1978L0660 — EN — 01.05.2004 — 006.001 — 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
►M1Seventh Council 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
►M3Eleventh Council 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 March 1994 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
►M9Council Directive 2003/38/EC of 13 May 2003 L 120 22 15.5.2003
►M10Directive 2003/51/EC of the European Parliament and of the Council of
18 June 2003L 178 16 17.7.2003
Amended by:
►A1Act of Accessionof Greece L 291 17 19.11.1979
►A2Act of Accessionof Spainan d 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
►A4Act concerning the conditions of accession of the Czech Republic, the
Republic of Estonia, the Republic of Cyprus, the Republic of Latvia,the Republic of Lithuania, the Republic of Hungary, the Republic of
Malta, the Republic of Poland, the Republic of Slovenia and the Slovak
Republic and the adjustments to the Treaties on which the EuropeanUnion is foundedL 236 33 23.9.2003
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 thereinan d their publicationinrespect of certaincompa-nies with limited liability is of special importance for the 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 inaccordan ce 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-
tionregardin g legislationincertainMember States, the period allowed1978L0660 — EN — 01.05.2004 — 006.001 — 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 theMember States relating to the following types of companies:
— inGerman y:
die Aktiengesellschaft, die Kommanditgesellschaft auf Aktien, die
Gesellschaft mit beschränkter Haftung;
— inBelgium:
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;
— inDen mark:
aktieselskaber, kommanditaktieselskaber, anpartsselskaber;
— inFran ce:
la société anonyme, la société en commandite par actions, la société
à responsabilité limitée;
— inIrelan d:
public companies limited by shares or by guarantee, private compa-
nies limited by shares or by guarantee;
— inItaly:
la società per azioni, la società in accomandita per azioni, la società
a responsabilità limitata;
— inLuxembourg:
la société anonyme, la société en commandite par actions, la société
à responsabilité limitée;
— inthe Netherlan ds:
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;
— inGreece:
η ανώνυµη εταιρία, η εταιρία περιωρισµένης ευθύνης, η ετερ-
όρρυθµη κατά µετοχές εταιρία;
— inSpain :
la sociedad anónima, la sociedad comanditiara por acciones, la soci-
edad de responsabilidad limitada;
— inPortugal:
a sociedade anónima, de responsabilidade limitada, a sociedade em
comandita por açcões, a sociedadepor quotas de responsabilidade
limitada;
— inAustria:
die Aktiengesellschaft, die Gesellschaft mit beschränkter Haftung;
— in Finland:
osakeyhtiö/aktiebolag;1978L0660 — EN — 01.05.2004 — 006.001 — 3
▼A1
▼A2
▼A3
▼A3
— inSweden :
aktiebolag;
— inthe Czech Republic:
spole čnost s ru čením omezeným, akciová spole čnost;
— inEston ia:
aktsiaselts, osaühing;
— inCyprus:
∆ηµόσιες εταιρείες περιορισµένης ευθύνης µε µετοχές ή µε
εγγύηση, ιδιωτικές εταιρείες περιορισµένης ευθύνης µεµετοχές ή µε εγγύηση ;
— inLatvia:
akciju sabiedr ība, sabiedr ība ar ierobežotu atbild ību;
— inLithuan ia:
akcin ės bendrov ės, uždarosios akcin ės bendrov ės;
— inHun gary:
részvénytársaság, korlátolt felel ősségűtársaság;
— inMalta:
kumpanija pubblika — public limited liability company, kumpan-
nija privata — private limited liability company,
soċjeta in akkomandita bil-kapital maqsum f'azzjonijiet — partner-
ship en commandite with the capital divided into shares;
— inPolan d:
spółka akcyjna, spółka z ograniczon ąodpowiedzialno ścią, spółka
komandytowo-akcyjna;
— inSloven ia:
delniška družba, družba z omejeno odgovornostjo, komanditna
delniška družba;
— inSlovakia:
akciová spolo čnosť, spolo čnosťsr učením obmedzeným.
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) inGerman y:
die offene Handelsgesellschaft, die Kommanditgesellschaft;
(b) inBelgium:
la société en nom collectif/de vennootschap onder firma, la société
en commandité (SIC! commandite) simple/de gewone commandi-taire vennootschap;
(c) inDen mark:
interessentskaber, kommanditselskaber;
(d) inFran ce:
la société enn om collectif, la société encomman dite simple;
(e) inGreece:
η οµόρρυθµος εταιρία, η ετερόρρυθµος εταιρία;
(f) inSpain :
sociedad colectiva, sociedad encoman dita simple;
(g) inIrelan d:
partnerships, limited partnerships, unlimited companies;
(h) inItaly:
la società inn ome collettivo, la società inaccoman dita semplice;1978L0660 — EN — 01.05.2004 — 006.001 — 4
▼A4
▼M5
▼M5
(i) inLuxembourg:
la société enn om collectif, la société encomman dite simple;
(j) inthe Netherlan ds:
de vennootschap onder firma, de commanditaire vennootschap;
(k) inPortugal:
sociedade em nome colectivo, sociedade em comandita simples;
(l) in the United Kingdom:
partnerships, limited partnerships, unlimited companies;
(m) inAustria:
die offene Handelsgesellschaft, die Kommanditgesellschaft;
(n) in Finland:
avoin yhtiö/ öppet bolag, kommandiittiyhtiö/kommanditbolag;
(o) inSweden :
handelsbolag, kommanditbolag;
(p) inthe Czech Republic:
veřejná obchodní spole čnost, komanditní spole čnost, družstvo;
(q) inEston ia:
täisühing, usaldusühing;
(r) inCyprus:
Οµόρρυθµες και ετερόρρυθµες εταιρείες (συνεταιρισµοί) ;
(s) inLatvia:
pilnsabiedr ība, komanditsabiedr ība;
(t) inLithuan ia:
tikrosios ūkinės bendrijos, komanditin ėsūkinės bendrijos;
(u) inHun gary:
közkereseti társaság, betéti társaság, közös vállalat, egyesülés;
(v) inMalta:
Soċjeta f'isem kollettiv jew so ċjeta inakkoman dita, bil-kapital li
mhux maqsum f'azzjonijiet meta s-so ċji kollha li g ħandhom
responsabbilita' llimitata huma so ċjetajiet tat-tip deskritt f'sub para-
grafu 1 — Partnership en nom collectif or partnership en
commandite with capital that is not divided into shares, when all
the partners with unlimited liability are partnerships as describedinsub-paragraph 1;
(w) inPolan d:
spółka jawna, spółka komandytowa;
(x) inSloven ia:
družba z neomejeno odgovornostjo, komanditna družba;
(y) inSlovakia:
verejná obchodná spolo čnosť, komanditná spolo čnosť
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 form
comparable to those referred to inDirective 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 — 01.05.2004 — 006.001 — 5
▼A3
▼A4
▼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.
Member States may permit or require the inclusion of other statements
in the annual accounts in addition to the documents referred to in the
first subparagraph.
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 applicationof the provisionof this Directive would n ot
be sufficient to give a true and fair view within the meaning of para-
graph 3, additional information must be given.
5. Where inexception al cases the applicationof a provisionof this
Directive is incompatible with the obligation laid down in paragraph 3,
that provisionmust be departed from inorder to give a true an d fair
view within the meaning of paragraph 3. Any such departure must bedisclosed in the notes on the accounts together with an explanation ofthe 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 inthe
annual accounts of other information as well as that which must bedisclosed inaccordan ce with this 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 fromthis principle shall be permitted in exceptional cases. Any such depar-
ture 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 account the items
prescribed inArticles 9, 10 an d 23 to 26 must be shownseparately in
the order indicated. A more detailed subdivision of the items shall be
authorized provided that the layouts are complied with. New items maybe added provided that their contents are not covered by any of theitems prescribed by the layouts. Such subdivisionor n ew 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 numeralsmust be adapted where the special nature of an undertaking so requires.Such adaptations may be required by the Member States of undertak-ings forming part of a particular economic sector.1978L0660 — EN — 01.05.2004 — 006.001 — 6
▼M10
▼B
▼B
3. The balance sheet and profit and loss account items that are
preceded by Arabic numerals may be, combined where:
(a) they are immaterial inamoun t 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 financialyear must be shown. The Member States may provide that, where thesefigures are not comparable, the figure for the preceding financial yearmust be adjusted. In any case, non-comparability and any adjustment of
the 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.
6. Member States may permit or require the presentation of amounts
within items in the profit and loss account and balance sheet to haveregard to the substance of the reported transaction or arrangement.Such permissionor requiremen t may be restricted to certainclasses of
company and/or to consolidated accounts as defined in the Seventh
Council Directive 83/349/EEC of 13 June 1983 on consolidatedaccounts (
1).
Article 5
1. By way of derogationfrom Article 4 (1) an d (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 forinArticle 2 (3).
2. For the purposes of this Directive, ‘investment companies’ shall
meanon ly:
(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 the
benefit of the results of the management of their assets;
(b) those companies associated with investment companies with fixed
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 (
2).
3. For the purposes of this Directive, ‘financial holding companies’
shall mean only those companies the sole object of which is to acquireholdings 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 preju-dice to their rights as shareholders. The limitations imposed on theactivities of these companies must be such that compliance with themcanbe supervised by anadmin istrative or judicial authority.
Article 6
The Member States may authorize or require adaptationof the layout
of the balance sheet and profit and loss account in order to includethe appropriationof profit or the treatmen t of loss.1978L0660 — EN — 01.05.2004 — 006.001 — 7
(1) OJ L 193, 18.7.1983, p. 1. Directive as last amended by Directive 2001/65/
EC of the European Parliament and of the Council (OJ L 283, 27.10.2001,
p. 28).
(2) OJ No L 26, 31. 1. 1977, p. 1▼M10
▼B
▼B
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 both of the layouts prescribed by Articles 9 and 10.
If a Member State prescribes both, it may allow companies to choosebetweenthem.
Member States may permit or require companies to adopt the presenta-
tion of the balance sheet set out in Article 10a as an alternative to thelayouts otherwise prescribed or permitted.
Article 9
Assets
A.Subscribedcapitalunpaid
of which there has beencalled(unless national law provides that called-up capital be shown under
‘Liabilities’. Inthat case, the part of the capital called but n ot 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 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
shownun der 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.1978L0660 — EN — 01.05.2004 — 006.001 — 8
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▼B
▼B
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 inprogress.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 shownseparately 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 shownas anasset un derA).
6. Prepayments and accrued income (unless national law
provides for such items to be shownas anasset un der 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 such items to be shown 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 capitaland paid-up capital must be shown separately).1978L0660 — EN — 01.05.2004 — 006.001 — 9
▼B
II.Share premium account
III.Revaluation reserve
IV.Reserves
1. Legal reserve, in so far as national law requires such a
reserve.
2. Reserve for own shares, in so far as national law requires
such a reserve, without prejudice to Article 22 (1) (b) ofDirective 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.►
M10 Provisions ◄
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 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
shownseparately as deduction s 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
such items to be shown under D under ‘Liabilities’).
D.Accrualsanddeferred income
(unless national law provides for such items to be shown 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 beencalled(unless national law provides that called-up capital be shown under
L. Inthat case, the part of the capital called but n ot 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 for1978L0660 — EN — 01.05.2004 — 006.001 — 10
▼B
formation expenses to be shown as the first item under ‘Intangible
assets’.
C.Fixedassets
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
shownun der 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 inprogress.
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 shownseparately 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 shownun der A).
6. Prepayments and accrued income (unless national law
provides that such items be shownun der E).1978L0660 — EN — 01.05.2004 — 006.001 — 11
▼B
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 such items to be shown 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
shownseparately as deduction s 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
such items to be shownun der K).
G.Netcurrentassets/liabilities (taking into account prepayments and
accrued income when shown under E and accruals and deferred
income 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
shownseparately as deduction s 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
such items to be shownun der K).
J.►
M10 Provisions ◄
1. Provisions for pensions and similar obligations.
2. Provisions for taxation.
3. Other provisions.
K.Accrualsanddeferred income
(unless national law provides for such items to be shown under F
(9) or I (9) or both).1978L0660 — EN — 01.05.2004 — 006.001 — 12
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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 such a
reserve.
2. Reserve for own shares, in so far as national law requires
such a reserve, without prejudice to Article 22 (1) (b) ofDirective 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 10a
Instead of the presentation of balance sheet items in accordance with
Articles 9 and 10, Member States may permit or require companies,or certain classes of company, to present those items on the basis of adistinction between current and non-current items provided that the
information given is at least equivalent to that otherwise required by
Articles 9 and 10.
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:
—►
M9balance sheet total: EUR 3 650 000 ◄,
—►M9net turnover: EUR 7300 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 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, but
intotal for each.
Member States may waive the applicationof Article 15 (3) (a) an d (4)
to the abridged balance sheet.
Inthe case of those Member States which have n ot adopted the euro,
the amount in national currency equivalent to the amounts specified in
the first paragraph shall be that obtained by applying the exchange ratepublished inthe Official Journal of the European Union onthe date of
the entry into force of the Directive setting those amounts in conse-quence of the review provided for in Article 53(2).
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 applicationof the derogationprovided for inthat Article only if it occurs in two consecutive financial years.1978L0660 — EN — 01.05.2004 — 006.001 — 13
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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 inA to E un der ‘Assets’ inthe layout prescribed inArticle9 or those inA to E inthe layout prescribed inArticle 10.
Article 13
1. Where anasset or liability relates to more thanon e layout item,
its relationship to other items must be disclosed 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
obligationto show them as liabilities, be clearly set out at the foot of
the balance sheet or in the notes on the accounts, and a distinctionmade 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 of
affiliated undertakings must be shown separately.
SECTION 4
Specialprovisionsrelatingtocertain balancesheetitems
Article 15
1. Whether particular assets are to be shownas 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 end
there shall be shownseparately, startin g with the purchase priceor production cost, for each fixed asset item, on the one hand,the additions, disposals and transfers during the financial yearand, 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.
(b) If, when annual accounts are drawn up in accordance with this
Directive for the first time, the purchase price or productioncost
of a fixed asset cannot be determined without undue expense or
delay, the residual value at the beginning of the financial yearmay be treated as the purchase price or productioncost. An yapplicationof this provisionmust be disclosed inthe n otes onthe accounts.
(c) Where Article 33 is applied, the movements in the various fixed
asset items referred to insubparagraph (a) of this paragraph
shall be shownstartin g with the purchase price or production
cost resulting from revaluation.
4. Paragraph 3 (a) and (b) shall apply to the presentation of ‘Forma-
tionexpen ses’.1978L0660 — EN — 01.05.2004 — 006.001 — 14
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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 representedby certificates, which, by creating a durable link with those undertak-ings, are intended to contribute to the company's activities. The holding
of 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 relating
to the financial year in question, is not due until after its expiry must
be shown under ‘Prepayments and accrued income’. The MemberStates 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 are intended to cover liabilities the nature of which is
clearly defined and which at the date of the balance sheet are eitherlikely to be incurred, or certain to be incurred but uncertain as toamount or as to the date on which they will arise.
2. The Member States may also authorize the creationof provision s
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 eitherlikely 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 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 deferred
income’. The Member States may, however, provide that such charges
shall be included in ‘Creditors’. Where such charges are material, theymust 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 thanon e layout, it may allowcompanies to choose from among them.1978L0660 — EN — 01.05.2004 — 006.001 — 15
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By way of derogationfrom Article 2(1), Member States may permit or
require all companies, or any classes of company, to present a state-ment of their performance instead of the presentation of profit and
loss items in accordance with Articles 23 to 26, provided that the infor-
mationgivenis at least equivalen t to that otherwise required by thoseArticles.
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, with a separate indication of those
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, 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 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 onprofit or loss onordin ary activities.15. Profit or loss on ordinary activities after taxation.16. Extraordinary income.17. Extraordinary charges.18. Extraordinary profit or loss.19. Tax onextraordin ary 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;
(b) other external charges.
3. Staff costs:
(a) wages and salaries;
(b) social security costs, with a separate indication of those
relating to pensions.1978L0660 — EN — 01.05.2004 — 006.001 — 16
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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 onprofit or loss onordin ary activities.9. Profit or loss on ordinary activities after taxation.
10. Extraordinary charges.
11. Tax onextraordin ary 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 undertakings.
6. Income from other investments and loans forming part of the
fixed assets, with a separate indication of that 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, 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 indica-
tion of that derived from affiliated undertakings.
10. Value 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. Tax onprofit or loss onordin ary activities.13. Profit or loss on ordinary activities after taxation.14. Extraordinary income.1978L0660 — EN — 01.05.2004 — 006.001 — 17
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15. Extraordinary charges.
16. Extraordinary profit or loss.17. Tax onextraordin ary 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 onprofit or loss onordin ary activities.
7. Profit or loss on ordinary activities after taxation.
8. Extraordinary charges.9. Tax onextraordin ary 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 undertakings.
4. Income from other investments and loans forming part of the
fixed assets, with a separate indication of that 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 followingcriteria:
—►
M9balance sheet total: EUR 14 600000 ◄,
—►M9net turnover: EUR 29200000 ◄,
— average number of employees during the financial year: 250
to adopt layouts different from those prescribed in Articles 23 to 26
withinthe followin g 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’;
(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.1978L0660 — EN — 01.05.2004 — 006.001 — 18
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Inthe case of those Member States which have n ot adopted the euro,
the amount in national currency equivalent to the amounts specified inthe first paragraph shall be that obtained by applying the exchange rate
published inthe Official Journal of the European Union onthe date of
the entry into force of the Directive setting those amounts in conse-quence of the review provided for in Article 53(2).
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'sordinary 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 ‘Extraordinary
income 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. Thesame shall apply to income and charges relating to another financialyear.
Article 30
The Member States may permit taxes onthe profit or loss onordin ary
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 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 liabilities arising in the course of
the financial year concerned or of a previous one, even if suchliabilities become apparent only between the date of thebalance sheet and the date on which it is drawn up,1978L0660 — EN — 01.05.2004 — 006.001 — 19
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(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 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.
1a. In addition to those amounts recorded pursuant to paragraph
(1)(c)(bb), Member States may permit or require account to be takenof all foreseeable liabilities and potential losses arising in the courseof the financial year concerned or of a previous one, even if suchliabilities or losses become apparent only between the date of the
balance sheet and the date on which it is drawn up.
2. Departures from these general principles shall be permitted in
exceptional cases. Any such departures must be disclosed in the notes
on the accounts and the reasons for them given together with an assess-
ment of their effect on the assets, liabilities, financial position andprofit or loss.
Article 32
The items shown in the annual accounts shall be valued in accordance
with Articles 34 to 42, which are based onthe prin ciple of purchase
price or productioncost.
Article 33
1. The Member States may declare to the Commissionthat 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
with limited useful economic lives and for stocks;
(b) valuationby methods other thanthat provided for in(a) which are
designed to take account of inflation for the items shown in annualaccounts, including capital and reserves;
(c) revaluationof 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 valuesshown are calculated shall be disclosed in the notes on the accounts.
2. (a) Where paragraph 1 is applied, the amount of the difference
betweenvaluationby the method used an d valuationinaccor-dance with the general rule laid down in Article 32 must beentered 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 applicationof 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 in
the notes on the accounts interalia a table showing:
— the amount of the revaluation reserve at the beginning of the
financial year,1978L0660 — EN — 01.05.2004 — 006.001 — 20
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— 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 such transfer being diclosed,
— the amount of the revaluation reserve at the end of the finan-
cial year.
(b) The revaluationreserve may be capitalized inwhole or inpart at
any time.
(c) The revaluationreserve must be reduced to the exten t that the
amounts transferred thereto are no longer necessary for theimplementation of the valuation method used and the achieve-ment of its purpose.
The Member States may lay down rules governing the applica-
tionof the revaluationreserve, provided that tran sfers 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 derogationfrom Articles 4 an d 22, the Member States may permit orrequire that only the amount of the value adjustments arising as a result
of the applicationof the gen eral rule laid downinArticle 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 prescribedinArticles 9 an d 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 resulting
from the applicationof Article 32 an d, 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 a
maximum 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 the
amount of the reserves available for distribution and profits
brought forward is at least equal to that of the expenses notwrittenoff.
2. The amounts entered under ‘Formation expenses’ must be
explained in the notes on the accounts.1978L0660 — EN — 01.05.2004 — 006.001 — 21
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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 productioncost of fixed assets with
limited useful economic lives must be reduced by value adjust-ments calculated to write off the value of such assets
systematically 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 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
charget to the profit and loss account and disclosed sepa-rately in the notes on the accounts if they have not beenshown separately in the profit and loss account.
(dd) Valuationat 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 andthe reasons for making them shall be indicated in the notes onthe accounts.
2. The purchase price shall be calculated by adding to the price paid
the expenses incidental thereto.
3. (a) The productioncost shall be calculated by addin g to the
purchasing price of the raw materials and consumables the costsdirectly attributable to the product inquestion .
(b) A reasonable proportion of the costs which are only indirectly
attributable to the product inquestionmay be added in to the
productioncosts to the exten t 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 itrelates 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 derogationfrom 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‘Liabilities’ inthe balan ce sheet.
Article 37
1. Article 34 shall apply to costs of research and development. In
exceptional cases, however, the Member States may permit derogations
from Article 34 (1) (a). Inthat case, they may also provide for deroga-
tions from Article 34 (1) (b). Such derogations and the 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.1978L0660 — EN — 01.05.2004 — 006.001 — 22
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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 compositionthereof 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 to
them at the balance sheet date.
(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 bemodified 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 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 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-
tionof the methods of calculationspecified inparagraph 1, differsmaterially, at the balance sheet date, from the value on the basis ofthe last known market value prior to the balance sheet date, the amount
of that differen ce must be disclosed intotal by category inthe n otes 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. 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 of
repayment of the debt.
Article 42
Provisions 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.1978L0660 — EN — 01.05.2004 — 006.001 — 23
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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 shallpermit or require in respect of all companies or any classes of compa-
nies valuation at fair value of financial instruments, including
derivatives.
Such permission 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 other
financial instrument shall be considered to be derivative financialinstruments, 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 paragraph 1 shall 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 the
instruments, according to what is generally accepted, should be
accounted for differently from other financial instruments.
5. By way of derogationfrom 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 ofsuch assets or liabilities, permit valuationat the specific amoun trequired under that system.
Article 42b
1. The fair value referred to inArticle 42a shall be determin ed 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 not
readily identifiable for an instrument but can be identified for itscomponents or for a similar instrument, the market value may bederived 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 market
cannot be readily identified. Such valuation models and techniques
shall 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 inaccordance with Articles 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 be1978L0660 — EN — 01.05.2004 — 006.001 — 24
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included in the profit and loss account. However, such a change shall
be in cluded directly inequity, ina 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 change
in 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
foreignen tity.
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 whenamoun ts shown
therein are no longer necessary for the implementation of paragraphs1a nd2 .
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 accordancewith Article 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 as
changes included in the fair value reserve;
(c) for each class of derivative financial instruments, information about
the extent and the nature of the instruments, including significantterms and conditions that may affect the amount, timing and
certainty of future cash flows; and
(d) a table showing movements in the fair value reserve during the
financial year.
Article 42e
By way of derogationfrom Article 32, Member States may permit or
require in respect of all companies or any classes of company the
valuation of specified categories of assets other than financial instru-ments at amounts determined by reference to fair value.
Such permission or requirement may be restricted to consolidated
accounts as defined in Directive 83/349/EEC.
Article 42f
Notwithstanding Article 31(1)(c), Member States may permit or require
in respect of all companies or any classes of company that, where anasset is valued in accordance with Article 42e, a change in the value
is included in the profit and loss account.
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 areor were originally expressed in foreign currency, the bases ofconversion used to express them in local currency must bedisclosed;1978L0660 — EN — 01.05.2004 — 006.001 — 25
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(2) the name and registered office of each of the undertakings in
which the company, either itself or through a person acting inhis own name but on the company's behalf, holds at least a
percentage of the capital which the Member States cannot fix at
more than20 %, showin g the proportionof the capital held, theamount of capital and reserves, and the profit or loss for the latestfinancial year of the undertaking concerned for which accountshave beenadopted. This in formationmay be omitted where for
the 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 isheld (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 memberhaving unlimited liability. This information may be omitted wherefor 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, the
accounting par value for each class;
(5) the existence of any participation certificates, convertible deben-
tures or similar securities or rights, with anin dicationof 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 bedisclosed separately for each creditors item, as provided for inthe
layouts prescribed in ►
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(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 commitmentsconcerning 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 faras, taking account of the manner in which the sale of productsand the provision 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 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
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year in question or in an earlier financial year with a 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 for1978L0660 — EN — 01.05.2004 — 006.001 — 26
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purposes of future taxation. This amount may also be disclosed in
the balance sheet as a cumulative amount under a separate itemwith anappropriate headin g;
(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, with indica-
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, with an indication of the total foreach category;
14. where valuation at fair value of financial instruments has not been
applied inaccordan ce with Section7a:
(a) for each class 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 Article
42b(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 beingmade of the option to make a value adjustment in accordancewith Article 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 the
meaning of Article 5 (3).
3. Member States may waive the requirement to provide the infor-
mation referred to in paragraph 1 point 12 where such informationmakes it possible to identify the position of a specific member of
such a 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 in formationspecified inArticle 43(1)(6) intotal forall the items concerned.
2. Member States may also permit the companies referred to in
paragraph 1 to be exempted from the obligationto disclose inthe n otes
on 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.1978L0660 — EN — 01.05.2004 — 006.001 — 27
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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 whentheir n ature 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 omissions
subject 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 shallapply.
SECTION 9
Contentsoftheannualreport
Article 46
1. (a) The annual report shall include at least a fair review of the
development and performance of the company's business and of
its position, together with a description of the principal risks anduncertainties that it faces.
The review shall be a balanced and comprehensive analysis of
the development and performance of the company's businessand of its position, consistent with the size and complexity ofthe business;
(b) To the extent necessary for an understanding of the company's
development, performance or position, the analysis shall includeboth financial and, where appropriate, non-financial key perfor-mance indicators relevant to the particular business, including
information relating to environmental and employee matters;
(c) In providing its analysis, the annual report shall, where appro-
priate, include references to and additional explanations of
amounts reported in the annual accounts.
2. The report shall also give anin dicationof:
(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-tionan d 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 cash flow risk.1978L0660 — EN — 01.05.2004 — 006.001 — 28
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3. Member States may waive the obligationoncompan ies covered
by Article 11 to prepare annual reports, provided that the informationreferred 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.
4. Member States may choose to exempt companies covered by
Article 27 from the obligationinparagraph 1(b) above inso far as itrelates to non-financial information.
SECTION 10
Publication
Article 47
1. The annual accounts, duly approved, and the annual report,
together with the opin ionsubmitted by the personrespon sible forauditing the accounts, shall be published as laid down by the laws ofeach Member State inaccordan ce with Article 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. ►
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obtaina copy of all or part of an y such report uponrequest. The priceof such a 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 thatentity from publishing its accounts in accordance with Article 3 ofDirective 68/151/EEC, provided that those accounts are available to
the 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 MemberState whose law governs that entity and none of those companiespublishes 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 legalform comparable to those referred to inDirective 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 sanc-tions must be provided for failure to comply with the publication
obligationimposed inthis paragraph.
2. By way of derogationfrom paragraph 1, the 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 in formationrequired inbrackets inD (II) un der ‘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 publish their profit and loss accounts and annual reportsand the opinions of the persons responsible for auditing the accounts.1978L0660 — EN — 01.05.2004 — 006.001 — 29
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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 un der ‘Liabilities’ inArticle 9, intotal 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 in formationrequired inbrackets inD (11) inArticle 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 inso 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 inthe form an d text onthe basis of
which the person responsible for auditing the accounts has drawn uphis opinion. They must be accompanied by the full text of his report.►
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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 tothe register inwhich the accoun ts have beenfiled inaccordan ce withArticle 47 (1). Where such filing has not yet been effected, the factmust be disclosed. ►
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sible for auditing the annual accounts (hereinafter: the statutory
auditors) shall not accompany this publication, but it shall be disclosedwhether an unqualified, qualified or adverse audit opinion wasexpressed, or whether the statutory auditors were unable to express anaudit opinion. It shall also be disclosed whether the report of the statu-tory auditors included a reference to any matters to which the statutory
auditors drew attention by way of emphasis without qualifying the
audit opinion. ◄
Article 50
The following must be published together with the annual accounts,
and in like manner:
— the proposed appropriationof the profit or treatmen t of the loss,
— the appropriationof the profit or treatmen t 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 the1978L0660 — EN — 01.05.2004 — 006.001 — 30
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balance sheet date. That rate shall be disclosed in the notes on the
accounts.
SECTION 11
Auditing
Article 51
1. The annual accounts of companies shall be audited by one or
more persons approved by Member States to carry out statutory auditsonthe basis of the Eighth Coun cil Directive 84/253/EEC of 10 April1984 on the approval of persons responsible for carrying out the statu-tory audits of accounting documents (
1).
The statutory auditors shall also express an opinion concerning the
consistency or otherwise of the annual report with the annual accountsfor the same financial year.
2. The Member States may relieve the companies referred to in
Article 11 from the obligationimposed by paragraph 1.
Article 12 shall apply.
3. Where the exemptionprovided for inparagraph 2 is gran ted the
Member States shall introduce appropriate sanctions into their lawsfor cases in which the annual accounts or the annual reports of suchcompanies are not drawn up in accordance with the requirements ofthis Directive.
Article 51a
1. The report of the statutory auditors shall include:
(a) an introduction which shall at least identify the annual accounts
that are the subject of the statutory audit, together with the finan-
cial reporting framework that has been applied in their preparation;
(b) a descriptionof the scope of the statutory audit which shall at least
identify the auditing standards in accordance with which the statu-
tory audit was conducted;
(c) an audit opinion which shall state clearly the opinion of the statu-
tory auditors as to whether the annual accounts give a true and fairview in accordance with the relevant financial reporting frameworkand, where appropriate, whether the annual accounts comply withstatutory requirements; the audit opinion shall be either unqualified,
qualified, an adverse opinion or, if the statutory auditors are unable
to express an audit opinion, a disclaimer of opinion;
(d) a reference to any matters to which the statutory auditors draw
attention by way of emphasis without qualifying the audit opinion;
(e) an opinion concerning the consistency or otherwise of the annual
report with the annual accounts for the same financial year.
2. The report shall be signed and dated by the statutory auditors.1978L0660 — EN — 01.05.2004 — 006.001 — 31
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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 with practical problemsarising in connection with its 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. The
chairman shall be a representative of the Commission. The Commis-
sionshall 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.
Article 53
2. Every five years the Council, acting on a proposal from the
Commission, shall examine and, if need be, revise the amounts
expressed inEuropeanun its of accoun t inthis Directive, inthe light
of economic and monetary trends in the Community.
Article 53a
Member States shall not make available the exemptions set out in Arti-
cles 11, 27, 46, 47 and 51 in the case of companies whose securities
are admitted to trading on a regulated market of any Member Statewithin the meaning of Article 1(13) of Council Directive 93/22/EECof 10 May 1993 on investment services in the securities field (
1).
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 forthwithinform 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 inthat 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;1978L0660 — EN — 01.05.2004 — 006.001 — 32
(1) OJ L 141, 11.6.1993, p. 27. Directive as last amended by Directive 2002/87/
EC of the European Parliament and of the Council (OJ L 35, 11.2.2003, p.
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(c) for purposes of the applicationof this Directive as regards the
calculation and disclosure in balance sheets of depreciation relatingto 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 applicationof Article 47 (1) of this Directive
except as regards companies already under an obligation of publi-cationun der Article 2 (1) (f) of Directive 68/151/EEC. Inthis case
the second subparagraph of Article 47 (1) of this Directive shall
apply to the annual account and to the opinion drawn up by theperson responsible for auditing the accounts;
(e) for purposes of the applicationof 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
inparagraph 1.
3. The Member States shall ensure that they communicate to the
Commission the texts of the main provisions of national law whichthey adopt inthe field covered by this Directive.
Article 56
1. The obligation to show in annual accounts the items prescribed by
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undertakings, as defined by Article 41 of Directive 83/349/EEC, andthe 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 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 ofwhich the company forms part as a subsidiary undertaking andwhich 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 Directiveconcerning the content, auditing and publication of annual accounts tocompanies 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 financialyear;
(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 inaccordan ce with Article 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 withDirective 83/349/EEC;1978L0660 — EN — 01.05.2004 — 006.001 — 33
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(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 thoseaccounts must be published for the subsidiary undertaking as laiddownby the laws of the Member State inaccordan ce 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 (entityconcerned), to draw up, have audited and publish, with their ownaccounts, 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 Directive by a companywhich 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 bya member having unlimited liability or where the entity concerned
is 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 exemptionmust be disclosedin 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 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 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 showninthe balan ce sheet of the
parent 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 showninthe balan ce sheet inaccordan ce 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 be1978L0660 — EN — 01.05.2004 — 006.001 — 34
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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 shall
apply.
2. When this Article is first applied to a participating interest
covered by paragraph 1, it shall be showninthe balan ce sheet either:
(a) at its book value calculated inaccordan ce with ►
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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 balancesheet or in the notes on the accounts. That difference shall becalculated 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 ►
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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 applicationof on e or other of
the above paragraphs. The balance sheet or the notes on theaccount must indicate whether (a) or (b) above has been used.
(d) In addition, when applying (a) and (b) above, a Member State may
require or permit calculationof the differen ce as at the date of
acquisition of the participating interest referred to in paragraph 1or, where the acquisitiontook place intwo or more stages, as atthe 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 drawing
up the annual accounts, they may, for the purpose of calculating the
difference referred to in paragraph 2 (a) or (b) above, be revalued bythe methods used by the company drawing up the annual accounts.Disclosure must be made in he notes on the accounts where such reva-luationhas n ot beencarried out. A Member State may require suchrevaluation.
4. The book value referred to inparagraph 2 (a) above, or the
amount corresponding to the proportion of capital and reserves referred
to inparagraph 2 (b) above, shall be in creased or reduced by the
amount 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 dividendsrelating to the participating interest.
5. Inso far as a positive differen ce covered by paragraph 2 (a) or (b)
above cannot be related to any category of asset or liability, it shall bedealt with inaccordan ce with the rules applicable to the item ‘good-
will’.
6. (a) The proportionof the profit or loss attributable to participatin g
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 proportionof the
profit or loss attributable to the participating interests referred toinparagraph 1 above be showninthe profit-an d-loss accoun tonly to the extent of the amount corresponding to dividendsalready received or the payment of which can be claimed.1978L0660 — EN — 01.05.2004 — 006.001 — 35
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7. The eliminations referred to in Article 26 (1) (c) of Directive 83/
349/EEC shall be effected inso far as the facts are kn ownor canbeascertained. Article 26 (2) and (3) of that Directive shall apply.
8. Where an undertaking in which a participating interest within the
meaning of paragraph 1 above is held draws up consolidated accounts,the foregoing paragraphs shall apply to the capital and reserves shownin such consolidated accounts.
9. 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 ►
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the basis of their fair value ◄.
Inthat case, the Member States may also waive the obligationon
investment companies with variable capital to show separately thevalue 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 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 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 accordancewith Article 59, or in the consolidated accounts drawn up by thatparent undertaking in accordance with Article 33 of Directive 83/
349/EEC.
Article 61a
Not later than1 Jan uary 2007, the Commissionshall review the provi-
sions in ►
M10Articles 42a to 42f ◄, Article 43(1)(10) and (14),
Article 44(1), Article 46(2)(f) and Article 59(2)(a) and (b) in the lightof the experience acquired in applying provisions on fair valueaccounting and taking account of international developments in the
field of accounting and, if appropriate, submit a proposal to the
European Parliament and the Council with a view to amending theabovementioned Articles.
Article 62
This Directive is addressed to the Member States.1978L0660 — EN — 01.05.2004 — 006.001 — 36
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