WRITTEN QUESTION E-2414/03 by Peter Skinner (PSE) to the Commission. IAS application to companies not incorporated in the EU.
Date: 2003-07-21
Institutions: European Parliament, Provisional data
Subjects: capital market, dissemination of information, domestic market, international standard, publication, securities, standardised accounting system, stock-exchange listing

C 70 E/96

Official Journal of the European Union

EN

20.3.2004

(c) The Commission’s Directorate-General for Research has co-financed several European research projects
concerning desertification in the Mediterranean.
In fact, a new call for proposals has just been
launched under the Environment Programme, with a deadline of 9 October 2003. This call addresses
issues of (i) Assessment of Vulnerability to Desertification and Early Warning, and (ii) Combating
desertification, with a view to providing input to Annex IV to the Convention on Combating
Desertification.

2. Within the framework of the United Nations Convention to Combat Desertification (UN-CCD), Spain
is currently in the last phase of finalising its National Action Programme (NAP) (1), which is the main
instrument for implementing the provisions of the Convention. Furthermore, Spain is included in the
regional Annex to the UN-CDD covering the Northern Mediterranean. A Sub-regional Action Programme
(SRAP) is currently not available. An overview of projects of relevance to the Annex IV Group countries, as
submitted at the UNCCD/CRIC-1 Meeting of November 2002, can be found on the UNCCD internet
site (2).

In the medium term, the following Community activities are expected to further strengthen the fight

3.
against desertification significantly:

(a) On 16 April 2002 the Commission adopted a communication entitled ‘Towards a thematic strategy
for soil protection’ (3). This communication addresses desertification in the context of soil degradation
processes such as erosion and depletion of organic matter. The communication acknowledges that the
Mediterranean region is severely affected by erosion. The impact on the environment, water reservoirs
and agricultural land represents a major threat for these regions. The communication represents a first
step towards the development of a Soil Thematic Strategy as requested by the 6th Environmental
Action Programme. The Commission is presently in the process of further developing this Soil
Thematic Strategy (4). Detailed policy options in response to soil degradation due to erosion, organic
matter depletion, soil contamination and soil monitoring will be presented in the forthcoming soil
proposals for 2004;

(b) The 2003 Common Agricultural Policy (CAP) reform involves further measures contributing to soil
protection. A new modulation system is established and the funds made available by it will increase
the budget for rural development measures, including agri-environmental and afforestation schemes.
There will also be an increase in the maximum Community co-financing rate for agri-environmental
measures, which becomes 85 % in Objective 1 areas and 60 % in other areas. Moreover, a single
decoupled farm income payment comes to replace most of the direct payments under several
Common Market Organisations and is expected to reduce incentives for intensive production. Farmers
receiving direct payments will be subject to a system of compulsory ‘cross-compliance’. This includes
the obligation to maintain all agricultural
land in good agricultural and environmental condition,
which entails compliance with standards relating to soil protection, maintenance of soil organic matter
and soil structure, to be defined by Member States. Where a farmer fails to comply with these
standards, a reduction in payments will be applied as a penalty.

(1) http://www.unccd.int/actionprogrammes/northmed/northmed.php
(2) http://www.unccd.int/cop/reports/northmed/regional/2002/group_of_annex_iv_countries-eng.pdf
(3) COM(2002) 179 final.
(4) http://europa.eu.int/comm/environment/soil/index.htm

(2004/C 70 E/099)

WRITTEN QUESTION E-2414/03

by Peter Skinner (PSE) to the Commission

(21 July 2003)

Subject: IAS application to companies not incorporated in the EU

According to the IAS Regulation (Article 4), companies governed by the law of a Member State that also
have securities admitted to trading on an EU regulated market will have to prepare their consolidated
accounts in conformity with IAS as of January 2005. The Regulation allows (Article 5) EU countries to
apply IAS to other companies. According to CESR’s consultation paper of June 2003 on disclosure
requirements for prospectus, financial information must have been prepared according to IAS Regulation,

20.3.2004

EN

Official Journal of the European Union

C 70 E/97

or IAS as applicable, or if not applicable, to local GAAP. The proposed Transparency Directive covers all
issuers that have securities trading on an EU-regulated market and implies that IAS may be applicable
although exemptions could be made on the basis of equivalent reporting.

Could the Commission clarify whether, under the IAS Regulation, Prospectus and Transparency Directives,
non-EU incorporated companies with securities admitted to trading on an EU-regulated market are obliged
to reconcile their accounts to IAS or if such reconciliation is subject to an equivalence test? Is the
Commission aware of any EU country that wishes to require IAS reconciliation for non-EU domiciled
companies?

Answer given by Mr Bolkestein on behalf of the Commission

(4 September 2003)

Regulation (EC) No 1606/2002 of the Parliament and of the Council of 19 July 2002 on the application of
international accounting standards (1) applies only to companies governed by the law of a Member State.
Companies not governed by the law of a Member State are outside the scope of this Regulation. Therefore,
this legislative text does not address the issue of disclosure obligations for non Union issuers with
securities admitted to trading on an Union regulated market. Article 5 only provides an option to Member
States with respect to certain Union companies.

Regarding the first question, it should be noted that the issue of disclosure obligations related to financial
information of non Union issuers with securities admitted to trading on an Union regulated market is
currently dealt with by the Securities Law Directives. The codified Directive 2001/34/EC of the Parliament
and of the Council of 19 July 2001 on the admission of securities to official stock exchange listing and on
the information to be published on those securities (2) contains the Union legal requirements on this issue.
This Directive allows Member States to impose more stringent or additional conditions to the ones laid
down in the Directive itself.

In the context of listing particulars (prospectus),
it is specified in items 5.1.5 and 5.1.3 of Annex 1
Schedule A and B, that if the financial statements of an issuer do not comply with Community legislation
on accounting standards and do not give a true and fair view of the issuer’s assets and liabilities, financial
position and profits and losses, more detailed and/or additional information must be given. It is also
important to note that disclosure obligations for wholesale markets such as ‘eurobonds’ are defined at
national level and not at Community level for the time being.

The same obligation is imposed for periodic reporting (Articles 67 and 80 paragraphs 3 for annual
accounts). For half yearly reporting, Member States’ competent authorities may require information from
third country issuers equivalent to that required from companies based in their own jurisdiction (Article 76
paragraph 4).

These obligations apply to non Union issuers and represent the Union legal requirement for reconciliation
of non Union issuers’ accounts with the national accounting standards of a given Member State.

In practice, these obligations have been applied in various ways by Members States because of their
different understandings and assessments, whether or not a given set of third country accounting standards
provides a ‘true and fair view’, as defined by Community legislation.

For instance, in France, a reconciliation is imposed upon non Union issuers on a case-by-case basis in the
context of a prospectus but no reconciliation is required for periodic reporting, whereas in the United
Kingdom (UK), an equivalent standard to UK Generally Agreed Accounting Principles is required in the
context of a prospectus. In the UK, UK GAAP, US GAAP and IAS are the accepted accounting standards
for annual and half yearly accounts. However, derogations under certain conditions are possible.

It is also important to note that Union issuers are obliged to present a reconciliation of their financial
statements according to US GAAP when seeking a listing of their securities on a US exchange.

C 70 E/98

Official Journal of the European Union

EN

20.3.2004

Turning to the second question, the Commission has no indication of how Member States will apply in
practice the existing Community disclosure obligations to third country issuers when the IAS Regulation
enters into force. It is, however, unlikely that Member States will consider any accounting standards in the
world as acceptable when raising capital on their territory. For the time being, the Commission believes
that Members States will maintain their national practices that derive from existing Community legislation
until the implementing measures of the new prospectus Directive and the proposed transparency Directive
are adopted.

The new prospectus Directive and the proposed transparency Directive should bring more consistency and
harmonisation regarding the financial information to be disclosed by third country issuers who wish to
raise capital within the Union. It will also cover securities aimed at wholesale investors. The content of the
implementing measures of the prospectus Directive is not yet known and the proposed transparency
Directive is in the early stages of the co-decision procedure.

(1) OJ L 243, 11.9.2002.
(2) OJ L 184, 6.7.2001.

(2004/C 70 E/100)

WRITTEN QUESTION E-2425/03

by Maurizio Turco (NI) to the Council

(21 July 2003)

Subject: Harmonisation of tax on the income from the savings of non-resident Union citizens and abolition

of banking secrecy

Knowing that:

(cid:1) At the Feira summit on 19/20 June 2000 the EU finance ministers decided that as of 2011 the
automatic exchange of information would be introduced for all Union countries in the interests of
harmonising, at Community level, the tax on income from the savings of Union citizens.

(cid:1) On 21 January 2003 the EU finance ministers initialled a policy agreement, which is subject to

acceptance of equivalent measures by other third countries and stipulates that:

(a) as of 1 January 2004 twelve Member States will initiate the automatic exchange of information;

(b) Luxembourg, Austria and Belgium will initiate the automatic exchange of information ‘if and
when’ the Council unanimously agrees that Switzerland, the United States, Liechtenstein, Andorra,
San Maríno and Monaco accept the exchange of information on the basis of OECD’s 2002
parameters, which define criminal and civil offences in the areas of taxation and fraud.

(cid:1) On 3 June 2003 the EU finance ministers approved an arrangement negotiated with Switzerland.

Can the Council answer the following questions:

1. Why do the third countries do not include the Vatican State, despite the fact that:

(a)

(b)

the central bank, the Istituto Opere di Religione (IOR) does not belong to any international
monitoring body;

the IOR takes part indirectly in the payment systems of the euro zone (cid:1) with dual access via two
major banks, one of them German, the other Italian, which are themselves linked to the system (cid:1)
thereby evading surveillance by the banking authorities to which only direct participants are
subjected;

(c)

it has no legislation to combat money-laundering;