1978L0660 — EN — 17.07.2003 — 005.001 — 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 Accession of Greece L 291 17 19.11.1979
►A2Act of Accession of Spain and Portugal L 302 23 15.11.1985
►A3Act of Accession of Austria, Sweden and Finland C 241 21 29.8.1994
(adapted by Council Decision 95/1/EC, Euratom, ECSC) L 1 1 1.1.1995
NB: This consolidated version contains references to the European unit of account and/or the ecu, which from 1 January 1999
should be understood as references to the euro — Council Regulation (EEC) No 3308/80 (OJ L 345, 20.12.1980, p. 1) andCouncil Regulation (EC) No 1103/97 (OJ L 162, 19.6.1997, p. 1).
▼B
FOURTHCOUNCILDIRECTIVE
of25July1978
basedonArticle 54(3)(g)oftheTreaty ontheannualaccountsof
certain typesofcompanies
(78/660/EEC)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the European Economic
Community, and in particular Article 54 (3) (g) thereof,
Having regard to the proposal from the Commission,Having regard to the opinion of the European Parliament (
1),
Having regard to the opinion of the Economic and Social
Committee (2),
Whereas the coordination of national provisions concerning the presen-
tation and content of annual accountsand annual reports , the valuationmethods, used therein and their publication in respect of certain compa-nieswith limited liability isof s pecial importance for the protection ofmembersand third parties ;
Whereas simultaneous coordination is necessary in these fields for
these forms of company because, on the one hand, these companies'
activitiesfrequently extend beyond the frontiersof their national terri-toriesand, on the other, they offer no s afeguardsto third partiesbeyondthe 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 requirementsasregardsthe extent of the
financial information that should be made available to the public bycompaniesthat are in competition with one another;
Whereasannual accountsmus t 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 noteson the accountsand the annual report mus t 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;
Whereasthe annual accountsof all companiesto which thisDirective
applies must be published in accordance with Directive 68/151/EEC;whereas, however, certain derogations may likewise be granted in thisarea for small and medium-sized companies;
Whereas annual accounts must be audited by authorized persons whose
minimum qualifications will be the subject of subsequent coordination;whereasonly s mall companiesmay be relieved of thisaudit obligation;
Whereas, when a company belongs to a group, it is desirable that group
accountsgiving a true and fair view of the activitiesof the group asa
whole be published; whereas, however, pending the entry into force ofa Council Directive on consolidated accounts, derogations from certainprovisions of this Directive are necessary;
Whereas, in order to meet the difficulties arising from the present posi-
tion regarding legislation in certain Member States, the period allowed1978L0660 — EN — 17.07.2003 — 005.001 — 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.
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for the implementation of certain provisions of this Directive must be
longer than the period generally laid down in such cases,
HAS ADOPTED THIS DIRECTIVE:
Article 1
1. The coordination measures prescribed by this Directive shall
apply to the laws, regulations and administrative provisions of the
Member Statesrelating to the following typesof companies :
— in Germany:
die Aktiengesellschaft, die Kommanditgesellschaft auf Aktien, die
Gesellschaft mit beschränkter Haftung;
— in Belgium:
la société anonyme/de naamloze vennootschap, la société en
commandite par actions/ de commanditaire vennoots chap opaandelen, la société de personnes à responsabilité limitée/de perso-nenvennootschap met beperkte aansprakelijkheid;
— in Denmark:
aktieselskaber, kommanditaktieselskaber, anpartsselskaber;
— in France:
la société anonyme, la société en commandite par actions, la société
à responsabilité limitée;
— in Ireland:
public companieslimited by s haresor by guarantee, private compa-
nieslimited by s haresor by guarantee;
— in Italy:
la società per azioni, la società in accomandita per azioni, la società
a responsabilità limitata;
— in Luxembourg:
la société anonyme, la société en commandite par actions, la société
à responsabilité limitée;
— in the Netherlands:
de naamloze vennootschap, de besloten vennootschap met beperkte
aansprakelijkheid;
— in the United Kingdom:
public companieslimited by s haresor by guarantee, private compa-
nieslimited by s haresor by guarantee;
— in Greece:
η ανώνυµη εταιρία, η εταιρία περιωρισµένης ευθύνης, η ετερ-
όρρυθµη κατά µετοχές εταιρία;
— in Spain:
la sociedad anónima, la sociedad comanditiara por acciones, la soci-
edad de responsabilidad limitada;
— in Portugal:
a sociedade anónima, de responsabilidade limitada, a sociedade em
comandita por açcões, a sociedadepor quotas de responsabilidadelimitada;
— in Austria:
die Aktiengesellschaft, die Gesellschaft mit beschränkter Haftung;
— in Finland:1978L0660 — EN — 17.07.2003 — 005.001 — 3
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osakeyhtiö/aktiebolag;
— in Sweden:
aktiebolag.
The coordination measures prescribed by this Directive shall also apply
to the Member States' laws, regulations and administrative provisions
relating to the following typesof company:
(a) in Germany:
die offene Handelsgesellschaft, die Kommanditgesellschaft;
(b) in Belgium:
la société en nom collectif/de vennootschap onder firma, la société
en commandité (SIC! commandite) simple/de gewone commandi-taire vennootschap;
(c) in Denmark:
interessentskaber, kommanditselskaber;
(d) in France:
la société en nom collectif, la société en commandite simple;
(e) in Greece:
η οµόρρυθµος εταιρία, η ετερόρρυθµος εταιρία;
(f) in Spain:
sociedad colectiva, sociedad en comandita simple;
(g) in Ireland:
partnerships, limited partnerships, unlimited companies;
(h) in Italy:
la società in nome collettivo, la società in accomandita semplice;
(i) in Luxembourg:
la société en nom collectif, la société en commandite simple;
(j) in the Netherlands:
de vennootschap onder firma, de commanditaire vennootschap;
(k) in Portugal:
sociedade em nome colectivo, sociedade em comandita simples;
(l) in the United Kingdom:
partnerships, limited partnerships, unlimited companies;
(m) in Austria:
die offene Handelsgesellschaft, die Kommanditgesellschaft;
(n) in Finland:
avoin yhtiö/ öppet bolag, kommandiittiyhtiö/kommanditbolag;
(o) in Sweden:
handelsbolag, kommanditbolag.
where all membershaving unlimited liability are companiesof the
types set out in the first subparagraph or companies which are notgoverned by the lawsof a Member State but which have a legal form
comparable to those referred to in Directive 68/151/EEC.
This Directive shall also apply to the types of companies or firms
referred to in the second subparagraph where all members havingunlimited liability are themselves companies of the types set out inthat or the first subparagraph.
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.1978L0660 — EN — 17.07.2003 — 005.001 — 4
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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 accountsin addition to the documentsreferred 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 accountss hall give a true and fair view of the
company's assets, liabilities, financial position and profit or loss.
4. Where the application of the provision of this Directive would not
be sufficient to give a true and fair view within the meaning of para-
graph 3, additional information must be given.
5. Where in exceptional cases the application of a provision of this
Directive isincompatible with the obligation laid down in paragraph 3,
that provision must be departed from in order to give a true and fairview within the meaning of paragraph 3. Any such departure must bedisclosed in the notes on the accounts together with an explanation 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 the
exceptional cases in question and lay down the relevant special rules.
6. The Member States may authorize or require the disclosure in the
annual accountsof other information aswell asthat which mus t be
disclosed in accordance with this Directive.
SECTION 2
Generalprovisionsconcerningthebalancesheetandtheprofitand
lossaccount
Article 3
The layout of the balance sheet and of the profit and loss account,
particularly asregardsthe form adopted for their pres entation, maynot be changed from one financial year to the next. Departuresfromthis 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 in Articles 9, 10 and 23 to 26 must be shown separately inthe order indicated. A more detailed subdivision of the items shall beauthorized provided that the layoutsare complied with. New itemsmaybe added provided that their contentsare not covered by any of the
items prescribed by the layouts. Such subdivision or new items may
be required by the Member States.
2. The layout, nomenclature and terminology of itemsin the balance
sheet and profit and loss account that are preceded by Arabic numerals
must be adapted where the special nature of an undertaking so requires.Such adaptationsmay be required by the Member Statesof undertak-ingsforming part of a particular economic s ector.
3. The balance sheet and profit and loss account items that are
preceded by Arabic numeralsmay be, combined where:
(a) they are immaterial in amount for the purposes of Article 2 (3); or1978L0660 — EN — 17.07.2003 — 005.001 — 5
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(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 thesefiguresare 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 isa corres ponding 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 Statesmay permit or require the pres entation 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 permission or requirement may be restricted to certain classes 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 derogation from Article 4 (1) and (2), the Member
States may prescribe special layouts for the annual accounts of invest-
ment companiesand of financial holding companiesprovided that thes elayoutsgive a view of thes e companiesequivalent to that provided forin Article 2 (3).
2. For the purposes of this Directive, ‘investment companies’ shall
mean only:
(a) those companies the sole object of which is to invest their funds in
various securities, real property and other assets with the sole aimof spreading investment risks and giving their shareholders thebenefit of the results of the management of their assets;
(b) 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 companieswithout 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 turnthem to profit, without involving themselves directly or indirectly inthe management of those undertakings, the aforegoing without preju-
dice to their rights as shareholders. The limitations imposed on the
activities of these companies must be such that compliance with themcan be supervised by an administrative or judicial authority.
Article 6
The Member Statesmay authorize or require adaptation of the layout
of the balance sheet and profit and loss account in order to include
the appropriation of profit or the treatment of loss.
Article 7
Any set-off between asset and liability items, or between income and
expenditure items, shall be prohibited.1978L0660 — EN — 17.07.2003 — 005.001 — 6
(1) OJ L 193, 18.7.1983, p. 1. Directive aslas t 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
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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 choose
between them.
Member Statesmay permit or require companiesto adopt the pres enta-
tion of the balance sheet set out in Article 10a as an alternative to the
layouts otherwise prescribed or permitted.
Article 9
Assets
A.Subscribedcapitalunpaid
of which there hasbeen called
(unless national law provides that called-up capital be shown under
‘Liabilities’. In that case, the part of the capital called but not yetpaid must appear as an asset either under A or under D (II) (5)).
B.Formation expenses
asdefined by national law, and in s o far asnational 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
shown under C (I) (3); or
(b) created by the undertaking itself, in so far as national
law permits their being shown as assets.
3. Goodwill, to the extent that it wasacquired for valuable
consideration.
4. Paymentson account.
II.Tangible assets
1. Land and buildings.
2. Plant and machinery.3. Other fixturesand fittings , toolsand equipment.4. Payments on account and tangible assets in course of
construction.
III.Financial assets
1. Sharesin affiliated undertakings .
2. Loansto affiliated undertakings .
3. Participating interests.4. Loansto undertakingswith which the company islinked by
virtue of participating interests.
5. Investments held as fixed assets.
6. Other loans.1978L0660 — EN — 17.07.2003 — 005.001 — 7
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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 permitstheir being s hown in
the balance sheet.
D.Currentassets
I.Stocks
1. Raw materials and consumables.
2. Work in progress.3. Finis hed goodsand goodsfor res ale.4. Paymentson account.
II.Debtors
(Amountsbecoming due and payable after more than one year
must be shown separately for each item.)
1. Trade debtors.
2. Amountsowed by affiliated undertakings .3. Amountsowed by undertakingswith which the company is
linked by virtue of participating interests.
4. Other debtors.
5. Subscribed capital called but not paid (unless national law
provides that called-up capital be shown as an asset under
A).
6. Prepaymentsand accrued income (unles snational law
provides for such items to be shown as an asset under E).
III.Investments
1. Sharesin 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 permitstheir being s hown 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).
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.1978L0660 — EN — 17.07.2003 — 005.001 — 8
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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
(Amountsbecoming 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. Paymentsreceived on account of ordersin s o far asthey are not
shown separately as deductions from stocks.
4. Trade creditors.5. Billsof exchange payable.6. Amountsowed to affiliated undertakings .7. Amountsowed to undertakingswith which the company is
linked by virtue of participating interests.
8. Other creditors including tax and social security.9. Accrualsand deferred income (unles snational law providesfor
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 hasbeen called
(unless national law provides that called-up capital be shown under
L. In that case, the part of the capital called but not yet paid must
appear either under A or under D (11) (5)).
B.Formation expenses
asdefined by national law, and in s o far asnational 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.1978L0660 — EN — 17.07.2003 — 005.001 — 9
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2. Concessions, patents, licences, trade marks and similar rights
and assets, if they were:
(a) acquired for valuable consideration and need not be
shown under C (I) (3); or
(b) created by the undertaking itself, in so far as national
law permits their being shown as assets.
3. Goodwill, to the extent that it wasacquired for valuable
consideration.
4. Paymentson account.
II.Tangible assets
1. Land and buildings.
2. Plant and machinery.
3. Other fixturesand fittings , toolsand equipment.
4. Payments on account and tangible assets in course of
construction.
III.Financial assets
1. Sharesin affiliated undertakings .
2. Loansto affiliated undertakings .3. Participating interests.4. Loansto undertakingswith which the company islinked 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 permitstheir being s hown in
the balance sheet.
D.Currentassets
I.Stocks
1. Raw materials and consumables.
2. Work in progress.3. Finis hed goodsand goodsfor res ale.4. Paymentson account.
II.Debtors
(Amountsbecoming due and payable after more than one year
must be shown separately for each item.)
1. Trade debtors.
2. Amountsowed by affiliated undertakings .3. Amountsowed by undertakingswith which the company is
linked by virtue of participating interests.
4. Other debtors.5. Subscribed capital called but not paid (unless national law
providesthat called-up capital be s hown under A).
6. Prepaymentsand accrued income (unles snational law
provides that such items be shown under E).
III.Investments
1. Sharesin 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 permitstheir being s hown inthe balance sheet.
3. Other investments.1978L0660 — EN — 17.07.2003 — 005.001 — 10
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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. Paymentsreceived on account of ordersin s o far asthey are not
shown separately as deductions from stocks.
4. Trade creditors.5. Billsof exchange payable.6. Amountsowed to affiliated undertakings .7. Amountsowed to undertakingswith which the company is
linked by virtue of participating interests.
8. Other creditors including tax and social security.9. Accrualsand deferred income (unles snational law providesfor
such items to be shown under K).
G.Netcurrentassets/liabilities (taking into account prepaymentsand
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. Paymentsreceived on account of ordersin s o far asthey are not
shown separately as deductions from stocks.
4. Trade creditors.5. Billsof exchange payable.6. Amountsowed to affiliated undertakings .7. Amountsowed to undertakingswith which the company is
linked by virtue of participating interests.
8. Other creditors including tax and social security.9. Accrualsand deferred income (unles snational law providesfor
such items to be shown under K).
J.►
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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).
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 reserve1978L0660 — EN — 17.07.2003 — 005.001 — 11
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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
Articles9 and 10, Member Statesmay permit or require companies ,or certain classes of company, to present those items on the basis of a
distinction between current and non-current items provided that the
information given is at least equivalent to that otherwise required byArticles9 and 10.
Article 11
The Member Statesmay permit companieswhich on their balance
sheet dates do not exceed the limits of two of the three followingcriteria:
—►
M9balance sheet total: EUR 3 650 000 ◄,
—►M9net turnover: EUR 7 300 000 ◄,
— average number of employeesduring 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
in total for each.
Member Statesmay waive the application of Article 15 (3) (a) and (4)
to the abridged balance sheet.
In the case of those Member States which have not adopted the euro,
the amount in national currency equivalent to the amountss pecified inthe first paragraph shall be that obtained by applying the exchange ratepublished in the Official Journal of the European Union on the 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 limitsof two of the three criteria indicated in Article 11,
that fact shall affect the application of the derogation provided for inthat Article only if it occurs in two consecutive financial years.
2. For the purposes of translation into national currencies, the
amountsin European unitsof account s pecified in Article 11 may beincreased by not more than 10 %.
3. The balance sheet total referred to in Article 11 shall consist of
the assets in A to E under ‘Assets’ in the layout prescribed in Article9 or those in A to E in the layout prescribed in Article 10.1978L0660 — EN — 17.07.2003 — 005.001 — 12
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Article 13
1. Where an asset or liability relates to more than one layout item,
its relationship to other items must be disclosed either under the item
where it appears or in the notes on the accounts, if such disclosure isessential 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 commitmentsby way of guarantee of any kind mus t, if there isno
obligation to 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 varioustypesof 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 shown as fixed assets or
current assets shall depend upon the purpose for which they are
intended.
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 shown separately, starting with the purchase priceor production cost, for each fixed asset item, on the one hand,the additions, disposals and transfers during the financial yearand, on the other, the cumulative value adjustments at thebalance 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,asclear deductionsfrom the relevant items , or in the notesonthe accounts.
(b) If, when annual accountsare drawn up in accordance with this
Directive for the first time, the purchase price or production costof a fixed asset cannot be determined without undue expense ordelay, the residual value at the beginning of the financial yearmay be treated as the purchase price or production cost. Any
application of this provision must be disclosed in the notes on
the accounts.
(c) Where Article 33 isapplied, the movementsin the variousfixed
asset items referred to in subparagraph (a) of this paragraph
shall be shown starting with the purchase price or productioncost resulting from revaluation.
4. Paragraph 3 (a) and (b) shall apply to the presentation of ‘Forma-
tion expenses’.
Article 16
Rightsto immovablesand other s imilar rightsasdefined 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 holding1978L0660 — EN — 17.07.2003 — 005.001 — 13
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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 Stateswhich 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 thenoteson 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 asto
amount or asto the date on which they will aris e.
2. The Member States may also authorize the creation of provisions
intended to cover chargeswhich have their origin in the financial yearunder review or in a previousfinancial 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 astoamount or asto the date on which they will aris e.
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 chargeswhich, though relating
to the financial year in question, will be paid only in the course of a
subsequent financial year, must be shown under ‘Accruals and deferredincome’. The Member Statesmay, however, provide that s uch chargesshall 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 than one layout, it may allow
companiesto choos e from among them.
By way of derogation from Article 2(1), Member Statesmay permit or
require all companies, or any classes of company, to present a state-ment of their performance instead of the presentation of profit andloss items in accordance with Articles 23 to 26, provided that the infor-mation given is at least equivalent to that otherwise required by thoseArticles.1978L0660 — EN — 17.07.2003 — 005.001 — 14
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Article 23
1. Net turnover.
2. Variation in stocks of finished goods and in work in progress.3. Work performed by the undertaking for itsown purpos esand 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 are
normal in the undertaking concerned.
8. Other operating charges.9. Income from participating interests, with a separate indication of
that derived from affiliated undertakings.
10. Income from other investments and loans forming part of the fixed
assets, with a separate indication of that derived from affiliated
undertakings.
11. Other interest receivable and similar income, with a separate indi-
cation of that derived from affiliated undertakings.
12. Value adjustments in respect of financial assets and of investments
held as current assets.
13. Interest payable and similar charges, with a separate indication of
those concerning affiliated undertakings.
14. Tax on profit or loss on ordinary activities.15. Profit or loss on ordinary activities after taxation.16. Extraordinary income.17. Extraordinary charges.18. Extraordinary profit or loss.
19. Tax on extraordinary profit or loss.
20. Other taxes not shown under the above items.21. Profit or loss for the financial year.
Article 24
A.Charges
1. Reduction in stocks of finished goods and in work in progress:
2. (a) raw materials and consumables;
(b) other external charges.
3. Staff costs:
(a) wages and salaries;
(b) social security costs, with a separate indication of those
relating to pensions.
4. (a) Value adjustments in respect of formation expenses and of
tangible and intangible fixed assets.
(b) Value adjustments in respect of current assets, to the extent
that they exceed the amount of value adjustments which arenormal in the undertaking concerned.
5. Other operating charges.1978L0660 — EN — 17.07.2003 — 005.001 — 15
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6. Value adjustments in respect of financial assets and of invest-
ments held as current assets.
7. Interest payable and similar charges, with a separate indication
of those concerning affiliated undertakings.
8. Tax on profit or loss on ordinary activities.9. Profit or loss on ordinary activities after taxation.
10. Extraordinary charges.11. Tax on extraordinary profit or loss.12. Other taxes not shown under the above items.13. Profit or loss for the financial year.
B.Income
1. Net turnover.
2. Increase in stocks of finished goods and in work in progress.3. Work performed by the undertaking for itsown purpos esand
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 affiliatedundertakings.
9. Other interest receivable and similar income with a separate indica-
tion of that derived from affiliated undertakings.
10. Value adjustments in respect of financial assets and of investments
held as current assets.
11. Interest payable and similar charges, with a separate indication of
those concerning affiliated undertakings.
12. Tax on profit or loss on ordinary activities.
13. Profit or loss on ordinary activities after taxation.14. Extraordinary income.15. Extraordinary charges.16. Extraordinary profit or loss.17. Tax on extraordinary profit or loss.18. Other taxes not shown under the above items.
19. Profit or loss for the financial year.1978L0660 — EN — 17.07.2003 — 005.001 — 16
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Article 26
A.Charges
1. Cost of sales (including value adjustments).
2. Distribution costs (including value adjustments).3. Administrative expenses (including value adjustments).4. Value adjustments in respect of financial assets and of invest-
ments held as current assets.
5. Interest payable and similar charges, with a se-parate indication
of those concerning affiliated undertakings.
6. Tax on profit or loss on ordinary activities.7. Profit or loss on ordinary activities after taxation.
8. Extraordinary charges.
9. Tax on extraordinary profit or loss.
10. Other taxes not shown under the above items.11. Profit or loss for the financial year.
B.Income
1. Net turnover.
2. Other operating income.3. Income from participating interests, 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 Statesmay permit companieswhich on their balance
sheet dates do not exceed the limits of two of the three followingcriteria:
—►
M9balance sheet total: EUR 14 600 000 ◄,
—►M9net turnover: EUR 29 200 000 ◄,
— average number of employeesduring the financial year: 250
to adopt layouts different from those prescribed in Articles 23 to 26
within the following limits:
(a) in Article 23: 1 to 5 inclusive may be combined under one item
called ‘Gross profit or loss’;
(b) in Article 24: A (1), A (2) and B (1) to B (4) inclu-sive may be
combined under one item called ‘Gross profit or loss’;
(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.
In the case of those Member States which have not adopted the euro,
the amount in national currency equivalent to the amountss pecified in
the first paragraph shall be that obtained by applying the exchange ratepublished in the Official Journal of the European Union on the date of
the entry into force of the Directive setting those amounts in conse-quence of the review provided for in Article 53(2).1978L0660 — EN — 17.07.2003 — 005.001 — 17
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SECTION 6
Special provisions relating to certain items in the profit and loss
account
Article 28
The net turnover shall comprise the amounts derived from the sale of
products and the provision of services falling within the company's
ordinary activities, after deduction of sales rebates and of value added
tax and other taxesdirectly linked to the turnover.
Article 29
1. Income and charges that arise otherwise than in the course of the
company's ordinary activities must be shown under ‘Extraordinaryincome and extraordinary charges’.
2. Unless the income and charges referred to in paragraph 1 are
immaterial for the assessment of the results, explanations of their
amount and nature must be given in the notes on the accounts. The
same shall apply to income and charges relating to another financialyear.
Article 30
The Member Statesmay permit taxeson the profit or los son ordinary
activities and taxes on the extraordinary profit or loss to be shown in
total asone item in the profit and los saccount before ‘Other taxesnot
shown under the above items’. In that case, ‘Profit or loss on ordinaryactivities after taxation’ shall be omitted from the layouts prescribed inArticles23 to 26.
Where this derogation is applied, companies must disclose in the notes
on the accountsthe extent to which the taxeson the profit or los saffectthe 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 accountsare 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 profitsmade at the balance s heet date may be included,
(bb) account must be taken of all liabilities arising in the course of
the financial year concerned or of a previousone, even if s uchliabilitiesbecome apparent only between the date of thebalance sheet and the date on which it is drawn up,
(cc) account must be taken of all depreciation, whether the result
of the financial year isa los sor 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;1978L0660 — EN — 17.07.2003 — 005.001 — 18
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(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 Statesmay permit or require account to be taken
of all foreseeable liabilities and potential losses arising in the course
of the financial year concerned or of a previousone, even if s uchliabilities or losses become apparent only between the date of thebalance 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 on the principle of purchaseprice or production cost.
Article 33
1. The Member States may declare to the Commission that they
reserve the power, by way of derogation from Article 32 and pendingsubsequent coordination, to permit or require in respect of all compa-nies or any classes of companies:
(a) valuation by the replacement value method for tangible fixed assets
with limited useful economic lives and for stocks;
(b) valuation by methodsother than that provided for in (a) which are
designed to take account of inflation for the items shown in annualaccounts, including capital and reserves;
(c) revaluation of fixed assets.
Where national law providesfor valuation methodsasindicated in (a),
(b) and (c), it must define their content and limits and the rules fortheir application.
The application of any such method, the balance sheet and profit and
loss account items concerned and the method by which the values
shown are calculated shall be disclosed in the notes on the accounts.
2. (a) Where paragraph 1 isapplied, the amount of the difference
between valuation by the method used and valuation in accor-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 application of the last subparagraph of para-
graph 1, companies shall, whenever the amount of the reservehas been changed in the course of the financial year, publish inthe noteson the accounts interalia a table showing:
— the amount of the revaluation reserve at the beginning of the
financial year,
— the revaluation differencestrans ferred 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.1978L0660 — EN — 17.07.2003 — 005.001 — 19
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(b) The revaluation reserve may be capitalized in whole or in part at
any time.
(c) The revaluation reserve must be reduced to the extent that the
amounts transferred thereto are no longer necessary for the
implementation of the valuation method used and the achieve-ment of itspurpos e.
The Member Statesmay lay down rulesgoverning the applica-
tion of the revaluation reserve, provided that transfers to the
profit and loss account from the revaluation reserve may be
made only to the extent that the amountstrans ferred have beenentered aschargesin the profit and los saccount 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 asprovided under (b) and (c) the revaluation res erve may
not be reduced.
3. Value adjustments shall be calculated each year on the basis of
the value adopted for the financial year in question, save that by wayof derogation from Articles4 and 22, the Member Statesmay permit orrequire that only the amount of the value adjustments arising as a result
of the application of the general rule laid down in Article 32 be shown
under the relevant itemsin the layoutspres cribed in Articles23 to 26and that the difference arising as a result of the valuation methodadopted under this Article be shown separately in the layouts. Further-more, Articles34 to 42 s hall apply mutatis mutandis .
4. Where paragraph 1 is applied, the following must be disclosed,
either in the balance sheet or in the notes on the accounts, separatelyfor each balance sheet item as provided for in the layouts prescribed
in Articles 9 and 10, except for stocks, either:
(a) the amount at the balance sheet date of the valuation made in
accordance with the general rule laid down in Article 32 and the
amount of the cumulative value adjustments; or
(b) the amount at the balance sheet date of the difference between the
valuation made in accordance with thisArticle and that res ultingfrom the application of Article 32 and, where appropriate, thecumulative amount of the additional value adjustments.
5. Without prejudice to Article 52 the Council shall, on a proposal
from the Commission and within seven years of the notification of
this Directive, examine and, where necessary, amend this Article in
the light of economic and monetary trendsin the Community.
Article 34
1. (a) Where national law authorizesthe inclus ion of formation
expenses under ‘Assets’, they must be written off within amaximum period of five years.
(b) In so far as formation expenses have not been completely
written off, no distribution of profits shall take place unless theamount of the reserves available for distribution and profitsbrought forward is at least equal to that of the expenses notwritten off.
2. The amounts entered under ‘Formation expenses’ must be
explained in the noteson the accounts .
Article 35
1. (a) Fixed assets must be valued at purchase price or production
cost, without prejudice to (b) and (c) below.
(b) The purchase price or production cost of fixed assets with
limited useful economic lives must be reduced by value adjust-ments calculated to write off the value of such assetssystematically over their useful economic lives.1978L0660 — EN — 17.07.2003 — 005.001 — 20
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(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, so
that they are valued at the lower figure to be attributed to
them at the balance sheet date if it is expected that thereduction 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 noteson the accountsif they have not beenshown separately in the profit and loss account.
(dd) Valuation at the lower of the valuesprovided for in (aa)
and (bb) may not be continued if the reasons for whichthe value adjustments were made have ceased to apply.
(d) If fixed assets are the subject of exceptional value adjustments
for taxation purposes alone, the amount of the adjustments and
the reasons for making them shall be indicated in the notes on
the accounts.
2. The purchase price shall be calculated by adding to the price paid
the expenses incidental thereto.
3. (a) The production cost shall be calculated by adding to the
purchasing price of the raw materials and consumables the costsdirectly attributable to the product in question.
(b) A reasonable proportion of the costs which are only indirectly
attributable to the product in question may be added into theproduction costs to the extent that they relate to the period ofproduction.
4. Interest on capital borrowed to finance the production of fixed
assets may be included in the production costs to the extent that 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 derogation from Article 35 (1) (c) (cc), the Member States
may allow investment companies within the meaning of Article 5 (2) toset off value adjustments to investments directly against ‘Capital andreserves’. The amounts in question must be shown separately under
‘Liabilities’ in the balance sheet.
Article 37
1. Article 34 shall apply to costs of research and development. In
exceptional cases, however, the Member States may permit derogationsfrom Article 34 (1) (a). In that case, they may also provide for deroga-
tionsfrom Article 34 (1) (b). Such derogationsand the reas onsfor
them must be disclosed in the notes on the accounts.
2. Article 34 (1) (a) shall apply to goodwill. The Member States
may, however, permit companies to write goodwill off systematically
over a limited period exceeding five yearsprovided that thisperiod
does not exceed the useful economic life of the asset and is disclosedin the notes on the accounts together with the supporting reasons there-fore.
Article 38
Tangible fixed assets, raw materials and consumables which are
constantly being replaced and the overall value of which is ofsecondary importance to the undertaking may be shown under ‘Assets’at a fixed quantity and value, if the quantity, value and compositionthereof do not vary materially.1978L0660 — EN — 17.07.2003 — 005.001 — 21
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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 Statesmay permit exceptional value adjus tments
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 the
accounts.
(d) Valuation at the lower value provided for in (b) and (c) may not
be continued if the reasons for which the value adjustments weremade have ceased to apply.
(e) If current assets are the subject of exceptional value adjustments
for taxation purposes alone, the amount of the adjustments and
the reasons for making them must be disclosed in the notes onthe accounts.
2. The definitions of purchase price and of production cost given in
Article 35 (2) and (3) shall apply. The Member States may also applyArticle 35 (4). Distribution costs may not be included in productioncosts.
Article 40
1. The Member Statesmay permit the purchas e price or production
cost of stocks of goods of the same category and all fungible items
including investments to be calculated either on the basis of weightedaverage prices or by the ‘first in, first out’ (FIFO) method, the ‘last in,first out’ (LIFO) method, or some similar method.
2. Where the value shown in the balance sheet, following applica-
tion of the methodsof calculation s pecified in paragraph 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 difference must be disclosed in total by category in the notes on
the accounts.
Article 41
1. Where the amount repayable on account of any debt isgreater
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 the
accounts.
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 — 17.07.2003 — 005.001 — 22
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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
accountsasdefined 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 aspart 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 loansand receivablesoriginated 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 derogation from Article 32, Member Statesmay 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 valuation at the specific amountrequired under that system.
Article 42b
1. The fair value referred to in Article 42a shall be determined by
reference to:
(a) a market value, for those financial instruments for which a reliable
market can readily be identified. Where a market value isnot
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 modelsand 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 Articles34 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 — 17.07.2003 — 005.001 — 23
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included in the profit and loss account. However, such a change shall
be included directly in equity, in a fair value reserve, where:
(a) the instrument accounted for is a hedging instrument under a
system of hedge accounting that allows some or all of the change
in value not to be shown in the profit and loss account; or
(b) the change in value relatesto an exchange difference aris ing on a
monetary item that formspart of a company'snet inves tment in a
foreign entity.
2. Member Statesmay permit or require a change in the value on an
available for sale financial asset, other than a derivative financialinstrument, to be included directly in equity, in the fair value reserve.
3. The fair value reserve shall be adjusted when amounts shown
therein are no longer necessary for the implementation of paragraphs1 and 2.
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
techniqueswhere fair valueshave 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
changesincluded in the fair value res erve;
(c) for each class of derivative financial instruments, information about
the extent and the nature of the instruments, including significanttermsand conditionsthat 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 derogation from Article 32, Member Statesmay permit or
require in respect of all companies or any classes of company the
valuation of specified categories of assets other than financial instru-mentsat amountsdetermined by reference to fair value.
Such permission or requirement may be restricted to consolidated
accountsasdefined 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
isincluded in the profit and los saccount.
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 methodsapplied to the variousitemsin 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 — 17.07.2003 — 005.001 — 24
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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 inhisown name but on the company'sbehalf, holdsat leas t a
percentage of the capital which the Member Statescannot fix at
more than 20 %, showing the proportion of the capital held, theamount of capital and reserves, and the profit or loss for the latestfinancial year of the undertaking concerned for which accountshave been adopted. Thisinformation may 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 undertakingsof which the company or firm isa memberhaving unlimited liability. Thisinformation 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 limitsof an authorized capital, withoutprejudice asfar asthe amount of thiscapital isconcerned 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 an indication of theirnumber and the rightsthey confer;
(6) amountsowed by the company becoming due and payable after
more than five yearsaswell asthe company'sentire debtscoveredby 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 in the
layoutspres cribed in ►
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(7) the total amount of any financial commitmentsthat 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 categoriesof activity and into geographical marketsin s o faras, taking account of the manner in which the sale of productsand the provision of services falling within the company's
ordinary activitiesare organized, thes e categoriesand 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 asprovided for in Article 23(6);
(10) the extent to which the calculation of the profit or loss for the
financial year hasbeen affected by a valuation of the itemswhich,
by way of derogation from the principlesenunciated 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 yearsand the amount of tax payable in res pectof those years, provided that this difference is material for1978L0660 — EN — 17.07.2003 — 005.001 — 25
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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 an appropriate heading;
(12) the amount of the emolumentsgranted in res pect of the financial
year to the members of the administrative, managerial and super-
visory bodies by reason of their responsibilities, and any
commitments arising or entered into in respect of retirementpensions for former members of those bodies, with an indicationof the total for each category;
(13) the amount of advancesand creditsgranted to the membersof the
administrative, managerial and supervisory bodies, with indica-tions of the interest rates, main conditions and any amountsrepaid, aswell ascommitmentsentered into on their behalf byway of guaranteesof any kind, with an indication of the total for
each category;
14. where valuation at fair value of financial instruments has not been
applied in accordance with Section 7a:
(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 methodspres cribed 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 being
made 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 providesthe bas isfor 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 companieswithin the
meaning of Article 5 (3).
3. Member Statesmay waive the requirement to provide the infor-
mation referred to in paragraph 1 point 12 where such information
makes it possible to identify the position of a specific member ofsuch a body.
Article 44
1. Member Statesmay permit the companiesreferred to in Article
11 to draw up abridged noteson their accountswithout the informationrequired in Article 43(1)(5) to (12) and (14)(a). However, the notesmust disclose the information specified in Article 43(1)(6) in total for
all the itemsconcerned.
2. Member Statesmay als o permit the companiesreferred to in
paragraph 1 to be exempted from the obligation to disclose in the notes
on their accountsthe information pres cribed 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 — 17.07.2003 — 005.001 — 26
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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; thismus t be
disclosed in the notes on the accounts;
(b) to be omitted when their nature iss uch that they would be
seriously prejudicial to any of the undertakings to which Article43 (1) (2) relates. The Member States may make such omissions
subject to prior administrative or judicial authorization. Any such
omission 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 Statesmay permit the companiesreferred 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 anduncertaintiesthat it faces .
The review shall be a balanced and comprehensive analysis of
the development and performance of the company's business
and of its position, consistent with the size and complexity of
the business;
(b) To the extent necessary for an understanding of the company's
development, performance or position, the analysis shall include
both financial and, where appropriate, non-financial key perfor-
mance indicators relevant to the particular business, includinginformation relating to environmental and employee matters;
(c) In providing its analysis, the annual report shall, where appro-
priate, include referencesto and additional explanationsof
amountsreported in the annual accounts .
2. The report shall also give an indication of:
(a) any important eventsthat have occurred s ince the end of the finan-
cial year;
(b) the company'slikely future development;
(c) activitiesin the field of res earch and development;
(d) the information concerning acquisitions of own shares prescribed
by Article 22 (2) of Directive 77/91/EEC.
(e) the existence of branches of the company;
(f) in relation to the company's use of financial instruments and where
material for the assessment of its assets, liabilities, financial posi-tion and profit or loss,
— the company'sfinancial ris k management objectivesand 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 — 17.07.2003 — 005.001 — 27
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3. Member Statesmay waive the obligation on companiescovered
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 Statesmay choos e to exempt companiescovered by
Article 27 from the obligation in paragraph 1(b) above in so far as itrelatesto non-financial information.
SECTION 10
Publication
Article 47
1. The annual accounts, duly approved, and the annual report,
together with the opinion submitted by the person responsible forauditing the accounts, shall be published as laid down by the laws ofeach Member State in accordance with Article 3 of Directive 68/151/EEC.
The lawsof a Member State may, however, permit the annual report
not to be published as stipulated above. ►
M1It must be possible to
obtain a copy of all or part of any such report upon request. 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 that
entity from publishing its accounts in accordance with Article 3 of
Directive 68/151/EEC, provided that those accounts are available tothe public at itshead office, where:
(a) all the membershaving unlimited liability of the entity concerned
are the companies referred to in the first subparagraph of Article 1(1) governed by the lawsof Member Statesother than the Member
State whose law governs that entity and none of those companies
publishes the accounts of the entity concerned with its ownaccounts; or
(b) all the membershaving unlimited liability are companieswhich are
not governed by the lawsof a Member State but which have a legal
form comparable to those referred to in Directive 68/151/EEC.
Copies of the accounts must be obtainable upon request. The price of
such a copy may not exceed its administrative cost. Appropriate sanc-tionsmus t be provided for failure to comply with the publicationobligation imposed in this paragraph.
2. By way of derogation from paragraph 1, the Member Statesmay
permit the companiesreferred to in Article 11 to publis h:
(a) abridged balance sheets showing only those items preceded by
letters and roman numerals in Articles 9 and 10, disclosing sepa-rately the information required in brackets in D (II) under ‘Assets’and C under ‘Liabilities’ in Article 9 and in D (11) in Article 10,but in total for all the itemsconcerned; and
(b) abridged noteson their accountsin accordance with Article 44.
Article 12 shall apply.
In addition, the Member Statesmay relieve s uch companiesfrom the
obligation to publish their profit and loss accounts and annual reportsand the opinions of the persons responsible for auditing the accounts.1978L0660 — EN — 17.07.2003 — 005.001 — 28
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3. The Member Statesmay permit the companiesmentioned 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 'Liabilitiesin Article 9,
— C (I) (3), C (II) (1), (2), (3) and (4), C (III) (1), (2), (3), (4) and
(7), D (II) (2), (3) and (6), D (III) (1) and (2), F (1), (2), (6), (7)
and (9) and (I) (1), (2), (6), (7) and (9) in Article 10,
— the information required in brackets in D (II) under ‘Assets’ and
C under ‘Liabilities’ in Article 9, in total for all the itemsconcerned and sepa-rately for D (II) (2) and (3) under ‘Assets’and C (1), (2), (6), (7) and (9) under ‘Liabilities’,
— the information required in bracketsin D (11) in Article 10, in
total for all the itemsconcerned, and s eparately for D (II) (2)and (3);
(b) abridged noteson their accountswithout 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 itemsconcerned.
This paragraph shall be without prejudice to paragraph 1 in so far as it
relatesto the profit and los saccount, the annual report and the opinionof the person responsible for auditing the accounts.
Article 12 shall apply.
Article 48
Whenever the annual accountsand the annual report are publis hed in
full, they must be reproduced in the form and text on the basis of
which the person responsible for auditing the accounts has drawn uphisopinion. They mus t be accompanied by the full text of hisreport.►
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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 in which the accounts have been filed in accordance withArticle 47 (1). Where such filing has not yet been effected, the factmust be disclosed. ►
M10The report of the person or persons respon-
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 auditorsincluded a reference to any mattersto which the s tatutory
auditorsdrew attention by way of emphas iswithout qualifying the
audit opinion. ◄
Article 50
The following must be published together with the annual accounts,
and in like manner:
— the proposed appropriation of the profit or treatment of the loss,
— the appropriation of the profit or treatment of the loss,
where these items do not appear in the annual accounts.
Article 50a
Annual accountsmay be publis hed in the currency in which they were
drawn up and in ecus, translated at the exchange rate prevailing on the1978L0660 — EN — 17.07.2003 — 005.001 — 29
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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 accountsof companiess hall be audited by one or
more persons approved by Member States to carry out statutory auditson the basis of the Eighth Council Directive 84/253/EEC of 10 April1984 on the approval of persons responsible for carrying out the statu-tory auditsof 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 Statesmay relieve the companiesreferred to in
Article 11 from the obligation imposed by paragraph 1.
Article 12 shall apply.
3. Where the exemption provided for in paragraph 2 isgranted the
Member States shall introduce appropriate sanctions into their lawsfor cases in which the annual accounts or the annual reports of suchcompaniesare not drawn up in accordance with the requirementsofthisDirective.
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 hasbeen applied in their preparation;
(b) a description of the scope of the statutory audit which shall at least
identify the auditing standards in accordance with which the statu-
tory audit wasconducted;
(c) an audit opinion which shall state clearly the opinion of the statu-
tory auditorsasto whether the annual accountsgive a true and fairview in accordance with the relevant financial reporting frameworkand, where appropriate, whether the annual accountscomply 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 mattersto which the s tatutory auditorsdraw
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 accountsfor the s ame financial year.
2. The report shall be signed and dated by the statutory auditors.1978L0660 — EN — 17.07.2003 — 005.001 — 30
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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 thisDirective through
regular meetingsdealing in particular with practical problemsarising in connection with its application;
(b) to advise the Commission, if necessary, on additions or amend-
mentsto thisDirective.
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-
sion shall provide the secretariat.
3. The Committee shall be convened by the chairman either on his
own initiative or at the request of one of its members.
Article 53
2. Every five yearsthe Council, acting on a propos al from the
Commission, shall examine and, if need be, revise the amounts
expressed in European units of account in this Directive, in the light
of economic and monetary trendsin 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 yearsof itsnotification. They s hall 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 in that paragraph.
That period of 18 monthsmay, however, be five years :
(a) in the case of unregistered companies in the United Kingdom and
Ireland;
(b) for purpos esof the application of Articles9 and 10 and Articles23
to 26 concerning the layoutsfor the balance s heet 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 thisDirective;1978L0660 — EN — 17.07.2003 — 005.001 — 31
(1) OJ L 141, 11.6.1993, p. 27. Directive aslas t 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 application of 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 application of Article 47 (1) of this Directive
except asregardscompaniesalready under an obligation of publi-cation under Article 2 (1) (f) of Directive 68/151/EEC. In thiscas e
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 application of Article 51 (1) of this Directive.
Furthermore, thisperiod of 18 monthsmay be extended to eight years
for companiesthe principal object of which iss hipping and which are
already in existence on the entry into force of the provisions referred to
in paragraph 1.
3. The Member States shall ensure that they communicate to the
Commission the texts of the main provisions of national law whichthey adopt in the field covered by thisDirective.
Article 56
1. The obligation to show in annual accounts the items prescribed by
►
M10Articles9, 10, 10a ◄and 23 to 26 which relate to affiliated
undertakings, as defined by Article 41 of Directive 83/349/EEC, andthe obligation to provide information concerning these undertakings in
accordance with Articles13 (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 isals o included in the body of undertakingsreferred to in(a) above;
(c) the place where copiesof the cons olidated accountsreferred 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 accountstocompanies governed by their national laws which are subsidiary under-takings, as defined in Directive 83/349/EEC, where the followingconditionsare 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 in accordance with Article 3 of Directive 68/151/EEC;
(e) the subsidiary undertaking must be included in the consolidated
accountsdrawn up by the parent undertaking in accordance withDirective 83/349/EEC;1978L0660 — EN — 17.07.2003 — 005.001 — 32
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(f) the above exemption must be disclosed in the notes on the consoli-
dated accountsdrawn 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 laiddown by the lawsof the Member State in accordance with Article3 of Directive 68/151/EEC.
Article 57a
1. Member Statesmay require the companiesreferred to in the firs t
subparagraph of Article 1 (1) governed by their law, which aremembershaving unlimited liability of any of the companiesand 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 thiscas e, the requirementsof thisDirective do not apply to the
entity concerned.
2. Member Statesneed not apply the requirementsof thisDirective
to the entity concerned where:
(a) the accountsof thisentity are drawn up, audited and publis hed in
conformity with the provisions of this Directive by a companywhich isa member having unlimited liability of the entity and is
governed by the law of another Member State;
(b) the entity concerned isincluded in cons olidated accountsdrawn up,
audited and published in accordance with Directive 83/349/EEC bya member having unlimited liability or where the entity concerned
isincluded in the cons olidated accountsof a larger body of under-
takingsdrawn up, audited and publis hed in conformity withCouncil Directive 83/349/EEC by a parent undertaking governedby the law of a Member State. The exemption must 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 companiesgoverned by their national lawswhich are parent under-takingsfor the purpos esof Directive 83/349/EEC where the followingconditionsare 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
accountsof the parent undertaking;
(c) the above exemption must be disclosed in the notes on the consoli-
dated accountsdrawn up by the parent undertaking;
(d) the profit or loss of the parent company, determined in accordance
with this Directive, must be shown in the balance sheet of the
parent company.
Article 59
1. A Member State may require or permit that participating interests,
asdefined in Article 17, in the capital of undertakingsover the oper-
ating and financial policies of which significant influence is exercised,be shown in the balance sheet in accordance with paragraphs 2 to 9below, as sub-items of the items ‘shares in affiliated undertakings’ or‘participating interests’, as the case may be. An undertaking shall be1978L0660 — EN — 17.07.2003 — 005.001 — 33
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presumed to exercise a significant influence over another undertaking
where it has 20 % or more of the ‘shareholders’ or ‘members’ votingrightsin that undertaking. Article 2 of Directive 83/349/EEC s hall
apply.
2. When this Article is first applied to a participating interest
covered by paragraph 1, it shall be shown in the balance sheet either:
(a) at itsbook value calculated in accordance 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 asat the date asat which the method isapplied 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 asat the date asat which the method isapplied for
the first time.
(c) A Member State may prescribe the application of one or other of
the above paragraphs. The balance sheet or the notes on 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 calculation of the difference asat the date of
acquisition of the participating interest referred to in paragraph 1or, where the acquisition took place in two or more stages, as atthe date asat which the holding became a participating interes twithin 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-luation hasnot been carried out. A Member State may require s uchrevaluation.
4. The book value referred to in paragraph 2 (a) above, or the
amount corresponding to the proportion of capital and reserves referred
to in paragraph 2 (b) above, shall be increased or reduced by the
amount of the variation which hastaken 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. In so far as a positive difference covered by paragraph 2 (a) or (b)
above cannot be related to any category of asset or liability, it shall bedealt with in accordance with the rulesapplicable to the item ‘good-
will’.
6. (a) The proportion of the profit or loss attributable to participating
interests within the meaning of paragraph 1 above shall be
shown in the profit-and-loss account as a separate item with anappropriate heading.
(b) Where that amount exceedsthe amount of dividendsalready
received or the payment of which can be claimed, the amountof the difference must be placed in a reserve which cannot be
distributed to shareholders.
(c) A Member State may require or permit that the proportion of the
profit or loss attributable to the participating interests referred toin paragraph 1 above be shown in the profit-and-loss accountonly to the extent of the amount corresponding to dividendsalready received or the payment of which can be claimed.1978L0660 — EN — 17.07.2003 — 005.001 — 34
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7. The eliminationsreferred to in Article 26 (1) (c) of Directive 83/
349/EEC shall be effected in so far as the facts are known or can beascertained. Article 26 (2) and (3) of that Directive shall apply.
8. Where an undertaking in which a participating interest within the
meaning of paragraph 1 above is held draws up consolidated accounts,the foregoing paragraphs shall apply to the capital and reserves shownin such consolidated accounts.
9. ThisArticle need not be applied where a participating interes t as
defined in paragraph 1 isnot material for the purpos esof 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 ◄.
In that case, the Member States may also waive the obligation on
investment companies with variable capital to show separately thevalue adjustments referred to in Article 36.
Article 61
A Member State need not apply the provisions of point 2 of Article 43
(1) of thisDirective concerning the amount of capital and res ervesand
profits and losses of the undertakings concerned to companies governed
by their national lawswhich are parent undertakingsfor the purpos esof Directive 83/349/EEC:
(a) where the undertakingsconcerned are included in cons olidated
accountsdrawn up by that parent undertaking, or in the cons oli-dated accountsof a larger body of undertakingsasreferred to in
Article 7 (2) of Directive 83/349/EEC; or
(b) where the holdingsin the undertakingsconcerned have been dealt
with by the parent undertaking in itsannual accountsin 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 than 1 January 2007, the Commission shall review the provi-
sions in ►
M10Articles42a 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 developmentsin 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 — 17.07.2003 — 005.001 — 35
▼B
▼M1
▼M8
▼B