Commission Regulation (EC) No 1569/2007 of 21 December 2007 establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council
Date: 2007-12-21
Institutions: European Commission
Subjects: accounting, consumer information, dissemination of information, international standard, investment, securities

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Official Journal of the European Union

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COMMISSION REGULATION (EC) No 1569/2007

of 21 December 2007

establishing a mechanism for the determination of equivalence of accounting standards applied by
third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the
European Parliament and of the Council

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty
Community,

establishing the European

Having regard to Directive 2003/71/EC of
the European
Parliament and of the Council of 4 November 2003 on the
prospectus to be published when securities are offered to the
public or
and amending Directive
2001/34/EC (1), and in particular Article 7(1) thereof,

admitted to trading

Having regard to Directive 2004/109/EC of
the European
Parliament and of the Council of 15 December 2004 on the
harmonisation of transparency requirements in relation to infor-
mation about issuers whose securities are admitted to trading
on a regulated market and amending Directive 2001/34/EC (2),
and in particular Article 23(4)(i) thereof,

Whereas:

(1)

Article 23(4) of Directive 2004/109/EC requires the
Commission to set up a mechanism for the determi-
nation of the equivalence of the information required
including financial statements and
under this Directive,
the corresponding requirements under the law, regu-
lations or administrative provisions of third countries.
This Article also requires
the Commission to take
decisions in relation to the equivalence of accounting
standards used by third country issuers, and enables the
Commission to allow the use of third country accounting
standards during an appropriate transitional period.
Given the close interconnection of
the information
required under Directive 2004/109/EC with the infor-
mation required under Directive 2003/71/EC, it is appro-
priate
criteria for determination of
equivalence apply in the framework of both Directives.

same

that

the

(2)

Given the objectives of Directive 2003/71/EC to ensure
that investors are able to make an informed assessment
of the assets and liabilities, financial position, profit and
losses and prospects of an issuer, and the objectives of
Directive 2004/109/EC to enable investors to make an

(3)

(4)

informed assessment of the financial situation of issuers
with securities admitted to trading on a regulated market,
it is appropriate that equivalence should be defined by
reference to the ability of investors to make a similar
assessment of
financial position and
prospects,
irrespective of whether financial statements
are drawn up in accordance with the accounting
standards of a third country or with International
Financial Reporting Standards (hereinafter IFRS).

issuer’s

the

for

that

to ensure

an authority

that are relevant

a determination of

the
In order
third country accounting standards is
equivalence of
made in all cases
to Community
markets, the Commission should assess the equivalence
third country accounting standards either upon a
of
from the competent authority of a Member
request
accounting
responsible
State or
standards or market supervision of a third country, or
on its own initiative. The Commission will first consult
the Committee of
the European Securities Regulators
(CESR) with regard to the assessment of equivalence of
the accounting standards in question.
In addition, the
Commission will actively monitor ongoing progress in
the work by the relevant third country authorities to
eliminate
issuers
accessing the financial markets of a third country to
reconcile
IFRS
adopted pursuant to Regulation (EC) No 1606/2002 of
the European Parliament and of the Council of 19 July
2002 on the application of
international accounting
standards (3). The decision of the Commission will have
to be such that Community issuers are permitted to use
IFRS adopted pursuant to Regulation (EC) No 1606/2002
in the third country concerned.

statements prepared using

for Community

requirement

financial

any

The President of the European Council, the President of
the Commission and the President of the United States
have agreed in April 2007 to promote and secure
conditions for US Generally Accepted Accounting Prin-
ciples (GAAP) and IFRS to be recognised in both juris-
dictions without the need for reconciliation by 2009 or
sooner. The Commission and the US Securities and
pursued
Exchange Commission
their
(SEC)
have
towards
dialogue
IFRS adopted
the
acceptance of
to Regulation (EC) No 1606/2002 in the
pursuant
United States, which would relieve issuers using IFRS
from costly reconciliation requirements. Steps should be
arrangements with other
taken to achieve

similar

(1) OJ L 345, 31.12.2003, p. 64.
(2) OJ L 390, 31.12.2004, p. 38.

(3) OJ L 243, 11.9.2002, p. 1.

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countries on whose exchanges EU companies list their
securities before the end of 2008. The Accounting
Standards Board of
is pursuing the im-
Japan (ASBJ)
plementation of its joint work programme with the Inter-
national Accounting Standards Board (IASB) towards the
IFRS. The
convergence
Accounting
(AcSB)
published an Implementation Plan for
incorporating
IFRS into Canadian GAAP as from 1 January 2011.

Japanese GAAP with

of
Standards

Canada

Board

of

(5)

third country to adopt

In order to promote the objectives of Regulation (EC) No
1606/2002 and to encourage the use of IFRS throughout
the global financial markets, and to minimise disruption
to markets in the Community, it is appropriate to take
account of any convergence programme with IFRS or
commitment on the part of the relevant authority of
the
is
specify under which conditions
necessary to further
convergence
as
providing a sufficient basis for allowing third country
issuers to apply their national accounting standards for
a transitional period. The Commission will first consult
CESR on the convergence programme or the progress
towards adoption of IFRS, as the case may be.

IFRS. Therefore

programmes

considered

can

be

it

may be taken on the initiative of the Commission, upon appli-
cation submitted by the competent authority of a Member State
or upon application of an authority responsible for accounting
standards or market supervision of a third country.

Where the Commission decides to make a determination of
equivalence, whether on an application or on its own initiative,
it shall make that decision public.

Article 4

Conditions for the acceptance of third country accounting
standards for a limited period

1.
Third country issuers may be permitted to use financial
statements drawn up in accordance with the accounting
standards of a third country in order to comply with obligations
under Directive 2004/109/EC and, by derogation from Article
35(5) of Regulation (EC) No 809/2004, to provide historical
financial
that Regulation for a period
commencing any time after 31 December 2008 and expiring
no later than 31 December 2011 in the following cases:

information under

(6)

The measures provided for in this Regulation are in
accordance with the opinion of the European Securities
Committee,

HAS ADOPTED THIS REGULATION:

standards

1. the third country authority responsible for the national
a public
accounting
commitment before 30 June 2008 to converge these
standards with International Financial Reporting Standards
before 31 December 2011 and both the
following
conditions are met:

concerned has made

Article 1

Subject matter

(a)

This Regulation lays down the conditions under which the
Generally Accepted Accounting Principles of a third country
Financial
may be
Reporting Standards
a
mechanism for the determination of such equivalence.

considered equivalent
(hereinafter

to International
IFRS)

and introduces

Article 2

Equivalence

The Generally Accepted Accounting Principles of a third
country may be
to IFRS adopted
considered equivalent
pursuant
to Regulation (EC) No 1606/2002 if the financial
statements drawn up in accordance with Generally Accepted
Accounting Principles of the third country concerned enable
investors to make a similar assessment of
the assets and
liabilities, financial position, profit and losses and prospects of
the issuer as financial statements drawn up in accordance with
IFRS, with the result that investors are likely to make the same
decisions about the acquisition, retention or disposal of securi-
ties of an issuer.

Article 3

Equivalence mechanism

The decision on the determination of the equivalence of the
Generally Accepted Accounting Principles of a third country

standards

the third country authority responsible for the national
accounting
established a
convergence programme before 31 December 2008
that is comprehensive and capable of being completed
before 31 December 2011;

concerned has

(b) the convergence programme is effectively implemented,
without delay, and the resources necessary for
its
completion are allocated to its implementation;

standards

concerned has made

2. the third country authority responsible for the national
accounting
a public
commitment before 30 June 2008 to adopt International
Financial Reporting Standards before 31 December 2011
and effective measures are taken in the third country to
secure the timely and complete transition to International
Financial Reporting Standards by that date, or has reached
a mutual recognition agreement with the EU before 31
December 2008.

Any decision under paragraph 1 to permit the continued
2.
acceptance of financial statements drawn up in accordance with
the accounting standards of a third country shall be made in
accordance with the procedure referred to in Article 24 of
Directive
of Directive
2004/109/EC.

2003/71/EC and Article

27(2)

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financial

3. Where the Commission permits the continued acceptance
of
statements drawn up in accordance with the
accounting standards of a third country in accordance with
paragraph 1,
it shall review regularly whether the conditions
specified in point (a) or (b) (as the case may be) continue to
be met, and shall report accordingly to the European Securities
Committee and to the European Parliament.

If the conditions in point (a) or (b) of paragraph 1 are no
4.
longer met, the Commission shall take a decision in accordance
with the procedure referred to in Article 24 of Directive
2003/71/EC and Article 27(2) of Directive 2004/109/EC

amending its decision under paragraph 1 in respect of these
accounting standards.

5. When complying with this Article, the Commission shall
first consult CESR on the convergence programme or the
progress towards adoption of IFRS, as the case may be.

Article 5

This Regulation shall enter into force on the third day following
its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 21 December 2007.

For the Commission

Charlie McCREEVY
Member of the Commission