No C 319/64 Official Journal of the European Communities 30. 11. 87 
Opinion on the proposal for a Council Directive on the obligations of branches established 
in a Member State by credit institutions and financial institutions having their head offices 
outside that Member State regarding the publications of annual accounting documents (*) 
(87/C 319/19) 
On 23 September 1986 the Council decided to consult the Economic and Social Committee, 
under Article 54 of the Treaty establishing the European Economic Community, on the 
abovementioned proposal. 
The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing 
the Committee's work on the subject, adopted its Opinion on 6 May 1987, in the light of 
the report by Mr Pardon. 
At its 248th plenary session (meeting of 24 September 1987) the Economic and Social 
Committee unanimously adopted the following Opinion: 
The Committee approves the proposal but submits the 
following constructive comments. 
1. General comments 
1. The Committee refers to the points it made in its 
Opinion on the proposal for an 11th Council Directive 
based on Article 54 (3) (g) of the Treaty concerning 
disclosure requirements in respect of branches opened 
in a Member State by certain types of companies gover­
ned by the law of another State (doc. COM(86) 397 
final). When this Directive is implemented, it will apply 
to both credit institutions and financial institutions set 
up as companies and to which Directive 68/151/EEC 
applies, subject to Member States being given the option 
of not applying the provisions on compulsory publi­
cation of accounting documents. 
2. The proposal thus sets out to complement the 
11th Directive on this point. As credit institutions and 
financial institutions are involved, the requirements on 
publication of accounts are stricter than those regarding 
companies whose objects are different. 
3. Under the proposal, Member States must ensure 
that branches publish, in the Member States where they 
are located, annual accounts, consolidated accounts, 
their annual reports, their consolidated annual reports, 
reports drawn up by the person responsible for auditing 
the annual accounts, and consolidated accounts of the 
company to which the branch belongs. 
4. The proposal under discussion, for the same 
reasons which brought about the 11th Directive, pro­
hibits Member States from requiring the publication of 
annual accounts relating to the business of the branch 
itself. 
(!) OJ No C 230, 11. 9. 1986, p. 4. 5. However, with regard to credit institutions and 
financial institutions, the proposal allows Member 
States, pending further coordination, to demand the 
following additional information: 
— the branch's endowment capital, 
— the profits or losses of the branch, 
— the following: 
— interest earned, 
— income from shares and holdings, 
— commissions received, 
— other operational income, 
— the total claims and liabilities attributable to the 
branch, broken down by those in respect of credit 
institutions and those in respect of customers, 
— the net sums of the total assets or liabilities of the 
balances of the branch in relation to the head office, 
the other branches and the undertakings included 
in the consolidated accounts of the credit institution 
or financial institution, 
— a description of the activities of the branch, showing 
the main categories of business during the financial 
year. 
6. The Committee would like all the conditions for 
a genuine European internal market to be met rapidly. 
It is ready to support proposals aimed at effectively 
achieving this goal, whilst taking into account all 
aspects of the current economic and social situation, 
including the need to protect savers and third parties. 
7. In the area covered by the Directive, i.e. credit 
and financial institutions, the achievement of a genuine 
internal market first requires the strengthening of econ-
30. 11. 87 Official Journal of the European Communities No C 319/65 
omic cohesion through free movement of capital, 
through tighter coordination in the area of parities 
between Member States' currencies and, more gener­
ally, through coordination of economic policies. 
7.1. The Commission must continue to concentrate 
on these areas. 
8. The economic agents referred to in the Directive, 
and particularly the 'credit institutions' within the 
meaning of Directive 77/780/CEE, are subject to specific 
rules in all Member States. Although in actual practice 
in the economy itself the distinction is not so clear-cut, 
these agents are theoretically covered by two different 
types of rules, namely: 
a) macro-economic rules, allowing national authorities 
to use these agents as instruments of their economic 
policy, particularly as regards foreign exchange, 
currency and credit; 
b) micro-economic rules, allowing the authorities to 
oversee the liquidity, solvency and profitability of 
these agents, so as to ensure their security; this is 
designed to protect the deposits and savings en­
trusted to them, and also to ensure continuity of 
credit administration, which is vital for the proper 
operation of the economy. 
8.1. As regards (a), it is plain that the branch of 
a credit institution, which commences business in a 
Member State other than that where its head office is 
located, falls by virtue of this fact and by the very nature 
of its activities, under a monetary system different from 
the one applying to the head office. Like banks, which 
fall under the laws of the countries where they are 
located, the branch will become an instrument at the 
disposal of the monetary policy, credit and foreign 
exchange authorities. 
8.2. With regard to (b), as Community integration 
stands at present, the branch of a credit institution 
which commences business in a Member State other 
than that where its head office is located, is conse­
quently, by the very nature of its activities, subject to 
different laws, regulations and administrative pro­
cedures than the head office. This is borne out by 
Article 4 (1) of Directive 77/780/EEC. The branch is, 
for reasons connected with the security of depositors 
as well as for reasons of fair competition between 
economic agents operating in the same area, subject to 
the rules of the host country. 
8.2.1. Faster and greater progress can be made in 
this area rather than in the area of macro-economic supervision, which is a matter for the economic policy 
of Member States. The Committee notes with satisfac­
tion that the Commission is looking into this. 
9. Having regard to the above factors, branches or 
groups of branches established in a Member State other 
than the one where the head office is located must, as 
things stand, keep and submit accounting documents 
which (a) meet the requirements laid down by the 
monetary authorities and (b) are suitable for monitor­
ing. This is necessary to ensure liquidity if profitability 
and liquidity checks are subsequently carried out by the 
supervisory authority of the country where the head 
office is located. 
10. The Committee feels that it is up to the Com­
munity authorities to try to resolve the problems 
referred to above and to propose approximation of 
Member States' laws in order to secure uniform super­
visory arrangements providing comparable security and 
fair terms of competition between economic agents 
operating in the same European market. 
11. In order to take into account the socio-economic 
peculiarities of each Member State, the Commission 
should, pending further coordination, allow those 
Member States which so desire, to demand that 
branches, or groups of branches, with considerable 
economic and social influence publish their accounts. 
Objective criteria should, if this were the case, be 
imposed on firms the same size as credit institutions 
and financial institutions whose head office is located 
in the particular Member State concerned. 
2. Specific comments 
Article 1 (1) 
12. The proposal's scope is defined by reference to 
the scope of the 'Proposal for a Directive on the annual 
accounts of banks and other financial institutions' (1). 
12.1. The various directives referred to differ as 
regards application: 
a) Directive 77/780/EEC applies to natural persons 
and legal persons within the meaning of the second 
paragraph of Article 58 of the Treaty; 
(!) OJ No C 130, 1 June 1981 and proposed amendments (OJ 
No C 83, 24. 3. 1984 and OJ No C 351, 31. 12. 1985). 
No C 319/66 Official Journal of the European Communities 30. 11. 87 
b) the draft Directive under discussion applies to legal 
persons within the meaning of the second paragraph 
of Article 58 of the Treaty, but not to natural 
persons; 
c) the proposal for an 11th Directive, to which the 
currrent proposal refers, applies to 'companies with 
share capital', but not to other types of company 
within the meaning of the second paragraph of 
Article 58 of the Treaty, or to natural persons. 
12.2. The Committee wonders whether these differ­
ences are not liable to distort competition, and asks the 
Commission to examine the matter carefully. 
12.3. At all events, the Committee would repeat its 
comment regarding the draft Eleventh Directive: in 
terms of security and of the remedies open to third party 
creditors, consolidated accounts have no significance in 
law, except where the parent company has agreed to 
assume responsibility for the debts of its subsidiary. 
Article 2.3. 
13. This clause applies only in respect of information 
for third parties. It does not in any way affect infor­
mation obligations which branches have vis-a-vis mon­
etary and monitoring authorities in the host country. 
This should be spelled out in a recital. 
Article 2.4. 
14. The Committee feels that, in principle, the 
additional information required in Article 2.4 (see 
point 5 above) is adequate to ensure that third parties 
Done at Brussels, 24 September 1987. are properly informed and to establish fair conditions 
of competition in the Member State(s) where, until now, 
the publication of branch accounts was a requirement. 
In fact, from a legal standpoint, the publication of these 
accounts has no significance and a requirement of this 
nature is contradictory to the aim of establishing a 
single internal market in the Community. 
14.1. Article 2.4 b) is unclear in some language ver­
sions. 
It should read as follows: 
'b) a description of the activities of the branch, 
showing the main categories of business during the 
financial year.' (English version is unchanged.) 
Article 4 
15. Given the specific nature of the establishments 
under discussion, and since they are already required 
to submit accounting documents to the relevant autho­
rities in the host country in that country's language, 
the Committee is not against the proposal to require 
documents to be published in the language of the host 
country. 
Article 5 
16. The Contact Committee referred to is the one 
set up under the Directive on annual accounts of certain 
types of company. 
16.1. The Committee wonders whether the Advisory 
Committee set up under Article 11 of Directive 77/780/ 
EEC should not also be given some responsibility. 
The Chairman 
of the Economic and Social Committee 
Alfons MARGOT