , including renewable energy , energy systems transformation enabling a switch to lower carbon intensive technologies and fuels , energy security and energy infrastructure , including electricity transmission infrastructure , in particular interconnections that facilitate the integration of electricity from renewable sources , environmental infrastructure , including water and sanitation and green infrastructure , information and communication technology , including telecommunications and broadband network infrastructure , health and education . priority consideration should be given to electricity infrastructure projects connecting the union and third countries which provide mutual economic , development , social and environmental benefits .


### eib financing operations supporting the objectives provided for in paragraph 1 shall support investment projects in climate change mitigation and adaptation which contribute to the overall objective of the united nations framework convention on climate change , in particular by avoiding or reducing greenhouse gas emissions in the areas of renewable energy , energy efficiency and sustainable transport , or by increasing resilience to the adverse impacts of climate change on vulnerable countries , sectors and communities . over the period covered by the decision , the volume of these operations shall represent at least 25% of total eib financing operations . ### eib financing operations supporting the objectives provided for in paragraph 1 shall support investment projects in climate change mitigation and adaptation which contribute to the overall objective of the united nations framework convention on climate change , in particular by avoiding or reducing greenhouse gas emissions in the areas of renewable energy , energy efficiency and sustainable transport , or by increasing resilience to the adverse impacts of climate change on vulnerable countries , sectors and communities . over the period covered by the decision , the volume of these operations shall represent at least 40% of total eib financing operations .


### the eib should also continue to finance investment projects in support of climate change mitigation and adaptation , to further the promotion of the union ' s climate goals on a global scale . ### the eib should also increase its financing of investment projects in support of climate change mitigation and adaptation , to further the promotion of the union ' s climate goals on a global scale .


### the eib activity under this decision should support the agenda for change proposed by the commission and be coherent with the relevant principles of the european consensus on development and the principles of aid effectiveness outlined in the paris declaration of 2005 , the accra agenda for action of 2008 and the busan partnership agreement of 2011 . furthermore , it should be coherent with the eu strategic framework and action plan on human rights and democracy adopted by the council on 25 june 2012 and international environmental agreements including biodiversity commitments . it should be implemented through a number of concrete measures , in particular by reinforcing the eib ' s capacity to appraise environmental , social and development aspects of investment projects , including human rights and conflict - related risks , and by promoting local consultation with public authorities and civil society . in this context , the eib should implement and further develop its results measurement framework which provides a detailed set of performance indicators measuring the economic , environmental , social , and development impact of its financing operations throughout the lifecycle of the underlying investment . the implementation of the rem should be evaluated as part of the mid - term review of this decision . when carrying out due diligence in respect of an investment project , the eib should , where appropriate and in line with the union ' s social and environmental principles , require the investment project promoter to carry out local consultations and disclose their results to the public . eib financing agreements involving public counterparts should explicitly include the possibility to suspend disbursements in case of revocation of eligibility under this decision of the country in which the investment project takes place . ### the eib activity under this decision should support the agenda for change proposed by the commission and be coherent with the relevant principles of the european consensus on development and the principles of aid effectiveness outlined in the paris declaration of 2005 , the accra agenda for action of 2008 and the busan partnership agreement of 2011 . furthermore , it should be coherent with the eu strategic framework and action plan on human rights and democracy adopted by the council on 25 june 2012 and international environmental agreements including biodiversity commitments . it should be implemented through a number of concrete measures , in particular by reinforcing the eib ' s capacity to appraise environmental , social , development and economic aspects of investment projects , including explicitly human rights , fundamental freedoms and conflict - related risks , and by promoting local consultation with public authorities and civil society . in this context , the eib should implement and further develop its results measurement framework which provides a detailed set of performance indicators measuring the economic , environmental , social , and development impact of its financing operations throughout the lifecycle of the underlying investment . the implementation of the rem should be evaluated as part of the mid - term review of this decision . when carrying out due diligence in respect of an investment project , the eib should in line with the principles of the union ' s human rights , social and environmental legislation , require the investment project promoter to carry out local consultations with all stakeholders concerned and disclose their results to the public . eib financing agreements involving public counterparts should explicitly include the possibility to suspend disbursements in case of revocation of eligibility under this decision of the country in which the investment project takes place .


### in accordance with its own transparency policy , the eib shall make publicly available on its website information relating to : ### in accordance with eu legislation on access to documents and information , the eib shall make publicly available on its website information relating to :


### for the purpose of calculating the annual percentage rate of charge , the total cost of the credit to the consumer shall be determined excluding any charges payable by the consumer for non - compliance with any of his commitments laid down in the credit agreement . where the opening of an account is obligatory in order to obtain the credit , the costs of maintaining such an account , the costs of using a means of payment for both payment transactions and drawdowns on that account , and other costs relating to payment transactions shall be included in the total cost of credit to the consumer , unless the costs have been clearly and separately shown in the credit agreement or in any other agreement concluded with the consumer . ### for the purpose of calculating the annual percentage rate of charge , the total cost of the credit to the consumer shall be determined excluding charges payable by the consumer for non - compliance with any of his commitments laid down in the credit agreement . the costs of maintaining an account recording both payment transactions and drawdowns , the costs of using a means of payment for both payment transactions and drawdowns , and other costs relating to payment transactions shall be included in the total cost of credit to the consumer unless the opening of the account is optional and the costs relating to the account have been clearly and separately shown in the credit agreement or in any other agreement concluded with the consumer .


### member states shall ensure that the creditor and , where applicable , the credit intermediary , without undue delay after the consumer has given the necessary information on his needs , financial situation and preferences in accordance with article 14 , provides the consumer with the personalised information needed to compare the credits available on the market , assess their implications and take an informed decision on whether to conclude a credit agreement . such information , on paper or on another durable medium , shall be provided by means of the european standardised information sheet , as set out in annex ii . ### member states shall ensure that the creditor and , where applicable , the credit intermediary , in good time before the consumer is bound by any credit agreement and after the consumer has given the necessary information on his needs , financial situation and preferences in accordance with article 14 , provides the consumer with the personalised information needed to compare the credits available on the market , assess their implications and take an informed decision on whether to conclude a credit agreement . such information , on paper or on another durable medium , shall be provided by means of the european standardised information sheet , as set out in annex ii .


### such adequate explanations shall include an explanation of the information and terms included in the pre - contractual information to be provided in accordance with articles 9 and 10 and of the consequences that concluding the credit agreement may have for the consumer , including in the event of default in payment by the consumer . ### member states may adapt the manner by which and the extent to which such assistance is given , as well as by whom it is given , to the particular circumstances of the situation in which the credit agreement is offered , the person to whom it is offered and the type of credit offered .


### member states shall ensure that creditors and , where applicable , credit intermediaries provide adequate explanations to the consumer on the proposed credit agreement and any ancillary service , in order to place the consumer in a position enabling him to assess whether the proposed credit agreements are adapted to his needs and financial situation . an adequate explanation shall include the provision of personalised information on the characteristics of the credits on offer , without however formulating any recommendation . creditors and , where applicable , credit intermediaries shall accurately assess the level of knowledge and experience with credit of the consumer by any means necessary so as to enable the creditor or the intermediary to determine the level of explanations to be given to the consumer and adjust such explanations accordingly . ### member states shall ensure that creditors and , where applicable , credit intermediaries provide adequate explanations to the consumer on the proposed credit agreement and any ancillary service , in order to place the consumer in a position enabling him to assess whether the proposed credit agreements are adapted to his needs , to his financial situation , where appropriate by explaining the pre - contractual information to be provided in accordance with art . 9 , the essential characteristics of the products proposed and the specific effect they may have on the consumer , including the consequences of default in payment by the consumer .


### member states shall ensure that creditors and , where applicable , credit intermediaries provide adequate explanations to the consumer on the proposed credit agreement and any ancillary service , in order to place the consumer in a position enabling him to assess whether the proposed credit agreements are adapted to his needs and financial situation . an adequate explanation shall include the provision of personalised information on the characteristics of the credits on offer , without however formulating any recommendation . creditors and , where applicable , credit intermediaries shall accurately assess the level of knowledge and experience with credit of the consumer by any means necessary so as to enable the creditor or the intermediary to determine the level of explanations to be given to the consumer and adjust such explanations accordingly . such adequate explanations shall include an explanation of the information and terms included in the pre - contractual information to be provided in accordance with articles 9 and 10 and of the consequences that concluding the credit agreement may have for the consumer , including in the event of default in payment by the consumer . ### member states shall ensure that creditors and , where applicable , credit intermediaries provide adequate explanations to the consumer , in order to place the consumer in a position enabling him to assess whether the proposed credit agreement is adapted to his needs and financial situation , where appropriate by explaining the pre - contractual information and the information from the esis , the essential characteristics of the products proposed and the specific effects they may have on the consumer , including the consequences of default in payment by the consumer . member states may adapt the manner by which and the extent to which such assistance is given , as well as by whom it is given , to the particular circumstances of the situation in which the credit agreement is offered , the person to whom it is offered and the type of credit offered .


### without prejudice to procedures for the withdrawal of authorisation or to the right of member&#160 ; states to impose criminal sanctions , member&#160 ; states shall ensure , in conformity with their national law , that appropriate administrative measures can be taken or administrative sanctions imposed against persons responsible where the provisions adopted in the implementation of this directive have not been complied with . member&#160 ; states shall ensure that these measures are effective , proportionate and dissuasive . ### member states shall lay down the rules on penalties applicable to infringements of the national provisions adopted pursuant to this directive and shall take all measures necessary to ensure that they are implemented . those sanctions shall be effective , proportionate and dissuasive .


### member states shall ensure that when an offer binding on the creditor is provided to the consumer , it shall be accompanied by an esis . in such circumstances , member states shall ensure that the credit agreement cannot be concluded until the consumer has had sufficient time to compare the offers , assess their implications and take an informed decision on whether to accept an offer , regardless of the means of conclusion of the contract . ### member states shall ensure that when an offer binding on the creditor is provided to the consumer , it shall be accompanied by an esis . in such circumstances , member states shall ensure that the consumer has had sufficient time to compare the offers , assess their implications and take an informed decision on whether to accept an offer , regardless of the means of conclusion of the contract . if the consumer has a right of withdrawal in respect of the credit agreement , this shall in itself be regarded as providing him with sufficient time to take a decision .


### where the assessment of the consumer ' s creditworthiness results in a negative prospect for his ability to repay the credit over the lifetime of the credit agreement , the creditor refuses credit . ### where the assessment of the consumer ' s creditworthiness at the time of loan decision results in a negative prospect for his ability to repay the interests of the credit and the percentage of the nominal value that has been contractually agreed over the lifetime of the credit agreement , the creditor refuses credit .


### in order to be in a position to understand the nature of the service , consumers should be made aware of what constitutes a personalised recommendation on suitable credit agreements for that consumer’s needs and financial situation and when it is being provided and when it is not . those providing advice should comply with general standards in order to ensure that the consumer is presented with a range of products suitable for his needs and circumstances . that service should be based on a fair and sufficiently wide - ranging analysis of the products available on the market , and on a close inspection of the consumer’s financial situation , preferences and objectives . such an assessment should be based on up - to - date information and reasonable assumptions on the consumer’s circumstances during the lifetime of the loan . member states may clarify how the suitability of a given product for a consumer should be assessed in the context of the provision of advice . ### in order to be in a position to understand the nature of the service , consumers should be made aware of what constitutes a personalised recommendation on suitable credit agreements for that consumer’s needs and financial situation and when it is being provided and when it is not . it is therefore important to ensure that the service of advice is a distinct service which is separately remunerated in a manner transparent to the consumer . consumers should also be able to rely on the competence of the adviser . those providing advice should comply with general standards in order to ensure that the consumer is presented with a range of products suitable for his needs and circumstances and should also have the necessary professional competence to provide expert advice . that service should be based on a fair and sufficiently wide - ranging analysis of the products available on the market , in the case of provision of advice by an untied credit intermediary , or from within the creditor’s organisation in the case of provision of advice by the creditor or a tied credit intermediary , and on a close inspection of the consumer’s financial situation , preferences and objectives . such an assessment should be based on up - to - date information and reasonable assumptions on the consumer’s circumstances during the lifetime of the loan . member states may clarify how the suitability of a given product for a consumer should be assessed in the context of the provision of advice . the act of making a binding offer to a consumer does not in itself constitute advice .


### credit intermediaries shall be duly authorised to carry out the activities set out in article 3 by a competent authority as defined in article 4 in their home member state . such authorisation shall be granted on the basis of requirements established in the home member state of the credit intermediary and shall include the fulfilment of the professional requirements laid down in article 20 . ### credit intermediaries shall be duly authorised or registered with a competent authority as defined in article 4 in their home member state to carry out the activities set out in article 3 . such authorisation or registration shall be granted on the basis of requirements established in the home member state of the credit intermediary and shall include the fulfilment of the requirements laid down in articles 6 and 21 . what is later on provided for regarding authorisation , applies to registration .


### the powers to adopt delegated acts referred to in articles 6 , 8 , 9 , 10 , 14 and 16 shall be conferred on the commission for an indeterminate period of time following the entry into force of this directive . 2 . as soon as it adopts a delegated act , the commission shall notify it simultaneously to the european parliament and to the council . 3 . the power to adopt delegated acts is conferred on the commission subject to the conditions laid down in articles 27 and 28 . ### the power to adopt delegated acts referred to in article 12 shall be conferred on the commission subject to the conditions laid down in this article . 2 . the power referred to in article 12 shall be conferred on the commission for an indeterminate period of time following the entry into force of this directive . 3 . the delegation of power referred to in article 12 may be revoked at any time by the european parliament or by the council . a decision to revoke shall put an end to the delegation of the power specified in that decision . it shall take effect the day following the publication of the decision in the official journal of the european union or at a later date specified therein . it shall not affect the validity of any delegated acts already in force . 3a . as soon as it adopts a delegated act , the commission shall notify it simultaneously to the european parliament and to the council . 3b . a delegated act adopted pursuant to article 12 shall enter into force only if no objection has been expressed either by the european parliament or the council within a period of three months of notification of that act to the european parliament and the council or if , before the expiry of that period , the european parliament and the council have both informed the commission that they will not object . that period shall be extended by two months at the initiative of the european parliament or the council .


### in order to be in a position to understand the nature of the service , consumers should be made aware of what constitutes a personalised recommendation on suitable credit agreements for that consumer’s needs and financial situation and when it is being provided and when it is not . those providing advice should comply with general standards in order to ensure that the consumer is presented with a range of products suitable for his needs and circumstances . that service should be based on a fair and sufficiently wide - ranging analysis of the products available on the market , and on a close inspection of the consumer’s financial situation , preferences and objectives . such an assessment should be based on up - to - date information and reasonable assumptions on the consumer’s circumstances during the lifetime of the loan . member states may clarify how the suitability of a given product for a consumer should be assessed in the context of the provision of advice . ### in order to be in a position to understand the nature of the service , consumers should be made aware of what constitutes an expert personalised recommendation on suitable credit agreements for that consumer ' s needs and financial situation and when it is being provided . it is therefore important to ensure that this advisory service is a separate service which is paid for separately in a manner transparent to the consumer . consumers should also be able to rely on the competence of the adviser . those providing advice should comply with general standards in order to ensure that the consumer is presented with a range of products suitable for his needs and circumstances and should also have the necessary professional competence to provide expert advice . that service should be based on a fair and sufficiently wide - ranging analysis of the products offered , in the case of advice provided by creditors or tied credit intermediaries , or of the products available on the market , in the case of advice provided by credit intermediaries who are not tied , and on a close inspection of the consumer’s financial situation , preferences and objectives . such an assessment should be based on up - to - date information and reasonable assumptions on the consumer’s circumstances during the lifetime of the loan . member states may clarify how the suitability of a given product for a consumer should be assessed in the context of the provision of advice . the act of making a binding offer to a consumer does not in itself constitute advice .


### in order to be in a position to understand the nature of the service , consumers should be made aware of what constitutes a personalised recommendation on suitable credit agreements for that consumer ' s needs and financial situation and when it is being provided and when it is not . those providing advice should comply with general standards in order to ensure that the consumer is presented with a range of products suitable for his needs and circumstances . that service should be based on a fair and sufficiently wide - ranging analysis of the products available on the market , and on a close inspection of the consumer ' s financial situation , preferences and objectives . such an assessment should be based on up - to - date information and reasonable assumptions on the consumer ' s circumstances during the lifetime of the loan . member states may clarify how the suitability of a given product for a consumer should be assessed in the context of the provision of advice . ### in order to be in a position to understand the nature of the service , consumers should be made aware of what constitutes an expert personalised recommendation on suitable credit agreements for that consumer ' s needs and financial situation and when it is being provided and when it is not . it is therefore important to ensure that the service of advice is a distinct service which is separately remunerated in a manner transparent to the consumer . consumers should also be able to rely on the competence of the adviser . those providing advice should comply with general standards in order to ensure that the consumer is presented with a range of products suitable for his needs and circumstances and should also have the necessary professional competence to provide expert advice . that service should be based on a fair and sufficiently wide - ranging analysis of the products available on the market , and on a close inspection of the consumer ' s financial situation , preferences and objectives . such an assessment should be based on up - to - date information and reasonable assumptions on the consumer ' s circumstances during the lifetime of the loan . member states may clarify how the suitability of a given product for a consumer should be assessed in the context of the provision of advice . the act of making a binding offer to a consumer does not in itself constitute advice .


### member states shall ensure that creditors and , where applicable , credit intermediaries provide adequate explanations to the consumer on the proposed credit agreement and any ancillary service , in order to place the consumer in a position enabling him to assess whether the proposed credit agreements are adapted to his needs and financial situation . an adequate explanation shall include the provision of personalised information on the characteristics of the credits on offer , without however formulating any recommendation . creditors and , where applicable , credit intermediaries shall accurately assess the level of knowledge and experience with credit of the consumer by any means necessary so as to enable the creditor or the intermediary to determine the level of explanations to be given to the consumer and adjust such explanations accordingly . ### member states shall ensure that creditors and , where applicable , credit intermediaries provide adequate explanations to the consumer , in order to place the consumer in a position enabling him to assess whether the proposed credit agreement is adapted to his needs and financial situation , where appropriate by explaining the pre - contractual information to be provided in accordance with articles 9 and 10 , the essential characteristics of the products proposed and the specific effects they may have on the consumer , including the consequences of default in payment by the consumer . member states may adapt the manner by which and the extent to which such assistance is given , as well as by whom it is given , to the particular circumstances of the situation in which the credit agreement is offered , the person to whom it is offered and the type of credit offered .


### a negative creditworthiness assessment should indicate to the creditor that the consumer is unable to afford the credit and as a consequence , the creditor should not grant the credit . such a negative outcome may derive from a wide range of reasons , including but not limited to the consultation of a database or a negative credit score . a positive creditworthiness assessment should not constitute an obligation for the creditor to provide credit . ### a negative creditworthiness assessment should indicate to the creditor that the consumer may be unable to afford the credit . such a negative outcome may derive from a wide range of reasons , including but not limited to the consultation of a database or a negative credit score . it should be noted that different mortgage lenders have different risk appetites , and therefore a negative creditworthiness assessment is not always indicative of a poor financial situation , but simply reflects the willingness of the creditor to lend to the borrower at that particular time . a positive creditworthiness assessment should not constitute an obligation for the creditor to provide credit .


### member states shall ensure that the consumer has a statutory or contractual right to discharge his obligations under a credit agreement prior to the expiry of that agreement . in such cases , he shall be entitled to a reduction in the total cost of the credit , such a reduction consisting of the interest and the costs for the remaining duration of the contract . ### member states shall ensure that the consumer has a statutory or contractual right to discharge fully or partially his obligations under a credit agreement prior to the expiry of that agreement . in such cases , he shall be entitled to a reduction in the total cost of the credit , such a reduction consisting of the interest and the costs for the remaining duration of the contract .


### in order to facilitate the emergence of a smoothly functioning internal market with a high level of consumer protection in the area of credit agreements relating to residential immovable property , a harmonised union framework needs to be established in a number of areas . it is further necessary to establish harmonised standards in order to ensure that consumers looking for credit agreements relating to residential immovable property are able to do so confident in the knowledge that the institutions they interact with act in a professional and responsible manner . ### in order to determine the scope for the emergence of a smoothly functioning internal market with a high level of consumer protection in the area of credit agreements relating to residential immovable property , a harmonised union framework could prove useful in a number of areas . at the same time , harmonised standards could be established in order to ensure that consumers looking for credit agreements relating to residential immovable property are able to do so confident in the knowledge that the institutions they interact with act in a professional and responsible manner . in that connection , due account should be taken of the highly local nature of the market in credit agreements relating to residential immovable property . in this area in particular , consumers are very much in need of local advice .


### for the purpose of calculating the annual percentage rate of charge , the total cost of the credit to the consumer shall be determined excluding any charges payable by the consumer for non - compliance with any of his commitments laid down in the credit agreement . where the opening of an account is obligatory in order to obtain the credit , the costs of maintaining such an account , the costs of using a means of payment for both payment transactions and drawdowns on that account , and other costs relating to payment transactions shall be included in the total cost of credit to the consumer , unless the costs have been clearly and separately shown in the credit agreement or in any other agreement concluded with the consumer . ### for the purpose of calculating the annual percentage rate of charge , the total cost of the credit to the consumer shall be determined excluding charges payable by the consumer for non - compliance with any of his commitments laid down in the credit agreement . the costs of maintaining an account recording both payment transactions and drawdowns , the costs of using a means of payment for both payment transactions and drawdowns , and other costs relating to payment transactions shall be included in the total cost of credit to the consumer unless the opening of the account is optional and the costs relating to the account have been clearly and separately shown in the credit agreement or in any other agreement concluded with the consumer .


### the powers to adopt delegated acts referred to in articles 6 , 8 , 9 , 10 , 14 and 16 shall be conferred on the commission for an indeterminate period of time following the entry into force of this directive . ### the powers to adopt delegated acts referred to in article 12 shall be conferred on the commission for an indeterminate period of time following the entry into force of this directive .


### credit agreements the purpose of which is to acquire or retain property rights in land or in an existing or projected residential building . ### credit agreements the purpose of which is to acquire or retain rights in rem in land or in an existing or projected residential building .


### member states shall ensure that appropriate and effective complaints and redress procedures are established for the out - of - court settlement of disputes concerning rights and obligations established under this directive between creditors and consumers and between credit intermediaries and consumers , using existing bodies where appropriate . member states shall further ensure that all creditors and credit intermediaries adhere to one or more such bodies implementing such complaint and redress procedures . ### member states shall ensure that adequate and effective out - of - court dispute resolution procedures for the settlement of consumer disputes concerning credit agreements are put in place , using existing bodies where appropriate .


### the amount of the instalments ; ### if applicable , the amount of the instalments ;


### where the opening of an account is obligatory in order to obtain the credit , the costs of maintaining such an account , the costs of using a means of payment for both payment transactions and drawdowns on that account , and other costs relating to payment transactions shall be included in the total cost of credit to the consumer , unless the costs have been clearly and separately shown in the credit agreement or in any other agreement concluded with the consumer . ### the costs of maintaining an account recording both payment transactions and drawdowns , the costs of using a means of payment for both payment transactions and drawdowns , and other costs relating to payment transactions shall be included in the total cost of credit to the consumer unless the opening of the account is optional and the costs of the account have been clearly and separately shown in the credit agreement or in any other agreement concluded with the consumer .


### credit intermediaries shall be duly authorised to carry out the activities set out in article 3 by a competent authority as defined in article 4 in their home member state . such authorisation shall be granted on the basis of requirements established in the home member state of the credit intermediary and shall include the fulfilment of the professional requirements laid down in article 20 . ### credit intermediaries shall be duly authorised or registered with a competent authority as defined in article 4 in their home member state to carry out the activities set out in article 3 . such authorisation or registration shall be granted on the basis of requirements established in the home member state of the credit intermediary and shall include the fulfilment of the professional requirements laid down in articles 6 and 20 . what is later on provided for regarding authorisation , applies to registration .


### at the same time , it is important take into consideration the specificities of credit agreements relating to residential immovable property which justify a differentiated approach . given the nature and the possible consequences of a credit agreement relating to residential immovable property for the consumer , advertising materials and personalised pre - contractual information should include specific risk warnings , for instance about the nature and implications of taking out a security . following what already existed as a voluntary approach by the industry concerning home loans , general pre - contractual information should be made available at all times in addition to the personalised pre - contractual information . furthermore , a differentiated approach is justifiable in order to take into consideration the lessons learnt from the financial crisis in order to ensure that loan origination takes place in a sound manner . in this respect , the provisions on the creditworthiness assessment should be strengthened in comparison to consumer credit , more precise information should be provided by credit intermediaries on their status and relationship with the creditors in order to disclose potential conflicts of interest , and all actors involved in the origination of credit agreements relating to residential immovable property should be adequately authorised , registered and supervised . ### at the same time , it is important take into consideration the specificities of credit agreements relating to residential immovable property which justify a differentiated approach . given the nature and the possible consequences of a credit agreement relating to residential immovable property for the consumer , advertising materials and personalised pre - contractual information should include specific risk warnings , for instance about the nature and implications of taking out a security . nevertheless , the nature of the advertising medium should be taken into account and thus diversification on the rules should be foreseen according to the medium . following what already existed as a voluntary approach by the industry concerning home loans , general pre - contractual information should be made available at all times in addition to the personalised pre - contractual information . furthermore , a differentiated approach is justifiable in order to take into consideration the lessons learnt from the financial crisis in order to ensure that loan origination takes place in a sound manner . in this respect , the provisions on the creditworthiness assessment should be strengthened in comparison to consumer credit , more precise information should be provided by credit intermediaries on their status and relationship with the creditors in order to disclose potential conflicts of interest , and all actors involved in the origination of credit agreements relating to residential immovable property should be adequately authorised , registered and supervised .


### a negative creditworthiness assessment should indicate to the creditor that the consumer is unable to afford the credit and as a consequence , the creditor should not grant the credit . such a negative outcome may derive from a wide range of reasons , including but not limited to the consultation of a database or a negative credit score . a positive creditworthiness assessment should not constitute an obligation for the creditor to provide credit . ### a positive creditworthiness assessment should not constitute an obligation for the creditor to provide credit .


### an assessment of creditworthiness should take into consideration all necessary factors that could influence a consumer’s ability to repay over the lifetime of the loan including , but not limited to , the consumer’s income , regular expenditures , credit score , past credit history , ability to handle interest rate adjustments , and other existing credit commitments . additional provisions may be necessary to further elaborate on the different elements that may be taken into consideration in a creditworthiness assessment . member states may issue guidance on the method and criteria to assess a consumer’s creditworthiness , for example by setting limits on loan - to - value or loan - to - income ratios . ### an assessment of creditworthiness should take into consideration all necessary factors that could influence a consumer’s ability to repay the loan including , but not limited to , the consumer’s income , regular expenditures , credit score , past credit history , ability to handle interest rate adjustments , and other existing credit commitments . additional provisions may be necessary to further elaborate on the different elements that may be taken into consideration in a creditworthiness assessment . member states may issue guidance on the method and criteria to assess a consumer’s creditworthiness .


### credit agreements the purpose of which is to acquire or retain property rights in land or in an existing or projected residential building . ### credit agreements the purpose of which , at the time they are concluded , is to acquire or retain property rights in land or in an existing or projected residential building .


### the natural persons within the management of creditors and credit intermediaries who are responsible for or have a role in the intermediation , advice or approval of the credit agreement , possess appropriate knowledge and competence in relation to credit agreements . ### the natural persons within the management of credit intermediaries who are responsible for the intermediation or advice with regards to credit agreement , possess appropriate knowledge and competence in relation to credit agreements . the management of credit intermediaries shall ensure that the staff has an appropriate level of knowledge and competence to perform their tasks .


### without prejudice to procedures for the withdrawal of authorisation or to the right of member&#160 ; states to impose criminal sanctions , member&#160 ; states shall ensure , in conformity with their national law , that appropriate administrative measures can be taken or administrative sanctions imposed against persons responsible where the provisions adopted in the implementation of this directive have not been complied with . member&#160 ; states shall ensure that these measures are effective , proportionate and dissuasive . ### member states shall lay down the rules on penalties applicable to infringements of the national provisions adopted pursuant to this directive and shall take all measures necessary to ensure that they are implemented . those sanctions shall be effective , proportionate and dissuasive .


### the standard information shall specify the following in a clear , concise and prominent way by means of a representative example : ### the standard information shall specify in a clear , concise and prominent way by means of a representative example :


### a consumer ' s ability to repay his credit prior to the expiry of his credit agreement may play an important role in promoting competition in the single market and the free movement of eu citizens . however , substantial differences exist between the national principles and conditions under which consumers have the ability to repay and the conditions under which such early repayment can take place . whilst recognising the diversity in mortgage funding mechanisms and the range of products available , certain standards with regard to early repayment of credit are essential at union level in order to ensure that consumers have the possibility to discharge their obligations before the date agreed in the credit agreement and the confidence to shop around for the best products to meet their needs . member states should therefore ensure , either by legislation or by means of contractual clauses , that consumers have a statutory or contractual right to early repayment ; nevertheless , member states should be able to define the conditions for the exercise of such a right . these conditions may include time limitations on the exercise of the right , different treatment depending on the type of the borrowing rate , whether fixed or variable , restrictions with regard to the circumstances under which the right may be exercised . member states could also provide that the creditor should be entitled to fair and objectively justified compensation for potential costs directly linked to early repayment of the credit . in any event if the early repayment falls within a period for which the borrowing rate is fixed , exercise of the right may be made subject to the existence of a special interest on the part of the consumer . such special interest may for example occur in case of divorce or unemployment . where a member state chooses to lay down such conditions , these should not make the exercise of the right excessively difficult or onerous for the consumer . ### a consumer ' s ability to repay his credit prior to the expiry of his credit agreement may play an important role in promoting competition in the single market and the free movement of eu citizens . however , substantial differences exist between the national principles and conditions under which consumers have the ability to repay and the conditions under which such early repayment can take place . whilst recognising the diversity in mortgage funding mechanisms and the range of products available , certain standards with regard to early repayment of credit are essential at union level in order to ensure that consumers have the possibility to discharge their obligations before the date agreed in the credit agreement and the confidence to shop around for the best products to meet their needs . member states should therefore ensure that consumers have a statutory right to early repayment ; nevertheless , the exercise of such a right should be subject to conditions depending on the nature and funding of the credit agreement . in order to ensure market efficiency , member states could also provide that , to preserve its indemnity , the creditor should be entitled to fair and objectively justified compensation for potential costs directly linked to early repayment of the credit while avoiding penalising the consumer . in any event if the early repayment falls within a period for which the borrowing rate is fixed , exercise of the right may be made subject to the existence of a special interest on the part of the consumer .


### the natural persons within the management of creditors and credit intermediaries who are responsible for or have a role in the intermediation , advice or approval of the credit agreement , possess appropriate knowledge and competence in relation to credit agreements . ### the natural persons within the management of credit intermediaries who are responsible for the intermediation or advice regarding credit agreements possess appropriate knowledge and experience in relation to credit agreements . the management of credit intermediaries shall see after that the personnel has an appropriate level of knowledge and competence for their tasks .


### member states shall ensure that consumers provide creditors and , where applicable , credit intermediaries with complete and correct information on their financial situation and personal circumstances in the context of the credit application process . that information should be supported , when necessary , by documentary evidence from independently verifiable sources . ### member states shall ensure that consumers provide creditors and , where applicable , credit intermediaries with necessary and correct information on their financial situation and personal circumstances in the context of the credit application process . that information should be supported , when necessary , by documentary evidence from independently verifiable sources .


### for the purposes of this directive , ' advice ' constitutes a separate service from the granting of a credit . such a service can only be marketed as advice when the remuneration of the individual providing the service is transparent to the consumer . ### member states may decide either : that advice constitutes a separate service from the granting of a credit ; that advice is included in the granting of a credit .


### member states shall ensure that the creditor and , where applicable , the credit intermediary , without undue delay after the consumer has given the necessary information on his needs , financial situation and preferences in accordance with article 14 , provides the consumer with the personalised information needed to compare the credits available on the market , assess their implications and take an informed decision on whether to conclude a credit agreement . such information , on paper or on another durable medium , shall be provided by means of the european standardised information sheet , as set out in annex ii . ### the creditor and , where applicable , the credit intermediary , shall on the basis of credit terms and conditions offered by the creditor and the information received from the consumer on his needs , financial situation and preferences , provide the consumer with the personalised information needed to compare the credits available on the market , assess their implications and take an informed decision on whether to conclude a credit agreement . this information shall be given in good time before the consumer is bound by any credit agreement or offer . such information , on paper or on another durable medium , shall be provided by means of the european standardised information sheet , as set out in annex ii .