78/660/EEC - - - I
1This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
FOURTH COUNCIL DIRECTIVE
of 25 July 1978
based on Article 54 (3) (g) of the Treaty on the annual accounts of certain types of companies
(78/660/EEC)
(OJ No L 222, 14. 8. 1978, p. 11)
Amended by:
Official Journal
No page date
Seventh Council Directive of 13 June 1983 (83/349/EEC) L 193 1 18. 7. 1983
Council Directive of 27 November 1984 (84/569/EEC) L 314 28 4. 12. 1984Eleventh Council Directive of 21 December 1989 (89/666/EEC) L 395 36 30. 12. 1989Council Directive of 8 November 1990 (90/604/EEC) L 317 57 16. 11. 1990Council Directive of 8 November 1990 (90/605/EEC) L 317 60 16. 11. 1990Council Directive 94/8/EC of 21 March 1994 L 82 33 25. 3. 1994
Amended
by:
A1 Act of Accession of Greece L 291 89 19. 11. 1979
A2 Act of Accession of Spain and Portugal L 302 157 15. 11. 1985A3 Act of Accession of Austria, Sweden and Finland C 241 195 29. 8. 1994
(adapted by Council decision 95/1/EC, Euratom, ECSC) L 1 143 1. 1. 1995
78/660/EEC - - - I
IFOURTH COUNCIL DIRECTIVE
of 25 July 1978
based on Article 54 (3) (g) of the Treaty on the annual accounts of certain types of companies
(78/660/EEC)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the T reaty establishing the EuropeanEconomic 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 Parlia-
ment (
1),
Having regard to the opinion of the Economic and Social
Committee (2),
Whereas the coordination of national provisions concern-
ing the presentation and content of annual accounts and
annual reports, the valuation methods, used therein andtheir publication in respect of certain companies with li-
mited liability is of special importance for the protection of
members 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 territories and, on the other,
they offer no safeguards to third parties beyond the
amounts of their net assets; whereas, moreover, the neces-
sity for and the urgency of such coordination have been
recognized and confirmed by Article 2 (1) (f) of Directive
68/151/EEC (
3);
Whereas it is necessary, moreover, to establish in the Com-
munity minimum equivalent legal requirements as regards
the extent of the financial information that should be made
available to the public by companies that are in competi-
tion 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 to this 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
companies of minor economic or social importance;
(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.
78/660/EEC - - - I
IIWhereas 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 deroga-
tions may likewise be granted in this area 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 desir-
able 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 of a Council Direc-tive on consolidated accounts, derogations from certain
provisions of this Directive are necessary;
Whereas, in order to meet the difficulties arising from the
present position regarding legislation in certain Member
States, the period allowed for the implementation of cer-
tain provisions of this Directive must be longer than the
period generally laid down in such cases,
HAS ADOPTED THIS DIRECTIVE:
78/660/EEC - - - I
1Article 1
1. The coordination measures prescribed by this Direc-
tive shall apply to the laws, regulations and administrative
provisions of the Member States relating to the following
types of companies:
—i n G e r m a n y :
die Aktiengesellschaft, die Kommanditgesellschaft auf
Aktien, die Gesellschaft mit beschränkter Haftung;
—i n B e l g i u m :
la société anonyme/de naamloze vennootschap, la so-
ciété en commandite par actions / de commanditaire
vennootschap op aandelen, la société de personnes à
responsabilité limitée/de personenvennootschap met
beperkte aansprakelijkheid;
—i n D e n m a r k :
aktieselskaber, kommanditaktieselskaber, anpartssels-
kaber;
—i n F r a n c e :
la société anonyme, la société en commandite par
actions, la société à responsabilité limitée;
—i n I r e l a n d :
public companies limited by shares or by guarantee,
private companies limited by shares or by guarantee;
—i n I t a l y :
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 companies limited by shares or by guarantee;
— in Greece:
η ανώνυμη εταιρία ,η εταιρία περιωρισμένης
ευθύνης ,η ετερόρρυθμη κατά μετοχές εταιρία ;
— in Spain:
la sociedad anónima, la sociedad comanditiara por ac-
ciones, la sociedad de responsabilidad limitada;
— in Portugal:
a sociedade anónima, de responsabilidade limitada, a
sociedade em comandita por açcões, a sociedadepor
quotas de responsabilidade limitada;78/660/EEC
Act of Accession GR
Act of Accession ES, PT
78/660/EEC - - - I
2—i n A u s t r i a :
die Aktiengesellschaft, die Gesellschaft mit
beschränkter Haftung;
—i n F i n l a n d :
osakeyhtiö/ aktiebolag;
—i n S w e d e n :
aktiebolag.
The coordination measures prescribed by this Directive
shall also apply to the Member States’ laws, regulations
and administrative provisions relating to the following
types of company:
(a) in Germany:
die offene Handelsgesellschaft, die Kommanditgesell-
schaft;
(b) in Belgium:
la société en nom collectif/de vennootschap onder
firma, la société en commandité (SIC! commandite)simple/de gewone commanditaire 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 com-
panies;
(h) in Italy:
la società in nome collettivo, la società in accomandi-
ta semplice;
(i) in Luxembourg:
la société en nom collectif, la société en commandite
simple;
(j) in the Netherlands:
de vennootschap onder firma, de commanditaire ven-
nootschap;
(k) in Portugal:
sociedade em nome colectivo, sociedade em comandi-
ta simples;
(l) in the United Kingdom:
partnerships, limited partnerships, unlimited com-
panies;95/1/EC, Euratom, ECSC
90/605/EEC
78/660/EEC - - - I
3(m) in Austria:
die offene Handelsgesellschaft, die Kommanditgesell-
schaft;
(n) in Finland:
avoin yhtiö/ öppet bolag, kommandiittiyhtiö/komman-
ditbolag;
(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 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.
This Directive shall also apply to the types of companies
or firms referred to in the second subparagraph where all
members having unlimited liability are themselves com-
panies of the types set out in that or the first subpara-graph.
2. Pending subsequent coordination, the Member Statesneed not apply the provisions of this Directive to banks
and other financial institutions 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 shall constitute a composite whole.
2. They shall be drawn up clearly and in accordance
with the provisions 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 Direc-
tive would not be sufficient to give a true and fair view
within the meaning of paragraph 3, additional informationmust be given.
5. Where in exceptional cases the application of a provi-
sion of this Directive is incompatible with the obligation
laid down in paragraph 3, that provision must be departed
from in order to give a true and fair view within the mean-
ing of paragraph 3. Any such departure must be disclosed
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 the exceptional cases in ques-
tion and lay down the relevant special rules.95/1/EC, Euratom, ECSC
90/605/EEC
78/660/EEC
78/660/EEC - - - I
46. The Member States may authorize or require the dis-
closure in the annual accounts of other information as well
as that which must be disclosed in accordance with this
Directive.
SECTION 2
General provisions concerning the balance sheet and the
profit and loss account
Article 3
The layout of the balance sheet and of the profit and loss
account, particularly as regards the form adopted for their
presentation, may not be changed from one financial year
to the next. Departures from this principle shall be per-
mitted in exceptional cases. Any such departure must be
disclosed in the notes on the accounts together with an
explanation of the reasons therefor.
Article 4
1. In the balance sheet and in the profit and loss ac-
count the items prescribed in Articles 9, 10 and 23 to 26
must be shown separately in the order indicated. A more
detailed subdivision of the items shall be authorized pro-
vided 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 subdivi-
sion or new items may be required by the Member States.
2. The layout, nomenclature and terminology of items in
the balance sheet and profit and loss account that are pre-
ceded by Arabic numerals must be adapted where the
special nature of an undertaking so requires. Such adapta-
tions may be required by the 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); or
(b) such combination makes for greater clarity, provided
that the items so combined are dealt with separately
in the notes on the accounts. Such combination may
be required by the Member States.
4. In respect of each balance sheet and profit and loss
account item the figure relating to the corresponding item
for the preceding financial year 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 of the figures must be disclosed in the notes on
the accounts, with relevant comments.
5. Save where there is a corresponding item for the pre-
ceding financial year within the meaning of paragraph 4, a
balance sheet or profit and loss account item for which
there is no amount shall not be shown.78/660/EEC
78/660/EEC - - - I
5Article 5
1. By way of derogation from Article 4 (1) and (2), the
Member States may prescribe special layouts for the an-
nual accounts of investment companies and of financial
holding companies provided that these layouts give a view
of these companies equivalent to that provided for in Ar-
ticle 2 (3).
2. For the purposes of this Directive, ‘investment com-
panies’ 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 aim of spreading investment
risks and giving their shareholders the benefit of the
results of the management of their assets;
(b) those companies associated with investment com-
panies with fixed capital if the sole object of the com-
panies so associated is to acquire fully paid shares is-sued by those investment companies without prejudice
to the provisions of Article 20 (1) (h) of Directive
77/91/EEC (
1).
3. For the purposes of this Directive, ‘financial holding
companies’ shall mean only those companies the sole ob-
ject of which is to acquire holdings in other undertakings,
and to manage such holdings and turn them to profit,
without involving themselves directly or indirectly in the
management of those undertakings, the aforegoing without
prejudice to their rights as shareholders. The limitations
imposed on the activities of these companies must be such
that compliance with them can be supervised by an admi-
nistrative or judicial authority.
Article 6
The Member States may authorize or require adaptation
of the layout of the balance sheet and profit and loss ac-
count 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
Layout of the balance sheet
Article 8
For the presentation of the balance sheet, the Member
States shall prescribe one or both of the layouts prescribedby Articles 9 and 10. If a Member State prescribes both, it
may allow companies to choose between them.
(1) OJ No L 26, 31. 1. 1977, p. 1.78/660/EEC
78/660/EEC - - - I
6Article 9
Assets
A. Subscribed capital unpaid
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 yet paid 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 for formation expenses to be
shown as the first item under ’Intangible assets’.
C. Fixed assets
I. Intangible assets
1. Costs of research and development, in so
far as national law permits their beingshown 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 . G o o d w i l l ,t ot h ee x t e n tt h a ti tw a sa c q u i r e d
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 equip-
ment.
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 com-
pany is linked by virtue of participating in-
terests.
5. Investments held as fixed assets.
6. Other loans.78/660/EEC
78/660/EEC - - - I
77. Own shares (with an indication of their
nominal value or, in the absence of a nom-
inal value, their accounting par value) to the
extent that national law permits their being
shown in the balance sheet.
D. Current assets
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. T rade debtors.
2. Amounts owed by affiliated undertakings.3. Amounts owed by undertakings with which
the company is linked by virtue of partici-
pating interests.
4. Other debtors.
5. Subscribed capital called but not paid (un-
less national law provides that called-up
capital be shown as an asset under A).
6. Prepayments and accrued income (unless
national law provides for such items to be
shown 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 nom-
inal value, their accounting par value) to the
extent that national law permits their being
shown in the balance sheet.
3. Other investments.
IV . Cash at bank and in hand
E.Prepayments and accrued income
(unless national law provides for such items to be
shown as an asset under D (II) (6)).
F . Loss for the financial year
(unless national law provides for it to be shown under
A (VI) under ‘Liabilities’).
Liabilities
A. Capital and reserves
I. Subscribed capital78/660/EEC
78/660/EEC - - - I
8(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 re-
quires such a reserve.
2. Reserve for own shares, in so far as national
law requires such a reserve, without preju-
dice to Article 22 (1) (b) of Directive
77/91/EEC.
3. Reserves provided for by the articles of as-
sociation.
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.Provisions for liabilities and charges
1. Provisions for pensions and similar obligations.
2. Provisions for taxation.
3. Other provisions.
C. Creditors
(Amounts becoming due and payable within one year
and amounts becoming due and payable after more
t h a no n ey e a rm u s tb es h o w ns e p a r a t e l yf o re a c hi t e m
and for the aggregate of these items.)
1. Debenture loans, showing convertible loans sep-
arately.
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. T rade 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 in-
terests.
8. Other creditors including tax and social security.78/660/EEC
78/660/EEC - - - I
99. Accruals and deferred income (unless national
law provides for such items to be shown under D
under ‘Liabilities’).
D . A c c r u a l sa n dd e f e r r e di n c o m e
(unless national law provides for such items to be
shown under C (9) under ‘Liabilities’).
E. Profit for the financial year
(unless national law provides for it to be shown under
A (VI) under ‘Liabilities’).
Article 10
A. Subscribed capital unpaid
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 must appear 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. Fixed assets
I. Intangible assets
1. Costs of research and 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 . G o o d w i l l ,t ot h ee x t e n tt h a ti tw a sa c q u i r e d
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 equip-
ment.
4. Payments on account and tangible assets in
course of construction.78/660/EEC
78/660/EEC - - - I
10III. Financial assets
1. Shares in affiliated undertakings.
2. Loans to affiliated undertakings.
3. Participating interests.
4. Loans to undertakings with which the com-
pany is linked by virtue of participating in-
terests.
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 nom-
inal value, their accounting par value) to the
extent that national law permits their being
shown in the balance sheet.
D. Current assets
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. T rade debtors.
2. Amounts owed by affiliated undertakings.
3. Amounts owed by undertakings with which
the company is linked by virtue of partici-
pating interests.
4. Other debtors.
5. Subscribed capital called but not paid (un-
less 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 nom-
inal value, their accounting par value) to the
extent that national law permits their being
shown in the balance sheet.
3. Other investments.
IV . Cash at bank and in hand.
E. Prepayments and accrued income
(unless national law provides for such items to be
shown under D (II) (6)).78/660/EEC
78/660/EEC - - - I
11F . Creditors: amounts becoming due and payable with-
in one year
1. Debenture loans, showing convertible loans sep-
arately.
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. T rade 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 in-
terests.
8. Other creditors including tax and social security.
9. Accruals and deferred income (unless national
law provides for such items to be shown underK).
G. Net current assets/liabilities (taking into account pre-
payments and accrued income when shown under E
and accruals and deferred income when shown under
K).
H. Total assets less current liabilities
I. Creditors: amounts becoming due and payable after
more than one year
1. Debenture loans, showing convertible loans sep-
arately.
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. T rade 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 in-
terests.
8. Other creditors including tax and social security.
9. Accruals and deferred income (unless national
law provides for such items to be shown under
K).
J. Provisions for liabilities and charges
1. Provisions for pensions and similar obligations.
2. Provisions for taxation.
3. Other provisions.78/660/EEC
78/660/EEC - - - I
12K . A c c r u a l sa n dd e f e r r e di n c o m e
(unless national law provides for such items to be
shown under F (9) or I (9) or both).
L. Capital and reserves
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 re-
quires such a reserve.
2. Reserve for own shares, in so far as national
law requires such a reserve, without preju-
dice to Article 22 (1) (b) of Directive77/91/EEC.
3. Reserves provided for by the articles of as-
sociation.
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:
— balance sheet total: ECU 2 500
000,
— net turnover: ECU 5 000 000,
— 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 separately the information required in
brackets in D (II) under ‘ Assets’ and C under ‘Liabilities’
in Article 9 and in D (II) in Article 10, but in total for
each.
Member States may waive the application of Article 15 (3)(a) and (4) to the abridged balance sheet.78/660/EEC
94/8/EEC
94/8/EEC
90/604/EEC
78/660/EEC - - - I
13Article 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 cur-
rencies, the amounts in European units of account speci-
fied in Article 11 may be increased 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 Article 9 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 dis-
closed either under the item where 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 clearlyset out at the foot of the balance sheet or in the notes on
the accounts, and a distinction made between the various
types of guarantee which national law recognizes; specific
disclosure must be made of any valuable security which has
been provided. Commitments of this kind existing in re-
spect of affiliated undertakings must be shown separately.
SECTION 4
Special provisions relating to certain balance sheet items
Article 15
1 . W h e t h e rp a r t i c u l a ra s s e t sa r et ob es h o w na sf i x e d
assets or current assets shall depend upon the purpose for
which they are intended.
2. Fixed assets shall comprise those assets which are in-
tended for use on a continuing basis for the purposes of
the undertaking’s activities.78/660/EEC
78/660/EEC - - - I
143. (a) Movements in the various fixed asset items shall
be shown in the balance sheet or in the notes on
the accounts. T o this end there shall be shown
separately, starting with the purchase price or
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
financial year to the value adjustments of pre-
vious financial years. V alue adjustments shall be
shown either in the balance sheet, as clear de-
ductions from the relevant items, or in the notes
on the accounts.
(b) If, when annual accounts are drawn up in accor-
dance with this Directive for the first time, the
purchase price or production cost of a fixed assetcannot 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. Any application of this
provision must be disclosed in the notes on the
accounts.
(c) Where Article 33 is applied, the movements in
the various fixed asset items referred to in sub-
paragraph (a) of this paragraph shall be shown
starting with the purchase price or production
cost resulting from revaluation.
4. Paragraph 3 (a) and (b) shall apply to the presenta-
tion of ‘Formation 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’
s h a l lm e a nr i g h t si nt h ec a p i t a lo fo t h e ru n d e r t a k i n g s ,
whether or not represented by certificates, which, by creat-
ing a durable link with those undertakings, are intended to
contribute to the company’s activities. The holding of part
of the capital of another company shall be presumed to
constitute a participating interest where it exceeds a per-
centage fixed by the Member States which may not exceed
20 %.78/660/EEC
78/660/EEC - - - I
15Article 18
Expenditure incurred during the financial year but relating
to a subsequent financial year, together with any income
which, though relating to the financial year in question, is
not due until after its expiry must be shown under ‘Prepay-
ments and accrued income’. The Member States may, how-
ever, provide that such income shall be included in
‘Debtors’. Where such income is material, it must be dis-
closed in the notes on the accounts.
Article 19
V alue adjustments shall comprise all adjustments intended
to take account of reductions in the values of individual
assets established at the 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 they will arise.
2. The Member States may also authorize the creation
of provisions intended to cover charges which have their
origin in the financial year under review or in a previous
financial year, the nature of which is clearly defined and
which at the date of the balance sheet are either likely tobe 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 relat-
ing to a subsequent financial year, together with any
charges which, though relating to the financial year in
question, will be paid only in the course of a subsequent
financial year, must be shown under ‘ Accruals and deferred
income’. The Member States may, however, provide that
such charges shall be included in ‘Creditors’. Where such
charges are material, they must be disclosed in the notes
on the accounts.
SECTION 5
Layout of the profit and loss account
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 to 26. If a Member State pre-
scribes more than one layout, it may allow companies to
choose from among them.78/660/EEC
78/660/EEC - - - I
16Article 23
1. Net turnover.
2. V ariation in stocks of finished goods and in work in
progress.
3. Work performed by the undertaking for its own pur-
poses and capitalized.
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, with a separate indication of
those relating to pensions.
7. (a) V alue adjustments in respect of formation ex-
penses and of tangible and intangible fixed as-
sets.
(b) V alue adjustments in respect of current assets, to
t h ee x t e n tt h a tt h e ye x c e e dt h ea m o u n to fv a l u e
adjustments which are normal in the undertaking
concerned.
8. Other operating charges.
9. Income from participating interests, with a separate
indication of that derived from affiliated undertakings.
10. Income from other investments and loans forming
part of the fixed assets, with a separate indication of
that derived from affiliated undertakings.
11. Other interest receivable and similar income, with a
separate indication of that derived from affiliated un-
dertakings.
12. V alue 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. T ax 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. T ax on extraordinary profit or loss.
20. Other taxes not shown under the above items.
21. Profit or loss for the financial year.78/660/EEC
78/660/EEC - - - I
17Article 24
A. Charges
1. Reduction in stocks of finished goods and in
work in progress:
2. (a) raw materials and consumables;
(b) other external charges.
3. Staff costs:
(a) wages and salaries;
(b) social security costs, with a separate indica-
tion of those relating to pensions.
4. (a) V alue adjustments in respect of formation
expenses and of tangible and intangible
fixed assets.
(b) V alue adjustments in respect of current
assets, to the extent that they exceed the
amount of value adjustments which are nor-
mal in the undertaking concerned.
5. Other operating charges.
6. V alue adjustments in respect of financial assets
and of investments held as current assets.
7. Interest payable and similar charges, with a sep-
arate indication of those concerning affiliated un-
dertakings.
8. T ax on profit or loss on ordinary activities.
9. Profit or loss on ordinary activities after taxation.
10. Extraordinary charges.
11. T ax 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, with a sepa-
rate indication of that derived from affiliated un-
dertakings.
6. Income from other investments and loans form-
ing part of the fixed assets, with a separate in-
dication of that derived from affiliated undertak-
ings.78/660/EEC
78/660/EEC - - - I
187. 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, with a separate
indication of that derived from affiliated undertakings.
8. Income from other investments and loans forming
part of the fixed assets, with a separate indication of
that derived from affiliated undertakings.
9. Other interest receivable and similar income with a
separate indication of that derived from affiliated un-
dertakings.
10. V alue adjustments in respect of financial assets and of
investments held as current assets.
11. Interest payable and similar charges, with a separate
indication of those concerning affiliated undertakings.
12. T ax 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. T ax 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).78/660/EEC
78/660/EEC - - - I
192. Distribution costs (including value adjustments).
3. Administrative expenses (including value adjust-
ments).
4. V alue adjustments in respect of financial assets
and of investments held as current assets.
5. Interest payable and similar charges, with a se-
parate indication of those concerning affiliated
undertakings.
6. T ax on profit or loss on ordinary activities.
7. Profit or loss on ordinary activities after taxation.
8. Extraordinary charges.
9. T ax 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, with a sepa-
rate indication of that derived from affiliated un-
dertakings.
4. Income from other investments and loans form-
ing part of the fixed assets, with a separate in-
dication of that derived from affiliated undertak-
ings.
5. Other interest receivable and similar income with
a separate indication of that derived from affili-
ated 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:
— balance sheet total: ECU 100 000
000,
— net turnover: ECU 20 000 000,
— 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’;78/660/EEC
94/8/EC
94/8/EC
78/660/EEC - - - I
20(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’;
(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 com-
bined 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 di-
rectly 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 ‘Extraordinary income and extraordinary charges’.
2. Unless the income and charges referred to in para-
graph 1 are immaterial for the assessment of the results,
explanations of their amount 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 in total 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 acti-
vities after taxation’ shall be omitted from the layouts pre-
scribed in Articles 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 affect the profit or loss on ordinary
activities and the ‘Extraordinary profit or loss’.78/660/EEC
78/660/EEC - - - I
21SECTION 7
Valuation rules
Article 31
1. The Member States shall ensure that the items shown
in the annual accounts are valued in accordance with the
following general principles:
(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 liabil-
ities and potential losses arising in the course of
the financial year concerned or of a previous
one, even if such liabilities or losses become ap-
parent only between the date of the balance
sheet and the date 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;
(d) account must be taken of income and charges relating
to the financial year, irrespective of the date of re-
ceipt or payment of such income or charges;
(e) the components of asset and liability items must be
valued separately;
(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 per-
mitted in exceptional cases. Any such departures must be
disclosed in the notes on the accounts and the reasons for
them given together with an assessment 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 purchase price 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 pending subsequent coordination, to permit
or require in respect of all companies or any classes of
companies:78/660/EEC
78/660/EEC - - - I
22(a) valuation by the replacement value method for tan-
gible fixed assets with limited 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 annual accounts, including capital
and reserves;
(c) revaluation of tangible fixed assets and financial fixed
assets.
Where national law provides for valuation methods as indi-
cated 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 accordance with the 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 either in the balance sheet or in the
notes on the accounts.
For purposes of the application of the last sub-
paragraph of paragraph 1, companies shall,
whenever the amount of the reserve has been
changed in the course of the financial year, pub-
lish in the notes on the accounts inter alia 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 trans-
ferred from the revaluation reserve during
the financial year, the nature of any such
transfer being disclosed,
— the amount of the revaluation reserve at the
end of the financial year.
(b) The revaluation reserve may be capitalized in
w h o l eo ri np a r ta ta n yt i m e .
(c) The revaluation reserve must be reduced to the
extent that the amounts transferred thereto are
no longer necessary for the implementation ofthe valuation method used and the achievement
of its purpose.78/660/EEC
78/660/EEC - - - I
23The Member States may lay down rules govern-
ing the application of the revaluation reserve,
provided that transfers to the profit and loss ac-
count 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 reflect increases in value which
have been actually realized. These amounts must
be disclosed separately in the profit and loss ac-
count. 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 revalua-
tion reserve may not be reduced.
3. V alue adjustments shall be calculated each year on
the basis of the value adopted for the financial year in
question, save that by way of derogation from Articles 4and 22, the Member States may permit or require that
only the amount of the value adjustments arising as a re-
sult of the application of the general rule laid down in
Article 32 be shown under the relevant items in the lay-
outs prescribed in Articles 23 to 26 and that the difference
arising as a result of the valuation method adopted 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, separately for 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 differ-
ence between the valuation made in accordance with
this Article and that resulting from the application of
Article 32 and, where appropriate, the cumulative
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 a maximum period of five
years.78/660/EEC
78/660/EEC - - - I
24(b) In so far as formation expenses have not been
completely written off, no distribution of profits
shall take place unless the amount of the re-
serves available for distribution and profits
brought forward is at least equal to that of the
expenses not written 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 adjustments calculated to write
off the value of such assets systematically over
their useful economic lives.
(c) (aa) V alue adjustments may be made in respect
of financial fixed assets, so that they are val-
ued at the lower figure to be attributed to
them at the balance sheet date.
(bb) V alue adjustments must be made in respect
of fixed assets, whether their useful econo-
mic lives are limited or not, so that they are
valued at the lower figure to be attributed
to 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 charged to the profit and
loss account and disclosed separately in the
notes on the accounts if they have not been
shown separately in the profit and loss ac-
count.
(dd) V aluation at the lower of the values pro-
vided for in (aa) and (bb) may not be con-
tinued if the reasons for which the value ad-
j u s t m e n t sw e r em a d eh a v ec e a s e dt oa p p l y .
(d) If fixed assets are the subject of exceptional val-
ue 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 . T h ep u r c h a s ep r i c es h a l lb ec a l c u l a t e db ya d d i n gt o
the price paid the expenses incidental thereto.
3. (a) The production cost shall be calculated by ad-
ding to the purchasing price of the raw materials
and consumables the costs directly attributable to
the product in question.78/660/EEC
78/660/EEC - - - I
25(b) A reasonable proportion of the costs which are
only indirectly attributable to the product in
question may be added into the production costs
to the extent that they relate to the period of
production.
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 such interest 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 and reserves’. The
amounts in question must be shown separately under ‘Lia-
bilities’ in the balance sheet.
Article 37
1. Article 34 shall apply to costs of research and devel-
opment. In exceptional cases, however, the Member States
may permit derogations from Article 34 (1) (a). In that
case, they may also provide for derogations from Article
34 (1) (b). Such derogations and the reasons for them
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 systematically over a limited period exceeding
five years provided that this period does not exceed the
useful economic life of the asset and is disclosed in the
notes on the accounts together with the supporting reasons
therefore.
Article 38
T angible fixed assets, raw materials and consumables which
are constantly being replaced and the overall value of
which is of secondary 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.78/660/EEC
78/660/EEC - - - I
26(b) V alue adjustments shall be made in respect of
current assets with a view to showing them at the
lower market value or, in particular circum-
stances, another lower value to be attributed to
them at the balance sheet date.
(c) The Member States may permit exceptional val-
ue adjustments where, on the basis of a reason-
able commercial assessment, these are necessary
if the valuation of these items is not to be modi-
fied in the near future because of fluctuations in
value. The amount of these value adjustments
must be disclosed separately in the profit and
loss account or in the notes on the accounts.
(d) V aluation at the lower value provided for in (b)
and (c) may not be continued if the reasons for
which the value adjustments were made 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
on the 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 production costs.
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 items including investments to be calcu-
lated either on the basis of weighted average 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, follow-
ing application of the methods of calculation specified in
paragraph 1, differs materially, 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 differ-
ence must be disclosed in total by category in the notes on
the 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. It must be shown separately in the ba-
lance sheet or in the notes on the accounts.
2 . T h ea m o u n to ft h i sd i f f e r e n c em u s tb ew r i t t e no f fb y
a reasonable amount each year and completely written off
no later than the time of repayment of the debt.78/660/EEC
78/660/EEC - - - I
27Article 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 8
Contents of the notes on the accounts
Article 43
1. In addition to the information required under other
provisions of this Directive, the notes on the accounts must
set out information in respect 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 of conversion
used to express them in local currency must be dis-
closed;
(2) the name and registered office of each of the under-
takings in which the company, either itself or through
ap e r s o na c t i n gi nh i so w nn a m eb u to nt h ec o m p a -
ny’s behalf, holds at least a percentage of the capital
which the Member States cannot fix at more than
20 %, showing the proportion of the capital held, the
amount of capital and reserves, and the profit or loss
for the latest financial year of the undertaking con-
cerned for which accounts have been adopted. This
information may be omitted where for the purposes
of Article 2 (3) it is of negligible importance only.
The information concerning capital and reserves and
t h ep r o f i to rl o s sm a ya l s ob eo m i t t e dw h e r et h eu n -
dertaking concerned does not publish its balance
sheet and less than 50 % of its capital is held (direct-ly or irdirectly) by the company;
the name, the head or registered office and the legalform of each of the undertakings of which the com-
pany or firm is a member having unlimited liability.
This information may be omitted where for the pur-
poses of Article 2 (3) it is of negligible importance
only;
(3) the number and the nominal value or, in the absence
of a nominal value, the accounting par value of the
shares subscribed during the financial year within the
limits of an authorized capital, without prejudice as
far as the amount of this capital is concerned to Ar-
ticle 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, the accounting par value for each
class;78/660/EEC
90/605/EEC
78/660/EEC
78/660/EEC - - - I
28(5) the existence of any participation certificates, convert-
ible debentures or similar securities or rights, with an
indication of their number and the rights they confer;
(6) amounts owed by the company becoming due and
p a y a b l ea f t e rm o r et h a nf i v ey e a r sa sw e l la st h ec o m -
pany’s entire debts covered by valuable security fur-
nished by the company with an indication of the na-
ture and form of the security. This information must
be disclosed separately for each creditors item, as
provided for in the 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 disclosed separately;
(8) the net turnover within the meaning of Article 28,
broken down by categories of activity and into geo-
graphical markets in so far as, taking account of the
manner in which the sale of products and the provi-
sion of services falling within the company’s ordinary
activities are organized, these categories and markets
differ substantially from one another;
(9) the average number of persons employed during the
financial year, broken down by categories and, if they
are not disclosed separately in the profit and loss ac-
count, the staff costs relating to 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 valu-
ation of the items which, by way of derogation from
the principles enunciated in Articles 31 and 34 to 42,
w a sm a d ei nt h ef i n a n c i a ly e a ri nq u e s t i o no ri na n
earlier financial year with a view to obtaining tax re-
lief. Where the influence of such a valuation on fu-
ture tax charges is material, details must be disclosed;
(11) the difference between the tax charged for the finan-
cial year and for earlier financial years and the
amount of tax payable in respect of those years, pro-
vided that this difference is material for purposes of
future taxation. This amount may also be disclosed in
the balance sheet as a cumulative amount under a
separate item with an appropriate heading;
(12) the amount of the emoluments granted in respect of
the financial year to the members of the administra-
tive, managerial and supervisory bodies by reason oftheir responsibilities, and any commitments arising or
entered into in respect of retirement pensions for
former members of those bodies, with an indication
of the total for each category;78/660/EEC
78/660/EEC - - - I
29(13) the amount of advances and credits granted to the
members of the administrative, managerial and super-
visory bodies, with indications of the interest rates,
main conditions and any amounts repaid, as well as
commitments entered into on their behalf by way of
guarantees of any kind, with an indication of the total
for each category.
2. Pending subsequent coordination, the Member States
need not apply paragraph 1 (2) to financial holding com-
panies within the meaning of Article 5 (3).
3. Member States may waive the requirement to providethe information referred to in paragraph 1 point 12 where
such information makes it possible to identify the position
of a specific member of such a body.
Article 44
1. Member States may permit companies covered by Ar-
ticle 11 to draw up abridged notes on their accounts with-
out the information prescribed in Article 43 (1) points S to
12. However, the notes must disclose the information pre-
scribed in Article 43 (1) point 6 in total for all the items
concerned.
2. Member States may also permit the companies re-
ferred to in paragraph 1 to be exempted from the obliga-
tion to disclose in the notes on their accounts the informa-
tion prescribed in Article 15 (3) (a) and (4), Articles 18,
21 and 29 (2), the second subparagraph of Article 30, Ar-
ticle 34 (2), Article 40 (2) and the second subparagraph of
Article 42.
3. Article 12 shall apply.
Article 45
1. The Member States may allow the disclosures pre-
scribed in Article 43 (1) (2):
(a) to take the form of a statement deposited in accord-
ance with Article 3 (1) and (2) of Directive
68/151/EEC; this must be disclosed 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 undertak-
ings to which Article 43 (1) (2) relates. The Member
States may make such omissions subject to prior ad-
ministrative or judicial authorization. Any such
omission must be disclosed in the notes on the ac-
counts.
2. Paragraph 1 (b) shall also apply to the information
prescribed by Article 43 (1) (8).78/660/EEC
90/604/EEC
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30The 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
Contents of the annual report
Article 46
1. The annual report must include at least a fair review
of the development of the company’s business and of its
position.
2. The report shall also give an indication of:
(a) any important events that have occurred since the end
of the financial 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.
3. Member States may waive the obligation on com-
panies covered by Article 11 to prepare annual reports,
provided that the information referred to in Article 22 (2)
of Directive 77/91/EEC concerning the acquisition by a
company of its own shares is given in the notes to their
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 for auditing the accounts, shall be published as
laid down by the laws of each Member State in accordance
with Article 3 of Directive 68/151/EEC.
The laws of a Member State may, however, permit the an-
nual report not to be published as stipulated above. It
must be possible to obtain a copy of all or part of any
such report upon request. The price of such a copy must
not exceed its administrative cost.
1a. The Member State of a company or firm referred toin Article 1 (1), second and third subparagraphs (entity
concerned) may exempt that entity from publishing its ac-
counts in accordance with Article 3 of Directive
68/151/EEC, provided that those accounts are available to
the public at its head office, where:78/660/EEC
89/666/EEC
90/604/EEC
78/660/EEC
83/349/EEC
90/605/EEC
78/660/EEC - - - I
31(a) all the members having unlimited liability of the en-
tity 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 com-
panies publishes the accounts of the entity concerned
with its own accounts; or
(b) all the members having unlimited liability are com-
panies which are not governed by the laws of a
Member State but which have a legal form compar-
able to those referred to in Directive 68/151/EEC.
Copies of the accounts must be obtainable upon request.
The price of such a copy may not exceed its administrative
cost. Appropriate sanctions must be provided for failure to
comply with the publication obligation imposed in this
paragraph.
2. By way of derogation from paragraph 1, the Member
States may permit the companies referred to in Article 11
to publish:
(a) abridged balance sheets showing only those items pre-
ceded by letters and roman numerals in Articles 9
and 10, disclosing separately the information required
in brackets in D (II) under ’Assets’ and C under ’Lia-
bilities’ 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 com-
panies from the obligation to publish their profit and loss
accounts and annual reports and the opinions of the per-
sons responsible for auditing the accounts.
3. The Member States may permit the companies men-
tioned in Article 27 to publish:
(a) abridged balance sheets showing only those items pre-
ceded by letters and roman numerals in Articles 9
and 10 disclosing separately, 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 10,90/605/EEC
78/660/EEC
90/604/EEC
78/660/EEC
78/660/EEC - - - I
32— the information required in brackets in D (II)
under ‘ Assets’ and C under ‘Liabilities’ in Article
9, in total for all the items concerned 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 informa-
tion 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 opinion of 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 audit-ing 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 qualifi-
cations or refused to report upon the accounts, that fact
must be disclosed 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 refe-
rence 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 fact must be dis-
closed. The report issued by the person responsible for au-
diting the accounts may not accompany this publication,
but it must be disclosed whether the report was issued
with or without qualification, or was refused.
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.78/660/EEC
78/660/EEC - - - I
33Article 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 au-
dited by one or more persons authorized by na-
tional law to audit accounts.
(b) The person or persons responsible for auditing
the accounts must also verify that the annual re-
port is consistent with the annual accounts for
the same financial year.
2. The Member States may relieve the companies re-
ferred to in Article 11 from the obligation imposed byparagraph 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 ac-
counts or the annual reports of such companies are not
drawn up in accordance with the requirements of this Di-
rective.
SECTION 12
Final provisions
Article 52
1. A Contact Committee shall be set up under the aus-
pices of the Commission. Its function shall be:
(a) to facilitate, without prejudice to the provisions of Ar-
ticles 169 and 170 of the T reaty, harmonized applica-
tion of this Directive through regular meetings dealing
in particular with practical problems arising in connec-
tion with its application;
(b) to advise the Commission, if necessary, on additions
or amendments to this Directive.
2. The Contact Committee shall be composed of repre-
sentatives of the Member States and representatives of the
Commission. The chairman shall be a representative of the
Commission. The Commission 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.90/604/EEC
78/660/EEC
78/660/EEC - - - I
34Article 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 Re-
gulation (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 proposalfrom the Commission, shall examine and, if need be, revise
the amounts expressed in European units of account in this
Directive, in the light of economic and monetary trends in
the Community.
Article 54
Article 55
1. The Member States shall bring into force the laws,
regulations and administrative provisions necessary for
them to comply with this Directive 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 the period 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 profit and loss account, where a
Member State has brought other layouts for these
documents into force not more than three years be-
fore the notification 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 publication under Article 2 (1)
(f) of Directive 68/151/EEC. In this case the second
subparagraph of Article 47 (1) of this Directive shall
apply to the annual account and to the opinion drawn
up by the person responsible for auditing the ac-
counts;
(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 are already in existence on the entry
into force of the provisions referred to in paragraph 1.
(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. 1.78/660/EEC
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78/660/EEC - - - I
353. The Member States shall ensure that they communi-
cate to the Commission the texts of the main provisions of
national law which they 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, as defined by Article 41 of Direc-
tive 83/349/EEC, and the obligation to provide information
concerning these undertakings in accordance with Articles
13 (2), and 14 and point 7 of Article 43 (1) shall enter
into force on the date fixed in Article 49 (2) of that Direc-
tive.
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 of which 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 pro-
vided 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 provi-
sions of this Directive concerning the content, auditing and
publication of annual accounts to companies governed by
their national laws which are subsidiary undertakings, as
defined in Directive 83/349/EEC, where the following
conditions are fulfilled:
(a) the parent undertaking must be subject to the laws of
a Member State;
(b) all shareholders or members of the subsidiary under-
taking must have declared their agreement to the
exemption from such obligation; 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 sub-
sidiary 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 with
Article 3 of Directive 68/151/EEC;
(e) the subsidiary undertaking must be included in the
consolidated accounts drawn up by the parent under-
taking in accordance with Directive 83/349/EEC;78/660/EEC
83/349/EEC
78/660/EEC - - - I
36(f) the above exemption must be disclosed in the notes
on the consolidated accounts drawn up by the parent
undertaking;
(g) the consolidated accounts referred to in (e), the con-
solidated annual report, and the report by the person
responsible for auditing those accounts must be pub-
lished for the subsidiary undertaking as laid down by
the laws of the Member State in accordance with Ar-
ticle 3 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 are members having unlimited liability of any of
the companies and firms listed 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 the provisions
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 Di-
rective by a company which is a member having un-
limited liability of the entity and is governed by the
law of another Member State;
(b) the entity concerned is included in consolidated ac-
counts drawn up, audited and published in accordance
with Directive 83/349/EEC by a member having un-
limited liability or where the entity concerned is in-
cluded in the consolidated accounts of a larger body
of undertakings drawn up, audited and published inconformity with Council Directive 83/349/EEC by a
parent undertaking governed by 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 Di-
rective concerning the auditing and publication of the
profit-and-loss account to companies governed by their
national laws which are parent undertakings for the pur-
poses of Directive 83/349/EEC where the following condi-
tions are fulfilled:83/349/EEC
90/605/EEC
83/349/EEC
78/660/EEC - - - I
37(a) the parent undertaking must draw up consolidated ac-
counts in accordance with Directive 83/349/EEC and
be included in the consolidated 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 consolidated 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 the parent company.
Article 59
1. A Member State may require or permit that partici-
pating interests, as defined in Article 17, in the capital of
undertakings over the operating and financial policies of
which significant influence is exercised, be shown in the
balance sheet in accordance with paragraphs 2 to 9 below,
as sub-items of the items ‘shares in affiliated undertakings’
or ‘participating interests’, as the case may be. An under-
taking shall be presumed to exercise a significant influence
over another undertaking where it has 20 % or more of
the ‘shareholders’ or ‘members’ voting rights in that under-taking. Article 2 of Directive 83/349/EEC shall apply.
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 Ar-
ticles 31 to 42. The difference between that value and
the amount corresponding to the proportion of capital
and reserves represented by the participating interest
shall be disclosed separately in the 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 the first time; or
(b) at the amount corresponding to the proportion of the
capital and reserves represented by the participating
interest. The difference between that amount and the
book value calculated in accordance with Articles 31
to 42 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 the 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 the account must indicate whether (a)
or (b) above has been used.83/349/EEC
78/660/EEC - - - I
38(d) In addition, when applying (a) and (b) above, a
Member State may require or permit calculation of
the difference as at the date of acquisition of the par-
ticipating 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 participat-
ing interest within the meaning of paragraph 1 above.
3. Where the assets or liabilities of an undertaking in
which a participating interest within the meaning of para-
graph 1 above is held have been valued by methods other
than those used by the company drawing up the annual
accounts, they may, for the purpose of calculating the dif-
ference referred to in paragraph 2 (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 revaluation has not been car-
ried out. A Member State may require such revaluation.
4. The book value referred to in paragraph 2 (a) above,
or the amount corresponding to the proportion of capital
and reserves referred to in paragraph 2 (b) above, shall be
increased or reduced by the amount of the variation which
has taken place during the financial year in the proportion
of capital and reserves represented by that participating in-
terest; 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 para-
graph 2 (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 ‘goodwill’.
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 an ap-
propriate heading.
(b) Where that amount exceeds the amount of divi-
dends already received or the payment of which
can be claimed, the amount of the difference
must be placed in a reserve which cannot be dis-
tributed to shareholders.
(c) A Member State may require or permit that the
proportion of the profit or loss attributable to
the participating interests referred to in para-
graph 1 above be shown in the profit-and-loss
account only to the extent of the amount corre-
sponding to dividends already 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 be ascertained. Article 26 (2) and
(3) of that Directive shall apply.
8. Where an undertaking in which a participating in-
terest within the meaning of paragraph 1 above is held
draws up consolidated accounts, the foregoing paragraphs
shall apply to the capital and reserves shown in such con-
solidated accounts.83/349/EEC
78/660/EEC - - - I
399. This Article need not be applied where a participating
interest as defined in paragraph 1 is not material for the
purposes of Article 2 (3).
Article 60
Pending subsequent coordination, the Member States may
prescribe that investments in which investment companies
within the meaning of Article 5 (2) have invested their
funds shall be valued on the basis of their market value.
In that case, the Member States may also waive the obliga-
tion on investment companies with variable capital to show
separately the value adjustments referred to in Article 36.
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 under-
takings concerned to companies governed by their national
laws which are parent undertakings for the purposes of Di-
rective 83/349/EEC:
(a) where the undertakings concerned are included in
consolidated accounts drawn up by that parent under-
taking, or in the consolidated accounts of a larger
body of undertakings as referred to in Article 7 (2) of
Directive 83/349/EEC; or
(b) where the holdings in the undertakings concerned
have been dealt with by the parent undertaking in its
annual accounts in accordance with Article 59, or in
the consolidated accounts drawn up by that parent
undertaking in accordance with Article 33 of Directive
83/349/EEC.
Article 62
This Directive is addressed to the Member States.83/349/EEC
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