1978L0660 — EN — 16.11.2001 — 003.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B FOURTHCOUNCILDIRECTIVE
of25July1978
basedonArticle 54(3)(g)oftheTreaty ontheannualaccountsofcertain typesofcompanies
(78/660/EEC)
(OJ L 222, 14.8.1978, p. 11)
Amended by:
Official Journal
No page date
►M1SeventhCouncil Directive of 13 June 1983 (83/349/EEC) L 193 1 18.7.1983
►M2Council Directive of 27 November 1984 (84/569/EEC) L 314 28 4.12.1984
►M3EleventhCouncil Directive of 21 December 1989 (89/666/EEC) L 395 36 30.12.1989
►M4Council Directive of 8 November 1990 (90/604/EEC) L 317 57 16.11.1990
►M5Council Directive of 8 November 1990 (90/605/EEC) L 317 60 16.11.1990
►M6Council Directive 94/8/EC of 21 March1994 L 82 33 25.3.1994
►M7Council Directive 1999/60/EC of 17 June 1999 L 162 65 26.6.1999
►M8Directive 2001/65/EC of the European Parliament and of the Council of
27 September 2001L 283 28 27.10.2001
Amended by:
►A1Act of Accession of Greece L 291 17 19.11.1979
►A2Act of Accession of Spain and Portugal L 302 23 15.11.1985
►A3Act of Accession of Austria, Sweden and Finland C241 21 29.8.1994
(adapted by Council Decision 95/1/EC, Euratom, ECSC) L 1 1 1.1.1995
NB: This consolidated version contains references to the European unit of account and/or the ecu, which from 1 January 1999
should be understood as references to the euro — Council Regulation (EEC) No 3308/80 (OJ L 345, 20.12.1980, p. 1) andCouncil Regulation (EC) No 1103/97 (OJ L 162, 19.6.1997, p. 1).
▼B
FOURTHCOUNCILDIRECTIVE
of25July1978
basedonArticle 54(3)(g)oftheTreaty ontheannualaccountsof
certain typesofcompanies
(78/660/EEC)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic
Community, and in particular Article 54 (3) (g) thereof,
Having regard to the proposal from the Commission,Having regard to the opinion of the European Parliament(
1),
Having regard to the opinion of the Economic and Social
Committee(2),
Whereas the coordination of national provisions concerning the presen-
tation and content of annual accounts and annual reports, the valuationmethods, used therein and their publication in respect of certain compa-nies withlimited liability is of special importance for th e protection ofmembers and third parties;
Whereas simultaneous coordination is necessary in these fields for
these forms of company because, on the one hand, these companies'
activities frequently extend beyond the frontiers of their national terri-tories and, on the other, they offer no safeguards to third parties beyondthe amounts of their net assets; whereas, moreover, the necessity forand the urgency of such coordination have been recognized andconfirmed by Article 2 (1) (f) of Directive 68/151/EEC(
3);
Whereas it is necessary, moreover, to establish in the Community
minimum equivalent legal requirements as regards the extent of the
financial information that should be made available to the public bycompanies that are in competition with one another;
Whereas annual accounts must give a true and fair view of a company's
assets and liabilities, financial position and profit or loss; whereas tothis end a mandatory layout must be prescribed for the balance sheet
and the profit and loss account and whereas the minimum content of
the notes on the accounts and the annual report must be laid down;whereas, however, derogations may be granted for certain companiesof minor economic or social importance;
Whereas the different methods for the valuation of assets and liabilities
must be coordinated to the extent necessary to ensure that annual
accounts disclose comparable and equivalent information;
Whereas the annual accounts of all companies to which this Directive
applies must be published in accordance with Directive 68/151/EEC;whereas, however, certain derogations may likewise be granted in thisarea for small and medium-sized companies;
Whereas annual accounts must be audited by authorized persons whose
minimum qualifications will be the subject of subsequent coordination;whereas only small companies may be relieved of this audit obligation;
Whereas, when a company belongs to a group, it is desirable that group
accounts giving a true and fair view of the activities of the group as a
whole be published; whereas, however, pending the entry into force ofa Council Directive on consolidated accounts, derogations from certainprovisions of this Directive are necessary;
Whereas, in order to meet the difficulties arising from the present posi-
tion regarding legislation in certain Member States, the period allowed1978L0660 — EN — 16.11.2001 — 003.001 — 2
(1) OJ No C 129, 11. 12. 1972, p. 38.
(2) OJ No C 39, 7. 6 1973, p. 31.
(3) OJ No L 65, 14. 3. 1968, p. 8.
▼B
for the implementation of certain provisions of this Directive must be
longer than the period generally laid down in such cases,
HAS ADOPTED THIS DIRECTIVE:
Article 1
1. The coordination measures prescribed by this Directive shall
apply to the laws, regulations and administrative provisions of the
Member States relating to the following types of companies:
— in Germany:
die Aktiengesellschaft, die Kommanditgesellschaft auf Aktien, die
Gesellschaft mit beschränkter Haftung;
— in Belgium:
la société anonyme/de naamloze vennootschap, la société en
commandite par actions / de commanditaire vennootschap op
aandelen, la société de personnes à responsabilité limitée/de perso-
nenvennootschap met beperkte aansprakelijkheid;
— in Denmark:
aktieselskaber, kommanditaktieselskaber, anpartsselskaber;
— in France:
la société anonyme, la société en commandite par actions, la société
à responsabilité limitée;
— in Ireland:
public companies limited by shares or by guarantee, private compa-
nies limited by shares or by guarantee;
— in Italy:
la società per azioni, la società in accomandita per azioni, la società
a responsabilità limitata;
— in Luxembourg:
la société anonyme, la société en commandite par actions, la société
à responsabilité limitée;
— in the Netherlands:
de naamloze vennootschap, de besloten vennootschap met beperkte
aansprakelijkheid;
— in the United Kingdom:
public companies limited by shares or by guarantee, private compa-
nies limited by shares or by guarantee;
— in Greece:
η ανώνυµη εταιρία, η εταιρία περιωρισµένης ευθύνης, η ετερ-
όρρυθµη κατά µετοχές εταιρία;
— in Spain:
la sociedad anónima, la sociedad comanditiara por acciones, la soci-
edad de responsabilidad limitada;
— in Portugal:
a sociedade anónima, de responsabilidade limitada, a sociedade em
comandita por açcões, a sociedadepor quotas de responsabilidadelimitada;
— in Austria:
die Aktiengesellschaft, die Gesellschaft mit beschränkter Haftung;1978L0660 — EN — 16.11.2001 — 003.001 — 3
▼A1
▼A2
▼A3
▼A3
— in Finland:
osakeyhtiö/aktiebolag;
— in Sweden:
aktiebolag.
The coordination measures prescribed by this Directive shall also apply
to the Member States' laws, regulations and administrative provisionsrelating to the following types of company:
(a) in Germany:
die offene Handelsgesellschaft, die Kommanditgesellschaft;
(b) in Belgium:
la société en nom collectif/de vennootschap onder firma, la société
en commandité (SIC! commandite) simple/de gewone commandi-taire vennootschap;
(c) in Denmark:
interessentskaber, kommanditselskaber;
(d) in France:
la société en nom collectif, la société en commandite simple;
(e) in Greece:
η οµόρρυθµος εταιρία, η ετερόρρυθµος εταιρία;
(f) in Spain:
sociedad colectiva, sociedad en comandita simple;
(g) in Ireland:
partnerships, limited partnerships, unlimited companies;
(h) in Italy:
la società in nome collettivo, la società in accomandita semplice;
(i) in Luxembourg:
la société en nom collectif, la société en commandite simple;
(j) in the Netherlands:
de vennootschap onder firma, de commanditaire vennootschap;
(k) in Portugal:
sociedade em nome colectivo, sociedade em comandita simples;
(l) in the United Kingdom:
partnerships, limited partnerships, unlimited companies;
(m) in Austria:
die offene Handelsgesellschaft, die Kommanditgesellschaft;
(n) in Finland:
avoin yhtiö/ öppet bolag, kommandiittiyhtiö/kommanditbolag;
(o) in Sweden:
handelsbolag, kommanditbolag.
where all members having unlimited liability are companies of the
types set out in the first subparagraph or companies which are notgoverned by the laws of a Member State but which have a legal formcomparable to those referred to in Directive 68/151/EEC.
This Directive shall also apply to the types of companies or firms
referred to in the second subparagraph where all members havingunlimited liability are themselves companies of the types set out inthat or the first subparagraph.1978L0660 — EN — 16.11.2001 — 003.001 — 4
▼M5
▼A3
▼M5
▼B
2. Pending subsequent coordination, the Member States need not
apply the provisions of this Directive to banks and other financial insti-tutions or to insurance companies.
SECTION 1
General provisions
Article 2
1. The annual accounts shall comprise the balance sheet, the profit
and loss account and the notes on the accounts. These documents shallconstitute a composite whole.
2. They shall be drawn up clearly and in accordance with the provi-
sions of this Directive.
3. The animal accounts shall give a true and fair view of the
company's assets, liabilities, financial position and profit or loss.
4. Where the application of the provision of this Directive would not
be sufficient to give a true and fair view within the meaning of para-graph3, additional information must be given.
5. Where in exceptional cases the application of a provision of this
Directive is incompatible withth e obligation laid down in paragraph3,that provision must be departed from in order to give a true and fairview within the meaning of paragraph 3. Any such departure must bedisclosed in the notes on the accounts 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 theexceptional cases in question and lay down the relevant special rules.
6. The Member States may authorize or require the disclosure in the
annual accounts of other information as well as that which must bedisclosed in accordance withth is Directive.
SECTION 2
Generalprovisionsconcerningthebalancesheetandtheprofitand
lossaccount
Article 3
The layout of the balance sheet and of the profit and loss account,
particularly as regards the form adopted for their presentation, maynot be changed from one financial year to the next. Departures from
this principle shall be permitted in exceptional cases. Any such depar-
ture must be disclosed in the notes on the accounts together with anexplanation of the reasons therefor.
Article 4
1. In the balance sheet and in the profit and loss account the items
prescribed in Articles 9, 10 and 23 to 26 must be shown separately inthe order indicated. A more detailed subdivision of the items shall beauthorized provided that the layouts are complied with. New items may
be added provided that their contents are not covered by any of the
items prescribed by the layouts. Such subdivision or new items maybe required by the Member States.
2. The layout, nomenclature and terminology of items in the balance
sheet and profit and loss account that are preceded by Arabic numerals
must be adapted where the special nature of an undertaking so requires.Suchadaptations may be required by th e Member States of undertak-ings forming part of a particular economic sector.
3. The balance sheet and profit and loss account items that are
preceded by Arabic numerals may be, combined where:
(a) they are immaterial in amount for the purposes of Article 2 (3); or1978L0660 — EN — 16.11.2001 — 003.001 — 5
▼B
(b) such combination makes for greater clarity, provided that the items
so combined are dealt with separately in the notes on the accounts.Suchcombination may be required by th e Member States.
4. In respect of eachbalance sh eet and profit and loss account item
the figure relating to the corresponding item for the preceding financialyear must be shown. The Member States may provide that, where these
figures are not comparable, the figure for the preceding financial year
must be adjusted. In any case, non-comparability and any adjustment ofthe figures must be disclosed in the notes on the accounts, with rele-vant comments.
5. Save where there is a corresponding item for the preceding finan-
cial year within the meaning of paragraph 4, a balance sheet or profitand loss account item for which there is no amount shall not be shown.
Article 5
1. By way of derogation from Article 4 (1) and (2), the Member
States may prescribe special layouts for the annual accounts of invest-ment companies and of financial holding companies provided that theselayouts give a view of these companies equivalent to that provided for
in Article 2 (3).
2. For the purposes of this Directive, ‘investment companies’ shall
mean only:
(a) those companies the sole object of which is to invest their funds in
various securities, real property and other assets with the sole aimof spreading investment risks and giving their shareholders thebenefit of the results of the management of their assets;
(b) th ose companies associated withinvestment companies withfixed
capital if the sole object of the companies so associated is toacquire fully paid shares issued by those investment companies
without prejudice to the provisions of Article 20 (1) (h) of Direc-
tive 77/91/EEC(
1).
3. For the purposes of this Directive, ‘financial holding companies’
shall mean only those companies the sole object of which is to acquire
holdings in other undertakings, and to manage such holdings and turnthem to profit, without involving themselves directly or indirectly inthe management of those undertakings, the aforegoing without preju-dice to their rights as shareholders. The limitations imposed on theactivities of these companies must be such that compliance with them
can be supervised by an administrative or judicial authority.
Article 6
The Member States may authorize or require adaptation of the layout
of the balance sheet and profit and loss account in order to include
the appropriation of profit or the treatment of loss.
Article 7
Any set-off between asset and liability items, or between income and
expenditure items, shall be prohibited.
SECTION 3
Layoutofthebalancesheet
Article 8
For the presentation of the balance sheet, the Member States shall
prescribe one or bothof th e layouts prescribed by Articles 9 and 10.If a Member State prescribes both, it may allow companies to choosebetween them.1978L0660 — EN — 16.11.2001 — 003.001 — 6
(1) OJ No L 26, 31. 1. 1977, p. 1
▼B
Article 9
Assets
A.Subscribedcapitalunpaid
of which there has been called
(unless national law provides that called-up capital be shown under
‘Liabilities’. In that case, the part of the capital called but not yetpaid must appear as an asset either under A or under D (II) (5)).
B.Formation expenses
as defined by national law, and in so far as national law permits
their being shown as an asset. National law may also provide forformation expenses to be shown as the first item under ‘Intangibleassets’.
C.Fixedassets
I.Intangible assets
1. Costs of researchand development, in so far as national law
permits their being shown as assets.
2. Concessions, patents, licences, trade marks and similar rights
and assets, if they were:
(a) acquired for valuable consideration and need not be
shown under C (I) (3); or
(b) created by the undertaking itself, in so far as national
law permits their being shown as assets.
3. Goodwill, to the extent that it was acquired for valuable
consideration.
4. Payments on account.
II.Tangible assets
1. Land and buildings.
2. Plant and machinery.3. Other fixtures and fittings, tools and equipment.4. Payments on account and tangible assets in course of
construction.
III.Financial assets
1. Shares in affiliated undertakings.
2. Loans to affiliated undertakings.
3. Participating interests.4. Loans to undertakings with which the company is linked by
virtue of participating interests.
5. Investments held as fixed assets.6. Other loans.7. Own shares (with an indication of their nominal value or, in
the absence of a nominal value, their accounting par value)to the extent that national law permits their being shown inthe balance sheet.
D.Currentassets
I.Stocks
1. Raw materials and consumables.
2. Work in progress.
3. Finished goods and goods for resale.4. Payments on account.
II.Debtors1978L0660 — EN — 16.11.2001 — 003.001 — 7
▼B
(Amounts becoming due and payable after more than one year
must be shown separately for each item.)
1. Trade debtors.
2. Amounts owed by affiliated undertakings.
3. Amounts owed by undertakings with which the company is
linked by virtue of participating interests.
4. Other debtors.
5. Subscribed capital called but not paid (unless national law
provides that called-up capital be shown as an asset under
A).
6. Prepayments and accrued income (unless national law
provides for suchitems to be sh own as an asset under E).
III.Investments
1. Shares in affiliated undertakings.
2. Own shares (with an indication of their nominal value or, in
the absence of a nominal value, their accounting par value)
to the extent that national law permits their being shown inthe balance sheet.
3. Other investments.
IV.Cash at bank and in hand
E.Prepaymentsandaccrued income
(unless national law provides for suchitems to be sh own as an asset
under D (II) (6)).
F.Lossforthefinancialyear
(unless national law provides for it to be shown under A (VI) under
‘Liabilities’).
Liabilities
A.Capitalandreserves
I.Subscribed capital
(unless national law provides for called-up capital to be shown
under this item. In that case, the amounts of subscribed capital
and paid-up capital must be shown separately).
II.Share premium account
III.Revaluation reserve
IV.Reserves
1. Legal reserve, in so far as national law requires sucha
reserve.
2. Reserve for own shares, in so far as national law requires
sucha reserve, with out prejudice to Article 22 (1) (b) of
Directive 77/91/EEC.
3. Reserves provided for by the articles of association.
4. Other reserves.
V.Profit or loss brought forward
VI.Profit or loss for the financial year
(unless national law requires that this item be shown under F
under ‘Assets’ or under E under ‘Liabilities’).
B.Provisionsforliabilities andcharges
1. Provisions for pensions and similar obligations.
2. Provisions for taxation.
3. Other provisions.1978L0660 — EN — 16.11.2001 — 003.001 — 8
▼B
C.Creditors
(Amounts becoming due and payable within one year and amounts
becoming due and payable after more than one year must be shownseparately for each item and for the aggregate of these items.)
1. Debenture loans, showing convertible loans separately.
2. Amounts owed to credit institutions.3. Payments received on account of orders in so far as they are not
shown separately as deductions from stocks.
4. Trade creditors.5. Bills of exchange payable.6. Amounts owed to affiliated undertakings.7. Amounts owed to undertakings with which the company is
linked by virtue of participating interests.
8. Other creditors including tax and social security.9. Accruals and deferred income (unless national law provides for
suchitems to be sh own under D under ‘Liabilities’).
D.Accrualsanddeferred income
(unless national law provides for suchitems to be sh own under C
(9) under ‘Liabilities’).
E.Profitforthefinancialyear
(unless national law provides for it to be shown under A (VI) under
‘Liabilities’).
Article 10
A.Subscribedcapitalunpaid
of which there has been called
(unless national law provides that called-up capital be shown under
L. In that case, the part of the capital called but not yet paid mustappear either under A or under D (11) (5)).
B.Formation expenses
as defined by national law, and in so far as national law permits
their being shown as an asset. National law may also provide for
formation expenses to be shown as the first item under ‘Intangible
assets’.
C.Fixedassets
I.Intangible assets
1. Costs of researchand development, in so far as national law
permits their being shown as assets.
2. Concessions, patents, licences, trade marks and similar rights
and assets, if they were:
(a) acquired for valuable consideration and need not be
shown under C (I) (3); or
(b) created by the undertaking itself, in so far as national
law permits their being shown as assets.
3. Goodwill, to the extent that it was acquired for valuable
consideration.
4. Payments on account.
II.Tangible assets
1. Land and buildings.
2. Plant and machinery.3. Other fixtures and fittings, tools and equipment.4. Payments on account and tangible assets in course of
construction.1978L0660 — EN — 16.11.2001 — 003.001 — 9
▼B
III.Financial assets
1. Shares in affiliated undertakings.
2. Loans to affiliated undertakings.3. Participating interests.4. Loans to undertakings with which the company is linked by
virtue of participating interests.
5. Investments held as fixed assets.
6. Other loans.7. Own shares (with an indication of their nominal value or, in
the absence of a nominal value, their accounting par value)to the extent that national law permits their being shown inthe balance sheet.
D.Currentassets
I.Stocks
1. Raw materials and consumables.
2. Work in progress.3. Finished goods and goods for resale.4. Payments on account.
II.Debtors
(Amounts becoming due and payable after more than one year
must be shown separately for each item.)
1. Trade debtors.
2. Amounts owed by affiliated undertakings.3. Amounts owed by undertakings with which the company is
linked by virtue of participating interests.
4. Other debtors.
5. Subscribed capital called but not paid (unless national law
provides that called-up capital be shown under A).
6. Prepayments and accrued income (unless national law
provides that such items be shown under E).
III.Investments
1. Shares in affiliated undertakings.
2. Own shares (with an indication of their nominal value or, in
the absence of a nominal value, their accounting par value)to the extent that national law permits their being shown inthe balance sheet.
3. Other investments.
IV.Cash at bank and in hand.
E.Prepaymentsandaccrued income
(unless national law provides for suchitems to be sh own under D
(II) (6)).
F.Creditors:amountsbecomingdueandpayablewithinoneyear
1. Debenture loans, showing convertible loans separately.
2. Amounts owed to credit institutions.
3. Payments received on account of orders in so far as they are not
shown separately as deductions from stocks.
4. Trade creditors.5. Bills of exchange payable.6. Amounts owed to affiliated undertakings.7. Amounts owed to undertakings with which the company is
linked by virtue of participating interests.1978L0660 — EN — 16.11.2001 — 003.001 — 10
▼B
8. Other creditors including tax and social security.
9. Accruals and deferred income (unless national law provides for
suchitems to be sh own under K).
G.Netcurrentassets/liabilities (taking into account prepayments and
accrued income when shown under E and accruals and deferredincome when shown under K).
H.Totalassetslesscurrentliabilities
I.Creditors: amounts becoming due and payable after more than
oneyear
1. Debenture loans, showing convertible loans separately.
2. Amounts owed to credit institutions.
3. Payments received on account of orders in so far as they are not
shown separately as deductions from stocks.
4. Trade creditors.
5. Bills of exchange payable.
6. Amounts owed to affiliated undertakings.7. Amounts owed to undertakings with which the company is
linked by virtue of participating interests.
8. Other creditors including tax and social security.9. Accruals and deferred income (unless national law provides for
suchitems to be sh own under K).
J.Provisionsforliabilities andcharges
1. Provisions for pensions and similar obligations.
2. Provisions for taxation.3. Other provisions.
K.Accrualsanddeferred income
(unless national law provides for suchitems to be sh own under F
(9) or I (9) or both).
L.Capitalandreserves
I.Subscribed capital
(unless national law provides for called-up capital to be shown
under this item. In that case, the amounts of subscribed capitaland paid-up capital must be shown separately).
II.Share premium account
III.Revaluation reserve
IV.Reserves
1. Legal reserve, in so far as national law requires sucha
reserve.
2. Reserve for own shares, in so far as national law requires
sucha reserve, with out prejudice to Article 22 (1) (b) of
Directive 77/91/EEC.
3. Reserves provided for by the articles of association.4. Other reserves.
V.Profit or loss brought forward
VI.Profit or loss for the financial year
Article 11
The Member States may permit companies which on their balance
sheet dates do not exceed the limits of two of the three following
criteria:
—►
M7balance sheet total: EUR 3 125 000 ◄,
—►M7net turnover: EUR 6250 000 ◄,1978L0660 — EN — 16.11.2001 — 003.001 — 11
▼B
— average number of employees during the financial year: 50
to draw up abridged balance sheets showing only those items preceded
by letters and roman numerals in Articles 9 and 10, disclosing sepa-rately the information required in brackets in D (II) under ‘Assets’and C under ‘Liabilities’ in Article 9 and in D (II) in Article 10, butin total for each.
Member States may waive the application of Article 15 (3) (a) and (4)
to the abridged balance sheet.
Article 12
1. Where on its balance sheet date, a company exceeds or ceases to
exceed the limits of two of the three criteria indicated in Article 11,that fact shall affect the application of the derogation provided for in
that Article only if it occurs in two consecutive financial years.
2. For the purposes of translation into national currencies, the
amounts in European units of account specified in Article 11 may beincreased by not more than 10 %.
3. The balance sheet total referred to in Article 11 shall consist of
the assets in A to E under ‘Assets’ in the layout prescribed in Article9 or those in A to E in the layout prescribed in Article 10.
Article 13
1. Where an asset or liability relates to more than one layout item,
its relationship to other items must be disclosed either under the itemwhere it appears or in the notes on the accounts, if such disclosure is
essential to the comprehension of the annual accounts.
2. Own shares and shares in affiliated undertakings may be shown
only under the items prescribed for that purpose.
Article 14
All commitments by way of guarantee of any kind must, if there is no
obligation to show them as liabilities, be clearly set out at the foot ofthe balance sheet or in the notes on the accounts, and a distinction
made between the various types of guarantee which national law recog-
nizes; specific disclosure must be made of any valuable security whichhas been provided. Commitments of this kind existing in respect ofaffiliated undertakings must be shown separately.
SECTION 4
Specialprovisionsrelatingtocertain balancesheetitems
Article 15
1. Whether particular assets are to be shown as fixed assets or
current assets shall depend upon the purpose for which they areintended.
2. Fixed assets shall comprise those assets which are intended for
use on a continuing basis for the purposes of the undertaking's activ-ities.
3. (a) Movements in the various fixed asset items shall be shown in
the balance sheet or in the notes on the accounts. To this endthere shall be shown separately, starting with the purchase priceor production cost, for each fixed asset item, on the one hand,the additions, disposals and transfers during the financial year
and, on the other, the cumulative value adjustments at the
balance sheet date and the rectifications made during the finan-cial year to the value adjustments of previous financial years.Value adjustments shall be shown either in the balance sheet,as clear deductions from the relevant items, or in the notes onthe accounts.1978L0660 — EN — 16.11.2001 — 003.001 — 12
▼M4
▼B
▼B
(b) If, when annual accounts are drawn up in accordance with this
Directive for the first time, the purchase price or production costof a fixed asset cannot be determined without undue expense or
delay, the residual value at the beginning of the financial year
may be treated as the purchase price or production cost. Anyapplication of this provision must be disclosed in the notes onthe accounts.
(c) Where Article 33 is applied, the movements in the various fixed
asset items referred to in subparagraph(a) of th is paragraphshall be shown starting with the purchase price or productioncost resulting from revaluation.
4. Paragraph 3 (a) and (b) shall apply to the presentation of ‘Forma-
tion expenses’.
Article 16
Rights to immovables and other similar rights as defined by national
law must be shown under ‘Land and buildings’.
Article 17
For the purposes of this Directive, participating interest shall mean
rights in the capital of other undertakings, whether or not represented
by certificates, which, by creating a durable link with those undertak-
ings, are intended to contribute to the company's activities. The holdingof part of the capital of another company shall be presumed to consti-tute a participating interest where it exceeds a percentage fixed by theMember States which may not exceed 20 %.
Article 18
Expenditure incurred during the financial year but relating to a subse-
quent financial year, together with any income which, though relatingto the financial year in question, is not due until after its expiry must
be shown under ‘Prepayments and accrued income’. The Member
States may, however, provide that such income shall be included in‘Debtors’. Where such income is material, it must be disclosed in thenotes on the accounts.
Article 19
Value adjustments shall comprise all adjustments intended to take
account of reductions in the values of individual assets established atthe balance sheet date whether that reduction is final or not.
Article 20
1. Provisions for liabilities and charges are intended to cover losses
or debts the nature of which is clearly defined and which at the date of
the balance sheet are either likely to be incurred, or certain to be
incurred but uncertain as to amount or as to the date on which theywill arise.
2. The Member States may also authorize the creation of provisions
intended to cover charges which have their origin in the financial yearunder review or in a previous financial year, the nature of which isclearly defined and which at the date of the balance sheet are either
likely to be incurred, or certain to be incurred but uncertain as to
amount or as to the date on which they will arise.
3. Provisions for liabilities and charges may not be used to adjust
the values of assets.
Article 21
Income receivable before the balance sheet date but relating to a subse-
quent financial year, together with any charges which, though relatingto the financial year in question, will be paid only in the course of asubsequent financial year, must be shown under ‘Accruals and deferredincome’. The Member States may, however, provide that such charges1978L0660 — EN — 16.11.2001 — 003.001 — 13
▼B
shall be included in ‘Creditors’. Where such charges are material, they
must be disclosed in the notes on the accounts.
SECTION 5
Layoutoftheprofitandlossaccount
Article 22
For the presentation of the profit and loss account, the Member States
shall prescribe one or more of the layouts provided for in Articles 23 to26. If a Member State prescribes more than one layout, it may allow
companies to choose from among them.
Article 23
1. Net turnover.
2. Variation in stocks of finished goods and in work in progress.3. Work performed by the undertaking for its own purposes and capi-
talized.
4. Other operating income.5. (a) Raw materials and consumables.
(b) Other external charges.
6. Staff costs:
(a) wages and salaries;
(b) social security costs, witha separate indication of th ose
relating to pensions.
7. (a) Value adjustments in respect of formation expenses and of
tangible and intangible fixed assets.
(b) Value adjustments in respect of current assets, to the extent
that they exceed the amount of value adjustments which arenormal in the undertaking concerned.
8. Other operating charges.9. Income from participating interests, witha separate indication of
that derived from affiliated undertakings.
10. Income from other investments and loans forming part of the fixed
assets, witha separate indication of th at derived from affiliatedundertakings.
11. Other interest receivable and similar income, with a separate indi-
cation of that derived from affiliated undertakings.
12. Value adjustments in respect of financial assets and of investments
held as current assets.
13. Interest payable and similar charges, with a separate indication of
those concerning affiliated undertakings.
14. Tax on profit or loss on ordinary activities.15. Profit or loss on ordinary activities after taxation.16. Extraordinary income.17. Extraordinary charges.18. Extraordinary profit or loss.19. Tax on extraordinary profit or loss.20. Other taxes not shown under the above items.21. Profit or loss for the financial year.
Article 24
A.Charges
1. Reduction in stocks of finished goods and in work in progress:
2. (a) raw materials and consumables;1978L0660 — EN — 16.11.2001 — 003.001 — 14
▼B
(b) other external charges.
3. Staff costs:
(a) wages and salaries;
(b) social security costs, witha separate indication of th ose
relating to pensions.
4. (a) Value adjustments in respect of formation expenses and of
tangible and intangible fixed assets.
(b) Value adjustments in respect of current assets, to the extent
that they exceed the amount of value adjustments which are
normal in the undertaking concerned.
5. Other operating charges.6. Value adjustments in respect of financial assets and of invest-
ments held as current assets.
7. Interest payable and similar charges, with a separate indication
of those concerning affiliated undertakings.
8. Tax on profit or loss on ordinary activities.9. Profit or loss on ordinary activities after taxation.
10. Extraordinary charges.11. Tax on extraordinary profit or loss.12. Other taxes not shown under the above items.13. Profit or loss for the financial year.
B.Income
1. Net turnover.
2. Increase in stocks of finished goods and in work in progress.3. Work performed by the undertaking for its own purposes and
capitalized.
4. Other operating income.
5. Income from participating interests, witha sepa-rate indication
of that derived from affiliated undertakings.
6. Income from other investments and loans forming part of the
fixed assets, witha separate indication of th at derived fromaffiliated undertakings.
7. Other interest receivable and similar income, with a separate
indication of that derived from affiliated undertakings.
8. Profit or loss on ordinary activities after taxation.9. Extraordinary income.
10. Profit or loss for the financial year.
Article 25
1. Net turnover.
2. Cost of sales (including value adjustments).3. Gross profit or loss.4. Distribution costs (including value adjustments).5. Administrative expenses (including value adjustments).6. Other operating income.7. Income from participating interests, witha separate indication of
that derived from affiliated undertakings.
8. Income from other investments and loans forming part of the fixed
assets, witha separate indication of th at derived from affiliatedundertakings.
9. Other interest receivable and similar income with a separate indica-
tion of that derived from affiliated undertakings.
10. Value adjustments in respect of financial assets and of investments
held as current assets.1978L0660 — EN — 16.11.2001 — 003.001 — 15
▼B
11. Interest payable and similar charges, with a separate indication of
those concerning affiliated undertakings.
12. Tax on profit or loss on ordinary activities.13. Profit or loss on ordinary activities after taxation.14. Extraordinary income.15. Extraordinary charges.16. Extraordinary profit or loss.
17. Tax on extraordinary profit or loss.
18. Other taxes not shown under the above items.19. Profit or loss for the financial year.
Article 26
A.Charges
1. Cost of sales (including value adjustments).
2. Distribution costs (including value adjustments).3. Administrative expenses (including value adjustments).4. Value adjustments in respect of financial assets and of invest-
ments held as current assets.
5. Interest payable and similar charges, with a se-parate indication
of those concerning affiliated undertakings.
6. Tax on profit or loss on ordinary activities.7. Profit or loss on ordinary activities after taxation.
8. Extraordinary charges.
9. Tax on extraordinary profit or loss.
10. Other taxes not shown under the above items.11. Profit or loss for the financial year.
B.Income
1. Net turnover.
2. Other operating income.3. Income from participating interests, witha sepa-rate indication
of that derived from affiliated undertakings.
4. Income from other investments and loans forming part of the
fixed assets, witha separate indication of th at derived fromaffiliated undertakings.
5. Other interest receivable and similar income with a separate indi-
cation of that derived from affiliated undertakings.
6. Profit or loss on ordinary activities after taxation.7. Extraordinary income.
8. Profit or loss for the financial year.
Article 27
The Member States may permit companies which on their balance
sheet dates do not exceed the limits of two of the three following
criteria:
—►
M7balance sheet total: EUR 12 500000 ◄,
—►M7net turnover: EUR 25000000 ◄,
— average number of employees during the financial year: 250
to adopt layouts different from those prescribed in Articles 23 to 26
within the following limits:
(a) in Article 23: 1 to 5 inclusive may be combined under one item
called ‘Gross profit or loss’;
(b) in Article 24: A (1), A (2) and B (1) to B (4) inclu-sive may be
combined under one item called ‘Gross profit or loss’;1978L0660 — EN — 16.11.2001 — 003.001 — 16
▼B
(c) in Article 25: (1), (2), (3) and (6) may be combined under one item
called ‘Gross profit or loss’;
(d) in Article 26, A (1), B (1) and B (2) may be combined under one
item called ‘Gross profit or loss’.
Article 12 shall apply.
SECTION 6
Special provisions relating to certain items in the profit and loss
account
Article 28
The net turnover shall comprise the amounts derived from the sale of
products and the provision of services falling within the company's
ordinary activities, after deduction of sales rebates and of value added
tax and other taxes directly linked to the turnover.
Article 29
1. Income and charges that arise otherwise than in the course of the
company's ordinary activities must be shown under ‘Extraordinaryincome and extraordinary charges’.
2. Unless the income and charges referred to in paragraph 1 are
immaterial for the assessment of the results, explanations of theiramount and nature must be given in the notes on the accounts. The
same shall apply to income and charges relating to another financial
year.
Article 30
The Member States may permit taxes on the profit or loss on ordinary
activities and taxes on the extraordinary profit or loss to be shown intotal as one item in the profit and loss account before ‘Other taxes not
shown under the above items’. In that case, ‘Profit or loss on ordinary
activities after taxation’ shall be omitted from the layouts prescribed inArticles 23 to 26.
Where this derogation is applied, companies must disclose in the notes
on the accounts the extent to which the taxes on the profit or loss affectthe profit or loss on ordinary activities and the ‘Extraordinary profit orloss’.
SECTION 7
Valuationrules
Article 31
1. The Member States shall ensure that the items shown in the
annual accounts are valued in accordance withth e following generalprinciples:
(a) the company must be presumed to be carrying on its business as a
going concern;
(b) the methods of valuation must be applied consistently from one
financial year to another;
(c) valuation must be made on a prudent basis, and in particular:
(aa) only profits made at the balance sheet date may be included,
(bb) account must be taken of all foreseeable liabilities and poten-
tial losses arising in the course of the financial year concerned
or of a previous one, even if suchliabilities or losses becomeapparent only between the date of the balance sheet and thedate on which it is drawn up,
(cc) account must be taken of all depreciation, whether the result
of the financial year is a loss or a profit;1978L0660 — EN — 16.11.2001 — 003.001 — 17
▼B
(d) account must be taken of income and charges relating to the finan-
cial year, irrespective of the date of receipt or payment of suchincome or charges;
(e) the components of asset and liability items must be valued sepa-
rately;
(f) the opening balance sheet for each financial year must correspond
to the closing balance sheet for the preceding financial year.
2. Departures from these general principles shall be permitted in
exceptional cases. Any suchdepartures must be disclosed in th e noteson the accounts and the reasons for them given together with an assess-ment of their effect on the assets, liabilities, financial position and
profit or loss.
Article 32
The items shown in the annual accounts shall be valued in accordance
with Articles 34 to 42, which are based on the principle of purchaseprice or production cost.
Article 33
1. The Member States may declare to the Commission that they
reserve the power, by way of derogation from Article 32 and pendingsubsequent coordination, to permit or require in respect of all compa-
nies or any classes of companies:
(a) valuation by the replacement value method for tangible fixed assets
withlimited useful economic lives and for stocks;
(b) valuation by methods other than that provided for in (a) which are
designed to take account of inflation for the items shown in annualaccounts, including capital and reserves;
(c) revaluation of tangible fixed assets and financial fixed assets.
Where national law provides for valuation methods as indicated in (a),
(b) and (c), it must define their content and limits and the rules for
their application.
The application of any such method, the balance sheet and profit and
loss account items concerned and the method by which the values
shown are calculated shall be disclosed in the notes on the accounts.
2. (a) Where paragraph 1 is applied, the amount of the difference
between valuation by the method used and valuation in accor-dance withth e general rule laid down in Article 32 must be
entered in the revaluation reserve under ‘Liabilities’. The treat-
ment of this item for taxation purposes must be explained eitherin the balance sheet or in the notes on the accounts.
For purposes of the application of the last subparagraph of para-
graph 1, companies shall, whenever the amount of the reservehas been changed in the course of the financial year, publish inthe notes on the accounts interalia a table showing:
— the amount of the revaluation reserve at the beginning of the
financial year,
— the revaluation differences transferred to the revaluation
reserve during the financial year,
— the amounts capitalized or otherwise transferred from the
revaluation reserve during the financial year, the nature ofany suchtransfer being diclosed,
— the amount of the revaluation reserve at the end of the finan-
cial year.
(b) The revaluation reserve may be capitalized in whole or in part at
any time.
(c) The revaluation reserve must be reduced to the extent that the
amounts transferred thereto are no longer necessary for theimplementation of the valuation method used and the achieve-ment of its purpose.1978L0660 — EN — 16.11.2001 — 003.001 — 18
▼B
The Member States may lay down rules governing the applica-
tion of the revaluation reserve, provided that transfers to theprofit and loss account from the revaluation reserve may be
made only to the extent that the amounts transferred have been
entered as charges in the profit and loss account or reflectincreases in value which have been actually realized. Theseamounts must be disclosed separately in the profit and lossaccount. No part of the revaluation reserve may be distributed,
either directly or indirectly, unless it represents gains actually
realized.
(d) Save as provided under (b) and (c) the revaluation reserve may
not be reduced.
3. Value adjustments shall be calculated each year on the basis of
the value adopted for the financial year in question, save that by wayof derogation from Articles 4 and 22, the Member States may permit orrequire that only the amount of the value adjustments arising as a result
of the application of the general rule laid down in Article 32 be shown
under the relevant items in the layouts prescribed in Articles 23 to 26and that the difference arising as a result of the valuation methodadopted under this Article be shown separately in the layouts. Further-more, Articles 34 to 42 shall apply mutatis mutandis .
4. Where paragraph 1 is applied, the following must be disclosed,
either in the balance sheet or in the notes on the accounts, separatelyfor each balance sheet item as provided for in the layouts prescribed
in Articles 9 and 10, except for stocks, either:
(a) the amount at the balance sheet date of the valuation made in
accordance with the general rule laid down in Article 32 and the
amount of the cumulative value adjustments; or
(b) the amount at the balance sheet date of the difference between the
valuation made in accordance with this Article and that resultingfrom the application of Article 32 and, where appropriate, thecumulative amount of the additional value adjustments.
5. Without prejudice to Article 52 the Council shall, on a proposal
from the Commission and within seven years of the notification of
this Directive, examine and, where necessary, amend this Article in
the light of economic and monetary trends in the Community.
Article 34
1. (a) Where national law authorizes the inclusion of formation
expenses under ‘Assets’, they must be written off within amaximum period of five years.
(b) In so far as formation expenses have not been completely
written off, no distribution of profits shall take place unless theamount of the reserves available for distribution and profitsbrought forward is at least equal to that of the expenses notwritten off.
2. The amounts entered under ‘Formation expenses’ must be
explained in the notes on the accounts.
Article 35
1. (a) Fixed assets must be valued at purchase price or production
cost, without prejudice to (b) and (c) below.
(b) The purchase price or production cost of fixed assets with
limited useful economic lives must be reduced by value adjust-ments calculated to write off the value of such assetssystematically over their useful economic lives.
(c) (aa) Value adjustments may be made in respect of financial
fixed assets, so that they are valued at the lower figure tobe attributed to them at the balance sheet date.
(bb) Value adjustments must be made in respect of fixed assets,
whether their useful economic lives are limited or not, sothat they are valued at the lower figure to be attributed to1978L0660 — EN — 16.11.2001 — 003.001 — 19
▼B
them at the balance sheet date if it is expected that the
reduction in their value will be permanent.
(cc) The value adjustments referred to in (aa) and (bb) must be
charget to the profit and loss account and disclosed sepa-rately in the notes on the accounts if they have not been
shown separately in the profit and loss account.
(dd) Valuation at the lower of the values provided for in (aa)
and (bb) may not be continued if the reasons for which
the value adjustments were made have ceased to apply.
(d) If fixed assets are the subject of exceptional value adjustments
for taxation purposes alone, the amount of the adjustments and
the reasons for making them shall be indicated in the notes on
the accounts.
2. The purchase price shall be calculated by adding to the price paid
the expenses incidental thereto.
3. (a) The production cost shall be calculated by adding to the
purchasing price of the raw materials and consumables the costsdirectly attributable to the product in question.
(b) A reasonable proportion of the costs which are only indirectly
attributable to the product in question may be added into theproduction costs to the extent that they relate to the period ofproduction.
4. Interest on capital borrowed to finance the production of fixed
assets may be included in the production costs to the extent that it
relates to the period of production. In that event, the inclusion of suchinterest under ‘Assets’ must be disclosed in the notes on the accounts.
Article 36
By way of derogation from Article 35 (1) (c) (cc), the Member States
may allow investment companies within the meaning of Article 5 (2) to
set off value adjustments to investments directly against ‘Capital andreserves’. The amounts in question must be shown separately under‘Liabilities’ in the balance sheet.
Article 37
1. Article 34 shall apply to costs of research and development. In
exceptional cases, however, the Member States may permit derogationsfrom Article 34 (1) (a). In that case, they may also provide for deroga-tions from Article 34 (1) (b). Suchderogations and th e reasons forthem must be disclosed in the notes on the accounts.
2. Article 34 (1) (a) shall apply to goodwill. The Member States
may, however, permit companies to write goodwill off systematicallyover a limited period exceeding five years provided that this perioddoes not exceed the useful economic life of the asset and is disclosedin the notes on the accounts together with the supporting reasons there-fore.
Article 38
Tangible fixed assets, raw materials and consumables which are
constantly being replaced and the overall value of which is ofsecondary importance to the undertaking may be shown under ‘Assets’at a fixed quantity and value, if the quantity, value and composition
thereof do not vary materially.
Article 39
1. (a) Current assets must be valued at purchase price or production
cost, without prejudice to (b) and (c) below.
(b) Value adjustments shall be made in respect of current assets
with a view to showing them at the lower market value or, inparticular circumstances, another lower value to be attributed tothem at the balance sheet date.1978L0660 — EN — 16.11.2001 — 003.001 — 20
▼B
(c) The Member States may permit exceptional value adjustments
where, on the basis of a reasonable commercial assessment,these are necessary if the valuation of these items is not to be
modified in the near future because of fluctuations in value.
The amount of these value adjustments must be disclosed sepa-rately in the profit and loss account or in the notes on theaccounts.
(d) Valuation at the lower value provided for in (b) and (c) may not
be continued if the reasons for which the value adjustments weremade have ceased to apply.
(e) If current assets are the subject of exceptional value adjustments
for taxation purposes alone, the amount of the adjustments and
the reasons for making them must be disclosed in the notes onthe accounts.
2. The definitions of purchase price and of production cost given in
Article 35 (2) and (3) shall apply. The Member States may also apply
Article 35 (4). Distribution costs may not be included in productioncosts.
Article 40
1. The Member States may permit the purchase price or production
cost of stocks of goods of the same category and all fungible itemsincluding investments to be calculated either on the basis of weightedaverage prices or by the ‘first in, first out’ (FIFO) method, the ‘last in,first out’ (LIFO) method, or some similar method.
2. Where the value shown in the balance sheet, following applica-
tion of the methods of calculation specified in paragraph 1, differsmaterially, at the balance sheet date, from the value on the basis of
the last known market value prior to the balance sheet date, the amount
of that difference must be disclosed in total by category in the notes onthe accounts.
Article 41
1. Where the amount repayable on account of any debt is greater
than the amount received, the difference may be shown as an asset. Itmust be shown separately in the ba-lance sheet or in the notes on theaccounts.
2. The amount of this difference must be written off by a reasonable
amount each year and completely written off no later than the time ofrepayment of the debt.
Article 42
Provisions for liabilities and charges may not exceed in amount the
sums which are necessary.
The provisions shown in the balance sheet under ‘Other provisions’
must be disclosed in the notes on the accounts if they are material.
SECTION 7a
Valuationatfairvalue
Article 42a
1. By way of derogation from Article 32 and subject to the condi-
tions set out in paragraphs 2 to 4 of this Article, Member States shall
permit or require in respect of all companies or any classes of compa-nies valuation at fair value of financial instruments, includingderivatives.
Suchpermission or requirement may be restricted to consolidated
accounts as defined in Directive 83/349/EEC.
2. For the purpose of this Directive commodity-based contracts that
give either contracting party the right to settle in cash or some other1978L0660 — EN — 16.11.2001 — 003.001 — 21
▼M8
▼M8
financial instrument shall be considered to be derivative financial
instruments, except when:
(a) they were entered into and continue to meet the company's
expected purchase, sale or usage requirements;
(b) they were designated for such purpose at their inception; and
(c) they are expected to be settled by delivery of the commodity.
3. Paragraph 1 shall apply only to liabilities that are:
(a) held as part of a trading portfolio; or
(b) derivative financial instruments.
4. Valuation according to paragraph1 sh all not apply to:
(a) to non-derivative financial instruments held to maturity;
(b) to loans and receivables originated by the company and not held
for trading purposes; and
(c) to interests in subsidiaries, associated undertakings and joint
ventures, equity instruments issued by the company, contracts forcontingent consideration in a business combination as well as otherfinancial instruments with such special characteristics that theinstruments, according to what is generally accepted, should be
accounted for differently from other financial instruments.
5. By way of derogation from Article 32, Member States may in
respect of any assets and liabilities which qualify as hedged items
under a fair value hedge accounting system, or identified portions ofsuchassets or liabilities, permit valuation at th e specific amountrequired under that system.
Article 42b
1. The fair value referred to in Article 42a shall be determined by
reference to:
(a) a market value, for those financial instruments for which a reliable
market can readily be identified. Where a market value is notreadily identifiable for an instrument but can be identified for itscomponents or for a similar instrument, the market value may be
derived from that of its components or of the similar instrument; or
(b) a value resulting from generally accepted valuation models and
techniques, for those instruments for which a reliable marketcannot be readily identified. Suchvaluation models and tech niquesshall ensure a reasonable approximation of the market value.
2. Those financial instruments that cannot be measured reliably by
any of the methods described in paragraph 1, shall be measured in
accordance withArticles 34 to 42.
Article 42c
1. Notwithstanding Article 31(1)(c), where a financial instrument is
valued in accordance with Article 42b, a change in the value shall be
included in the profit and loss account. However, such a change shallbe included directly in equity, in a fair value reserve, where:
(a) the instrument accounted for is a hedging instrument under a
system of hedge accounting that allows some or all of the changein value not to be shown in the profit and loss account; or
(b) the change in value relates to an exchange difference arising on a
monetary item that forms part of a company's net investment in a
foreign entity.
2. Member States may permit or require a change in the value on an
available for sale financial asset, other than a derivative financialinstrument, to be included directly in equity, in the fair value reserve.
3. The fair value reserve shall be adjusted when amounts shown
therein are no longer necessary for the implementation of paragraphs1 and 2.1978L0660 — EN — 16.11.2001 — 003.001 — 22
▼M8
Article 42d
Where valuation at fair value of financial instruments has been applied,
the notes on the accounts shall disclose:
(a) the significant assumptions underlying the valuation models and
techniques where fair values have been determined in accordance
withArticle 42b(1)(b);
(b) per category of financial instruments, the fair value, the changes in
value included directly in the profit and loss account as well aschanges included in the fair value reserve;
(c) for eachclass of derivative financial instruments, information about
the extent and the nature of the instruments, including significantterms and conditions that may affect the amount, timing andcertainty of future cashflows; and
(d) a table showing movements in the fair value reserve during the
financial year.
SECTION 8
Contentsofthenotesontheaccounts
Article 43
1. In addition to the information required under other provisions of
this Directive, the notes on the accounts must set out information inrespect of the following matters at least:
(1) the valuation methods applied to the various items in the annual
accounts, and the methods employed in calculating the value
adjustments. For items included in the annual accounts which are
or were originally expressed in foreign currency, the bases ofconversion used to express them in local currency must bedisclosed;
(2) the name and registered office of each of the undertakings in
which the company, either itself or through a person acting in
his own name but on the company's behalf, holds at least apercentage of the capital which the Member States cannot fix atmore than 20 %, showing the proportion of the capital held, theamount of capital and reserves, and the profit or loss for the latest
financial year of the undertaking concerned for which accounts
have been adopted. This information may be omitted where forthe purposes of Article 2 (3) it is of negligible importance only.The information concerning capital and reserves and the profit orloss may also be omitted where the undertaking concerned doesnot publish its balance sheet and less than 50 % of its capital is
held (directly or irdirectly) by the company;
the name, the head or registered office and the legal form of each
of the undertakings of which the company or firm is a member
having unlimited liability. This information may be omitted where
for the purposes of Article 2 (3) it is of negligible importanceonly;
(3) the number and the nominal value or, in the absence of a nominal
value, the accounting par value of the shares subscribed during thefinancial year within the limits of an authorized capital, withoutprejudice as far as the amount of this capital is concerned toArticle 2 (1) (e) of Directive 68/151/EEC or to Article 2 (c) of
Directive 77/91/EEC;
(4) where there is more than one class of shares, the number and the
nominal value or, in the absence of a nominal value, theaccounting par value for eachclass;1978L0660 — EN — 16.11.2001 — 003.001 — 23
▼B
▼M5
▼B
▼B
(5) the existence of any participation certificates, convertible deben-
tures or similar securities or rights, with an indication of theirnumber and the rights they confer;
(6) amounts owed by the company becoming due and payable after
more than five years as well as the company's entire debts coveredby valuable security furnished by the company with an indicationof the nature and form of the security. This information must be
disclosed separately for eachcreditors item, as provided for in th e
layouts prescribed in Articles 9 and 10;
(7) the total amount of any financial commitments that are not
included in the balance sheet, in so far as this information is of
assistance in assessing the financial position. Any commitments
concerning pensions and affiliated undertakings must be disclosedseparately;
(8) the net turnover within the meaning of Article 28, broken down
by categories of activity and into geographical markets in so far
as, taking account of the manner in which the sale of productsand the provision of services falling within the company'sordinary activities are organized, these categories and marketsdiffer substantially from one another;
(9) the average number of persons employed during the financial
year, broken down by categories and, if they are not disclosedseparately in the profit and loss account, the staff costs relatingto the financial year, broken down as provided for in Article 23
(6);
(10) the extent to which the calculation of the profit or loss for the
financial year has been affected by a valuation of the items which,by way of derogation from the principles enunciated in
►
M8Articles 31 and 34 to 42c ◄, was made in the financial
year in question or in an earlier financial year witha view toobtaining tax relief. Where the influence of such a valuation onfuture tax charges is material, details must be disclosed;
(11) the difference between the tax charged for the financial year and
for earlier financial years and the amount of tax payable in respectof those years, provided that this difference is material forpurposes of future taxation. This amount may also be disclosedin the balance sheet as a cumulative amount under a separateitem withan appropriate h eading;
(12) the amount of the emoluments granted in respect of the financial
year to the members of the administrative, managerial and super-visory bodies by reason of their responsibilities, and anycommitments arising or entered into in respect of retirement
pensions for former members of those bodies, with an indication
of the total for each category;
(13) the amount of advances and credits granted to the members of the
administrative, managerial and supervisory bodies, withindica-
tions of the interest rates, main conditions and any amounts
repaid, as well as commitments entered into on their behalf byway of guarantees of any kind, withan indication of th e total foreachcategory;
14. where valuation at fair value of financial instruments has not been
applied in accordance withSection 7a:
(a) for eachclass of derivative financial instruments:
(i) the fair value of the instruments, if such a value can be
determined by any of the methods prescribed in Article42b(1);
(ii) information about the extent and the nature of the instru-
ments; and
(b) for financial fixed assets covered by Article 42a, carried at an
amount in excess of their fair value and without use being1978L0660 — EN — 16.11.2001 — 003.001 — 24
▼M8
▼M8
made of the option to make a value adjustment in accordance
withArticle 35(1)(c)(aa):
(i) the book value and the fair value of either the individual
assets or appropriate groupings of those individual assets;
(ii) the reasons for not reducing the book value, including the
nature of the evidence that provides the basis for the
belief that the book value will be recovered.
2. Pending subsequent coordination, the Member States need not
apply paragraph 1 (2) to financial holding companies within themeaning of Article 5 (3).
3. Member States may waive the requirement to provide the infor-
mation referred to in paragraph1 point 12 wh ere suchinformationmakes it possible to identify the position of a specific member ofsucha body.
Article 44
1. Member States may permit the companies referred to in Article
11 to draw up abridged notes on their accounts without the informationrequired in Article 43(1)(5) to (12) and (14)(a). However, the notesmust disclose the information specified in Article 43(1)(6) in total for
all the items concerned.
2. Member States may also permit the companies referred to in
paragraph 1 to be exempted from the obligation to disclose in the noteson their accounts the information prescribed in Article 15 (3) (a) and
(4), Articles 18, 21 and 29 (2), the second subparagraph of Article 30,
Article 34 (2), Article 40 (2) and the second subparagraph of Article42.
3. Article 12 shall apply.
Article 45
1. The Member States may allow the disclosures prescribed in
Article 43 (1) (2):
(a) to take the form of a statement deposited in accordance with
Article 3 (1) and (2) of Directive 68/151/EEC; this must bedisclosed in the notes on the accounts;
(b) to be omitted when their nature is such that they would be
seriously prejudicial to any of the undertakings to which Article
43 (1) (2) relates. The Member States may make such omissionssubject to prior administrative or judicial authorization. Any suchomission must be disclosed in the notes on the accounts.
2. Paragraph 1 (b) shall also apply to the information prescribed by
Article 43 (1) (8).
The Member States may permit the companies referred to in Article 27
to omit the disclosures prescribed by Article 43 (1) (8). Article 12 shall
apply.
SECTION 9
Contentsoftheannualreport
Article 46
1. The annual report must include at least a fair review of the devel-
opment of the company's business and of its position.1978L0660 — EN — 16.11.2001 — 003.001 — 25
▼B
▼M4
▼M8
▼M4
▼B
▼B
2. The report shall also give an indication of:
(a) any important events that have occurred since the end of the finan-
cial year;
(b) the company's likely future development;
(c) activities in the field of research and development;
(d) the information concerning acquisitions of own shares prescribed
by Article 22 (2) of Directive 77/91/EEC.
(e) the existence of branches of the company;
(f) in relation to the company's use of financial instruments and where
material for the assessment of its assets, liabilities, financial posi-tion and profit or loss,
— the company's financial risk management objectives and poli-
cies, including its policy for hedging each major type of
forecasted transaction for which hedge accounting is used, and
— the company's exposure to price risk, credit risk, liquidity risk
and cashflow risk.
3. Member States may waive the obligation on companies covered
by Article 11 to prepare annual reports, provided that the informationreferred to in Article 22 (2) of Directive 77/91/EEC concerning theacquisition by a company of its own shares is given in the notes totheir accounts.
SECTION 10
Publication
Article 47
1. The annual accounts, duly approved, and the annual report,
together with the opinion submitted by the person responsible forauditing the accounts, shall be published as laid down by the laws ofeachMember State in accordance withArticle 3 of Directive 68/151/EEC.
The laws of a Member State may, however, permit the annual report
not to be published as stipulated above. ►
M1It must be possible to
obtain a copy of all or part of any suchreport upon request. Th e priceof sucha copy must not exceed its administrative cost. ◄
1a. The Member State of a company or firm referred to in Article 1
(1), second and third subparagraphs (entity concerned) may exempt that
entity from publishing its accounts in accordance with Article 3 ofDirective 68/151/EEC, provided that those accounts are available tothe public at its head office, where:
(a) all the members having unlimited liability of the entity concerned
are the companies referred to in the first subparagraph of Article 1(1) governed by the laws of Member States other than the Member
State whose law governs that entity and none of those companies
publishes the accounts of the entity concerned with its ownaccounts; or
(b) all the members having unlimited liability are companies which are
not governed by the laws of a Member State but which have a legal
form comparable to those referred to in Directive 68/151/EEC.
Copies of the accounts must be obtainable upon request. The price of
sucha copy may not exceed its administrative cost. Appropriate sanc-tions must be provided for failure to comply withth e publicationobligation imposed in this paragraph.1978L0660 — EN — 16.11.2001 — 003.001 — 26
▼M3
▼M8
▼M4
▼B
▼M5
▼B
2. By way of derogation from paragraph1, th e Member States may
permit the companies referred to in Article 11 to publish:
(a) abridged balance sheets showing only those items preceded by
letters and roman numerals in Articles 9 and 10, disclosing sepa-
rately the information required in brackets in D (II) under ‘Assets’and C under ‘Liabilities’ in Article 9 and in D (11) in Article 10,but in total for all the items concerned; and
(b) abridged notes on their accounts in accordance with Article 44.
Article 12 shall apply.
In addition, the Member States may relieve such companies from the
obligation to publishth eir profit and loss accounts and annual reportsand the opinions of the persons responsible for auditing the accounts.
3. The Member States may permit the companies mentioned in
Article 27 to publish:
(a) abridged balance sheets showing only those items preceded by
letters and roman numerals in Articles 9 and 10 disclosing sepa-
rately, either in the balance sheet or in the notes on the accounts:
— C (I) (3), C (II) (1), (2), (3) and (4), C (III) (1), (2), (3), (4) and
(7), D (II) (2), (3) and (6) and D (III) (1) and (2) under ‘Assets’and C, (1), (2), (6), (7) and (9) under 'Liabilities in Article 9,
— C (I) (3), C (II) (1), (2), (3) and (4), C (III) (1), (2), (3), (4) and
(7), D (II) (2), (3) and (6), D (III) (1) and (2), F (1), (2), (6), (7)and (9) and (I) (1), (2), (6), (7) and (9) in Article 10,
— the information required in brackets in D (II) under ‘Assets’ and
C under ‘Liabilities’ in Article 9, in total for all the itemsconcerned and sepa-rately for D (II) (2) and (3) under ‘Assets’and C (1), (2), (6), (7) and (9) under ‘Liabilities’,
— the information required in brackets in D (11) in Article 10, in
total for all the items concerned, and separately for D (II) (2)and (3);
(b) abridged notes on their accounts without the information required
in Article 43 (1) (5), (6), (8), (10) and (11). However, the notes
on the accounts must give the information specified in Article 43(1) (6) in total for all the items concerned.
This paragraph shall be without prejudice to paragraph 1 in so far as it
relates to the profit and loss account, the annual report and the opinionof the person responsible for auditing the accounts.
Article 12 shall apply.
Article 48
Whenever the annual accounts and the annual report are published in
full, they must be reproduced in the form and text on the basis of
which the person responsible for auditing the accounts has drawn up
his opinion. They must be accompanied by the full text of his report.If the person responsible for auditing the accounts has made any quali-fications or refused to report upon the accounts, that fact must bedisclosed and the reasons given.
Article 49
If the annual accounts are not published in full, it must be indicated
that the version published is abridged and reference must be made to
the register in which the accounts have been filed in accordance with
Article 47 (1). Where such filing has not yet been effected, the factmust be disclosed. The report issued by the person responsible forauditing the accounts may not accompany this publication, but it mustbe disclosed whether the report was issued with or without qualifica-tion, or was refused.1978L0660 — EN — 16.11.2001 — 003.001 — 27
▼M4
▼B
▼B
Article 50
The following must be published together with the annual accounts,
and in like manner:
— the proposed appropriation of the profit or treatment of the loss,— the appropriation of the profit or treatment of the loss,
where these items do not appear in the annual accounts.
Article 50a
Annual accounts may be published in the currency in which they were
drawn up and in ecus, translated at the exchange rate prevailing on the
balance sheet date. That rate shall be disclosed in the notes on the
accounts.
SECTION 11
Auditing
Article 51
1. (a) Companies must have their annual accounts audited by one or
more persons authorized by national law to audit accounts.
(b) The person or persons responsible for auditing the accounts must
also verify that the annual report is consistent with the annual
accounts for the same financial year.
2. The Member States may relieve the companies referred to in
Article 11 from the obligation imposed by paragraph 1.
Article 12 shall apply.3. Where the exemption provided for in paragraph 2 is granted the
Member States shall introduce appropriate sanctions into their laws
for cases in which the annual accounts or the annual reports of suchcompanies are not drawn up in accordance withth e requirements ofthis Directive.
SECTION 12
Finalprovisions
Article 52
1. A Contact Committee shall be set up under the auspices of the
Commission. Its function shall be:
(a) to facilitate, without prejudice to the provisions of Articles 169 and
170 of the Treaty, harmonized application of this Directive through
regular meetings dealing in particular withpractical problems
arising in connection withits application;
(b) to advise the Commission, if necessary, on additions or amend-
ments to this Directive.
2. The Contact Committee shall be composed of representatives of
the Member States and representatives of the Commission. Thechairman shall be a representative of the Commission. The Commis-sion shall provide the secretariat.
3. The Committee shall be convened by the chairman either on his
own initiative or at the request of one of its members.1978L0660 — EN — 16.11.2001 — 003.001 — 28
▼M4
▼B
▼B
Article 53
1. For the purposes of this Directive, the ecu shall be that defined in
Regulation (EEC) No 3180/78(1), as amended by Regulation (EEC) No
2626/84(2), and by Regulation (EEC) No 1971/89(3).
The equivalent in national currency shall be that applying on 8
November 1990.
2. Every five years the Council, acting on a proposal from the
Commission, shall examine and, if need be, revise the amountsexpressed in European units of account in this Directive, in the lightof economic and monetary trends in the Community.
Article 55
1. The Member States shall bring into force the laws, regulations
and administrative provisions necessary for them to comply with thisDirective within two years of its notification. They shall forthwith
inform the Commission thereof.
2. The Member States may stipulate that the provisions referred to
in paragraph 1 shall not apply until 18 months after the end of theperiod provided for in that paragraph.
That period of 18 months may, however, be five years:
(a) in the case of unregistered companies in the United Kingdom and
Ireland;
(b) for purposes of the application of Articles 9 and 10 and Articles 23
to 26 concerning the layouts for the balance sheet and the profitand loss account, where a Member State has brought other layoutsfor these documents into force not more than three years before thenotification of this Directive;
(c) for purposes of the application of this Directive as regards the
calculation and disclosure in balance sheets of depreciation relating
to assets covered by the asset items mentioned in Article 9, C (II)
(2) and (3), and Article 10, C (II) (2) and (3);
(d) for purposes of the application of Article 47 (1) of this Directive
except as regards companies already under an obligation of publi-cation under Article 2 (1) (f) of Directive 68/151/EEC. In this casethe second subparagraph of Article 47 (1) of this Directive shallapply to the annual account and to the opinion drawn up by the
person responsible for auditing the accounts;
(e) for purposes of the application of Article 51 (1) of this Directive.
Furthermore, this period of 18 months may be extended to eight years
for companies the principal object of which is shipping and which arealready in existence on the entry into force of the provisions referred to
in paragraph1.
3. The Member States shall ensure that they communicate to the
Commission the texts of the main provisions of national law whichthey adopt in the field covered by this Directive.
Article 56
1. The obligation to show in annual accounts the items prescribed by
Articles 9, 10 and 23 to 26 which relate to affiliated undertakings, asdefined by Article 41 of Directive 83/349/EEC, and the obligation to1978L0660 — EN — 16.11.2001 — 003.001 — 29
(1) OJ No L 379, 30. 12. 1978, p. 1.
(2) OJ No L 247, 16. 9. 1984, p. 1.
(3) OJ No L 189, 4. 7. 1989, p. 1.▼M4
▼B
▼M3
▼B
▼M1
▼M1
provide information concerning these undertakings in accordance with
Articles 13 (2), and 14 and point 7 of Article 43 (1) shall enter intoforce on the date fixed in Article 49 (2) of that Directive.
2. The notes on the accounts must also disclose:
(a) the name and registered office of the undertaking which draws up
the consolidated accounts of the largest body of undertakings ofwhich the company forms part as a subsidiary undertaking;
(b) the name and registered office of the undertaking which draws up
the consolidated accounts of the smallest body of undertakings of
which the company forms part as a subsidiary undertaking and
which is also included in the body of undertakings referred to in(a) above;
(c) the place where copies of the consolidated accounts referred to in
(a) and (b) above may be obtained provided that they are available.
Article 57
Notwithstanding the provisions of Directives 68/151/EEC and 77/91/
EEC, a Member State need not apply the provisions of this Directive
concerning the content, auditing and publication of annual accounts to
companies governed by their national laws which are subsidiary under-takings, as defined in Directive 83/349/EEC, where the followingconditions are fulfilled:
(a) the parent undertaking must be subject to the laws of a Member
State;
(b) all shareholders or members of the subsidiary undertaking must
have declared their agreement to the exemption from such obliga-
tion; this declaration must be made in respect of every financial
year;
(c) the parent undertaking must have declared that it guarantees the
commitments entered into by the subsidiary undertaking;
(d) the declarations referred to in (b) and (c) must be published by the
subsidiary undertaking as laid down by the laws of the Member
State in accordance withArticle 3 of Directive 68/151/EEC;
(e) the subsidiary undertaking must be included in the consolidated
accounts drawn up by the parent undertaking in accordance with
Directive 83/349/EEC;
(f) the above exemption must be disclosed in the notes on the consoli-
dated accounts drawn up by the parent undertaking;
(g) the consolidated accounts referred to in (e), the consolidated annual
report, and the report by the person responsible for auditing those
accounts must be published for the subsidiary undertaking as laid
down by the laws of the Member State in accordance with Article3 of Directive 68/151/EEC.
Article 57a
1. Member States may require the companies referred to in the first
subparagraph of Article 1 (1) governed by their law, which aremembers having unlimited liability of any of the companies and firmslisted in Article 1 (1), second and third subparagraphs (entity
concerned), to draw up, have audited and publish, with their own
accounts, the accounts of the entity concerned in conformity with theprovisions of this Directive.
In this case, the requirements of this Directive do not apply to the
entity concerned.
2. Member States need not apply the requirements of this Directive
to the entity concerned where:
(a) the accounts of this entity are drawn up, audited and published in
conformity with the provisions of this Directive by a company1978L0660 — EN — 16.11.2001 — 003.001 — 30
▼M5
▼M5
which is a member having unlimited liability of the entity and is
governed by the law of another Member State;
(b) the entity concerned is included in consolidated accounts drawn up,
audited and published in accordance with Directive 83/349/EEC by
a member having unlimited liability or where the entity concernedis included in the consolidated accounts of a larger body of under-takings drawn up, audited and published in conformity withCouncil Directive 83/349/EEC by a parent undertaking governedby the law of a Member State. The exemption must be disclosed
in the notes on the consolidated accounts.
3. In these cases, the entity concerned must reveal to whomsoever
so requests the name of the entity publishing the accounts.
Article 58
A Member State need not apply the provisions of this Directive
concerning the auditing and publication of the profit-and-loss accountto companies governed by their national laws which are parent under-takings for the purposes of Directive 83/349/EEC where the followingconditions are fulfilled:
(a) the parent undertaking must draw up consolidated accounts in
accordance withDirective 83/349/EEC and be included in th econsolidated accounts;
(b) the above exemption must be disclosed in the notes on the annual
accounts of the parent undertaking;
(c) the above exemption must be disclosed in the notes on the consoli-
dated accounts drawn up by the parent undertaking;
(d) the profit or loss of the parent company, determined in accordance
with this Directive, must be shown in the balance sheet of theparent company.
Article 59
1. A Member State may require or permit that participating interests,
as defined in Article 17, in the capital of undertakings over the oper-ating and financial policies of which significant influence is exercised,be shown in the balance sheet in accordance with paragraphs 2 to 9below, as sub-items of the items ‘shares in affiliated undertakings’ or‘participating interests’, as the case may be. An undertaking shall be
presumed to exercise a significant influence over another undertaking
where it has 20 % or more of the ‘shareholders’ or ‘members’ votingrights in that undertaking. Article 2 of Directive 83/349/EEC shallapply.
2. When this Article is first applied to a participating interest
covered by paragraph 1, it shall be shown in the balance sheet either:
(a) at its book value calculated in accordance with ►
M8Section 7 or
7a◄. The difference between that value and the amount corre-
sponding to the proportion of capital and reserves represented bythe participating interest shall be disclosed separately in the balance
sheet or in the notes on the accounts. That difference shall be
calculated as at the date as at which the method is applied for thefirst time; or
(b) at the amount corresponding to the proportion of the capital and
reserves represented by the participating interest. The differencebetween that amount and the book value calculated in accordancewith►
M8Section 7 or 7a ◄shall be disclosed separately in the
balance sheet or in the notes on the accounts. That difference shall
be calculated as at the date as at which the method is applied forthe first time.
(c) A Member State may prescribe the application of one or other of
the above paragraphs. The balance sheet or the notes on theaccount must indicate whether (a) or (b) above has been used.1978L0660 — EN — 16.11.2001 — 003.001 — 31
▼M1
▼M1
(d) In addition, when applying (a) and (b) above, a Member State may
require or permit calculation of the difference as at the date ofacquisition of the participating interest referred to in paragraph 1
or, where the acquisition took place in two or more stages, as at
the date as at which the holding became a participating interestwithin the meaning of paragraph 1 above.
3. Where the assets or liabilities of an undertaking in which a parti-
cipating interest within the meaning of paragraph 1 above is held havebeen valued by methods other than those used by the company drawingup the annual accounts, they may, for the purpose of calculating thedifference referred to in paragraph2 (a) or (b) above, be revalued by
the methods used by the company drawing up the annual accounts.
Disclosure must be made in he notes on the accounts where such reva-luation has not been carried out. A Member State may require suchrevaluation.
4. The book value referred to in paragraph 2 (a) above, or the
amount corresponding to the proportion of capital and reserves referredto in paragraph 2 (b) above, shall be increased or reduced by theamount of the variation which has taken place during the financialyear in the proportion of capital and reserves represented by that parti-
cipating interest; it shall be reduced by the amount of the dividends
relating to the participating interest.
5. In so far as a positive difference covered by paragraph2 (a) or (b)
above cannot be related to any category of asset or liability, it shall be
dealt with in accordance with the rules applicable to the item ‘good-will’.
6. (a) The proportion of the profit or loss attributable to participating
interests within the meaning of paragraph 1 above shall be
shown in the profit-and-loss account as a separate item with anappropriate heading.
(b) Where that amount exceeds the amount of dividends already
received or the payment of which can be claimed, the amountof the difference must be placed in a reserve which cannot be
distributed to shareholders.
(c) A Member State may require or permit that the proportion of the
profit or loss attributable to the participating interests referred toin paragraph 1 above be shown in the profit-and-loss accountonly to the extent of the amount corresponding to dividendsalready received or the payment of which can be claimed.
7. The eliminations referred to in Article 26 (1) (c) of Directive 83/
349/EEC shall be effected in so far as the facts are known or can beascertained. Article 26 (2) and (3) of that Directive shall apply.
8. Where an undertaking in which a participating interest within the
meaning of paragraph1 above is h eld draws up consolidated accounts,the foregoing paragraphs shall apply to the capital and reserves shownin suchconsolidated accounts.
9. This Article need not be applied where a participating interest as
defined in paragraph1 is not material for th e purposes of Article 2 (3).
Article 60
Pending subsequent coordination, the Member States may prescribe
that investments in which investment companies within the meaningof Article 5 (2) have invested their funds shall be valued on the basisof their market value.
In that case, the Member States may also waive the obligation on
investment companies with variable capital to show separately thevalue adjustments referred to in Article 36.1978L0660 — EN — 16.11.2001 — 003.001 — 32
▼B
▼M1
Article 61
A Member State need not apply the provisions of point 2 of Article 43
(1) of this Directive concerning the amount of capital and reserves and
profits and losses of the undertakings concerned to companies governed
by their national laws which are parent undertakings for the purposesof Directive 83/349/EEC:
(a) where the undertakings concerned are included in consolidated
accounts drawn up by that parent undertaking, or in the consoli-dated accounts of a larger body of undertakings as referred to inArticle 7 (2) of Directive 83/349/EEC; or
(b) where the holdings in the undertakings concerned have been dealt
withby th e parent undertaking in its annual accounts in accordancewith Article 59, or in the consolidated accounts drawn up by thatparent undertaking in accordance withArticle 33 of Directive 83/
349/EEC.
Article 61a
Not later than 1 January 2007, the Commission shall review the provi-
sions in Article 42a to 42d, Article 43(1)(10) and (14), Article 44(1),Article 46(2)(f) and Article 59(2)(a) and (b) in the light of the experi-ence acquired in applying provisions on fair value accounting andtaking account of international developments in the field of accountingand, if appropriate, submit a proposal to the European Parliament and
the Council with a view to amending the abovementioned Articles.
Article 62
This Directive is addressed to the Member States.1978L0660 — EN — 16.11.2001 — 003.001 — 33
▼M8
▼B