COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 20.03.1996 
COM(96) 94 final 
Commission report to the Council on Member States' experience in applying the 
provisions listed in Article 50 of Council Directive 83/349/EEC on consolidated accounts 

1. Introduction and background 
Article 50 of the Seventh Council Directive of 13 June 1993 on consolidated accounts 
(83/349/EEC, OJNoL 193 of 18 July 1983) requires the Commission to report to the 
Council on Member States' experience of applying the provisions referred to in that Article. 
The Council is to examine those provisions in the light of the experience acquired, the aims 
of the Directive and the economic and monetary situation at the time and is to amend them 
if necessary. Austria, Finland and Sweden are not covered by this report because they have 
either not yet transposed the provisions in question into domestic law or have not yet 
acquired experience in applying them). 
Article 50 of the Seventh Directive 
" 1. Five years after the date referred to in Article 49(2), the Council, acting on a 
proposal from the Commission, shall examine and if need be revise Articles l(l)(d) 
(second subparagraph), 4(2), 5, 6, 7(1), 12, 43 and 44 in the light of the experience 
acquired in applying this Directive, the aims of this Directive and the economic and 
monetary situation at the time. 
2. Paragraph 1 above shall not affect Article 53(2) of Directive 78/660/EEC." 
The provisions in question are as follows: 
Article 1(1 )(d), second subparagraph: agreement between shareholders regarding 
the transfer of voting rights, which can lead to a consolidation requirement; 
Article 4(2): exemption from the consolidation requirement where the parent 
undertaking does not have certain legal forms; 
Article 5: exemption of financial holding companies from the consolidation 
requirement; 
Article 6: exemption of small and medium-sized enterprises from the consolidation 
requirement; 
Article 7(1): exemption of intermediate groups from the consolidation requirement; 
Article 12: exemption of horizontal groups from the consolidation requirement; 
Article 43: exemption of subsidiary undertakings from requirements arising from 
the Fourth Directive; 
Article 44: exemption of parent undertakings from requirements arising from the 
Fourth Directive. 
Article 50 provides for the Council to carry out the examination five years after companies 
first apply the provisions. According to Article 49(2), the provisions of 
2. 
n the Seventh Directive are to be applied for the first time to consolidated accounts for 
I financial years beginning on 1 January 1990 or during the calendar year 1990. In fact, the 
provisions of the Seventh Directive were first applied in the various Member States as 
If follows: 
l 
f I - Belgium: for the financial year beginning after 31 December 1990; 
J - Denmark: for the financial year beginning on or after 1 April 1991 ; 
Germany: for thé financial year beginning after 31 December 1989; 
Greece: for the financial year beginning on or after 1 July 1990; 
Spain: for the financial year beginning on or after 31 December 1991; 
France: for the financial year beginning after 31 December 1985 (companies 
eligible for stock-exchange listing) or after 31 December 1989 (companies not 
eligible for stock-exchange listing); 
Ireland: for the financial year beginning on or after 1 September 1992; 
Italy: for the financial year beginning on or after 1 January 1994; 
Luxembourg: for the financial year beginning on or after 1 January 1990; 
Netherlands: for the financial year beginning on or after 1 January 1990; 
Portugal: for the financial year beginning on or after 1 January 1991 ; 
United Kingdom: for the financial year beginning on or after 23 December 1989. 
The Commission wrote to the Member States on 4 August 1994 asking them to report to it 
on their experience in applying the provisions in question. At its meeting on 6 and 
7 December 1994, the Contact Committee for Accounting Directives discussed 
Member States' experience in applying those provisions. 
II. Detailed description of the provisions of the Seventh Directive in question and 
the outcome of the discussions 
Article l(l)(d), second subparagraph 
According to this provision, a parent undertaking must draw up consolidated accounts 
where, on the basis of an agreement with other shareholders, it alone controls a majority of 
the voting rights in a given subsidiary. Member States are permitted to adopt more 
detailed provisions governing the form and content of such agreements (Member States' 
option). 
3 
Comments 
France is the only Member State to have made use of this option. Such agreements 
concluded in France may not be directed against the company's interests. 
None of the Member States is experiencing problems in connection with the 
abovementioned provision. 
Articled) 
A consolidation requirement exists in principle where at least one undertaking in a group 
has the legal form of a company limited by shares. According to the abovementioned 
provision, however, Member States have the option of waiving the consolidation 
requirement where the parent undertaking does not have the legal form of a company 
limited by shares. 
Comments 
This option has been used without qualification by Greece, Ireland, Italy, Luxembourg, the 
Netherlands, Portugal and the United Kingdom. 
In France the list of undertakings not exempt from the consolidation requirement 
comprises, in addition to companies limited by shares, those with the form of a 
"société commerciale". In Germany very large enterprises (turnover of at least 
DM 250 million, balance-sheet total of at least DM 125 million and workforce of at least 
5 000) are subject to the consolidation requirement irrespective of their legal form. 
Belgium, Denmark and Spain have not made use of this option. 
None of the Member States is experiencing problems in connection with the 
abovementioned provision. 
Article 5 
This (extensive) Article gives Member States the option of exempting financial holding 
companies from the consolidation requirement where they satisfy certain conditions (e.g. 
they do not intervene in the management of subsidiary undertakings, they do not exercise 
certain voting rights attaching to participating interests). 
Comments 
This option has been used only by Luxembourg and Greece. 
None of the Mehiber States is experiencing problems in connection with the 
abovementioned Article. 
Article 6 
This Article gives Member States the option of exempting groups of undertakings from the 
consolidation requirement where they do not exceed two of the three size criteria referred 
to in Article 27 of Directive 78/660/EEC (medium-sized enterprises). For a limited period, 
furthermore, the size criteria laid down in Article 27 may be exceeded (Article 6(5)). 
Comments 
All the Member States have made use of this option. With the exception of Denmark, 
Ireland, the Netherlands, Portugal and the United Kingdom, all the Member States are 
permitting the size criteria to be exceeded temporarily under Article 6(5). In the 
Netherlands only those groups of undertakings are exempt from the consolidation 
requirement that do not exceed two of the three size criteria referred to in Article 11 of 
Directive 78/660/EEC (small enterprises). 
None of the Member States is experiencing problems in connection with the 
abovementioned Article. 
Article 7(1) 
Subject to certain conditions, this paragraph exempts parent undertakings which are also 
subsidiary undertakings (intermediate groups) from the consolidation requirement where 
the parent undertaking: 
holds all of the shares in the exempted undertaking, or 
holds 90% or more of the shares in the exempted undertaking and the remaining 
shareholders have approved the exemption. 
In so far as the laws of a Member State prescribe consolidation in this case at the time of 
the adoption of the Directive, that Member State need not apply this provision for ten years 
as from 1990. 
Comments 
None of the Member States has experienced problems in transposing the abovementioned 
exemption provision. No Member State has used the option of deferring the exemption for 
ten years. 
ArtkkH 
This Article permits Member States to impose a consolidation requirement on an 
undertaking where 
(a) that undertaking and one or more other undertakings with which it is not connected 
are managed on a unified basis pursuant to a contract concluded with that 
undertaking or provisions in the memorandum or articles of association of those 
undertakings, 
or 
x 
(b) the administrative, management or supervisory bodies of that undertaking and of 
one or more other undertakings with which it is not connected consist for the major 
part of the same persons. 
The circumstances referred to here are those of a horizontal group. 
Comments 
Only Belgium, Greece and the Netherlands have made use of this option. In Italy a 
consolidation requirement is imposed in such a case where banks are involved. 
Consolidation is required in France in such cases in the insurance sphere. In the view of 
the Belgian delegation, problems may arise where, in addition to horizontal consolidation, 
vertical consolidation comes into consideration. 
None of the Member States has so far experienced problems in connection with the 
abovementioned Article. 
Article 43 
This Article gives Member States the option of not applying to subsidiary undertakings 
governed by its laws the provisions of Directive 78/660/EEC (balance-sheet Directive) 
concerning the content, auditing and publication of annual accounts where the parent 
undertaking is subject to the law of a Member State and various conditions set out in the 
Article are met. In particular, the subsidiary undertaking must be included in the 
consolidated accounts and the parent undertaking must have declared that it guarantees the 
commitments entered into by the subsidiary undertaking. 
Comments 
Only Ireland, Luxembourg and the Netherlands have made use of this option. None of the 
Member States is experiencing problems in connection with the abovementioned Article. 
Article 44 
This Article gives Member States the option of not applying to parent undertakings 
governed by their laws the provisions of Directive 78/660/EEC concerning the auditing and 
publication of the profit-and-loss account where certain conditions set out in the Article are 
met. In particular, the parent undertaking's individual accounts must have been included in 
the consolidated accounts to be drawn up by it. 
Comment? 
Use may be made of this exemption in Ireland, Luxembourg, the Netherlands and the 
United Kingdom. 
None of the Member States is experiencing problems in connection with the 
abovementioned Article. 
m. Conclusions 
The negotiations leading to the adoption of Directive 83/349/EEC could not have been 
successful if the Council had not undertaken to review the Member State options referred 
to in Article 50 after five years and to amend them if necessary. It was feared that those 
options might materially undermine some of the Directive's objectives, notably regarding 
the equivalence and comparability of consolidated accounts, and so give rise to practical 
problems. 
In the Commission's view, those fears have not been realized. 
The Commission has examined the application or non-application of the options in 
individual countries in close cooperation with the Member States. It has concluded that 
these options have not given rise to problems in any Member State. In particular, there are 
no indications that they are impairing the equivalence and comparability of consolidated 
accounts. 
The Commission therefore proposes that the Council should not amend the provisions in 
question on the basis of Article 50 of Directive 83/349/EEC. 
} 

ISSN 0254-1475 
COM(96) 94 final 
DOCUMENTS 
EN 09 
Catalogue number : CB-CO-96-098-EN-C 
ISBN 92-78-01291-2 
Office for Official Publications of the European Communities 
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