COMMISSION OF THE EUROPEAN COMMUNITIES 
COM (89) 528 final - SYN 63 
Brussel, 16 November 1989 
Re-examined proposal for a 
COUNCIL DIRECTIVE 
on company law concerning 
disclosure requirements In respect of 
branches opened In a Member State by 
certain types of companies governed 
by the law of another State 
(presented by the Commission pursuant to Article 149.2(d) 
of the EEC Treaty) 
LVvw ïi8,i - 2 -
Revised proposal for a 
CounclI Direct !ve 
on company law concerning 
disclosure requirements in respect of 
branches opened In a Member State by 
certain types of companies governed 
by the iaw of another State 
(Submitted by the Commission to the Council 
on the basis of Article 149 (2d) 
of the EEC Treaty) 
Explanatory memorandum 
1. On 29 July 1986 the Commission transmitted to the Council the 
abovementloned proposal for a Direct Ive.<1) 
2. The European Parliament and the Economic and Social Committee 
delivered their opinions on 18 November 1987<2) and 24 
September 1987(3) respectively. 
3. On 5 April 1988 the Commission transmitted an amended 
proposal(4) to the Council, incorporating the substance of the 
changes requested by Parliament. The Council's Working Party on 
Economic Questions (establishments and services) examined that 
proposal in three readings from November 1988. 
4. The Council adopted a Common Position on 16 May 1989,(5) for 
which it Indicated Its grounds/6) and on which the Commission 
formulated its observât Ions.*7* 
5. In accordance with the coopération procedure, the European 
Parliament gave the proposal a second read 
1989 and voted in favour of eight amendments Parliament gave the proposal a second reading eft 13 September 
I 
(1) OJ No. C 20$, 12.8.1986, p. t2. 
(2) OJ No C 345, 21.12.1987, p. 1* 
(3) OJ NO C 319, 3t.11.1987, p. 61. 
(4) OJ No C 105, 2t.4.1988, p. f. 
(5) Council Document 6346/89, 11 May f989L 
(6) Council Document 6346/89 Add. 1, 11 May 1989 
(7) SEC(89)739 SYN 63, 18 May 1989. 
| (8) EP Doc. 133.773, 13 September 198Ô. 
ir 
3 -
6. The Commission has been able to accept the following amendments 
Involving improvements to the wording: 
(a) the first amendment, which adds the words "not ieast" to the 
fifth recital; 
(b) the second amendment, which, in the sixth recital, stresses 
the possibility of comparing the economic and social influence 
of a branch with that of a subsidiary company; 
(c) the fourth amendment, which refers in Article 3 not only to 
the auditing and disclosure of accounting documents, but also to 
their being drawn up In accordance with the various accounting 
direct ives. 
(d) the third and the fifth amendments which refer to the 
existence of other branches In the same Member State. 
7. The Commission has rejected the sixth, seventh and eighth 
amendments. 
As for the branches of third-country companies, the Member 
States may still request additional information since the 
Directive's provision on that matter is of a minimal nature. 
This is the reason for the rejection of the sixth amendment, 
which would allow the Member State to demand the signature of 
certain persons having power of representation. 
The seventh amendment aims to enable the Member States, in the 
case of the non-compliance or non-equivalence of the accounts of 
a third-country company, to require not only the drawing up and 
disclosure of accounts limited to the branch's activity but also 
their audit. However, no equivalent requirement exists in the 
comparable rules concerning the branches of third-country credit 
institutions (Directive 88/117/EEC, Article 3). It would seem 
indefensible to impose stricter requirements on the branches of 
industrial and commercial companies. 
Under the eighth amendment, where the accounting documents of 
third-country companies do not fully comply in every detail with 
the directives, despite being equivalent in principle, all 
differences would have to be expressly indicated at the time of 
disclosure. Moreover, the fact that they have not been audited 
would also have to be stated. The Commission considers that the 
equivalence criterion was introduced specifically to avoid 
Insisting on absolute conformity with the accounting directives. 
A substantial comparability of accounting documents was more 
what It had In mind. As for the question of auditing, it is easy 
to tell when accounts have not been audited by the mere fact 
that they do not bear any Indication to that effect. 
4 -
Revised proposai for a 
CounclI Direct ive 
on company iaw concerning 
disclosure requirements in respect of 
branches opened in a Member State by 
certain types of companies governed 
by the law of another State 
COMMON POSITION OF THE COUNCIL 
5th recital 
n Vnereas 
difference in 
Member States 
the exercise 
establishment; this field the 
the laws of the 
may interfere with 
of the right of 
whereas It is 
therefore necessary to eliminate 
such differences in order to 
safeguard the exercise of that 
right; 
6th recital 
Whereas to ensure the protection 
of persons who deal with companies 
through the Intermediary of 
branches, measures in respect of 
disclosure are required in the 
Member State in which a branch Is 
situated; whereas to effect such 
disclosure it Is necessary to make 
use of the procedure already 
instituted for companies with 
share capital within the 
Community; REVISED PROPOSAL OF THE COMMISSION 
5th recital 
Whereas in this field the 
difference In the laws of the 
Member States may interfere wlxh 
the exercise of the right of 
establishment; whereas It is 
therefore necessary to eliminate 
such differences, not least in 
order to safeguard the exercise of 
that right; 
6th recital 
Whereas to ensure the protection 
of persons who deal with companies 
through the Intermediary of 
branches, measures in respect of 
disclosure are required in the 
Member State in which a branch is 
situated; whereas the economic and 
social Influence of a branch may 
be comparable to that of a 
subsidiary company, so that to 
that extent the public interest in 
disclosure is comparable; whereas 
to effect such disclosure it is 
necessary to make use of the 
procedure already Instituted for 
companies with share capital 
within the Community; 
Article 2 Article 2(1)(e#)(new) 
(ea) the 
teranches In existence of other 
the same Member State 
^ 
Article 3 Article 3 
The compulsory disclosure provided 
for by Article 2(1)(g) shall be 
limited to the accounting 
documents of the company as 
audited and disclosed pursuant to 
the law of the Member State by 
which the company is governed in 
accordance with Directives 
78/660/EEC, 83/349/EEC and 
84/253/EEC. The compulsory disclosure provided 
for by Article 2(1)(g) shall be 
limited to the accounting 
documents of the company as drawn 
up, audited and disclosed pursuant 
to the law of the Member State by 
which the company is governed in 
accordance with Directives 
78/660/EEC, 83/349/EEC and 
84/253/EEC. 
Article 8 Article 8(da) (new) 
(da) the existence of other 
branches in the same Member State. 
The other recitals and articles remain unchanged. 
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ISSN 0254-1475 
COM(89) 528 final 
DOCUMENTS 
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