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Vol.1978/0265

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COMMISSION OFTHEEUROPEAN COMMUNITIES
AMENDED PROPOSAL FOR ASEVENTH DIRECTIVE
PURSUANT TOARTICLE 54(3 )(g)
OFTHE EEC TREATY CONCERNING GROUP ACCOUNTS
(Presented "bytheCommission totheCouncil
pursuant tothe second paragraph ofarticle
149oftheEECTreaty )COM(78 )703final
Brussels .12December 1978
001(78 )703finalmv>?r5

-1-
EXPLANATORY MEMORANDUM
I.INTRODUCTION
ThisamendedproposalforaseventhDirective,basedonArticle54(3)(g)of
theEECTreatyandconcerninggroupaccountshastwomainobjectives.Inthe
firstplace,accounthasbeentakenoftheOpinionsoftheEuropeanParliament
of'|6jUne1978(1)andoftheEconomicandSocialCommitteeof24February
'1977(2).inaddition,theadoptionbytheCouncilon25July1978ofthe
fourthDirective,basedonthesamearticleoftheTreatyandconcerningthe
annualaccountsofcertainkindsofcompany(3),hasmadenecessaryaseries
ofamendmentstotheproposalforaseventhdirectivewhicharelistedinthe
annextothismemorandum.Thememorandumitselfislimitedtoanexplanation
oftheamendmentswhichhavebeenmadeinthelightofthetwoOpinionscited
above.
II.COMMENTS ONTHEARTICLES
Artide5(d),Artide17a,Artide20(4a),Artide20(b))
Parliamentrequested,intheformofanamendmenttoArticle9,thatinform­
ationshouldbegivenconcerningholdingsinenterprises presumedtobe
dependentwithinthemeaningofArticle2(2)butnotformingpartofagroup
sincetheyarenotmanagedonaunifiedbasis.TheCommissionconsidersthat,
inexpressingthisview,Parliamentdidnotwishtoproposeanextensionof
thescopeoftheobligationtoconsolidate initself,whichexplainswhy
Parliamentexpresseditsfullagreementwiththedefinitions containedin
Articles 1to4.InordertosatisfythewishesofParliament,theCommission,
initsamendedproposal,hasenvisagedthefollowingprovisions :
1.Inclusionofundertakings betweenwhichthereexistsarelationship ofthe
kindspecifiedinArticle2(2)inthecategoryofaffiliatedundertakings
(Article5(d);
(1)OJNo.163,10.7.78,p.60.
(2)OJNo.75,26.3.77,p.5.
(3)OJNo.L222,14.8.78,p.11.

-2-
2.Application oftheequitymethodtoholdingsinthecapitalofassociated
undertakings withinthemeaningofArticle 'Iwhicharepresumedtobe
dependentwithinthemeaningofArticle2(2).Thisruleshallapplyin
thecaseofholdingsofanundertaking formingpartofagroup(Article17),
andinthecaseofanundertaking notpartofagroun(Article17a).
3.Inthecaseofholdingsinthecapitalofundertakings whicharenot
associated,butwhicharepresumedtobedependent,indicationinthenotes
ofthedifferences betweenthevalueswhichfigureinthebalancesheetand
thevaluesaccordingtotheequitymethod(Article20(4a)andArticle20b).
Article6a
Accordingtotheoriginalproposal(Article6(2)(a)),eachdependentgroup
undertaking havingitsregisteredofficewithintheCommunityandthrough
whichothergroupundertakings aredominatedisobligedtodrawupsub-group
consolidated accounts.Parliamentconsidersthatanobligationofthiskind
imposedgenerallyonsub-groups wouldentailtheimpositionofexcessivecosts
andinthepresentcircumstances ,wouldbeoflimitedinterest.Sub-group
accountsshouldnotthereforebedrawnupwhenthedominantundertaking
publishesaccountsforthegroupasawholeinconformitywiththeseventh
Directive.Thepresentamendedproposalsuggestsanintermediate solution.
WhileretainingParliament'sconceptionofthesubsidiarycharacterofsub­
groupaccountsinrelationtotheaccountsofthegroupasawhole,the
Commissionconsiders,inagreementwiththeopinionoftheEECAccountants'
StudyGroup,thatotherconditionsmustbefulfillediftheomissionofsub­
groupaccountsistobejustified.Inparticular,referenceshouldbemade
totheagreementofshareholders ormembersofthedependentundertaking
concerned/toadeclarationthatthedominantundertakings guaranteesthe
commitmentsenteredintobythedependentundertaking ,andtocertain
disclosureprovisionsinthiscontext.

-3-
Article6b
Theinitialproposal(Article6(2)(b))dealtwiththecaseofseveral
dependentundertakings withintheEECwhichfindthemselvesatthesamelevel
inrelationtoadominantundertakingoutsidetheEEC.Inthissituation,
sub-groupaccountswouldalsohavetobedrawnuprelatingtoallthese
dependentundertakings aswellasallothergroupundertakings dominated
throughthem.Parliament,andalsotheEconomicandSocialCommittee
considersuchanobligationtooonerous.Consolidated accountsdrawnupfor
thegroupasawholeshouldsufficeonconditionthatcertainsupplementary
informationisgivenontheactivitiesofthegroupwithintheCommunity.
TheCommissionisoftheopinionthatintheseparticularcasesalso,the
omissionofsub-groupaccountsofthiskindcouldonlybejustifiedunderthe
sameconditionsasthoseproposedforArticle6a.Inaddition,theCommission
isinfavouroftheideaputforwardbyParliamentofrequiringinformation
whichdistinguishes forcertainactivitiesbetweenthoseinsideandthose
outsidetheCommunity.However,thisbreakdownshouldbemadeinthe
accountsofallgroupsandsub-groupswherevertheundertaking whichis
obligedtodrawuptheaccountshasitsregisteredoffice.Thebreakdown
seemstobeappropriate asregardsemployees (Article20(8)),categoriesof
activityandgeographical markets(Article20(7)),aswellasresearchand
development (Article22(2)(d)).
Article8
TheoriginalproposalprovidedthattheMemberStatesshouldapplythe
Directivetobanksandinsurancecompanies"insofaraspossible".
Parliament andtheEconomicandSocialCommitteeconsiderthistexttoo
imprecise.Parliamenthasproposedanenumeration ofthearticlesthatthe
MemberStatesneednotapplytotheenterprises inquestion.Inthis
amendedproposal,theCommissionadoptsParliament'sviewbylimitingthe
exemptionswhicharepossibleuntilsubsequentco-ordination totherules
relatingtostructure(Article11)andvaluation (Articles15and16)for
theconsolidated accountsandbymakingitclearthattheseexemptions
applyonlytoagroupundertaking,whether .dominantordependent,which
carriesouttheactivityinoneofthesectorsspecified.

Article10(3)
TheamendedproposalhasfollowedParliament'sOpinioninspecifyingthatthe
auditofgroupaccountsrequiredbyArticle23shallapplytotheissueofthe
non-consolidation ofagroupundertaking byreasonofitminorimportancefor
thepurposesofgivingatrueandfairviewofthegroup'ssituation.
Article14(1)(e)
Theoriginalproposalrequiredaseparateauditoftheinterimaccounts
ofagroupundertaking .Toavoidsupplementary expenses.Parliament
expresseditselfinfavourofanauditfortheseaccountsatthesametime
astheauditofthegroupaccounts.Theamendedproposaladoptsthis
solution.
Article15(d)
Inaccordance,asfarassubstanceisconcerned,withParliamentandtaking
itsinspiration fromaprovisioninthefourthDirective (seeparagraph 4of
theannex),theconceptofdeferredtaxationhasbeenre-defined .
Article16
TheamendedproposalhasadoptedintheirentiretytheOpinionsofParliament
andtheEconomicandSocialCommitteeregardingthewriting-off ofconsolid­
ationdifferences whichcannotbeattributedtoanitemintheconsolidated
balancesheetinapplyingtheprovisionsofthefourthdirectiveonwriting-
offgood-will (seeparagraph 5ofannex).

-5-
ANNEX
AmendmentstotheproposalforaseventhDirective
consequent uponadoptionofthefourthDirective
CI)Supplementary information anddepartures fromgenerallyapplicable
provisionsinordertogiveatrueandfairviewofthegroup'ssituation
Article9(4)to(6)-amendedproposalforaseventhDirective
Article2(4)to(6)-fourthDirective
(2)Drawingupofagroupconsolidated balancesheetinanabridgedform
Article11(2)-amendedproposalforaseventhDirective
Article11 -fourthDirective
(3)Drawingupofagroupconsolidated profitandlossaccountinan
abridgedform
Article11(3)-amendedproposalforaseventhDirective
Article27 -fourthDirective
(4)Definition ofdeferredtaxation
Article15(d)-amendedproposalforaseventhDirective
Article43(11)-fourthDirective
(5)Consolidation differences non-attributable toitemsintheconsolidated
groupbalancesheet
Article16 -amendedproposalforaseventhDirective
Article37(2)-fourthDirective
(6)Information inthenotestotheaccountsconcerningparticipating
interestsofgroupundertakings
Article20(5)-amendedproposalforaseventhDirective
Article43j(2)-fourthDirective

-6-
(7)Information inthenotestotheaccountsconcerningfinancialcommitments
outsidethegroupthatarenotshowninthegroupconsolidated balance
sheet
Article20(6)-amendedproposalforaseventhDirective
Article43I(7)-fourthDirective
(8)Breakdowninthenotestotheaccountsofthenetamountofthegroup's
turnoverbycategoryofproductandbygeographical market
Article20(7)-amendedproposalforaseventhDirective
Article43I(8)-fourthDirective
(9)Information inthenotestotheaccountsconcerningpersonsemployedby
groupundertakings
Article20(8)-amendedproposalforaseventhDirective
Article43I(9)-fourthDirective
(10)Information inthenotestotheaccountsontheextenttowhichthe
calculation ofthegroup'sprofitorlossforthefinancialyearhas
beenaffectedbyvaluationofitemsmadetoobtaintaxrelief
Article20(9)-amendedproposalforaseventhDirective
Article43I(10)-fourthDirective
(11)Drawingupofnotestotheaccountsinabridgedform
Article20a-amendedproposalforaseventhDirective
Article44 -fourthDirective
(12)Omissionofcertaininformationlikelytobeprejudicialtooneofthe
undertakings concerned
Article21(1)(b)-amendedproposalforaseventhDirective
Article45(1)(b)-fourthDirective

-7-
(13)Omissionofabreakdownofthenetamountofagroup'sturnoverby
categoryofproductandbygeographical market
Article21(2)-amendedproposalforaseventhDirective
Article45(2)-fourthDirective
(14)Contentofgroupannualreport
Article22 -amendedproposalforaseventhDirective
Article46 -fourthDirective
(15)Exemptionfromobligatoryauditofgroupconsolidated accounts
Article23(2)(a)-amendedproposalforaseventhDirective
Article51(2)-fourthDirective
(16)Publication proceduresforgroupconsolidated accountsandannualreport
Article24(1)-amendedproposalforaseventhDirective
Article47(1)-fourthDirective
(17)Publication ofgroupconsolidated accountsandannualreportinabridged
form
Article24(2),(3)-amendedproposalforaseventhDirective
Article47(2),(3)-fourthDirective
(18)Repealoftransitional provisionsoffourthDirective
Article26a -amendedproposalforaseventhDirective
Article57,58861-fourthDirective

-8-
(19)Enlargement offunctionsofContactCommitteetoincludeproblemsarising
fromtheseventhDirective
Article26b -amendedproposalforaseventhDirective
Article52 -fourthDirective
(20)Bringingintoforceofnationalprovisions
Article26
Article55-amendedproposalforaseventhDirective
-fourthDirective

-9-
ORIGINAL PROPOSAL AMENDED PROPOSAL
PROPOSAL FOR ASEVENTH COUNCIL PROPOSAL FOR ASEVENTH COUNCIL
DIRECTIVE DIRECTIVE
pursuant toArticle 54(3)(g )ofthe Unchanged
EECTreaty concerning group accounts
(submitted tothe Council bythe
Commission on4May 1976 )
THE COUNCIL OFTHE EUROPEAN
COMMUNITIES
Having regard totheTreaty
establishing the European Economic
Community ,and inparticular
Article 54(3)(g )thereof ;
Having regard totheProposal from
the Commission ;
Having regard totheOpinion ofthe
European Parliament ;
Having regard totheOpinion ofthe
Economic andSocial Committee ;

-10-
WhereasDirective No...ofthe
...(1)forcoordination ofnational
Legislation regardingtheannual
accountsoflimitedliability
companiesappliestotheaccounts
ofindividualcompanies;
whereasatpresentagrowingnumber
ofcompaniesarenolongermanaged
independently butbelongtogroups
inwhichmanagementoftheunder­
takingsbelongingtothegroupis
coordinated intheinterestsofthe
wholegroup;whereastheannual
accountsofcompaniesbelongingto
agroupcannotbythemselvesgive
atrueandfairviewoftheir
position;whereasgroupaccounts
shouldthereforebedrawnupin
ordertogiveatrueandfairview
oftheeconomicunitconstituted
bythegroupandwherebythe
positionofacompanybelonging
tothegroupcanbedetermined
moreeasily;whereascoordination
ofnationallawsongroupaccounts
isthereforeessentialinorderto
completethescopeoftheDirective
referredtoaboveandtoattainthe
objectivethatinformation required
tobepublishedbycompanieswithin
theCommunitytoprotectthe
interestsoftheirmembers,their
employeesandthirdpartiesbe
drawnuponequivalentlinesand
maybedulycompared;WhereastheCouncilon25July1978
adoptedDirective78/660/FEC(1)for
coordination ofnationallegislation
regardingtheannualaccountsoflimited
liabilitycompanieswhichappliestothe
accountsofindividual companies;
Unchanged
(1)Amendedproposalforafourth
Directiveonannualaccounts,
Supplement 6/74-Bull.EC.(1)0JNo.L222,14.8.78,p.*11.

-11-
Whereasgroupsofcompaniesarein
facteconomicunitsinwhichallthe
membercompaniesandundertakings
aremanagedonacentralandunified
basisintheinterestofthewhole
group;whereasthiscentraland
unifiedmanagementwithinagroupis
normallyexercisedasaresultof
therelationships ofdependence
linkinggroupundertakings ;
whereas,however,agroupsometimes
consistsofundertakings whichexist
onanequalfootingwithoneanother;
whereasadefinitionofgroupsmust
begivenwhichtakesaccountof
theseeconomiccharacteristics ;Whereasgroupsofcompaniesarein
facteconomicunitsinwhichallthe
membercompaniesandundertakings
aremanagedonaunifiedbasis
intheinterestofthewholegroup;
whereasthisunifiedmanagement
withinagroupisnormallyexercised
asaresultoftherelationships
ofdependencelinkinggroupunder­
takings;(Englishtextonly)
unchanged
Whereasthepurposeofcoordinating
lawsongroupaccountsisto
protectalltheinterestssubsisting
inlimitedliabilitycompanies;
whereasinordertoprovidesuch
protection,itmustbecomecompuls­
ory.todrawupgroupaccounts
bothinrespectofcompaniesheading
agroupandthosewhichareina
positionofdependencywithinagroup;
whereasinorderthattheinforma­
tiongiveniscomplete,itisalso
necessarythat,whenagroupis
organizedwithseverallevels,
specialconsolidated accountsbe
drawnupforthedifferentparts
ofthegroup(sub-groupaccounts);whereasinorderthattheinforma­
tiongiveniscomplete,itisalso
necessarythat,whenagroupis
organizedwithseverallevels,
specialconsolidated accountsbe
drawnupforthedifferentparts
ofthegroup(sub-groupaccounts)
unlessthedominant undertaking
hasdrawnupaconsolidated account
forthewholegroupinaccordance
withthisDirectiveandtheshare­
holdersormembers,aswellasany
creditorshavebeenadequatelyprotected;

-12-
WhereasgroupaccountsshouldgiveUnchanged
atrueandfairviewoftheassets.
Liabilities,financialpositionand
resultsofthegroup;whereasthe
annualaccountsofalltheunder­
takingsbelongingtoagroupshould
inprinciplethereforeberequired
tobeconsolidated ;whereaswhen
theaccountsareconsolidated,the
relevantitemsintheannual
accountsofgroupundertakings
shouldbeincorporated infullin
thegroupaccounts,withinterests
heldbypersonsoutsidethegroup
beingshownseparately;whereas,
however,thenecessarycorrections
shouldbemadeinordertoelimin­
ateanytransactions orfinancial
relationships betweengroupunder­
takings;
Whereasanumberofgeneral
principlesrelatingtothedrawing
upofgroupaccountsandthevalua­
tionofitemsinthoseaccountsmust
belaiddowninordertoensurethat
itemsarepresentedcoherently and
canbereadilycomparedbothas
regardsthemethodsusedtovalue
themandtheperiodscoveredbythe
accounts;

-13-
WhereasholdingsinthecapitalofUnchanged
undertakings overwhichgroupunder­
takingsexertasignificant influence
withouthowevercontrolling such
undertakings shouldalsobevalued
realistically inthegroupaccounts
bytakingaccountoftheresults
obtainedbytherelevantunder­
takings;
Whereasitisofvitalimportancefor
allthosehavinganinterestina
company "belongingtoagroupthat
information onthestructureof
groupsshouldbepublished;whereas
itisthereforeessentialthatthe
notestothegroupaccountsshould
containpreciseinformation onthe
undertakings belongingtothegroup
andthenatureofthelegalrelation­
shipconnectingthemtothegroup.
HASADOPTEDTHISDIRECTIVE :

-14-
Section 1 Section 1
DEFINITIONS DEFINITIONS
Article 1 Article 1
1.ForthepurposesofthisDirective,
anassociatedundertaking meansan
undertaking overwhichanotherun­
dertakingexercises,directlyor
indirectly,asignificantinfluence.Unchanged
2.Anundertakingispresumedtobe
associatedwithanotherundertaking
wherethelatterundertaking holds,
directlyorindirectly,20%or
moreofthecapitaloftheformer
undertaking orofthevotesattach­
ingtosharesissuedbythatunder­
taking.
3.Forpurposesofapplication ofpa­
ragraphs 1and2,holdingsofa
dependentundertaking withinthe
meaningofArticle2oftheDi­
rective,andholdingsofaperson
actingonbehalfoftheundertaking
orofanundertaking dependenton
itshallberegardedasforming
partoftheholdingofoneunder­
takinginthecapitalofanother.

Article2-15-
Article2
1.ForthepurposesofthisDirective,Unchanged
adependentundertaking meansan
undertaking overwhichanotherun­
dertaking,referredtoasthedomi­
nantundertaking,isable,directly
orindirectly,toexerciseadomi­
nantinfluence.
2.Anundertakingispresumedtobe
dependentonanotherundertaking
wherethelatterundertaking,di­
rectlyorindirectly :
(a)holdsthemajorpartofthe
undertaking'ssubscribedcapital;or
(b)controlsthemajorityofthe
votesattachingtosharesissuedby
theundertaking;or
(c)canappointmorethanhalfof
themembersoftheundertaking's
administrative ,managerialor
supervisory body.
3.Holdingsofanundertaking dependent
onthedominantundertaking and
holdingsofanotherpersonactingon
behalfofthedominantundertaking
orofanundertaking dependenton
itshallberegardedasformingpart
oftheholdingofthedominant
undertaking .

-16-
Article3
1.ForthepurposesofthisDirective,
adominantundertaking andoneor
moreundertakings dependentonit
shallconstitute agroupifthe
dominantundertakingexercisesin
practiceitsdominantinfluenceto
theeffectthatallsuchunder­
takingsaremanagedonacentral
andunifiedbasisbythedominant
undertaking .Eachsuchundertaking
isagroupundertaking .Article3
1.ForthepurposesofthisDirective,
adominantundertaking andoneor
moreundertakings dependentonit
shallconstitute agroupifthe
dominantundertaking exercisesin
practiceitsdominantinfluenceto
theeffectthatallsuchunder­
takingsaremanagedonaunified
basisbythedominantundertaking .
Eachsuchundertakingisagroup
undertaking .(Englishtextonly)
2.Whereanundertakingisdependenton2.Unchanged
anotherundertaking asdefinedin
Article2ofthisDirective,the
dominantundertaking andthede­
pendentundertaking arepresumedto
constitute agroup.

-17-
Article4
1.Undertakings betweenwhichno
relationship ofdependencyas
definedinArticle2existsshall
alsoberegardedasconstituting a
groupforthepurposesofthisDi­
rectiveifallsuchundertakings
aremanagedonacentraland
unifiedbasis.Eachsuchunder­
takingisagroupundertaking .
2.Whereinagroupasdefinedin
paragraph 1,oneormoregroup
undertakings exerciseinpractice
adominantinfluenceononeormore
otherundertakings totheeffect
thatallsuchundertakings are
managedonacentralandunified
basis,thosedependentundertakings
shallalsoformpartofthegroup
andeachofthemisagroupunder­
taking.Article4
1.Undertakings betweenwhichno
relationship ofdependencyas
definedinArticle2existsshall
alsoberegardedasconstituting a
groupforthepurposesofthisDi­
rectiveifallsuchundertakings
aremanagedonaunifiedbasis.
Eachsuchundertakingisagroup
undertaking .(Englishtextonly)
2.Whereinagroupasdefinedin
paragraph 1,oneormoregroup
undertakings exerciseinpractice
adominantinfluence ononeormore
otherundertakings totheeffect
thatallsuchundertakings are
managedonaunifiedbasis,those
dependentundertakinsshallalso
formpartofthegroupandeachof
themisagroupundertaking .
(Englishtextonly)

-18-
Article5
ForthepurposesofDirective Mo...
(1)of...andofthisDirective,
thefollowingareaffiliatedunder­
takings:Article5
ForthepurposesofDirective
78/660/EECandofthisDirective,
thefollowingareaffiliatedunder­
takings:
(a)undertakings betweenwhicha(a)unchanged
relationship existsasdefinedby
Article 1oftinsDirective;
(b)dominantanddependentunder-(b)unchanged
takingswithinthemeaningof
Article2ofthisDirective;
(c)undertakings formingpartofa(c)unchanged
groupwithinthemeaningof
Articles3and4ofthisDirective .
(d)undertakings betweenwhicha
relationship existsasdefinedby
Article2(2)ofthisDirective.
(1)Amendedproposedforafourth
Directiveonannualaccounts,
Supplement 6/74-Bull.EC.

-19-
Section2 Section2
SCOPE SCOPE
Article6 Article6
1.(a)Whereadominantundertaking of1.Unchanged
agrouphasitsregisteredoffice
withintheCommunity,itshalldraw
upgroupaccountsandagroupannual
reportifeitherthedominantunder­
takingofthegrouporanydependent
groupundertakingisestablished as
oneofthefollowingtypesof
company:
-inGermany:
dieAktiengesellschaft ,dieKomman­
ditgesellschaft aufAktien,dieGe­
sellschaftmitbeschränkter Haftung;
-inBelgium:
lasociétéanonyme,denaamlozeven-
nootschap,lasociétéencommandite
paractions,decommanditaire ven-
nootschapopaandelen,lasociétéde
personnesàresponsabilité limitée,
depersonenvennootschap metbeperkte
aansprakelijkheid;
-inDenmark:
Aktieselskab,Kommandit-Aktieselskab ,
Anpartsselskab ;
-inFrance:
lasociétéanonyme,lasociétéen
commanditeparactions,lasociétéà
responsabilité limitée;
-inIreland: -inIreland:
companiesincorporated withlimited publiccompanieslimitedbyshares
liability; orbyguarantee,privatecompanies
limitedbysharesorbyguarantee

-20-
Article6(continued ) Article6(continued )
-inItaly: Unchanged
lasocietàperazioni,lasocietàin
accomandita perazioni,lasocietàa
responsabilità limitata;
inLuxembourg :
lasociétéanonyme,lasociétéen
commanditeparactions,lasociétéà
responsabilité limitée;
-inTheNetherlands :
denaamlozevennootschap,debesloten
vennootschap metbeperkteaansprake­
lijkheid;
-intheUnitedKingdom: .-intheUnitedKingdom:
companiesincorporated withlimitedpubliccompanieslimitedbyshares
liability. orbyguarantee,privatecompanies
limitedbysharesorbyguarantee.
(b)Withoutprejudicetothe
provisionsofArticle10,the
•»
annualaccountsofallundertakings
formingpartofthegroup,without
regardtowheretheirregistered
officesaresituated,shallbe
consolidated .Thegroupaccounts
shallbedrawnupasofthesame
dateastheannualaccountsofthe
dominantgroupundertaking .2.Withoutprejudicetothe
provisionsofArticle10,the
annualaccountsofallundertakings
formingpartofthegroup,without
regardtowheretheirregistered
officesaresituated,shallbe
consolidated .Thegroupaccounts
shallbedrawnupasofthesame
dateastheannualaccountsofthe
dominantgroupundertaking .

Article6(continued ) Article6a
.(a)Eachdependentgroupunder­
takinghavingitsregisteredoffice
withintheCommunityandthrough
whichothergroupundertakings are
dominatedshalldrawupconsolidat­
edsub-groupaccountsandasub­
groupannualreportwhereoneof
thoseundertakings isestablished
asoneofthetypesofcompany
referredtoinparagraph1(a).
However,thisrequirement doesnot
applytoadependentgroupundei–
takingwhichhasnotbeenestablish­
edasoneofthosetypesofcompany
providedthatthedominantgroup
undertaking publishesgroupaccounts
inconformitywiththeprovisions
ofthisDirective.
Theannualaccountsofallunder­
takingsformingpartofthesub­
groupwithoutregardtowheretheir
registeredofficesaresituated,
shallbeconsolidated .The
consolidated sub-groupaccounts
shallbedrawnupasofthesame
dateastheannualaccountsofthe
dependentgroupundertaking which
hastodrawuptheconsolidated
sub-groupaccounts.1.Eachdependentgroupunder­
takinghavingitsregisteredoffice
withintheCommunityandthrough
whichothergroupundertakings are
dominatedshalldrawupsub-group
consolidated accountsandasub­
groupannualreportwhereoneof
thoseundertakings isestablished
asoneofthetypesofcompany
referredtoinArticle6(1).
Article6(2)shallapplymutatis
mutandis.
2.However,theMemberStatesmay
exemptundertakings referredtoin
paragraph 1whicharegovernedby
theirnationallawsfromthe
obligationtoestablishsub-group
consolidated accountsandasub­
groupannualreport,wherethe
followingconditionsarefulfilled :
(a)theannualaccountsofall
undertakings formingpartofthe
sub-groupshallbeconsolidated in
thegroupaccounts;
(b)thegroupconsolidated accounts
andannualreportshallbedrawnup
auditedandpublishedinaccordance
withthisDirective;

-22-
Article6a(continued )
(c)allshareholders ormembersof
thedependententerprise have
declaredtheiragreementtothe
exemptionfromsuchobligation;
thisdeclaration shallbemadein
respectofeveryfinancialyear;
(d)thedominantenterprisehas
declaredthatitguaranteesthe
commitments enteredintobythe
dependententerprise;
(e)theexemptionconcerningthe
drawingupofthesub-groupconsolid­
atedaccountsandsub-groupannual
reportshallbedisclosedinthenotes
tothegroupconsolidated accounts.
(f)thedeclarations referredto
in(c)and(d)shallbepublishedby
thedependentundertaking inaccord­
ancewithArticle3ofDirective
68/151/EEC(1)providedthatthis
enterpriseisestablished asoneof
thetypesofcompanyreferredtoin
Article6('l).
(1)OJNo.L65,14.3.1968,p.8

Article6(continued ) Article6b
(b)Consolidated sub-groupaccounts
andasub-groupannualreportshall
alsobedrawnupwheretheregister­
edofficeofthedominantgroup
undertakingissituatedoutsidethe
Communityandoneormoredependent
groupundertakings havingtheir
registeredofficewithinthe
Communityareplacedatthesame
leveltowardsthedominantgroup
undertaking andwhereoneofthose
dependentgroupundertakings orone
ofthegroupundertakings dominated
throughthemisestablished asone
ofthetypesofcompaniesreferred
toinparagraph1(a).This
requirementappliestoeach
dependentgroupundertaking which
isplacedatthesamelevelwithin
thegroupandnearesttothe
dominantgroupundertaking .
However,wherenoneoftheseunder­
takingsisestablished asoneof
thetypesofcompaniesreferredto
inparagraph1(a),onlyoneofthem
needstodrawuptheconsolidated
sub-groupaccountsandthesub­
groupannualreport.1.Sub-groupconsolidated accounts
andasub-groupannualreportshall
alsobedrawnupwheretheregister­
edofficeofthedominantgroup
undertakingissituatedoutsidethe
Communityandoneormoredependent
groupundertakings havingtheir
registeredofficewithinthe
Communityareplacedatthesame
leveltowardsthedominantgroup
undertaking andwhereoneofthose
dependentgroupundertakings orone
ofthegroupundertakings dominated
throughthemisestablished asone
ofthetypesofcompaniesreferred
toinArticle6(1).This
requirementappliestoeach
dependentgroupundertaking which
isplacedatthesamelevelwithin
thegroupandnearesttothe
dominantgroupundertaking .
However,wherenoneoftheseunder­
takingsisestablished asoneof
thetypesofcompaniesreferredto
inArticle6(1),onlyoneofthem
needstodrawupthesub-groupcon­
solidatedaccountsandthesub­
groupannualreport.

-24-
Article6(continued )
Intheconsolidated sub-group
accountsreferredtointhe
precedingsubparagraph shallbe
consolidated theannualaccounts
ofallthedependentgroupunder­
takingsreferredtointhesecond
sentenceoftheprecedingsub­
paragraphaswellasofallother
groupundertakings dominated
throughthemwithoutregardto
wheretheirregisteredoffices
aresituated.Thesecondsentence
ofparagraph2(a)applies.Article6b(continued )
?..Theannualaccountsofallthe
dependentgroupundertakings
referredtointhesecondsentence
ofparagraph 1,aswellasofall
othergroupundertakings dominated
throughthemirrespective of
wheretheirregisteredofficesare
situated,shallbeconsolidated in
thesub-groupaccountsreferredto
inparagraph 1.Thelastsentence
ofArticle6(2),togetherwith
Article6a(2)shallapplymutatis
mutandis.

Article6(continued ) Article6c
(c)TheprovisionsofArticles9
to25alsoapplytotheconsolidated
sub-groupaccountsandthesub­
groupannualreportreferredto
in(a)and(b)ofthisparagraph.TheprovisionsofArticles9
to25alsoapplytothesub-group
solidatedaccountsandthesub­
groupannualreportreferredto
inArticles6aand6b.

-26-
Article7
1.Eachgroupundertaking withinthe
meaningofArticle4(1)whosere­
gisteredofficeissituatedwithin
theCommunityshalldrawupgroup
accountsandagroupannualreport,
whereeitherthatundertakingit­
selforadependentgroupunder­
takingwithinthemeaningof
Article4(2)isestablished asone
ofthetypesofcompaniesreferred
toinArticle6(1)(a).Inthe
lattercase,onlyoneofthegroup
undertakings withinthemeaningof
Article4(1)needstodrawupthe
groupaccountsandthegroupannual
report.
2.TheprovisionsofArticle6(1)(b)
and(2)ofArticles9to25shall
alsoapplyinrespectofthegroup
accounts „andgroupannualreport
referredtointhisArticle.Article7
1.Eachgroupundertaking withinthe
meaningofArticle4(1)whosere­
gisteredofficeissituatedwithin
theCommunityshalldrawupgroup
accountsandagroupannualreport,
whereeitherthatundertakingit­
selforadependentgroupunder­
takingwithinthemeaningof
Article4(2)isestablished asone
ofthetypesofcompanyreferred
toinArticle6(1).Inthe
lattercase,onlyoneofthegroup
undertakings withinthemeaningof
Article4(1)needstodrawupthe
groupaccountsandthegroupannual
report.
2.TheprovisionsofArticle6(2),
6a,6bandofArticles9to25
shallalsoapplyinrespectofthe
groupaccountsandgroupannual
reportreferredtointhisArticle.

-27-
Article8
Insofarasispossible,theMember
Statesshallapplytheprovisions
ofthisDirectiveregardingthe
presentation ofgroupaccountsand
consolidation principles wherea
groupundertakingisacredit
institutionoraninsurancecompany.Article8
Pendingsubsequentco-ordination,
MemberStatesshallnotbeboundto
applyArticles11,15and16with
regardtoanundertakingformingpart
ofagroupwherethatundertakingis
abank,otherfinancialinstitution
oraninsuranceundertaking.

-28-
Section3
DRAWINGUPOFGROUPACCOUNTS
Article9
1.Thegroupaccountssnailcomprise
thegroupconsolidated balancesheet,
thegroupconsolidated profitand
lossaccountandthenotestothe
accounts.Thesedocumentsshall
constitute acompositewhole.
2.Thegroupaccountsshallgiveatrue
andfairviewofthegroup'sassets,
liabilities,financialpositionand
results.
3.Theyshallbepresentedclearlyand
inconformitywiththeprovisions
oftheDirective.Section3
DRAWINGUPOFGROUPACCOUNTS
Article9
1.Unchanged
2.Unchanged
3.Unchanged
k.Wheretheapplicationofthis
Directiveisnotsufficienttogive
atrueandfairviewwithinthe
meaningofparagraph 2,additional
informationshallbegiven.

-29-
Article9(continued )
5.Where,inexceptional cases,the
application ofaprovisionof
Section3isincompatible withthe
obligationlaiddowninparagraph
2,aderogationshallbemadefrom
suchprovisioninordertogivea
trueandfairviewwithinthe
meaningofparagraph 2.Anysuch
derogationshallbedisclosedinthe
notestotheaccountstogetherwith
aproperexplanation ofthereasons
thereforandastatementofits
effectontheassets,liabilities,
financialpositionandprofitor
loss.MemberStatesmaydefine
thesaidexceptional casesandlay
downtherelevantspecialrulesof
derogation.
MemberStatesmayauthorizeor
requirethedisclosureinthegroup
accountsofotherinformation in
additiontothatwhichistobe
disclosedinaccordance withthis
Directive.

-30-
Article10
Agroupundertaking maybeomitted
fromaconsolidation ifitisof
onlyminorimportanceforthe
purposesofArticle9(2)ofthis
Directive.Application ofthis
provisionmustbeindicatedinthe
notestotheaccounts.Article10
1.Agroupundertaking maybeomitted
fromaconsolidation ifitisof
onlyminorimportanceforthe
purposesofArticle9(2).The
application ofthisprovisionshall
bementionedinthenotestothe
accounts,togetherwithaproper
explanation ofthereasonstherefor.
Whereseveralgroupundertakings 2.Unchanged
satisfytherequirement ofpara­
graph1,theyshallnevertheless
beconsolidated ifthoseunder­
takingstakenasawholeareofa
certainimportanceforthepurposes
ofArticle9(2)oftheDirective .
3.Theauditofgroupaccountsrequired
byArticle23
shallalsorelatetotheobservance
oftheprovisionsofthepreceding
paragraphs.

-31-
Article11 Article11
Withoutprejudicetotheprovisions 1.WithoutprejudicetoArticle12of
ofArticle12below,Articles3tothisDirective,Articles3to
27ofDirective No...(1)of... 30ofDirective78/660/EEC
shallapplyinrespectofthe
presentation ofgroupaccounts.shallapplyinrespectofthe
presentation ofqroupaccounts.
2.Whenatthedateofthegroup
consolidated balancesheet,the
limitsoftwoofthethreecriteria
referredtoinArticle11ofDirective
78/660/EECarenotexceededatgroup
level,MemberStatesmaypermit
thedominantgroupundertakingto
drawupagroupconsolidated
balancesheetinanabridgedform
inaccordancewiththatArticle.
Article12oftheabove-mentioned
Directiveshallapply.
3.Inaddition,whenatthedateofthe
groupconsolidated balancesheet,
thelimitsoftwoofthethree
criteriareferredtoinArticle27
ofDirective78/660/EECarenot
exceededatgrouplevel,Member
Statesmayauthorizethedominant
groupundertakingtodepart,within
thelimitsofthesaidArticle,from
thelayoutsprescribed byArticles
23to26ofthesaidDirective.
Article12thereofshallapply.
(1)Amendedproposalforafourth
Directiveonannualaccounts,
Supplement 6/74-Bull.EC.

-32-
Article12 Article12
1.(a)ThebookvaluesofholdingsinUnchanged
thecapitalofundertakings whose
accountsareconsolidated shallbe
compensated withthecorresponding
percentageofthecapitalofthe
undertakings inquestionincluding
reserves,resultsandresults
broughtforward.Thiscompensation
shallbecarriedoutonthebasis
ofthevaluesexistingatthe
momentoftheacquisition ofthese
holdings.Differencesarisingfrom
compensation shallbeentered
directlyagainsttherelevantitems
inthegroupconsolidated balance
sheet.Anybalancenotso
attributable shallbeshownasa
separateitemwithanappropriate
heading.Amountsenteredunderthis
itemshallbeexplainedinthenotes
totheaccounts.
(b)Bywayofderogation frompara­
graph1(a),holdingsinthecapital
ofthegroup'sdominantundertaking
heldbydependentgroupundertakings
whoseaccountsareconsolidated
shallnotbeconsolidated .Such
holdingsshallbeshowninthegroup
accountsasthegroup'sownshares.

-33-
Artide12(continued) Artide12(continued)
2.Withoutprejudicetotheprovisions Unchanged
ofArticles14,15,17and18,the
assetandLiabilityitemsinthe
balancesheetsofgrouDundertakings
whoseaccountsareconsolidated
shallbeincorporated infullinthe
groupconsolidated balancesheet.
Sharesheldbypersonsoutsidethe
groupinthecapital,reserves,
resultsorresultsbroughtforward
ofsuchdependentgrouDundertakings
shallbeshownasaseparateitem
withanappropriate heading.

Article13 Article13
Withoutprejudicetotheprovisions Unchanged
ofArticles14,15,17and18,
incomeandexpenditure showninthe
profitandlossaccountsofgroup
undertakings whoseaccountsare
consolidated shallbeincorporated
infullinthegroupconsolidated
profitandlossaccount.Shares
heldbypersonsoutsidethegroup
intheresultsofdependentgroup
undertakings shallbeshownasa
separateitemwithanappropriate
headinginthegroupconsolidated
profitandlossaccount.

Article14 Article14
.Groupaccountsshallbedrawnupin
accordancewiththefollowing
generalprinciples :
(a)themethodsofconsolidation
maynotbechangedfromoneyearto
thenext;
(b)debtsandclaimsbetweengroup
undertakings whoseaccountsare
consolidated shallbeeliminated;
(c)incomeandexpenditurerelating
totransactions betweengroupunder­
takingswhoseaccountsareconsoli­
datedshallbeeliminated;
(d)profitsrelatingtotransactions
betweengroupundertakings whose
accountsareconsolidated shallbe
eliminated;
(e)annualaccountswhichareinclud­
edintheconsolidation shall,in
sofarasispossible,bedrawnup
asofthesamedateasthegroup
accounts.Wherethefinancialyear
ofagroupundertaking doesnot
coincidewiththatadoptedforthe
groupaccounts,theaccountsofthat
undertaking maybeconsolidated only
onthebasisofauditedinterim
accountsdrawnupasatyear-end
■forthegroup.I.Unchanged
(a)unchanged
(b)unchanged
(c)unchanged
(d)unchanged
(e)annualaccountswhichareinclud­
edintheconsolidation shall,in
sofarasispossible,bedrawnup
asofthesamedateasthegroup
accounts.Wherethefinancialyear
ofagroupundertaking doesnot
coincidewiththatadoptedforthe
groupaccounts,theaccountsofthat
undertaking maybeconsolidated only
onthebasisofinterimaccounts
drawnupasatyear-endforthe
group.Theseinterimaccountsshall
alsobeincludedintheauditof
thegroupaccountsrequiredbyArticle

-36-
Artide14(continued ) Artide14(continued )
(a)Departuresfromthegeneral 2.(a)unchanged
principlesetoutin1(a)shallbe
permittedinexceptional cases.
Wheretheprincipleisdepartedfrom,
anindicationthereofshallbegiven
inthenotestotheaccounts,to­
getherwithanexplanation ofthe
reasonstherefore,andanasses-
mentoftheeffectonthegroup'
assets,liabilities,financial
positionandresults.
(b)Departures fromthegeneral (b)unchanged
principlesetoutin1(d)shallbe
permittedwherethetransaction
relatestoafixedassetwhichhas
alimitedusefullifeandhasbeen
concludedaccordingtonormal
marketconditions .Wherethe
principleisdepartedfrom,an
indicationthereofshallbegiven
inthenotestotheaccounts.

37-
Article15 Article15
Valuationofitemsinthegroup
accountsshallbecarriedoutin
accordancewiththefollowing
generalprinciples :
(a)itemsincludedintheconsoli­
dationshallbevaluedinconformity
withArticles28to39ofDirective
No...(1)of...;
(b)thesamevaluationrulesmustbe
appliedindrawingupannualaccounts
tobeincludedintheconsolidation .
Departures fromthisprincioleshall
bepermittedinexceptional cases.
Wheretheprincipleisdepartedfrom
thisshallbeindicated,together
withthereasonstherefore,inthe
notestotheaccounts,and■'terns
valuedinaccordance withdifferent
rulesshallbeconsolidated only
afterhavingbeenvaluedinaccor­
dancewiththevaluationrules
appliedbythedominantgroupunder­
taking;Valuationofitemsinthegroup
accountsshallbecarriedoutin
accordancewiththefollowing
generalprinciples :
(a)itemsincludedintheconsoli­
dationshallbevaluedinconformity
withArticles31to42ofDirective
78/660/EEC.
(b)unchanqed
(c)withoutprejudicetotheprovi-(c)unchanged
sionsofArticle12(1)(a),14(1)(d),
paragraphs (a)and(b)aboveand
Articles17and18,thesamevalues
mustbeascribedtotheitemsin­
corporatedinthegroupconsolidated
balancesheetasinthebalance
sheetsofgroupundertakings ;
(1)Amendedproposalforafourth
directive onannualaccounts.
Supplement 6/74-Bull.EC.

-38-
Article'15(continued )
(d)deferredtaxationarisingin
consolidation shallbetakeninto
account.Suchtaxationshallbe
shownseparatelyeitherinthe
groupconsolidated balancesheet
andprofitandlossaccountorin
thenotestotheaccounts.Article15(continued )
(d)accountshallbetakenofthe
difference betweenthetaxcharged
forthefinancialyearandforearlier
financialyearsandtheamountoftax
payableinrespectofthoseyears,
providedthatthisdifferenceis
materialforthepurposesoffuture
taxation.Thisamountshallbe
disclosedasacumulative amounteither
inthegroupconsolidated balancesheet
underaseparateitemwithanaopro-
priateheading,orinthenotestothe
accounts.

-39-
Article16
Differencesarisinginconsolidation
which,pursuanttoArticle12('l)(a),
havebeenenteredagainsttherele­
vantitemsinthegroupconsolidated
balancesheetshallbedealtwithin
accordance withtheruleslaiddown
inArticles29to39ofDirective
No...(1)of...
Whereconsolidation differences can­
notbeenteredwhollyorinpart
againstthevariousitemsinthe
groupconsolidated balancesheetand
areshownassuchasaseparateitem
ontheassetsside,thevalueof
thatitemshallbewrittenoffover
amaximumperiodoffiveyears.Article16
Differencesarisinginconsolidation
which,pursuanttoArticle12(1)(a),
havebeenenteredagainsttherele­
vantitemsinthegroupconsolidated
balancesheetshallbedealtwithin
accordance withtheruleslaiddown
inArticles31to42ofDirective
78/660/EEC.
Whereconsolidation differences can­
notbeenteredwhollyorinpart
againstthevariousitemsinthe
groupconsolidated balancesheetand
areshownassuchasaseparateitem
ontheassetsside,thevalueof
thatitemshallbewrittenoffin
accordance withArticle37(2)ofthe
above-mentioned Directive-
CDAmendedproposalforafourth
Directive onannualaccounts.
Supplement 6/74-Bull.EC.

-40-
Article17 Article17
1.Holdingsofgroupundertakings intheUnchanged
capitalofundertakings whichare
associatedwithgroupundertakings
withinthemeaningofArticle 1of
thisDirective,shallbeshownin
thegroupconsolidated balancesheet
asaseparateitemwithanappro­
priateheading.
2.Thefollowingprinciplesshallapply
tothevaluationinthegroupconso­
lidatedbalancesheetoftheholdings
referredtoinparagraph 1:
(a)Theamountofanydifferences
existingwhensuchholdingswere
acquiredbetweentheirpurchaseprice
andthecorresponding percentageof
thecapitalofsuchassociatedunder­
takings,includingreserves,results
andresultsbroughtforward,shall
beshownseparatelyinthegroup
consolidated balancesheetorin
thenotestotheaccounts.The
valuesmakingupthisamountshall
beanalysedinthenotestothe
accounts.Forthepurposeofvalu­
ingtheholdingsinquestioninthe
groupconsolidated balancesheet,
thevariouscomponents makingup
thesedifferences shallbedealtwith
inaccordancewiththeprovisions
ofArticle16.

-41-
Artide17(continued) Artide17(contmued)
(b)Thepurchasepriceofholdings Unchanged
inthecapitalofanassociated
undertakingshallbeincreasedor
reducedinthegroupconsolidated
balancesheetbytheprofitsor
lossesrealizedbythisundertaking
onaproratabasisaccordingto
thepercentageofcapitalheldby
thegroupundertaking .These
amountsshallbeshowneachyearin
thegroupconsolidated profitand
lossaccountasaseparateitem
withanappropriate heading.
Wheretheassociatedundertaking
distributes dividendstothegroup
undertaking,thebookvalueofthe
holdinginthegroupconsolidated
balancesheet,shallbereduced
accordingly .
(c)TheprovisionsofArticle
14(1)(d)shallbetakenintoaccount.
3.Application ofparagraphs 1and2
abovemaybewaivedwherethe
holdinginthecapitalofthe
associatedundertakingisofonly
minorimportanceforthepurposesof
Article9(2)ofthisDirective.
Suchwaivermustbeindicatedinthe
notestotheaccounts.

-42-
Article17a
1.Whereundertakings notformingpart
ofagroupholdsharesinthe
capitalofundertakings whichare
associatedwithinthemeaningof
Article 1andpresumedtobe
dependentwithinthemeaningof
Article2(2),theprovisionsof
Article17shallapplymutatis
mutandistotheinclusion and
valuationofthosesharesinthe
annualaccountsoftheundertaking
holdingthem.
MemberStatesshallnotbeboundto
applyparagraph 1ifneithertheunder­
takingwhichholdsthesharesnor
theundertaking inwhichtheyare
heldisestablished asoneof
typesofcompanyreferredtoin
Article6(1).
3.Article17(3)shallapplymutatis
mutandis.

-43-
Article18 Article18
1.Whereagroupundertaking manages Unchanged
anotherundertakingjointlywithone
ormoreundertakings whichdonot
formpartofthegroup,Member
Statesmayauthorizetheaccountsof
thatundertaking tobeconsolidated
inthegroupaccountsonaprorata
basisaccordingtothepercentage of
capitalheldbythegroupundertak­
ing.
2.Articles9to16shallapplymutatis
mutandistotheproportional conso­
lidationofaccountsreferredtoin
paragraph 1.
3.WherethisArticleapplies,Article
17shallnotapplyiftheundertaking
whoseaccountsareconsolidated ona
proportional basisisanassociated
undertaking withinthemeaningof
Article17.

-LL-
Article19 Article19
Thenotestotheaccountsshall Unchanged
containcommentary onthegroup
consolidated balancesheetand
profitandlossaccountinsuch
mannerastogiveatrueandfair
viewofthegroup'sassets,liabil­
ities,financialpositionand
results.

Article20 Article20
Inadditiontotheinformation re­
quiredunderotherprovisionsof
thisDirective,thenotestothe
accountsshallinanyeventinclude
information inrespectofthe
followingmatters:
thevaluationmethodsappliedto
thevariousitemsinthegroup
accounts,andthemethodsemployed
incalculating thevalueadjust­
ments.Foritemsintheannual
accountsofgroupundertakings in
foreigncurrencywhichhavebeen
incorporated inthegroupaccounts,
theratesofexchangeusedfor
theirconversionintolocal
currencymustbeindicated;Inadditiontotheinformation re­
quiredunderotherprovisionsof
thisDirective,thenotestothe
accountsshallincludeinformation
inrespectofatleastthefollowing
matters :
1.Unchanged
thenameandregisteredofficeof
groupundertakings whoseaccounts
havebeenconsolidated,theper­
centageofthecapitalheldin
thoseundertakings andthelegal
relationships betweenthem.The
sameinformation mustbegivenin
respectofgroupundertakings
whoseaccountshavenotbeen
consolidated pursuanttoArticle10;2.thenameandregisteredofficeof
groupundertakings whoseaccounts
havebeenconsolidated,theper­
centageofthecapitalheldin
thoseundertakings andthelegal
relationships betweenthem.The
sameinformationshallbegivenin
respectofgroupundertakings
whoseaccountshavenotbeen
consolidated pursuanttoArticle 1
togetherwithanexplanationfor
theirexclusionfromconsolidation

-46-
Artide20(continued ) Artide20(continued )
3.thenameandregisteredofficeof
undertakings associatedwithagroup
undertaking andwhichappearinthe
groupaccountspursuanttoArticle
17,andthepercentageofthe
capitalheldinsuchundertakings .
Thesameinformation mustbegiven
inrespectofundertakings associat­
edwithagroupundertaking towhich
Article17(3)hasbeenapolied;
4.thenameandregisteredofficeof
undertakings whoseaccountshave
beenconsolidated onaproportional
basispursuanttoArticle18to­
getherwiththepercentageofthe
capitalheldinsuchundertakings ;3.thenameandregisteredofficeof
undertakings associatedwithagroup
undertaking andwhichappearinthe
groupaccountspursuanttoArticle
17,andthepercentageofthe
capitalheldinsuchundertakings
Thesameinformationshallbegiven
inrespectofundertakings associat­
edwithagroupundertaking towhich
Article17(3)hasbeenapplied,
togetherwithaproperexplanation
ofthereasonstherefor;
4.unchanged
4a.thenameandregisteredofficeof
undertakings otherthanthose
referredtoinparagraphs 2,3and
4whicharepresumedtobe
dependent,withinthemeaningof
Article2(2),onagroupundertak­
ing,togetherwiththeamountsof
thedifferences betweenthevalue
ofthesharesinthecapitalof
theseenterprises appearinginthe
groupconsolidated balancesheet
andthevalueattributable tothem
inaccordance withArticle17(2);

-47-
Article20(continued )
5.thenameandregisteredofficeof
undertakings otherthatthose
referredtoinparagraphs 2,3and
4above,inwhichgroupundertak­
ingsholdnotlessthan10%of
thecapital,statingthepercent­
ageofthecapitalheldandthe
subscribedcapital,reservesand
resultsforthemostrecent
financialyearoftheundertaking
inquestion;Article20(continued )
5.thenameandregisteredofficeof
undertakings otherthanthose
referredtoinparagraphs 2,3
and4inwhichgroupundertak­
ings,eitherthemselvesorthrough
apersonactinginhisownname
butonbehalfofthegroupunder­
takings,holdatleastapercent­
ageofthecapitalwhichthe
MemberStatescannotfixatmore
than20%,showingtheproportion
ofthecapitalheld,theamountof
capitalandreserves,andthe
profitorlossforthelatest
financialyearoftheundertaking
concernedforwhichaccountshave
beenadopted.Thisinformation
maybeomittedwhereforthe
purposesofArticle9(2)itis
ofnegligibleimportanceonly.
Theinformation concerningcapital
andreservesandtheprofitorloss
maybeomittedwheretheunder­
takingconcerneddoesnotpublish
itsbalancesheetandlessthan
50%ofitscapitalisheld
(directlyorindirectly )bythe
groupundertaking .

-48-
Article20(continued )
theoverallamountoffinancial
commitments outsidethegroupwhich
arenotshowninthegroupconsolid­
atedbalancesheet,insofaras
thisinformation isofassistance in
assessingthefinancialposition
ofthegroup.Commitmentsexist­
ingwithregardtoundertakings
whichdonotformpartofthegroup
butareaffiliatedwithagroup
undertakingshallbeshown
separately;
thenetamountofthegroup'sturn­
over,brokendownbycategoryof
productandactivity,andby
geographical market.Theamount
contributed byeachcategoryand
markettothegroup'sresultfor
theyearmustbeindicated;Article20(continued )
6.thetotalamountoffinancial
commitmentsoutsidethegroupwhich
arenotshowninthegroupconsolid­
atedbalancesheet,insofaras
thisinformation isofassistance in
assessingthefinancialposition
ofthegroup.Commitments concern­
ingpensionsandcommitmentsexist­
ingwithregardtoundertakings
whichdonotformpartofthegroup
butareaffiliatedwithagroup
undertakingshallbeshown
separately;
7.thegroup'snetturnoverwithinthe
meaningofArticle28ofDirective
78/660/EEC,brokendownbycategories
ofactivityandintogeographical
marketsinsofaras,takingaccount
ofthemannerinwhichthesaleof
productsandtheprovisionof
servicesfallingwithinthegroup's
ordinaryactivitiesareorganized,
thesecategories andmarketsdiffer
substantially fromoneanother.
Thebreakdownbygeographical
marketshalldistinguish in
particularbetweentheinternal
andexternalmarketsofthe
Community;

-49-
Article20(continued )
8.thenumberofpersonsemployedby
groupundertakings duringtheyear,
brokendownbycategory,and,if
theyarenotshownseparatelyin
thegroupconsolidated profitand
lossaccount,thewholeofthe
personnelcostsrelatingtothe
accountingperiod,brokendownas
providedinArticle20,pointI.6
ofDirective No...(1)of...;
9.thetaxesincludedintheoperating
result,thefinancialresultorthe
exceptionalresultofthegroup;
10.theamountofthechangesinthe
group'sresultfortheyeardueto
theapplication oftaxlaws.Article20(continued )
8.theaveragenumberofpersons
employedbygroupundertakings
duringtheyear,brokendownby
categoryandaccordingtowhether
theyareemployedinsideorout­
sidetheCommunity,togetherwith,
iftheyarenotshownseparately
inthegroupconsolidated profit
andlossaccount,thewholeof
thestaffcostsrelatingto
thefinancialyear,brokendown
asprovidedforinArticle23(6)of
Directive78/660/CEE;
9.theextenttowhichthecalculation
oftheprofitorlossofthegroup
forthefinancialyearhasbeen
affectedbyavaluationofthe
itemswhich,bywayofderogation
fromtheprinciplesenunciatedin
Articles 31and34to42of
Directive78/660/EEC,wasmadein
thefinancialyearinquestionor
inanearlierfinancialyearwith
aviewtoobtainingtaxrelief.
Wheretheinfluenceofsucha
valuationonthegroup'sfuture
taxchargesismaterial,details
shallbedisclosed;
10.Deleted
(1)Amendedproposalforafourth
Directiveonannualaccounts,
Supplement 6/74-Bull.EC.

-50-
Article20a
Whenatthedateofthegroupconsolid­
atedbalancesheet,thelimitsoftwo
ofthethreecriteriareferredtoin
Article11ofDirective 78/660/EECare
notexceededatgrouplevel,Member
Statesmaypermitthedominantgroup
undertaking todrawupabridgednotes
totheirgroupaccountswithoutthe
information requiredbyArticle20(6)
to(9)ofthisDirective.
Article12ofDirective 78/660/EEC
shallapply.

-51-
Article20b
1.Whereundertakings notformingpart
ofagroupholdsharesinthe
capitalofundertakings whichare
presumedtobedependentwithinthe
meaningofArticle2(2),butwhich
arenotassociated withinthe
meaningofArticle 1,thenotesto
theannualaccountsofthese
enterprises shallincludeinformation
atleastastothenameand
registeredofficeoftheunder­
takingspresumeddependent,together
withtheamountsofthedifferences
betweenthevalueoftheseshares
appearinginthebalancesheetof
theseundertakings andthevalue
attributable totheminaccordance
withArticle17(2).
2.Article17a(2)shallapply

-52-
Article21 Article21
1.MemberStatesmayallowtheparticu-1.MemberStatesmayallowtheparticu­
larsstipulatedinArticle20, LarsstipulatedinArticle20(2),
points2,3,4and5: (3),(4),(4a)and(5):
(a)totaketheformofastatement
filedinaccordance withArticle3(1)
and(2)ofDirective 60/151/EEC(1)
of9March1968.Thisshallbein­
dicatedinthenotestotheaccounts;(a)unchanged
(b)tobeomittedwhentheirnature
issuchthat,intheviewofa
reasonablebusinessman,theywould
beseriouslyprejudicial toanyof
theundertakings towhichthese
provisionsrelate.Theomissionof
theparticularsshallbementioned
inthenotestotheaccounts.(b)tobeomittedwhentheirnature
issuchthattheywouldbeserious­
lyprejudicial toanyoftheunder­
takingsaffectedbytheseprovisions ,
MemberStatesmaymakesuch
omissionssubjecttoprioradminis­
trativeorjudicialauthorization .
Anysuchomissionshallbedisclosed
inthenotestotheaccounts.
2.MemberStatesmayallowtheparti­
cularsstipulated byArticle20,
point7to-beomittedwherethe
requirements laiddowninArticle24
ofDirective No...(2)of...are
satisfiedbythegroupasawhole.
ThesecondparagraphofArticle24
ofthatDirectiveshallapply.
(1)FirstCouncilDirectiveof9March
1968oncoordination ofsafeguards
which,fortheprotectionofthe
interestsofmembersandothers,
arerequiredbyMemberStatesof
companieswithinthemeaningof
thesecondparagraphofArticle
58oftheTreaty,withaviewto
makingsuchsafeguardsequivalent
throuqhouttheCommunity,0JL65of14~3.'I968.
(2)Amendedproposalforafourth
Directiveonannualaccounts,
Supplement 6/74-Bull.EC.Paragraph'l(b)shallalsoapplyto
theinformation prescribed by
Article20(7).Whenatthedateof
thegroupconsolidated balance
sheet,thelimitsoftwoofthe
threecriteriareferredtoin
Article11ofDirective 78/660/EEC
arenotexceededatgrouplevel,
MemberStatesmaypermitthe
disclosures prescribed byArticle
20(7)ofthisDirectivetobeomitted,
Article12ofDirective78/660/EEC
shaLlapply.

-53-
Section4
GROUPANNUALREPORT
Article22
1.Thegroup'sannualreportshall
containadetailedreviewofthe
development ofthegroup'sbusiness
andofitsposition.
2.Thereportshallalsogive
particulars of:
(a)importanteventsthathave
occurredsincetheyear-end;
(b)thegroup'slikelyfuture
development ;
(c)theactivitiesofthegroup
withregardtoresearchf,nd
development andthecoststhereof.Section4
GROUPANNUALREPORT
Article22
1.Unchanged
2.Unchanged
(a)unchanged
(b)unchanged
(c)theactivitiesofthegroup
inthefieldofresearchand
development,brokendowninto
activities insideandoutsidethe
Community;
(d)acquisitions ofownsharesby
groupundertakings inaccordance
withArticle22(2)ofDirective
77/91/EEC(1).
(1)OJNo.L26,31.1.77,p.1.

-54-
Section5 Section5
Article23
1.(a)Thedominantgroupundertaking
shallcausethegroupaccountsto
beauditedbyoneormorepersons
authorized bynationallawtoaudit
accounts.Article23
1.(a)Unchanged
(b)Thepersonorpersonsrespons­
ibleforauditingtheaccountsshall
alsoverifythatthegroupannual
reportisconsistentwiththegroup
accountsofthatfinancialyear.(b)Unchanged
2.Ca)MemberStatesmaywaivethe
compulsoryauditingprovisionsof
paragraph 1wheretherequirements
laiddowninArticle49(2)of
Directive No...(1)of...are
satisfiedbythegroupasawhole
andwherenoneofthegroupunder­
takings"isestablished underany
oftheformsspecifiedinArticle
1(1)(a)ofthatDirective .The
thirdsubparagraph ofArticle49(2)
ofthatDirectiveshallapply.2.(a)Whenatthedateofthegroup
consolidated balancesheet,thelimits
oftwoofthethreecriteriareferred
toinArticle11ofDirective
78/660/EECarenotexceededatgroup
level,theMemberStatesmayrelieve
thedominantundertaking ofthe
obligation imposedbyparagraph 'I.
Article12oftheabove-mentioned
Directiveshallapply.
(b)Whereparagraph2(a)isapplied,
theMemberStatesshallintroduce
appropriatesanctionsintotheirlaw
forcasesinwhichgroupaccounts
andgroupannualreportsarenot
drawnupinaccordancewiththe
requirements ofthisDirective.(b)Unchanged
(1)Amendedproposalforafourth
Directiveonannualaccounts,
Supplement 6/74-Bull.EC.

-55-
Section6 Section6
PUBLICATION
Article24PUBLICATION
Article24
(a)Groupaccounts,thegroupannual
reportandthereportsubmittedby
thepersonresponsibleforauditing
theaccountsshallbepublishedby
thedominantundertaking ofthe
groupinthemannerprovidedin
Article44ofDirective No...(1)
of...
(b)Articles45and46ofthat
Directiveshallalsoapply.1.(a)Groupaccounts,dulyapproved,
andthegroupannualreport,together
withtheopinionsubmittedbythe
personresponsibleforauditingthe
groupaccounts,shallbepublishedas
laiddownbythelawsofeachMember
Stateinaccordance withArticle3
ofDirective68/15'1/EEC.Thesecond
subparagraph ofArticle47(1)ofDir­
ective78/660/EECshallapplytothe
groupannualreport.
(b)Articles48and49ofDirective
78/660/EECshallalsoapply.
Notwithstanding paragraph1(a),
MemberStatesmaypermit:2.Notwithstanding paragraph 1a),when
atthedateofthegroupconsolid­
atedbalancesheet,thelimitsof
twoofthethreecriteriareferredto
inArticle11ofDirective 78/660/CEE
arenotexceededatgrouplevel,the
MemberStatesmaypermitthedominant
groupundertaking topublish:
(1)Amendedproposedforafourth
Directiveonannualaccounts,
Supplement 6/74-Bull.EC.

-56-
Article24(continued ) Article24(continued )
(a)thepublication merelyofagroup
consolidated balancesheetabridged
asprovidedinArticle50(2)(b)of
Directive No...(1)of...,andof
notestotheaccountsnotnecessarily
includingtheexplanations required
underArticle20,points6to'10,
ofthisDirective.Suchderoga­
tionshallbepermittedonlywhere
therequirements laiddownin
Article49(2)ofDirective No...(1)
of...aresatisfiedbythegroupas
awholeandwherenoneofthegroup
undertakings isestablished under
anyoftheformsspecifiedin
Article1(1)(a)ofthatDirective.
Thethirdsubparagraph ofArticle
49(2)ofthatDirectiveshallapply;(a)agroupconsolidated balance
sheetinanabridgedformin
accordance withArticle47(2)(a)
oftheabove-mentioned Directive;
(b)publicationtobeeffectedonly
asprescribed byArticle3of
Directive 68/151/EECof9March1968.
Suchderogationshallbepermitted
onlywheretherequirements laid
downinArticle50(2)(a)ofDirective
No...(1)of...aresatisfiedby
thegroupasawholeandwherenone
ofthegroupundertakings isestab­
lishedunderanyoftheforms
specifiedinArticle 1('I)(a)ofthat
Directive.Thesecondsubparagraph
ofArticle50(2)(a)ofthatDirective
shallapply.(b)abridqednoteswithoutthe
informationprescribed byArticle
20(6)to(9)ofthisDirective .
Inaddition,theMemberStatesmay
relievesuchdominantundertakings
fromtheobligationtopublishthe
groupconsolidated profitandloss
accounts,thegroupannualreport
andtheopinionsoftheperson
responsible forauditingthegroup
accounts.
Article12ofDirective 78/660/EEC
shallapply.
(1)Amendedproposedforafourth
Directive onannualaccounts.
Supplement 6/74-Bull.EC.

-57-
Article24(continued ;
3.Whenatthedateofthegroup
consolidated balancesheet,thelimits
oftwoofthethreecriteriareferred
toinArticle27ofDirective
78/660/EECarenotexceededatgroup
level,theMemberStatesmaypermit
thedominantgroupundertaking to
publish :
(a)agroupconsolidated balance
sheetinanabridgedformin
accordance withArticle47(3)(a)of
theabove-mentioned Directive
and
(b)abridgednoteswithoutthe
informationprescribed byArticle
20(7)and(9)ofthisDirective .
Thepresentparagraphshallbe
withoutprejudicetoparagraph 1
insofarasitrelatestothe
groupconsolidated profitandloss
account,thegroupannualreport
andthereportoftheperson
responsibleforauditingthegroup
accounts.
Article12ofDirective 78/660/EEC
shallapply.

-58-
Section7
FINALPROVISIONS
Article25Section7
FINALPROVISIONS
Article25
1.WhenthefirstgroupaccountsareUnchanged
drawnuppursuanttothisDirective,
thebookvalueofaholdingandthe
percentageofthecapitalthatit
representsatthetimeofsuchfirst
consolidation pursuanttothis
Directivemaybetakenintoaccount
forpurposesofapplication of
Article12(1)(a)ofthisDirective .
Anydifferencebetweenthesetwo
valueswhichrepresents aliability
shallbeenteredagainstgroup
reservesinthegroupconsolidated
balancesheet.
2.Theprovisionsofparagraph 1shall
applymutatismutandistothe
valuationpursuanttoArticle17(2)
ofaholdinginthecapitalofan
undertakingassociatedwithagroup
undertaking andtotheproportional
consolidation accordingtoArticle18.

«-59-
Article26
1.MemberStatesshall,withineighteen
monthsofnotification ofthisDi­
rective,makealltheamendmentsto
theirlaws,regulations andadminis­
trativeprovisionsnecessaryto
complywiththeprovisionsofthis
Directive,andshallforthwith
informtheCommissionthereof.They
shallbringsuchamendmentsinto
forcewithinthirtymonthsof
notification ofthisDirective.Article26
1.TheMemberStatesshallbringinto
forcethelaws,regulations and
administrative provisionsnecessary
forthemtocomplywiththis
Directivewithintwoyearsofits
notification .Theyshallforth­
withinformtheCommissionthereof.
2.TheMemberStatesmaystipulatethat
theprovisionsreferredtoinpara­
graph1shallnotapplyuntil18
monthsaftertheendoftheperiod
providedforinthatparagraph.
2.TheMemberStatesshallcommunicate
totheCommissionthetextsofthe
essentialprovisionsofinternal
lawwhichtheyadoptsubsequently
inthefieldcoveredbythis
Directive.3.TheMemberStatesshallensure
thattheycommunicate tothe
Commission thetextsofthemain
provisionsofnationallawwhich
theyadoptinthefieldcovered
bythisDirective.

-60-
Article26a
Articles57,58and61ofDirective
78/660/EECshallapplyuntilthe
expirationofaperiodof30months
fromthenotification ofthis
Directive.

-61-
Article26b
TheContactCommitteesetuponthe
basisofArticle52ofDirective
78/660/EECshallalsohaveasits
function
(a)tofacilitate,withoutprejudice
toArticles169and170oftheTreaty,
harmonizedapplication ofthis
Directivethroughregularmeetings
dealinginparticularwithpractical
problemsarisinginconnectionwith
itsapplication ;
(b)toadvisetheCommission,if
necessary,onadditionsoramendments
tothisDirective .

-62-
Article27 Article27
ThisDirectiveisaddressedtotheUnchanged
MemberStates.