Proposal for a Directive of the European Parliament and of the Council amending Council Directives 78/660/EEC, 83/349/EEC and 91/674/EEC on the annual and consolidated accounts of certain types of companies and insurance undertakings
Date: 2002-09-24
Institutions: European Commission
Subjects: access to information, account, balance sheet, balance-sheet analysis, capital market, consolidated account, financial market, insurance company, international standard, organisation, publication of accounts

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Official Journal of the European Communities

24.9.2002

Proposal for a Directive of the European Parliament and of the Council amending Council
Directives 78/660/EEC, 83/349/EEC and 91/674/EEC on the annual and consolidated accounts of
certain types of companies and insurance undertakings

(2002/C 227 E/07)

(Text with EEA relevance)

COM(2002) 259/2 final — 2002/0112(COD)

(Submitted by the Commission on 28 May 2002)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF
THE EUROPEAN UNION,

provided an option for Member States to permit or require
the application of adopted IAS in the preparation of annual
require the application of
accounts and to permit or
adopted IAS by unlisted companies.

Having regard to the Treaty establishing the European
Community, and in particular Article 44(1) thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the Economic and Social
Committee,

Acting in accordance with the procedure laid down in Article
251 of the Treaty,

Whereas:

is necessary that

(4) The IAS Regulation provides that to adopt an international
accounting standard for its application in the Community,
it
it meets the basic requirement of
Council Directive 78/660/EEC of 25 July 1978 based on
Article 54(3)(g) of the Treaty on the annual accounts of
certain types of companies (2) and of Council Directive
83/349/EEC of 13 June 1983 based on Article 54(3)(g)
of the Treaty on consolidated accounts (3), that is to say
that its application results in a true and fair view of the
financial position and performance of an enterprise; this
principle being considered in the
said
light of
Council Directives without
implying a strict conformity
with each and every provision of those Directives.

the

(1) The Lisbon European Council of 23-24 March 2000
emphasised the need to accelerate completion of
the
internal market for financial services, set the deadline of
2005 to implement the Commission’s Financial Services
Action Plan and urged that steps be taken to enhance the
comparability
by
Community companies whose securities are listed on a
regulated market (hereinafter: ‘listed companies’).

statements

prepared

financial

of

(2) On 13 June 2000,

the Commission published its
Communication on ‘EU Financial Reporting Strategy: The
Way Forward’ (1) in which it was proposed that all listed
in
companies
accordance with one single set of accounting standards,
namely International Accounting Standards (IAS), at the
latest by 2005.

consolidated

accounts

prepare

their

(3) Regulation (EC) No . . . of the European Parliament and of
the Council on the application of international accounting
standards (hereinafter: ‘the IAS Regulation’) introduced the
requirement that, from 2005 onwards, all listed companies
prepare their consolidated accounts in accordance with IAS
It also
adopted for application within the Community.

78/660/EEC

by Directive

(5) As the annual and consolidated accounts of undertakings
covered
and Directive
83/349/EEC which are not prepared in accordance with
the IAS Regulation will continue to have those Directives
their Community accounting
as the primary source of
that a level playing field
requirements,
exist between Community companies which apply IAS
and those which do not.

is important

it

is desirable that

of Directive
it

(6) For the purposes both of the adoption of IAS and the
78/660/EEC and Directive
application
those Directives reflect
83/349/EEC,
developments in international accounting. In this respect,
the Communication of the Commission on ‘Accounting
Harmonisation: A New Strategy vis-à-vis
International
Harmonisation’ (4) called for the European Union to work
to maintain consistency between Community Accounting
Directives and developments in international accounting
standard setting,
in particular within the International
Accounting Standards Committee (IASC).

(2) OJ L 222, 14.8.1978, p. 11, Directive as last amended by Directive

2001/65/EEC (OJ L 283, 27.10.2001, p. 28).

(3) OJ L 193, 18.7.1983, p. 1, Directive as last amended by Directive

2001/65/EEC (OJ L 283, 27.10. 2001, p. 28).

(1) COM(2000) 359, 13.6.2000.

(4) COM(1995) 508, 14.11.1995.

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and

additional

(7) The annual report and the consolidated annual report are
important elements of financial reporting. Enhancement, in
line with current best practice, of the existing requirement
for these to present a fair review of the development of the
business and of its position is necessary to promote greater
consistency
the
give
on
information content expected of a ‘fair
review’. The
information should not be restricted to the financial
aspects of the company’s business. It is expected that this
will lead to an analysis of environmental, social and other
aspects relevant
the company’s
to an understanding of
development and position. This is consistent also with
the Commission Recommendation 2001/453/EC of 30
May 2001 on the recognition, measurement and disclosure
of environmental issues in the annual accounts and annual
reports of companies (1).

guidance

(8) Differences in the preparation and presentation of

the
‘audit report’ reduce comparability and detract from the
financial
user’s understanding of
is
reporting.
by
achieved
amendments, consistent with current
international best
to the specific requirements concerning the
practice,
format and content of an audit report.

this vital aspect of

consistency

Increased

be

amended. Consequently,

(9) Directive 78/660/EEC and Directive 83/349/EEC should
accordingly
also
necessary to amend Council Directive 91/674/EEC of 19
December 1991 on the annual and consolidated accounts
insurance undertakings (2). These amendments will
of
remove all inconsistencies between Directive 78/660/EEC,
Directive 83/349/EEC and Directive 91/674/EEC and IAS
in existence at 1 May 2002,

is

it

certain classes of company or to consolidated accounts as
defined in Council Directive 83/349/EEC (*).

___________
(*) OJ L 193, 18.7.1983, p. 1.’

3. In Article 8 the following paragraph is added:

‘Member States may allow or require companies to adopt
the presentation of the balance sheet set out in Article 10a
as
to those otherwise prescribed or
permitted.’

an alternative

4. In Article 9, under

‘Liabilities’,
liabilities and charges’

in point B the title
replaced by

is

‘Provisions
‘Provisions’.

for

5. In Article 10, point J, the title ‘Provisions for liabilities and

charges’ is replaced by ‘Provisions’.

6. The following Article 10a is inserted:

‘Article 10a

require

Instead of
items in
the presentation of balance sheet
accordance with Articles 9 and 10, Member States may
allow or
certain classes of
companies, or
companies, to present those items based upon a distinction
between current and non-current items provided that the
information content given is at least equivalent to that
otherwise required by Articles 9 and 10.’

HAVE ADOPTED THIS DIRECTIVE:

7. Article 20 is amended as follows:

Article 1

(a) Paragraph 1 is replaced by the following:

Directive 78/660/EEC is amended as follows:

1. In Article 2(1) the following subparagraph is added:

‘Provisions are intended to cover liabilities the nature
of which is clearly defined and which at the date of the
balance sheet are either likely to be incurred, or certain
to be incurred but uncertain as to amount or as to the
date on which they will arise.’

‘Member States may allow or require the inclusion of other
statements in the annual accounts in addition to the
documents referred to in the first paragraph.’

(b) Paragraph 3 is replaced by the following:

2. In Article 4 the following paragraph 6 is added:

‘6. Member States may allow or require that the pres-
entation of amounts within items in the profit and loss
account and balance sheet
shall have regard to the
the reported transaction or arrangement.
substance of
Such permission or requirement may be restricted to

(1) OJ L 156, 13.6.2001, p. 33.
(2) OJ L 374, 31.12.1991, p. 7.

‘Provisions may not be used to adjust the values of
assets.’

8. In Article 22, the following paragraph is added:

‘By way of derogation from Article 2(1), Member States
may allow or require all companies, or any classes of
companies, to present a statement of their performance
instead of the presentation of profit and loss items in
accordance with Articles 23 to 26, provided that
the
information content given is at least equivalent to that
otherwise required by those Articles.’

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9. Article 31 is amended as follows:

(a)

In paragraph 1(c), the point (bb) is replaced by the
following:

‘account must be taken of all liabilities arising in the
course of the financial year concerned or of a previous
one, even if such liabilities or losses become apparent
only between the date of the balance sheet and the
date on which it is drawn up,’

(b) The following paragraph 1(a) is inserted:

‘1(a)
In addition to those amounts recorded further
to Article 31(1)(c)(bb), Member States may permit or
require account to be taken of all forseeable liabilities
and potential
the
financial year concerned or of a previous one, even
if such liabilities or
losses become apparent only
between the date of the balance sheet and the date
on which it is drawn up.’

losses arising in the course of

‘The annual report must include at least a fair review
of the development of the company’s business and of
its position.

The review shall include a balanced and comprehensive
analysis of the development of the company’s business
and of its position. The information included shall not
be restricted to the financial aspects of the company’s
business.

In providing its analysis, the annual report shall, where
appropriate, include references to and additional expla-
nations of amounts reported in the annual accounts.’

(b) In paragraph 2, point (b) is replaced by the following:

‘the company’s likely future development including any
significant uncertainties and risks which may affect
that development;’

10. In Article 33(1), the point (c) is replaced by the following:

15. In Article 48, the third sentence is deleted.

‘revaluation of fixed assets’

16. In Article 49,
following:

the third sentence is replaced by the

11. In Article 42,
following:

the first paragraph is replaced by the

‘Provisions may not exceed in amount the sums which are
necessary.’

12. The following Articles 42e and 42f are inserted:

‘Article 42e

By way of derogation from Article 32, Member States may
permit or require in respect of all companies or any classes
of companies the valuation of specified categories of assets
other than financial instruments at amounts determined by
reference to fair value.

Such permission or requirement may be restricted to
consolidated accounts as defined in Directive 83/349/EEC.

Article 42f

‘The report of
the person or persons responsible for
auditing the annual accounts (hereinafter: “the statutory
it
auditors”), may not accompany this publication, but
must be disclosed whether the audit opinion was issued
with or without qualification, or whether the statutory
auditors were unable to express an audit opinion. It shall
also be disclosed whether the report of
the statutory
auditors included a reference to any matters by way of
emphasis to which the statutory auditors drew attention
without qualifying the audit opinion.’

17. Article 51(1) is replaced by the following:

‘The annual accounts of companies shall be audited by one
or more persons approved by Member States to carry out
statutory audits on the basis of Directive 84/253/EEC (*).

The statutory auditors must also verify that the annual
report
is consistent with the annual accounts for the
same financial year.

Notwithstanding Article 31(1)(c), Member States may
permit or require in respect of all companies or any
classes of companies that, where an asset is valued in
accordance with Article 42e, a change in the value shall
be included in the profit and loss account.’

___________
(*) OJ L 126, 12.5.1984, p. 20.’

18. The following Article 51a is inserted:

13. In Article 43(1)(6) the reference to ‘Articles 9 and 10’ is
replaced by a reference to ‘Articles 9, 10 and 10a’.

‘Article 51a

14. Article 46 is amended as follows:

(a) Paragraph 1 is replaced by the following:

(a) an introduction which shall at least identify the annual
accounts which are the subject of the statutory audit;

1.

The report of the statutory auditors shall include:

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(b) a description of the scope of the statutory audit which
in
statutory audit was

shall at
accordance with which the
conducted;

identify the auditing standards

least

(c) an audit opinion which shall state clearly the opinion
of the statutory auditors as to whether the annual
accounts give a true and fair view in accordance
with the relevant financial reporting framework and,
accounts
where
comply with
audit
opinion shall be either unqualified, qualified, an
adverse opinion or,
the statutory auditors are
unable to express an audit opinion, a disclaimer of
opinion;

the
requirements;

appropriate, whether

statutory

annual

the

if

from the cases mentioned in paragraph 1,

the
‘Apart
Member States may require any undertaking governed by
their national law to draw up consolidated accounts and a
consolidated annual report if:

(a) that undertaking (a parent undertaking)

actually
exercises dominant influence over another undertaking
(the subsidiary undertaking); or

(b) that undertaking (a parent undertaking) and another
undertaking (the subsidiary undertaking) are managed
on a unified basis by the parent undertaking.’

2. In Article 3(1), the reference to ‘Articles 13, 14 and 15’ is

replaced by a reference to ‘Articles 13 and 15’.

(d) a reference to any matters to which the statutory
auditors draw attention by way of emphasis without
qualifying the audit opinion;

3. Article 6 is amended as follows:

(a) Paragraph 4 is replaced by the following:

(e) an opinion concerning the consistency or otherwise of
the annual report with the annual accounts for the
same financial year.

The report shall be signed and dated by the statutory

2.
auditors.’

19. Article 53(1) is deleted.

20. The following Article 53a is inserted:

‘Article 53a

Member States shall not make available the exemptions set
out in Articles 11, 27, 46, 47 and 51 in the case of
companies whose securities are admitted to trading on a
regulated market of any Member State within the meaning
of Article 1(13) of Council Directive 93/22/EEC (*).

___________
(*) OJ L 141, 11.6.1993, p. 27.’

21. In Article 56(1) the reference to ‘Articles 9, 10’ is replaced

by a reference to ‘Articles 9, 10, 10a’.

22. In Article 60, first paragraph, the words ‘on the basis of
their market value’ are replaced by ‘on the basis of their
fair value’.

‘This Article shall not apply where one of the under-
takings
to be consolidated is a company whose
securities are admitted to trading on a regulated
market of any Member State within the meaning of
Article 1(13) of Council Directive 93/22/EEC (*).
___________
(*) OJ L 141, 11.6.1993, p. 27.’

(b) Paragraph 5 is deleted.

4. Article 7 is amended as follows:

(a)

In paragraph 1(b), the second subparagraph is deleted.

(b) In paragraph 2(a), the reference to ‘Articles 13, 14 and
15’ is replaced by a reference to ‘Articles 13 and 15’.

(c) Paragraph 3 is replaced by the following:

‘A Member State may not apply paragraphs 1 and 2 to
companies whose securities are admitted to trading on
a regulated market of any Member State within the
meaning of Article 1(13) of Directive 93/22/EEC.’

5. In Article 11(1)(a) the reference to ‘Articles 13, 14 and 15’

is replaced by a reference to ‘Articles 13 and 15’.

6. Article 14 is deleted.

23. In Article 61a, the reference to ‘Articles 42a to 42d’

is

replaced by a reference to ‘Articles 42a to 42f’.

7. In Article 16(1) the following subparagraph is added:

Article 2

Directive 83/349/EEC is amended as follows:

‘Member States may allow or require the inclusion of other
statements in the consolidated accounts in addition to the
documents referred to in the first paragraph.’

1. In Article 1, paragraph 2 is replaced by the following:

replaced by a reference to ‘Articles 3 to 10a’.

8. In Article 17(1)

the reference to ‘Articles 3 to 10’

is

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9. In Article 34(2)(b) the terms ‘Articles 13 and 14 and,
without prejudice to Article 14(3),’ are replaced by a
reference to ‘Article 13 and’.

consistent with the consolidated accounts for the same
financial year.

10. In Article 34(5) the words ‘and those excluded pursuant to

Article 14’ are deleted.

2.

The report of the statutory auditors shall include:

11. Article 36 is amended as follows:

(a) Paragraph 1 is replaced by the following:

‘1.
The consolidated annual report must include at
least a fair review of the development of the business
and the position of the undertakings included in the
consolidation taken as a whole.

The review shall include a balanced and comprehensive
analysis of the development of the business and of its
information included shall not be
position. The
restricted to the financial aspects of the business.

In providing its analysis,
the consolidated annual
report shall, where appropriate, provide references to
and additional explanations of amounts reported in the
consolidated accounts.’

(b) In paragraph 2, point (b) is replaced by the following:

‘(b)

the likely future development of
those under-
takings taken as a whole including any significant
that
uncertainties and risks which may affect
development;’

(c) The following paragraph 3 is added:

‘3. Where a consolidated annual report is required
in addition to an annual report, the two reports may
be presented as a single report. In preparing such a
it may be appropriate to give greater
single report,
emphasis to those matters which are significant
to
the undertakings included in the consolidation taken
as a whole.’

12. Article 37 is replaced by the following:

‘1.
The consolidated accounts of companies shall be
audited by one or more persons approved by the
Member State whose laws govern the parent undertaking
to carry out statutory audits on the basis of Council
Directive 84/253/EEC (*).

The person or persons
responsible for auditing the
consolidated accounts (hereinafter: “the statutory auditors”)
must also verify that the consolidated annual report is

(a) an introduction which shall at

identify the
consolidated accounts which are the subject of the
statutory audit;

least

(b) a description of the scope of the statutory audit which
in
statutory audit was

shall at
accordance with which the
conducted;

identify the auditing standards

least

(c) an audit opinion which shall state clearly the opinion
of the statutory auditors as to whether the consolidated
accounts give a true and fair view in accordance with
the relevant financial reporting framework and, where
accounts
appropriate, whether
the
comply with statutory
audit
opinion shall be either unqualified, qualified, an
adverse opinion or,
the statutory auditors are
unable to express an audit opinion, a disclaimer of
opinion;

requirements;

consolidated

that

if

(d) a reference to any matters to which the statutory
auditors draw attention by way of emphasis without
qualifying the audit opinion;

(e) an opinion concerning the consistency or otherwise of
the consolidated annual report with the consolidated
accounts for the same financial year.

The report shall be signed and dated by the statutory

3.
auditors.

4.
In the case where the annual accounts of the parent
undertaking are attached to the consolidated accounts, the
report of the statutory auditors required by this Article
may be combined with any report of
the statutory
auditors on the annual accounts of the parent undertaking
required by Article 51 of Directive 78/660/EEC.

___________
(*) OJ L 126, 12.5.1984, p. 20.’

13. In Article 38, the following paragraph 7 is added:

Paragraphs 2 and 3 of

‘7.
this Article shall not be
applied in respect of companies whose securities are
admitted to trading on a regulated market of any
Member State within the meaning of Article 1(13) of
Directive 93/22/EEC.’

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Article 3

Directive 91/674/EEC is amended as follows:

1. In Article 1, paragraphs 1 and 2 are replaced by the

following:

‘1.
Articles 2, 3, 4(1), (3) to (5), 6, 7, 13, 14, 15(3) and
(4), 16 to 21, 29 to 35, 37 to 41, 42, 42a to 42f, 43(1),
points 1 to 7 and 9 to 14, 45(1), 46(1) and (2), 48 to 50,
50a, 51(1), 51a, 56 to 59, 61 and 61a of Directive
78/660/EEC shall apply to the undertakings mentioned in
Article 2 of
this Directive, except where this Directive
provides otherwise. Articles 46, 47, 48, 51 and 53 of this
Directive shall not apply in respect to assets and liabilities
that are valued in accordance with Section 7a of Directive
78/660/EEC.

2. Where reference is made in Directives 78/660/EEC
and 83/349/EEC to Articles 9, 10 and 10a (balance sheet)
or to Articles 22 to 26 (profit and loss account) of Directive
78/660/EEC,
shall be deemed to be
references to Article 6 (balance sheet) or to Article 34
(profit and loss account) of this Directive as appropriate.’

such references

2. In Article 6, under
‘Provisions for other
‘Other provisions’.

‘Liabilities’,
risks and charges’

in point E,

the title
is replaced by

‘Member States may permit derogations from the first
subparagraph.’

(b) Paragraph 6 is replaced by the following:

‘The method(s) applied to each investment item shall be
stated in the notes to the accounts, together with the
amounts so determined.’

Article 4

Member States shall bring into force the laws, regulations and
administrative provisions necessary to comply with this
Directive by [. . .] at the latest. They shall forthwith inform
the Commission thereof.

When Member States adopt those provisions, they shall contain
a reference to this Directive or be accompanied by such a
their official publication.
reference on the occasion of
Member States shall determine how such reference is to be
made.

Article 5

This Directive shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Communities.

3. Article 46 is amended as follows:

Article 6

(a)

In paragraph 5, the following subparagraph is added:

This Directive is addressed to the Member States.