Proposal for a Council Directive amending Directive 78/660/EEC as regards amounts expressed in euro
Date: 2003-01-24
Institutions: European Commission
Subjects: EC Directive, company law, derogation from EU law, private limited company, public limited company, publication of accounts

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 24.01.2003
COM(2003) 29 final

Proposal for a

COUNCIL DIRECTIVE

amending Directive 78/660/EEC as regards amounts expressed in euro

(presented by the Commission)

EXPLANATORY MEMORANDUM

1.

INTRODUCTION

The  Fourth  Council  Directive  of  25  July  1978  (78/660/EEC)1  introduced  for  all  limited
companies equivalent rules on the drawing up, audit and publication of annual accounts and
annual reports.

The  Fourth  Directive  allows  the  Member  States  to  provide  for  derogations  for  certain
companies based on their individual economic and social impact. The Directive provide that
companies which fall below certain size thresholds are not required to:

– 

– 

– 

– 

include certain detailed disclosures in their accounts;

prepare consolidated accounts;

prepare an annual report; or

have their accounts audited.

Articles 11 and 27 define the companies entitled to such derogations based upon balance sheet
total, net turnover and number of employees.

The  thresholds  laid  down  in  Article  27  also  serve  as  a  reference  for  Article  6  of  the  7th
Council Directive on consolidated accounts (83/349/EEC)2.

Article 53(2) of the Fourth Directive envisages that, every five years the Council, acting on a
proposal from the Commission, is to examine and, if need be, revise the amounts expressed in
euro in that Directive, in the light of economic and monetary trends in the Community.

To date the Council, in accordance with Article 53(2) of Directive 78/660/EEC, has on  four
occasions revised the amounts expressed by means of Directives 84/569/EEC3, 90/604/EEC4,
94/8/EC5 and 1999/60/EC6;

The fifth five-year period following the adoption of the Fourth Directive will end on 24 July
2003 and a review of those amounts is thus justified.

1

2

3

4

5

6

OJ L 222, 14.8.1978, p. 11, Directive as last amended by Directive 2001/65/EC (OJ L 283, 27.10.2001,
p. 28).
OJ L 193, 18. 7. 1983, p. 1, Directive as last amended by Directive 2001/65/EC (OJ L 283, 27.10.2001,
p. 28).
OJ L 314, 4.12.1984, p. 28.
OJ L 317, 16.11.1990, p. 57.
OJ L 82, 25.3.1994, p. 33.
OJ L 162, 26.6.1999, p. 65.

2

                                                
2.

OUTLINE OF THE CONTENTS OF THIS PROPOSAL

2.1.

Article 1 – Changes to thresholds

Economic and monetary trends have, since the date of the last revisions of the thresholds set
out in Articles 11 and 27, led to a diminution of the amounts expressed in those Articles, in
real terms.

Following a review of the detailed statistical data i.e. private final consumption expenditure at
current  prices,  gross  domestic  product  at  current  prices  and  gross  fixed  capital  formation  at
current prices (total EU  economy)  for  the  period of  1998 to  2001, and  having  regard  to  the
outcome  of  discussions  with  Member  States  in  the  Contact  Committee  for  the  Accounting
Directives, it is proposed to increase the  amounts of balance sheet total and net turnover by
16.8%.

Amounts in euro appearing in this Directive shall be converted into the national currency of
Member States not adopting the euro according to the exchange rate published in the Official
Journal of the European Communities on the date on which this Directive enters into force.

2.2.

Article 2 – Timetable

As the revision of the thresholds is at the discretion of the Member States, there is no need to
lay down a time limit for compliance with this Directive.

2.3.

Articles 3 and 4 – Final provisions

The  provisions  in  these  Articles  deal  with  the  adoption  and  administration  of  the  proposed
Directive.

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Proposal for a

COUNCIL DIRECTIVE

amending Directive 78/660/EEC as regards amounts expressed in euro

(Text with EEA relevance)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having  regard  to  the  Fourth  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 companies7, and in
particular Article 53(2) thereof,

Having regard to the proposal from the Commission8,

Whereas:

(1)

(2)

Articles 11 and 27 of Directive 78/660/EEC and, by way of reference, Article 6 of the
Seventh  Council  Directive  83/349/EEC  based  on  Article  54(3)(g)  of  the  Treaty  on
consolidated  accounts9  and  Articles  20  and  21  of  the  Eight  Council  Directive
84/253/EEC  based  on  Article  54(3)(g)  of  the  Treaty  on  the  approval  of  persons
responsible  for  carrying  out  the  statutory  audits  of  accounting  documents10  specify
thresholds  expressed  in  euro  for  the  balance  sheet  total  and  the  net  turnover,  below
which  Member  States  may  grant  derogations  from  certain  provisions  of  those
Directives.

Since  the  fifth  five-year  period  following  the  adoption  of  Directive  78/660/EEC  on
25 July  1978  ends  on  24  July  2003,  a  review  of  those  thresholds  has  duly  been
undertaken, as required by that Directive, the results of which indicate that, in the light
of  economic  and  monetary  trends  in  the  Community,  an  increase  in  the  amounts
expressed in euro is necessary.

(3)

Directive 78/660/EEC should therefore be amended accordingly.

7

8

9

10

OJ L 222, 14.8.1978, p. 11, Directive as last amended by Directive 2001/65/EC (OJ L 283, 27.10.2001,
p. 28)
OJ C , , p. .
OJ L 193, 18.7.1983, p. 1
OJ L 126, 12.5.1984, p. 20

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HAS ADOPTED THIS DIRECTIVE:

Article 1

Directive 78/660/EEC is amended as follows:

(1) 

Article 11 is amended as follows:

(a) The first paragraph is amended as follows:

in the first indent, the words ‘balance sheet total: EUR 3 125 000’ are replaced

(i)
by the words ‘balance sheet total: EUR 3 650 000’;

in the second indent, the words ‘net turnover: EUR 6 250 000' are replaced by

(ii)
the words ‘net turnover: EUR 7 300 000’.

(b) The following second paragraph is inserted:

’In the case of those Member States which have not adopted the euro, the amount in
national currency equivalent to the amounts specified in the first paragraph shall be
that obtained by applying the exchange rate published in the Official Journal of the
European  Communities  on  the  date  of  the  entry  into  force  of  the  Directive  setting
those amounts in consequence of the review provided for in Article 53(2).’

(2) 

Article 27 is amended as follows:

(a) The first paragraph is amended as follows:

in  the  first  indent,  the  words  ‘balance  sheet  total:  EUR  12  500  000’  are

(i)
replaced by the words ‘balance sheet total: EUR 14 600 000’;

in the second indent, the words ‘net turnover: EUR 25 000 000' are replaced by

(ii)
the words ‘net turnover: EUR 29 200 000’;

(b) The following second paragraph is inserted:

’In the case of those Member States which have not adopted the euro, the amount in
national currency equivalent to the amounts specified in the first paragraph shall be
that obtained by applying the exchange rate published in the Official Journal of the
European  Communities  on  the  date  of  the  entry  into  force  of  the  Directive  setting
those amounts in consequence of the review provided for in Article 53(2).’

Article 2

1.  Member  States  shall  adopt  the  measures  necessary  to  comply  with  this  Directive  if  and
when they decide to make use of the option provided for in Articles 11 and 27 of Directive
78/660/EEC. They shall forthwith inform the Commission thereof.

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

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2. Member States shall communicate to the Commission the texts of the main provisions of
national law which they adopt in the field governed by this Directive.

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

Article 3

Article 4

This Directive is addressed to the Member States.

Done at Brussels,

For the Council
The President

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IMPACT ASSESSMENT FORM

THE IMPACT OF THE PROPOSAL ON BUSINESS WITH SPECIAL REFERENCE
TO SMALL AND MEDIUM-SIZED ENTERPRISES( SMEs)

TITLE OF PROPOSAL

Proposal for a COUNCIL DIRECTIVE of [date] amending Directive 78/660/EEC as regards
amounts expressed in euro.

DOCUMENT REFERENCE NUMBER

[XX]

THE PROPOSAL

1.

The  proposal  represents  a  periodic  amendment  to  existing  Community  legislation
which was foreseen in the original legislation.

THE IMPACT ON BUSINESS

2.

3.

The proposal will increase the thresholds at which companies are eligible to benefit
from certain derogations contained in the 4th and, by way of cross reference  the  7th
Council Directives.  The effect  will be  that, all things  being  equal,  more  companies
will be entitled to benefit from these derogations.

Whilst  the  4th,  7th  Directives  and  this  proposal  make  no  reference  to  small  and
medium-sized companies – a term reserved for certain specific Community measures
–  the  derogations  provided  in  those  directives  to  companies  which  fall  beneath  the
thresholds are based upon the need to take account of the specific situation of firms
which are  economically speaking, smaller. This  proposal  is  concerned  with  exactly
those needs.

CONSULTATION

4.

The  Commission  has  consulted  with  the  Contact  Committee  on  the  Accounting
Directives.

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