### the scope of this directive should be confined to the management of collective investment undertakings which raise capital from a number of investors with a view to investing it in accordance with a defined investment policy on the principle of risk - spreading for the benefit of those investors . this directive should not apply to the management of pension funds or managers of non - pooled investments such as endowments , sovereign wealth funds or assets hold on own account by credit institutions , insurance or reinsurance undertakings . this directive should neither apply to actively managed investments in the form of securities , such as certificates , managed futures , or index - linked bonds . it should , however , cover managers of all collective investment undertakings which are not required to be authorised as ucits . investment firms authorised under directive 2004 / 39 / ec on markets in financial instruments should not be required to obtain an authorisation under this directive in order to provide investment services in respect of aif . investment firms can however only provide investment services in respect of aif , if and to the extent the units or shares thereof can be marketed in accordance with this directive . ### the scope of this directive should be confined to the management of collective investment undertakings which raise capital from a number of investors with a view to investing it in accordance with a defined investment policy on the principle of risk - spreading for the benefit of those investors . it should cover managers of all such collective investment undertakings which are not required to be authorised as ucits . this directive should not apply to the management of pension funds or managers of non - pooled investments such as endowments , sovereign wealth funds or assets held on own account by credit institutions , insurance or reinsurance undertakings . this directive should neither apply to actively managed investments in the form of securities , such as certificates , managed futures , or index - linked bonds . nor , for the purposes of this directive , is an undertaking which principally acts as a holding entity for a group of subsidiary undertakings and which owns strategic stakes in undertakings with a view to long term holding rather than for the purpose of generating returns through divestment within a defined timeframe , to be regarded as a collective investment undertaking . investment firms authorised under directive 2004 / 39 / ec on markets in financial instruments should not be required to obtain an authorisation under this directive in order to provide investment services in respect of aif . investment firms can however only provide investment services in respect of aif , if and to the extent the units or shares thereof can be marketed in accordance with this directive .


### the scope of this directive should be confined to the management of collective investment undertakings which raise capital from a number of investors with a view to investing it in accordance with a defined investment policy on the principle of risk - spreading for the benefit of those investors . this directive should not apply to the management of pension funds or managers of non - pooled investments such as endowments , sovereign wealth funds or assets hold on own account by credit institutions , insurance or reinsurance undertakings . this directive should neither apply to actively managed investments in the form of securities , such as certificates , managed futures , or index - linked bonds . it should , however , cover managers of all collective investment undertakings which are not required to be authorised as ucits . investment firms authorised under directive 2004 / 39 / ec on markets in financial instruments should not be required to obtain an authorisation under this directive in order to provide investment services in respect of aif . investment firms can however only provide investment services in respect of aif , if and to the extent the units or shares thereof can be marketed in accordance with this directive . ### the scope of this directive should be confined to the management of collective investment undertakings which raise capital from a number of investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors . this directive should not apply to managers of non - pooled investments such as endowments , sovereign wealth funds , central banks or assets directly or indirectly held on own account by credit institutions , institutions for retirement provision , or insurance or reinsurance undertakings . it should also not apply to the management of collective investment undertakings which are authorised in accordance with national law and only marketed in their home member state . this directive should , however , apply to actively managed investments in the form of securities , such as certificates , managed futures , or index - linked bonds . it should also cover managers of all collective investment undertakings which are not required to be authorised as ucits . investment firms authorised under directive 2004 / 39 / ec on markets in financial instruments should not be required to obtain an authorisation under this directive in order to provide investment services in respect of aif . investment firms can however only provide investment services in respect of aif , if and to the extent the units or shares thereof can be marketed in accordance with this directive .


### given that aifm employing high levels of leverage in their investment strategies may , under certain conditions , contribute to the build up of systemic risk or disorderly markets , special requirements should be imposed on aifm using certain techniques giving rise to particular risks . the information needed to detect , monitor and respond to those risks has not been collected in a consistent way throughout the community , and shared across member states so as to identify potential sources of risk to the stability of financial markets in the community . to remedy this situation , special requirements should apply to aifm , which consistently use high levels of leverage in their investment strategies . those aifm should be obliged to disclose information regarding their use and sources of leverage . that information should be aggregated and shared with other authorities in the community , so as to facilitate a collective analysis of the impact of the leverage of those aifm on the financial system in the community , as well as a common response . ### given that an aifm may employ leverage at the level of the aif and may , under certain conditions , contribute to the build up of systemic risk or disorderly markets , special requirements should be imposed on aifm employing leverage on a systemically significant basis . the information needed to detect , monitor and respond to those risks has not been collected in a consistent way throughout the union , and shared across member states so as to identify potential sources of risk to the stability of financial markets in the union . to remedy this situation , special requirements should apply to aifm , which employ leverage at the level of the aif on a systemically significant basis . such aifm should be obliged to disclose information regarding the use and sources of leverage . that information should be aggregated and shared with other authorities in the union , so as to facilitate a collective analysis of the impact of the leverage of aif managed by aifm on the financial system in the union , as well as a common response . competent authorities should pass such information to the european systemic risk board established under regulation no . . . / 2009 and to the european securities and markets authority established under regulation no . . . / 2009 for use by these bodies in the performance of their duties .


### given that aifm employing high levels of leverage in their investment strategies may , under certain conditions , contribute to the build up of systemic risk or disorderly markets , special requirements should be imposed on aifm using certain techniques giving rise to particular risks . the information needed to detect , monitor and respond to those risks has not been collected in a consistent way throughout the community , and shared across member states so as to identify potential sources of risk to the stability of financial markets in the community . to remedy this situation , special requirements should apply to aifm , which consistently use high levels of leverage in their investment strategies . those aifm should be obliged to disclose information regarding their use and sources of leverage . that information should be aggregated and shared with other authorities in the community , so as to facilitate a collective analysis of the impact of the leverage of those aifm on the financial system in the community , as well as a common response . ### given that an aifm may employ leverage , at the level of the aif and may , under certain conditions , contribute to the build up of systemic risk or disorderly markets , special requirements should be imposed on aifm employing leverage on a systemically significant basis . the information needed to detect , monitor and respond to those risks has not been collected in a consistent way throughout the union , and shared across member states so as to identify potential sources of risk to the stability of financial markets in the union . to remedy this situation , special requirements should apply to aifm , which employ leverage at the level of the aif on a systemically significant basis . such aifm should be obliged to disclose information regarding the use and sources of leverage in their aif . information gathered by competent authorities should be aggregated and shared with other authorities in the union , so as to facilitate a collective analysis of the impact of the leverage of aif managed by aifm on the financial system in the union , as well as a common response .


### given that aifm employing high levels of leverage in their investment strategies may , under certain conditions , contribute to the build up of systemic risk or disorderly markets , special requirements should be imposed on aifm using certain techniques giving rise to particular risks . the information needed to detect , monitor and respond to those risks has not been collected in a consistent way throughout the community , and shared across member states so as to identify potential sources of risk to the stability of financial markets in the community . to remedy this situation , special requirements should apply to aifm , which consistently use high levels of leverage in their investment strategies . those aifm should be obliged to disclose information regarding their use and sources of leverage . that information should be aggregated and shared with other authorities in the community , so as to facilitate a collective analysis of the impact of the leverage of those aifm on the financial system in the community , as well as a common response . ### given that an aifm may employ leverage at the level of the aif and may , under certain conditions , contribute to the build up of systemic risk or disorderly markets , special requirements should be imposed on aifm employing leverage on a systemically significant basis . the information needed to detect , monitor and respond to those risks has not been collected in a consistent way throughout the union , and shared across member states so as to identify potential sources of risk to the stability of financial markets in the union . to remedy this situation , special requirements should apply to aifm , which employ leverage at the level of the aif on a systemically significant basis . such aifm should be obliged to disclose information regarding the use and sources of leverage in their aif . information gathered by competent authorities should be aggregated and shared with other authorities in the union , so as to facilitate a collective analysis of the impact of the leverage of aif managed by aifm on the financial system in the union , as well as a common response .


### given that aifm employing high levels of leverage in their investment strategies may , under certain conditions , contribute to the build up of systemic risk or disorderly markets , special requirements should be imposed on aifm using certain techniques giving rise to particular risks . the information needed to detect , monitor and respond to those risks has not been collected in a consistent way throughout the community , and shared across member states so as to identify potential sources of risk to the stability of financial markets in the community . to remedy this situation , special requirements should apply to aifm , which consistently use high levels of leverage in their investment strategies . those aifm should be obliged to disclose information regarding their use and sources of leverage . that information should be aggregated and shared with other authorities in the community , so as to facilitate a collective analysis of the impact of the leverage of those aifm on the financial system in the community , as well as a common response . ### given that aifm employing high levels of leverage in their investment strategies may , under certain conditions , contribute to the build up of systemic risk or disorderly markets , special requirements should be imposed on aifm using certain techniques giving rise to particular risks . the information needed to detect , monitor and respond to those risks has not been collected in a consistent way throughout the community , and shared across member states so as to identify potential sources of risk to the stability of financial markets in the community . to remedy this situation , special requirements should apply to aifm , which consistently use high levels of leverage in their investment strategies . those aifm should be obliged to set leverage limits in respect of each aif it manages and to disclose information regarding their use and sources of leverage . that information should be aggregated and shared with other authorities in the community , so as to facilitate a collective analysis of the impact of the leverage of those aifm on the financial system in the community , as well as a common response . competent authorities should pass such information to the european systemic risk board established under regulation no . . . / 2009 and to the european securities and markets authority established under regulation no . . . / 2009 for use by these bodies in the performance of their duties .


### 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 . it is considered necessary to allow the commission to impose limits in exceptional circumstances on the level of leverage that aifm could use and 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 . the commission should take into account the views of the european systemic risk board when exercising its power to set limits to leverage .


### 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 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 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 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 onthespot verifications and investigations .


### ucits or their management or investment companies authorised in accordance with directive 2009 / … / ec [ the ucits directive ] ; ### ucits or their management or investment companies authorised in accordance with directive 2009 / 65 / ec in so far as those management or investment companies do not manage aif ;


### institutions which are covered by directive 2003 / 41 / ec of the european parliament and the council of 3 june 2003 on the activities and supervision of institutions for occupational retirement provision ; ### national , regional and local governments and bodies or institutions which manage funds supporting social security and pension systems ;


### the competent authorities shall , within a month of receipt of that notification , either approve , or impose restrictions , or reject those changes . ### if the competent authorities decide to impose restrictions or reject those changes , they shall , within a month of receipt of that notification , inform the aifm . if the competent authorities do not oppose the changes within the assessment period , they may be effected .


### where the value of the portfolios of aif managed by the aifm exceeds eur 250 million , the aifm shall provide an additional amount of own funds ; that additional amount of own funds shall be equal to 0 . 02 % of the amount by which the value of the portfolios of the aifm exceeds eur 250 million . ### where the value of the portfolios of aif managed by the aifm exceeds eur 150 million , the aifm shall provide an additional amount of own funds equal to at least 0 , 01 % of the amount by which the value of the portfolios of the aifm exceeds eur 150 million .


### where the value of the portfolios of aif managed by the aifm exceeds eur 250 million , the aifm shall provide an additional amount of own funds ; that additional amount of own funds shall be equal to 0 . 02 % of the amount by which the value of the portfolios of the aifm exceeds eur 250 million . ### where the value of the portfolios of aif managed by the aifm exceeds eur 250 million , the aifm shall provide an additional amount of own funds ; that additional amount of own funds shall be equal to 0 , 02 % of the amount by which the value of the portfolios of aif managed by the aifm exceeds eur 250 million .


### 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 a depositary is appointed to fulfil , where relevant , the following tasks :


### in no case shall the aifm ' s liability be affected by the fact that the aifm has delegated functions to a third party , nor shall the aifm delegate its functions to the extent that , in essence , it can no longer be considered to be the manager of the aif . ### the liability of the aifm shall not be affected by delegation by the aifm of any functions to third parties . the aifm shall not delegate its functions to the extent that it becomes a letter - box entity .


### in no case shall the aifm ' s liability be affected by the fact that the aifm has delegated functions to a third party , nor shall the aifm delegate its functions to the extent that , in essence , it can no longer be considered to be the manager of the aif . ### in no case shall the aifm ' s liability be affected by the fact that the aifm has delegated functions to a third party , nor shall the aifm delegate its functions to the extent that , in essence , it can no longer be considered to be the manager of the aif and to the extent that it becomes a letter - box entity .


### the commission shall adopt implementing measures further specifying the content and format of the annual report . these measures shall be adapted to the type of aifm to which they apply . ### the commission shall adopt delegated acts further specifying the content and format of the annual report . those acts shall be appropriate and proportionate and shall be adapted to the type of aifm to which they apply and the aif to which the report relates , taking account of the different size , resources , complexity , nature , investments , investment strategies and techniques , structures and investors of different types of aifm and the aif that they manage .


### a description of the investment strategy and objectives of the aif , all the assets which the aif can invest in and of the techniques it may employ and of all associated risks , any applicable investment restrictions , the circumstances in which the aif may use leverage , the types and sources of leverage permitted and the associated risks and of any restrictions to the use of leverage ; ### a description of the investment strategy and objectives of the aif , all the assets which the aif can invest in and of the techniques it may employ and of all associated risks , of any asset re - use and transfer arrangements and of custody arrangements if appropriate , any applicable investment restrictions , the circumstances in which the aif may use leverage , the types and sources of leverage permitted and the associated risks and of any restrictions to the use of leverage ;


### a description of the investment strategy and objectives of the aif , all the assets which the aif can invest in and of the techniques it may employ and of all associated risks , any applicable investment restrictions , the circumstances in which the aif may use leverage , the types and sources of leverage permitted and the associated risks and of any restrictions to the use of leverage ; ### a description of the investment strategy and objectives of the aif , the type of assets which the aif may invest in and of the techniques it may employ and of all associated risks , any applicable investment restrictions , the circumstances in which the aif may use leverage , the types and sources of leverage permitted and the associated risks and of any restrictions to the use of leverage ;


### for each aif an aifm manages , it shall periodically disclose to investors : ### for each aif that an aifm manages , it shall periodically disclose to retail investors :


### in order to ensure the stability and integrity of the financial system , the commission shall adopt implementing measures setting limits to the level of leverage aifm can employ . these limits should take into account , inter alia , the type of aif , their strategy and the sources of their leverage . ### in order to ensure the stability and integrity of the financial system , the commission shall adopt implementing measures entitling the commission , in the event that esma makes a determination under article 25 and after taking into account the advice of esrb , in exceptional circumstances and when this is required in order to ensure the stability and integrity of the financial system , to set limits to the level of leverage aifm can employ .


### the coordination of national provisions concerning the presentation and content of annual financial statements and management reports , the measurement bases , used therein and their publication in respect of certain undertakings with limited liability is of special importance for the protection of shareholders , members and third parties . simultaneous coordination is necessary in those fields for such forms of undertaking because , on the one hand , some undertakings operate in more than one member state and , on the other hand , they offer no safeguards to third parties beyond the amounts of their net assets . ### the coordination of national provisions concerning the presentation and content of annual financial statements and management reports , the measurement bases , used therein and their publication in respect of certain undertakings with limited liability is of special importance for the protection of shareholders , members and third parties , in particular with regard to the rules on capital maintenance and limitations on profit distributions laid down in the second council directive 77 / 91 / eec of 13 december 1976 on coordination of safeguards which , for the protection of the interests of members and others , are required by member states of companies within the meaning of the second paragraph of article 58 of the treaty , in respect of the formation of public limited liability companies and the maintenance and alteration of their capital , with a view to making such safeguards equivalent1 . simultaneous coordination is necessary in those fields for such forms of undertaking because , on the one hand , some undertakings operate in more than one member state and , on the other hand , they offer no safeguards to third parties beyond the amounts of their net assets . __________________ 1 oj l 26 , 31 . 1 . 1977 , p . 1 .


### to ensure the disclosure of comparable and equivalent information , recognition and measurement principles should include the going concern , the prudence , and the accrual bases . set - offs between asset and liability items and income and expenditure items should not be permitted , and components of assets and liabilities should be valued separately . the presentation of items in financial statements should have regard to the economic reality or commercial substance of the underlying transaction or arrangement . the principle of materiality should govern recognition , measurement , presentation and disclosure in the financial statements . ### to ensure the disclosure of comparable and equivalent information , recognition and measurement principles should include the going concern , the prudence , and the accrual bases . set - offs between asset and liability items and income and expenditure items should be permitted only in exceptional and narrowly defined cases , and components of assets and liabilities should be valued separately . the presentation of items in financial statements should have regard not only to the economic reality or commercial substance of the underlying transaction or arrangement but also to the legal form . the principle of materiality should govern presentation and disclosure in the financial statements .


### the information presented in the balance sheet and profit and loss account should be supplemented by disclosures by way of notes to the financial statements . users of financial statements typically have a limited need for supplementary information from small undertakings , and it can be costly to small undertakings to collate the supplementary information that needs to be disclosed . a limited disclosure regime for small undertakings is therefore justified . however where a small undertaking considers that it is beneficial to provide additional disclosures of the types required by medium - sized and large undertakings it shall not be prevented from doing so . ### the information presented in the balance sheet and profit and loss account should be supplemented by disclosures by way of notes to the financial statements . users of financial statements typically have a limited need for supplementary information from micro and small undertakings , and it can be costly to micro and small undertakings to collate the supplementary information that needs to be disclosed . a limited disclosure regime for micro and small undertakings is therefore justified . however where a micro and small undertaking considers that it is beneficial to provide additional disclosures of the types required by medium - sized and large undertakings it shall not be prevented from doing so .


### the management report and the consolidated management report are important elements of financial reporting . a fair review of the development of the business and of its position should be provided , in a manner consistent with the size and complexity of the business . the information should not be restricted to the financial aspects of the undertaking ' s business , and there should be an analysis of environmental and social aspects of the business necessary for an understanding of the undertaking ' s development , performance or position . in the cases where the consolidated management report and the parent undertaking management report are presented in a single report , it may be appropriate to give greater emphasis to those matters which are significant to the undertakings included in the consolidation taken as a whole . however , having regard to the potential burden placed on medium - sized undertakings , it is appropriate to provide that member states may choose to waive the obligation to provide non - financial information in the case of the management report of such undertakings . ### the management report and the consolidated management report are important elements of financial reporting . a fair review of the development of the business and of its position should be provided , in a manner consistent with the size and complexity of the business . the information should not be restricted to the financial aspects of the undertaking ' s business , and there should be an analysis of environmental and social aspects of the business necessary for an understanding of the undertaking ' s development , performance or position . in the cases where the consolidated management report and the parent undertaking management report are presented in a single report , it may be appropriate to give greater emphasis to those matters which are significant to the undertakings included in the consolidation taken as a whole . however , having regard to the potential burden placed on small and medium - sized undertakings , it is appropriate to provide that member states may choose to waive the obligation to provide non - financial information in the case of the management report of such undertakings .


### member states should have the possibility of exempting small undertakings from the obligation to draw up a management report provided that they include , in the notes to the financial statements , the data concerning the acquisition of own shares referred to in article 22 of the second council directive 77 / 91 / eec of 13 december 1976 on coordination of safeguards which , for the protection of the interests of members and others , are required by member states of companies within the meaning of the second paragraph of article 58 of the treaty , in respect of the formation of public limited liability companies and the maintenance and alteration of their capital , with a view to making such safeguards equivalent . ### member states should have the possibility of exempting small undertakings from the obligation to draw up a management report provided that they include , in the notes to the financial statements , the data concerning the acquisition of own shares referred to in article 22 of the second council directive 77 / 91 / eec .


### many undertakings are members of bodies of undertakings . consolidated financial statements should be drawn up so that financial information concerning such bodies of undertakings may be conveyed to members and third parties . national law governing consolidated financial statements should therefore be coordinated in order to achieve the objectives of comparability and equivalence in the information which undertakings should publish within the union . ### many undertakings are members of bodies of undertakings and the aim of coordinating the legislation governing consolidated accounts is to protect the interests subsisting in companies with a share capital . consolidated financial statements should be drawn up so that financial information concerning such bodies of undertakings may be conveyed to members and third parties . national law governing consolidated financial statements should therefore be coordinated in order to achieve the objectives of comparability and equivalence in the information which undertakings should publish within the union .


### the annual financial statements of all undertakings to which this directive applies should be published in accordance with directive 2009 / 101 / ec . it is however appropriate to provide that certain derogations may be granted also in this area for small and medium - sized undertakings . ### the annual financial statements of all undertakings to which this directive applies should be published in accordance with directive 2009 / 101 / ec of the european parliament and of the council of 16 september 2009 on coordination of safeguards which , for the protection of the interests of members and third parties , are required by member states of companies within the meaning of the second paragraph of article 48 of the treaty , with a view to making such safeguards equivalent1 . it is however appropriate to provide that certain derogations may be granted also in this area for small and medium - sized undertakings . _______________ 1 oj l 259 . 1 . 10 . 2009 , p . 11 .


### the annual financial statements and consolidated financial statements should be audited . the requirement that an audit opinion should state whether the annual or consolidated financial statements give a true and fair view in accordance with the relevant financial reporting framework does not represent a restriction of the scope of that opinion but clarifies the context in which it is expressed . the annual financial statements of small undertakings should not be covered by this audit obligation , as audit can be a significant administrative burden for this category of undertaking , whilst for many small undertakings the same persons are both shareholders and management and therefore have limited need for third party assurance on the financial statements . ### the annual financial statements and consolidated financial statements should be audited . the requirement that an audit opinion should state whether the annual or consolidated financial statements give a true and fair view in accordance with the relevant financial reporting framework does not represent a restriction of the scope of that opinion but clarifies the context in which it is expressed . the annual financial statements of micro and small undertakings should not be covered by this audit obligation , as audit can be a significant administrative burden for this category of undertaking , whilst for many micro and small undertakings the same persons are both shareholders and management and therefore have limited need for third party assurance on the financial statements .


### ' public interest entities ' means entities governed by the law of a member state as defined in point of article 2 of directive 2006 / 43 / ec ; ### ' public interest entities ' means entities within the scope of article 1 ;


### a group ' means a parent undertaking and all its subsidiary undertakings included in a consolidation ; ### ' group ' means a parent undertaking and all its subsidiary undertakings included in a consolidation ;


### in the case of those member states which have not adopted the euro , the amount in national currency equivalent to the amounts set out in paragraphs 1 to 5 shall be that obtained by applying the exchange rate published in the official journal of the european union on the date of the entry into force of any directive setting those amounts . ### in the case of those member states which have not adopted the euro , the amount in national currency equivalent to the amounts set out in paragraphs - 1 to 5 shall be that obtained by applying the exchange rate published in the official journal of the european union on the date of the entry into force of any directive setting those amounts .


### where on its balance sheet date , an undertaking exceeds or ceases to exceed the limits of two of the three criteria set out in paragraphs 1 to 5 , that fact shall affect the application of the derogations provided for in this directive only if it occurs in two consecutive financial years . ### where on its balance sheet date , an undertaking exceeds or ceases to exceed the limits of two of the three criteria set out in paragraphs - 1 to 5 , that fact shall affect the application of the derogations provided for in this directive only if it occurs in two consecutive financial years .


### where in exceptional cases the application of a provision of this directive is incompatible with the obligation laid down in paragraph 3 , that provision shall be departed from in order to give a true and fair view of the undertaking ' s assets , liabilities , financial position and profit or loss . any such departure shall be disclosed in the notes to the financial statements together with an explanation of the reasons for it and a statement of its effect on the assets , liabilities , financial position and profit or loss . ### where in exceptional cases the application of a provision of this directive is incompatible with the obligation laid down in paragraph 3 , that provision shall be departed from in order to give a true and fair view of the undertaking ' s assets , liabilities , financial position and profit or loss . any such departure shall be disclosed in the notes to the financial statements together with an explanation of the reasons for it and a statement of its effect on the assets , liabilities , financial position and profit or loss . the member states may define the exceptional cases in question and lay down the relevant special rules .


### any set - off between asset and liability items , or between income and expenditure items , shall be prohibited ; ### any set - off between asset and liability items , or between income and expenditure items , shall be prohibited unless a member state acknowledges in specific cases the legal right to set off claims and debts by virtue of the law or of a contractual arrangement ;


### items in the profit and loss account and balance sheet shall be presented having regard to the substance of the reported transaction or arrangement ; ### items in the profit and loss account and balance sheet shall be recognised and presented having regard to not only the legal form but also the substance of the reported transaction or arrangement ;


### departures from these general principles shall be permitted in exceptional cases in order to give a true and fair view of the undertaking ' s assets , liabilities , financial position and profit or loss . any such departures shall be disclosed in the notes to the financial statements and the reasons for them shall be given together with an assessment of their effect on the assets , liabilities , financial position , and profit or loss . ### departures from these general principles shall be permitted in exceptional cases . any such departures shall be disclosed in the notes to the financial statements and the reasons for them shall be given together with an assessment of their effect on the assets , liabilities , financial position , and profit or loss .


### in respect of an associated undertaking : ### in respect of a participating interest :


### member states may permit or require an associated undertaking to be accounted for in annual financial statements using the equity method as provided for in article 27 to , taking account of the essential adjustments resulting from the particular characteristics of annual financial statements as compared to consolidated financial statements . ### member states may permit or require a participating interest to be accounted for in annual financial statements using the equity method as provided for in article 27 to , taking account of the essential adjustments resulting from the particular characteristics of annual financial statements as compared to consolidated financial statements .


### member states may permit or require that the proportion of the profit or loss attributable to the associated undertaking be recognised in the profit and loss account only to the extent of the amount corresponding to dividends already received or the payment of which can be claimed . ### member states may permit or require that the proportion of the profit or loss attributable to the participating interest be recognised in the profit and loss account only to the extent of the amount corresponding to dividends already received or the payment of which can be claimed .


### where the profit or loss attributable to the associated undertaking recognised in the profit and loss account exceeds the amount of dividends already received or the payment of which can be claimed , the amount of the difference shall be placed in a reserve which cannot be distributed to shareholders . ### where the profit or loss attributable to the participating interest recognised in the profit and loss account exceeds the amount of dividends already received or the payment of which can be claimed , the amount of the difference shall be placed in a reserve which cannot be distributed to shareholders .


### costs of research and development , in so far as national law permits their being shown as assets . ### costs of development , in so far as national law permits their being shown as assets .


### member states may permit the purchase price or production cost of stocks of goods of the same category and all fungible items including investments to be calculated either on the basis of weighted average prices or on the basis of the ‘ first in , first out’ method , or a similar method . ### member states may permit the purchase price or production cost of stocks of goods of the same category and all fungible items including investments to be calculated either on the basis of weighted average prices or on the basis of the ‘ first in , first out’ method , or on the basis of the ' last in , first out ' method , or a similar method .


### where national law authorizes the inclusion of costs of research and development under ‘ assets’ , they shall be written off within a maximum period of five years . in so far as the costs of research and development have not been completely written off , no distribution of profits shall take place unless the amount of the reserves available for distribution and profits brought forward is at least equal to that of the costs not written off . ### where national law authorizes the inclusion of costs of development under ‘ assets’ , they shall be written off within a maximum period of five years . in so far as the costs of development have not been completely written off , no distribution of profits shall take place unless the amount of the reserves available for distribution and profits brought forward is at least equal to that of the costs not written off .


### a provision shall represent the best estimate of the expenses likely to be incurred , or in the case of a liability , the amount required to settle it at the balance sheet date . ### provisions shall be measured at the reasonable amount calculated on an objective basis to settle the amount payable , or in the case of a liability , at the amount required to settle it at the balance sheet date .


### the total amount of any financial commitments , guarantees or contingencies that are not included in the balance sheet , and an indication of the nature and form of any valuable security which has been provided ; any commitments concerning pensions and affiliated or associated undertakings shall be disclosed separately ; ### the total amount of any financial commitments , guarantees or contingencies that are not included in the balance sheet , and an indication of the nature and form of any valuable security which has been provided ; any commitments concerning pensions and affiliated or associated undertakings shall be disclosed separately or at the foot of the balance sheet ;


### for the purposes of this chapter , a parent undertaking and all of its subsidiary undertakings shall be undertakings to be consolidated where either the parent undertaking or one or more subsidiary undertakings is established as one of the types of undertaking listed in annex i or annex ii . ### for the purposes of this chapter , a parent undertaking and all of its subsidiary undertakings shall be undertakings to be consolidated where the parent undertaking complies with the provisions laid down in article 1 .


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


### the total amount of payments , including payments in kind , made to each government within a financial year ; ### the amount per type and the total amount of payments made to each government within a financial year ;


### 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 active in the extractive or forestry industry and governed by its national law to draw up a consolidated report on payments made to governments by such undertakings and public interest entities and by subsidiaries or entities under the control of that undertaking or public interest entity 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 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 costs and benefits the transparency requirements involve and the scope of the reporting requirements , including 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 on the security of energy supply for european industry . it should be completed at the latest three years after the date of entry into force of this directive . the report shall be submitted to the european parliament and the council , accompanied by 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 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 , the modalities of the reporting on a project basis and the impact of national criminal legislation prohibiting disclosure of payments . 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 delegation of power referred to in article 1 , article 3 and article 38 shall be conferred on the commission for an indetermined period of time from the date referred to in article 50 . ### the delegation of power referred to in article 3 and article 37 shall be conferred on the commission for an indetermined period of time from the date referred to in article 50 .


### the delegation of power referred to in article 1 , article 3 and article 38 may be revoked at any time by the european parliament or by the council . a decision of revocation 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 . ### the delegation of power referred to in article 3 and article 37 may be revoked at any time by the european parliament or by the council . a decision of revocation 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 .


### a delegated act adopted pursuant to article 1 , article 3 and article 38 shall enter into force only if no objection has been expressed either by the european parliament or the council within a period of two 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 . ### a delegated act adopted pursuant to article 3 and article 37 shall enter into force only if no objection has been expressed either by the european parliament or the council within a period of two 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 .


### unless expressly provided for in this directive , the member states shall not make the simplifications and exemptions set out in this directive available to public interest entities . ### unless expressly provided for in this directive , the member states shall not make the simplifications and exemptions set out in this directive available to public interest entities . a public - interest entity shall be treated as a large undertaking regardless of its net turnover , balance sheet total or average number of employees during the financial year .


### in addition to its core mission of financing investment in the union , the european investment bank undertakes financing operations outside the union in support of the union ' s external policies . this allows the budget funds of the union available to the external regions to be complemented by the financial strength of the eib for the benefit of the targeted third countries . in undertaking such financing operations , the eib contributes to the general principles and policy objectives of the union . ### in addition to its core mission of financing investment in the union , the european investment bank undertakes financing operations outside the union in support of the union ' s external policies . this allows the budget funds of the union available to the external regions to be complemented by the financial strength of the eib for the benefit of the targeted third countries . in undertaking such financing operations , the eib contributes to , supports and complements the external actions of the eu by paying full respect to the general principles and policy objectives of the union as stated in article 21 teu .


### with a view to supporting union external action , and in order to enable the eib to finance investments outside the union without affecting the credit standing of the eib , the majority of its operations outside the union have benefited from an eu budgetary guarantee administered by the commission . ### with a view to supporting union external action , and in order to enable the eib to finance investments outside the union without affecting the credit standing of the eib , the majority of its operations outside the union have benefited from an eu budgetary guarantee administered by the commission . it is of high importance that the eib maintains its triple - a rating .


### in order to reflect significant policy developments , the list of countries actually eligible for eib financing operations under the eu guarantee should be reviewed as appropriate and the power to adopt acts in accordance with article 290 tfeu should be delegated to the commission in respect of amendments to annex iii to this decision . it is of particular importance that the commission carry out appropriate consultations during its preparatory work , including at expert level . the commission , when preparing and drawing - up delegated acts , should ensure a simultaneous , timely and appropriate transmission of relevant documents to the european parliament and council . ### in order to reflect significant policy developments , the list of countries actually eligible for eib financing operations under the eu guarantee should be reviewed as appropriate and the power to adopt acts in accordance with article 290 tfeu should be delegated to the commission in respect of amendments to annex iii to this decision . it is of particular importance that the commission carry out appropriate consultations during its preparatory work , including at expert level . the commission , when preparing and drawing - up delegated acts , should ensure a simultaneous , timely and appropriate transmission of all relevant documents to the european parliament and council .


### the amounts covered by the eu guarantee in each region should continue to represent ceilings for the eib financing under the eu guarantee and not targets that the eib is required to meet . the ceilings should be evaluated as part of the mid - term review of this decision . ### the amounts covered by the eu guarantee in each region should continue to represent ceilings for the eib financing under the eu guarantee and not targets that the eib is required to meet . the ceilings should be evaluated as part of the mid - term review of this decision . changes to the list of eligible regions and countries in annex iii should be taken into account when adjusting regional ceilings .


### in order to enhance the coherence and the focus of the eib external financing activity on supporting union policies , and for the maximum benefit of beneficiaries , decision no 1080 / 2011 / eu set out general objectives for eib financing operations across all eligible regions and countries , i . e . local private sector development , in particular in support of small and medium - sized enterprises , social and economic infrastructure and climate change mitigation and adaptation , building on the comparative strengths of the eib in areas where it has a well - proven track record . these objectives should be maintained in this decision . ### in order to respect developing country ownership , all eib investments should be aligned to country owned development strategies . against this background , in order to enhance the coherence and the focus of the eib external financing activity on supporting union policies , and for the maximum benefit of beneficiaries , decision no 1080 / 2011 / eu set out general objectives for eib financing operations across all eligible regions and countries , i . e . local private sector development , in particular in support of small and medium - sized enterprises , social and economic infrastructure and climate change mitigation and adaptation , building on the comparative strengths of the eib in areas where it has a well - proven track record . these objectives should be maintained in this decision .


### improving access to financing for smes , including smes from the union investing in the regions covered by this decision , can play an essential role in stimulating economic development and in combating unemployment . in order to effectively reach out to smes , the eib should cooperate with local financial intermediary institutions in the eligible countries , in particular to ensure that part of the financial benefits is passed on to their clients and provide added value compared to other sources of finance . ### improving access to financing for smes , including smes from the union investing in the regions covered by this decision , can play an essential role in stimulating economic development and in combating unemployment . to ensure that investments in the private sector have the greatest development impact , they should be targeted towards local enterprises within developing countries . to this end , in order to effectively reach out to smes , the eib should cooperate with local financial intermediary institutions in the eligible countries , in particular to ensure that part of the financial benefits is passed on to their clients and provide added value compared to other sources of finance . the reliance on financial intermediaries must be complemented by increased transparency to ensure that they are engaging in programmes with clear development impacts . in particular , the eib should be encouraged to work with financial intermediaries embedded in the local economy , and ensure that the projects financed through intermediaries support sustainable development and that the operations are done in a transparent manner . the eib should also ensure that financing to the private sector goes where it is most needed , taking into account the priorities of the partner countries , whilst respecting recognized international and environmental standards .


### the coverage of the eu guarantee , which is limited to risks of a sovereign and political nature , is not sufficient in itself to ensure a meaningful eib activity in support of micro - finance . therefore such activity , where appropriate , should be carried out in connection with budgetary resources available under other instruments . ### the coverage of the eu guarantee , which is limited to risks of a sovereign and political nature , is not sufficient in itself to ensure a meaningful eib activity in support of micro - finance . therefore such activity , where appropriate , should be carried out in connection with budgetary resources available under other instruments . the eib should also be encouraged to strengthen its interventions in this area through its partners at local level , as a means to promote growth and poverty reduction in poor countries .


### the eib should continue to finance investment projects in the areas of social , environmental and economic infrastructure , and should consider increasing its activity in support of health and education infrastructure when there is clear added value in doing so . ### the eib should continue to finance investment projects in the areas of social , environmental , economic and transport infrastructure , and should consider increasing its activity in support of health and education infrastructure when there is clear added value in doing so . the eib should continue to also provide projects with technical advice and assistance , as this support has an important role in the improvement and quality control of projects .


### the practical measures for linking the general objectives of the eu guarantee and their implementation are to be set out in regional technical operational guidelines . such guidelines should be consistent with the wider union regional policy framework . the regional technical operational guidelines should be reviewed and further updated following the review of this decision in order to adapt to the developments in the union external policies and priorities . ### the practical measures for linking the general objectives of the eu guarantee and their implementation are to be set out in regional technical operational guidelines . such guidelines should be consistent with the wider union regional policy framework . the regional technical operational guidelines should be reviewed and further updated following the mid - term review of this decision in order to reflect developments in the union external policies and its priorities .


### while the eib ' s strength remains its distinctiveness as an investment bank , eib financing operations should contribute to the general principles guiding union external action , as referred to in article 21 of the treaty on european union , of promoting and consolidating democracy and the rule of law , human rights and fundamental freedoms , and to the implementation of international environmental agreements to which the union is a party . in particular , in relation to developing countries , eib financing operations should foster their sustainable economic , social and environmental development , particularly in the most disadvantaged amongst them , their smooth and gradual integration into the world economy , the campaign against poverty , as well as compliance with objectives approved by the union in the context of the united nations and other competent international organisations . while contributing to the implementation of the measures necessary to further the objectives of union development cooperation policy in accordance with article 209 of the treaty , the eib should strive to support indirectly the achievement of the un ' s 2015 millennium development goals in all regions where it is active . ### while the eib ' s strength remains its distinctiveness as an investment bank , eib financing operations should contribute to the general principles guiding union external action , as referred to in article 21 of the treaty on european union , of promoting and consolidating democracy and the rule of law , human rights and fundamental freedoms , the building of partnerships with third countries and to the implementation of international commitments and agreements , including environmental agreements to which the union is a party . careful consideration should therefore be given when placing countries in annex iii to those countries ' records regarding democracy , human rights and fundamental freedoms , regardless of whether eu sanctions or restrictive measures are in force . in particular , the eib should contribute to economic , financial and technical cooperation with third countries in accordance with article 212 tfeu . in relation to developing countries , eib financing operations should foster their sustainable economic , social and environmental development , particularly in the most disadvantaged amongst them , their smooth and gradual integration into the world economy , the campaign against poverty , as well as compliance with objectives approved by the union in the context of the united nations and other relevant international organisations . while contributing to the implementation of the measures necessary to further the objectives of union development cooperation policy in accordance with article 209 of the treaty , the eib should strive to support indirectly the achievement of the un ' s 2015 millennium development goals in all regions where it is active .


### while the eib ' s strength remains its distinctiveness as an investment bank , eib financing operations should contribute to the general principles guiding union external action , as referred to in article 21 of the treaty on european union , of promoting and consolidating democracy and the rule of law , human rights and fundamental freedoms , and to the implementation of international environmental agreements to which the union is a party . in particular , in relation to developing countries , eib financing operations should foster their sustainable economic , social and environmental development , particularly in the most disadvantaged amongst them , their smooth and gradual integration into the world economy , the campaign against poverty , as well as compliance with objectives approved by the union in the context of the united nations and other competent international organisations . while contributing to the implementation of the measures necessary to further the objectives of union development cooperation policy in accordance with article 209 of the treaty , the eib should strive to support indirectly the achievement of the un ' s 2015 millennium development goals in all regions where it is active . ### while the eib ' s strength remains its distinctiveness as an investment bank , eib financing operations should contribute to the general principles guiding union external action , as referred to in article 21 of the treaty on european union , of promoting and consolidating democracy and the rule of law , human rights and fundamental freedoms , and to the implementation of international environmental agreements to which the union is a party . in particular , in relation to developing countries , eib financing operations should foster their sustainable economic , social and environmental development , particularly in the most disadvantaged amongst them with the primary aim of eradicating poverty , their smooth and gradual integration into the world economy , as well as compliance with objectives approved by the union in the context of the united nations and other competent international organisations . while contributing to the implementation of the measures necessary to further the objectives of union development cooperation policy in accordance with article 209 of the treaty , the eib should support the achievement of the millennium development goals in all regions where it is active and in all regions where it will continue to be active or will start operations post - 2015 .


### 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 .


### 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 implementation of the european consensus on development , of the agenda for change and of 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 . in accordance with the development effectiveness agenda , the eib should ensure that its interventions are consistent with the development strategies of beneficiary countries .


### at all levels , from upstream strategic planning to downstream investment project development , it should be ensured that eib financing operations comply with and support union external policies and the general objectives set out in this decision . with a view to increasing the coherence of union external action , dialogue on policy and strategy should be further strengthened between the commission and the eib , including the european external action service . the memorandum of understanding to be revised in 2013 to enhance cooperation and early mutual exchange of information between the commission and the eib at operational level should continue to be applied . it is of particular importance to have an early exchange of views between the commission and the eib , including the eeas , as appropriate , in the process of preparing programming documents in order to maximise synergies between their activities . the cooperation in relation to the respect of human rights and conflict prevention issues should also be reinforced . ### at all levels , from upstream strategic planning to downstream investment project development , it should be ensured that eib financing operations comply with and support union external policies and the general objectives set out in this decision . with a view to increasing the coherence of union external action , dialogue on policy and strategy should be further strengthened between the commission and the eib , including the european external action service , while keeping the european parliament duly informed . the memorandum of understanding to be revised in 2013 to enhance cooperation and early mutual exchange of information between the commission and the eib at operational level should continue to be applied . it is of particular importance to have an early exchange of views between the commission and the eib , including the eeas , as appropriate , in the process of preparing programming documents in order to maximise synergies between their activities . the eib should further promote the practice of locating its field offices in eu delegations to improve this cooperation and share operating costs . the cooperation in relation to the respect of human rights fundamental freedoms and conflict prevention issues should also be reinforced .


### at all levels , from upstream strategic planning to downstream investment project development , it should be ensured that eib financing operations comply with and support union external policies and the general objectives set out in this decision . with a view to increasing the coherence of union external action , the dialogue on policy and strategy should be further strengthened between the commission and the eib , including the european external action service . the memorandum of understanding to be revised in 2013 to enhance cooperation and early mutual exchange of information between the commission and the eib at operational level should continue to be applied . it is of particular importance to have an early exchange of views between the commission and the eib , including the eeas , as appropriate , in the process of preparing programming documents in order to maximise synergies between their activities . the cooperation in relation to the respect of human rights and conflict prevention issues should also be reinforced . ### at all levels , from upstream strategic planning to downstream investment project development , it should be ensured that eib financing operations comply with and support union external policies and the general objectives set out in this decision . with a view to increasing the coherence of union external action , the dialogue on policy and strategy should be further strengthened between the commission and the eib , including the european external action service . the memorandum of understanding to be revised in 2013 to enhance cooperation and early mutual exchange of information between the commission and the eib at operational level should continue to be applied . it is of particular importance to systematically have an early exchange of views between the commission and the eib , including the eeas , in the process of preparing relevant programming documents in order to maximise synergies between their activities . the cooperation in relation to the respect of human rights and conflict prevention issues should also be reinforced .


### in its financing operations outside the union that fall within the scope of this decision , the eib should endeavour further to enhance coordination and cooperation with european financial institutions and international financial institutions , notably those participating in the eu platform for blending in external cooperation . this cooperation includes , where appropriate , cooperation on sector conditionality and mutual reliance on procedures , use of joint co - financing and participation in global initiatives , such as those promoting aid coordination and effectiveness . such coordination and cooperation should strive to minimise possible duplication of costs and unnecessary overlap . the tripartite memorandum of understanding between the commission , the eib group and the european bank for reconstruction and development in respect of cooperation outside the union , which allows the eib group and the ebrd to act in a complementary way by relying on their respective comparative advantages , was updated in 2012 to cover the extension of ebrd ' s geographical scope to the mediterranean region and should continue to be applied . the principles set out in this decision should also be applied when eib financing is implemented through cooperation agreements with other european financial institutions and international financial institutions . ### in its financing operations outside the union that fall within the scope of this decision , the eib should endeavour further to enhance coordination and cooperation with european financial institutions and international financial institutions , notably those participating in the eu platform for blending in external cooperation . this cooperation includes , where appropriate , cooperation on sector conditionality and mutual reliance on procedures , use of joint co - financing and participation in global initiatives , such as those promoting aid coordination and effectiveness . such coordination and cooperation should strive to minimise possible duplication of costs and unnecessary overlap . cooperation should be firmly based on the principle of reciprocity . the tripartite memorandum of understanding between the commission , the eib group and the european bank for reconstruction and development in respect of cooperation outside the union , which allows the eib group and the ebrd to act in a complementary way by relying on their respective comparative advantages , was updated in 2012 to cover the extension of ebrd ' s geographical scope to the mediterranean region and should continue to be applied . the principles set out in this decision should also be applied when eib financing is implemented through cooperation agreements with other european , multi - and bilateral , financial institutions and international financial institutions , including regarding consistency with eu external policy objectives , aid effectiveness principles and transparency .


### in its financing operations outside the union that fall within the scope of this decision , the eib should endeavour further to enhance coordination and cooperation with european financial institutions and international financial institutions , notably those participating in the eu platform for blending in external cooperation . this cooperation includes , where appropriate , cooperation on sector conditionality and mutual reliance on procedures , use of joint co - financing and participation in global initiatives , such as those promoting aid coordination and effectiveness . such coordination and cooperation should strive to minimise possible duplication of costs and unnecessary overlap . the tripartite memorandum of understanding between the commission , the eib group and the european bank for reconstruction and development in respect of cooperation outside the union , which allows the eib group and the ebrd to act in a complementary way by relying on their respective comparative advantages , was updated in 2012 to cover the extension of ebrd ' s geographical scope to the mediterranean region and should continue to be applied . the principles set out in this decision should also be applied when eib financing is implemented through cooperation agreements with other european financial institutions and international financial institutions . ### in its financing operations outside the union that fall within the scope of this decision , the eib should endeavour further to enhance coordination and cooperation with european financial institutions and international financial institutions , notably those participating in the eu platform for blending in external cooperation . this cooperation includes , where appropriate , cooperation on sector conditionality and mutual reliance on procedures , use of joint co - financing and participation in global initiatives , such as those promoting aid coordination and effectiveness . such coordination and cooperation should strive to minimise possible duplication of costs and unnecessary overlap . the tripartite memorandum of understanding between the european union , the eib group and the european bank for reconstruction and development in respect of cooperation outside the union , which allows the eib group and the ebrd to act in a complementary way by relying on their respective comparative advantages , was updated in 2012 to cover the extension of ebrd’s geographical scope to the mediterranean region and should continue to be applied . the principles set out in this decision should also be applied when eib financing is implemented through cooperation agreements with other european financial institutions and international financial institutions .


### in its financing operations outside the union that fall within the scope of this decision , the eib should endeavour further to enhance coordination and cooperation with european financial institutions and international financial institutions , notably those participating in the eu platform for blending in external cooperation . this cooperation includes , where appropriate , cooperation on sector conditionality and mutual reliance on procedures , use of joint co - financing and participation in global initiatives , such as those promoting aid coordination and effectiveness . such coordination and cooperation should strive to minimise possible duplication of costs and unnecessary overlap . the tripartite memorandum of understanding between the commission , the eib group and the european bank for reconstruction and development in respect of cooperation outside the union , which allows the eib group and the ebrd to act in a complementary way by relying on their respective comparative advantages , was updated in 2012 to cover the extension of ebrd ' s geographical scope to the mediterranean region and should continue to be applied . the principles set out in this decision should also be applied when eib financing is implemented through cooperation agreements with other european financial institutions and international financial institutions . ### the mechanism of blending loans and grants must be evaluated particularly in terms of development and financial additionality , transparency and accountability , local ownership and debt risk . provided that it has a clear sustainable development impact , the eib should , in its financing operations outside the union that fall within the scope of this decision , endeavour further to enhance coordination and cooperation with european financial institutions and international financial institutions , notably those participating in the eu platform for blending in external cooperation . this cooperation includes , where appropriate , cooperation on sector conditionality and mutual reliance on procedures , use of joint co - financing and participation in global initiatives , such as those promoting aid coordination and effectiveness . such coordination and cooperation should strive to minimise possible duplication of costs and unnecessary overlap . the tripartite memorandum of understanding between the commission , the eib group and the european bank for reconstruction and development in respect of cooperation outside the union , which allows the eib group and the ebrd to act in a complementary way by relying on their respective comparative advantages , was updated in 2012 to cover the extension of ebrd ' s geographical scope to the mediterranean region and should continue to be applied . the principles set out in this decision should also be applied when eib financing is implemented through cooperation agreements with other european financial institutions and international financial institutions , including regarding consistency with the union ' s development objectives , aid effectiveness principles , transparency and democratic scrutiny , while ensuring that those principles can be applied also by other european and international financial institutions .


### the eib financing operations in support of union external policies should continue to be conducted in accordance with the principles of sound banking practice . they should continue to be managed in accordance with the eib ' s own rules and procedures , including appropriate control measures and compliance with the eib ' s statement on social and environmental standards , as well as with the relevant rules and procedures concerning the court of auditors and the european anti - fraud office . in its financing operations the eib should adequately implement its policies towards weakly regulated or non - cooperative jurisdictions in order to contribute to the international fight against tax fraud , tax evasion and money - laundering . ### the eib financing operations in support of union external policies should continue to be conducted in accordance with the principles of sound banking practice . they should continue to be managed in accordance with the rules and procedures provided for under the principles of sound banking practice , including appropriate supervision measures and compliance with the eib’s statement on social and environmental standards , as well as with the relevant rules and procedures concerning the court of auditors and the european anti - fraud office . in its financing operations the eib should adequately implement its policies towards weakly regulated or non - cooperative jurisdictions in order to contribute to the international fight against tax fraud , tax evasion and money - laundering .


### the eib should take appropriate measures ensuring that , when financing operations subject to the eu guarantee , the financial interests of the european union are protected by the application of preventive measures against fraud , corruption and any other illegal activities and that olaf is entitled to conduct on - the - spot checks and inspections in the premises of the beneficiaries . ### the eib should take appropriate measures ensuring that , when financing operations subject to the eu guarantee , the financial interests of the european union and of its member states are protected by the application of preventive measures against fraud , corruption and any other illegal activities and that olaf is entitled to conduct on - the - spot checks and inspections in the premises of the beneficiaries .


### the eib should take appropriate measures ensuring that , when financing operations subject to the eu guarantee , the financial interests of the european union are protected by the application of preventive measures against fraud , corruption and any other illegal activities and that olaf is entitled to conduct on - the - spot checks and inspections in the premises of the beneficiaries . ### the eib should take appropriate measures ensuring that , when financing operations subject to the eu guarantee , the financial interests of the european union are protected by the application of preventive measures against fraud , corruption , money laundering and any other illegal activities and that olaf is entitled to conduct on - the - spot checks and inspections in the premises of the beneficiaries . the disbursement of loans should be suspended until olaf investigations findings become available and , where illegal activities are proven , the eib should assist recovery efforts for misused funds .