Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings
Date: 2011-10-25
Institutions: European Commission
Subjects: administrative formalities, administrative transparency, closing of accounts, disclosure of information, partnership, publication of accounts, registration of a company

EUROPEAN COMMISSION 

Brussels, 25.10.2011 
COM(2011) 684 final 

2011/0308 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the annual financial statements, consolidated financial statements and related reports 
of certain types of undertakings 

(Text with EEA relevance) 

{SEC(2011) 1289 final} 
{SEC(2011) 1290 final} 

 
 
  
 
EXPLANATORY MEMORANDUM 

1. 

GENERAL COMMENTS 

The Accounting Directives1 (hereafter the "Directives") deal with the annual and consolidated 
financial statements of limited liability companies in Europe. 

There are a number of key objectives in the current Review: 

(1)  The  reduction  of  administrative  burden/simplification  targeting  mainly  small 

companies. 

(2)  To increase the clarity and comparability of financial statements targeting the 
company categories for which these considerations are important due to a more 
vigorous cross-border activity and a larger number of external stakeholders. 

(3)  The protection of essential user needs aiming at retaining necessary accounting 

information for users. 

(4)  The  increased  transparency  on  payments  made  to  governments  by  the 

extractive industry and loggers of primary forests. 

Consultations  have  shown  that  stakeholders  are  overall  broadly  content  with  the  current 
framework  which  has  generally  functioned  well  over  the  years.  Those  stakeholders  include 
inter alia preparers and users of financial statements, and public authorities. However they do 
see room for simplification, especially to benefit the smallest companies. During the past 30 
years, amendments to the Directives have added many requirements, such as new disclosures 
and valuation rules, including detailed provisions on fair value accounting. Less attention has 
been  paid  to  considering  whether  existing  requirements  could  be  simplified  or  removed. 
Whilst every amendment may have been justified in its own right, these additions have tended 
to disregard the comparability and usefulness of the financial statements, increased reporting 
requirements and the number of Member State options, and have ultimately led to increased 
complexity  and  regulatory  burden  for  all  companies.  This  increased  burden  bears  down 
primarily on smaller companies. 

Stakeholders  have  also  pointed  to  the  need  to  increase  the  clarity  and  comparability  of 
financial statements, especially for larger companies which tend to undertake more extensive 
cross-border operations. 

The  raison  d'être  for  the  Directives  is  to  establish  the  requirement  for  limited  liability 
companies to prepare financial statements and set minimum requirements in order to improve 
the  EU-wide  comparability  of  financial  statements.  This,  in  turn,  should  lead  to  a  better 
functioning  of  the  Single  Market  and,  more  concretely,  an  increased  access  to  finance, 
reductions  in  the  cost  of  capital  and  increased  levels  of  cross-border  trade,  merger  and 
acquisition activity. Overall, the proposal contributes to improving Europe's competitiveness 
through establishing a regulatory environment conducive to job-rich growth. 

1 

Fourth  Council  Directive  of  25  July  1978  based  on  Article  54  (3)  (g)  of  the  Treaty  on  the  annual 
accounts of certain types of companies (78/660/EEC). Seventh Council Directive of 13 June 1983 based 
on the Article 54 (3) (g) of the Treaty on consolidated accounts (83/349/EEC). 

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The proposal complements the proposal for a Directive of 20092 on the financial statements of 
micro-entities,  which  is  currently  still  being  negotiated  by  the  EU  co-legislators.  Given  that 
the  Council  and  the  Parliament  have  now  both  agreed  to  the  principle  of  a  micro  entity 
regime,  the  current  proposal  does  not  contain  any  new  policy  proposal  regarding  micro 
companies as assessed in the accompanying Impact Assessment. The European Commission 
is  willing  to  consider,  together  with  the  EU  co-legislators,  how  best  to  integrate  into  the 
current proposal the final inter-institutional agreement on the Directive of 2009. 

This  proposal  supports  the  Commission's  approach  on  companies  outlined  in  a  number  of 
instances. The Europe 2020 Strategy3 aims to make the EU a smarter, more sustainable and 
inclusive economy. The Single Market Act4 aims to simplify life for SMEs, which make up 
more  than  99%  of  Europe's  businesses,  and  to  improve  these  companies'  access  to  finance. 
The  Small  Business  Act  (SBA)  recognises  the  need  to  consider  distinct  needs  for  the  SME 
group as well as to have segments within that group. It supports a "think small first" approach. 
The  proposal  also  forms  part  of  the  Commission's  simplification  rolling  programme  and 
administrative burden reduction initiatives. As such, it delivers on the commitment made by 
the Commission to review its acquis to ensure the relevance, effectiveness and proportionality 
of  the  legislation  in  place,  as  well  as  to  reduce  administrative  burdens  by  simplifying  the 
regulatory environment5. 

The proposal repeals the current Accounting Directives, replacing them and their subsequent 
amendments with a single new Directive. 

2. 

CONSULTATIONS OF STAKEHOLDERS AND IMPACT ASSESSMENT 

2.1. 

Consultation of stakeholders and interested parties 

The  Commission  Services  have  maintained  a  regular  dialogue  with  stakeholders  throughout 
the Review. The objective was to gather views from all interested parties, including preparers, 
users, standard setters, public authorities, etc. Dialogue took place through: 

– 

– 

An informal ad hoc SME reflection group composed of 10 experts with diverse 
experience and backgrounds. 

Two public consultations, respectively on the Review of the Directives and on 
the  International  Financial  Reporting  Standard  for  Small  and  Medium-Sized 
Entities,  both  followed  by  stakeholders'  meetings  to  consider  and  further 
discuss the results. 

2 

3 
4 

5 

Proposal for a Directive of the European Parliament and of the Council amending Council Directive 
78/660/EEC on the annual accounts of certain types of companies as regards micro-entities (Text with 
EEA relevance) {SEC(2009) 206} {SEC(2009) 207} COM/2009/0083 final - COD 2009/0035, 
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52009PC0083:EN:NOT 
http://ec.europa.eu/europe2020/index_en.htm 
The review of the Accounting Directives is flagged in section 2.11of the Communication of April 2011 
from  the  Commission  to  the  Council,  the  European  Parliament,  The  European  Economic  and  Social 
Committee and the Committee of the Regions: “Single Market Act – Twelve levers to boost growth and 
at 
together 
strengthen 
http://ec.europa.eu/internal_market/smact/docs/20110413-communication_en.pdf#page=2 
http://ec.europa.eu/governance/better_regulation/key_docs_en.htm#_simplification 

confidence, 

growth'”, 

'Working 

available 

create 

new 

to 

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– 

– 

– 

Several  targeted  meetings  with  national  standard  setters,  representatives  of 
small  and  medium-sized  businesses,  banks,  investors  and  accountants  across 
the EU. 

Consultations  with  the  EFRAG  (European  Financial  Reporting  Advisory 
Group)  Working  Group  on  SMEs  and  the  Accounting  Regulatory  Committee 
(ARC) ad hoc Working Group on SMEs. 

A  study  into  the  effects  on  administrative  burden  from  changes  to  Directives 
conducted by the Centre for Strategy and Evaluation Services (CSES). 

With respect to country-by-country reporting, the Commission Services have also maintained 
a  regular  dialogue  with  different  categories  of  stakeholders  (such  as  preparers,  users,  and 
public  authorities).  A  public  consultation  was  carried  out  in  2010/2011  and  a  series  of 
bilateral  consultations  with  stakeholders  (especially  users  and  preparers)  took  place  in  2010 
and  2011.  Furthermore,  the  European  Financial  Reporting  Advisory  Group  (EFRAG) 
provided input on the evaluation of the administrative costs associated with possibly requiring 
country-by-country financial reporting. 

2.2. 

Impact assessment 

2.2.1.  Financial Statements 

The  preparation  of  financial  statements  has  been  identified  as  one  of  the  most  burdensome 
regulatory  obligations  for  companies6.  Small  companies  face  proportionally  higher 
administrative burdens in comparison to medium-sized / large companies. 

The  Impact  Assessment  analysed  five  broad  policy  options  starting  from  the  baseline 
scenario. The broad option of revising and modernising selected requirements currently in the 
Accounting Directives was finally retained as the preferred option.  

After  examining  more  detailed  options,  it  appeared  that  a  "mini-regime"  specific  to  small 
companies would be the best policy choice. The potential for administrative burden reduction 
of this policy amounts to EUR 1.5 bn which arises from reduced reporting requirements in the 
notes,  further  relaxation  of  statutory  audit  and  the  exemption  from  preparing  consolidated 
financial statements for small groups. 

A second detailed option concerned the increase of the thresholds for small and medium-sized 
companies  as  defined  by  the  Directive  to  reflect  inflation  in  the  period  2007  to  2011.  The 
burden reduction potential of this proposal amounts to around EUR 0.2 bn. 

The  estimated  potential  for  savings  from  the  above  is  therefore  estimated  at  EUR 1.7 bn 
overall.  Micro-companies  will  in  any  event  benefit  from  the  simplified  regime  offered  to 
small  companies7.  However,  the  impact  on  micro-entities  of  the  above  policy  choices  has 

6 

7 

http://ec.europa.eu/enterprise/policies/better-regulation/administrative-burdens/priority-
areas/index_en.htm 
The impact on savings for micro-companies have not been included within the impacts attaching to this 
proposal in order to avoid double counting with the assessment of the impacts of 2009 proposal for a 
Directive on micro-entities. 

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been disregarded as the proposal for a Directive on micro-entities that is pending before the 
European Parliament and the Council specifically addresses these. 

These  policy  choices  will  reduce  the  amount  of  information  available  to  users  of  small  and 
medium-sized  company  financial  statements,  including  information  which  is  publicly 
available.  Creditor  protection  would  however  be  strengthened  due  to  the  fact  that  two 
disclosures  concerning  guarantees  and  commitments  and  related  party  transactions  would 
become mandatory. There would be a slightly positive impact on the information available in 
the case of medium-sized and large companies due to an improved clarity and comparability 
of their financial statements. 

Statistical  authorities  might  need  to  adjust  their  way  of  collecting  some  data  from  smaller 
companies  although  the  maximum  harmonisation  of  thresholds  would  allow  them  to  collect 
data  for  companies  that  are  objectively  the  same  size  across  the  EU,  thereby  improving 
comparability. However, harmonisation of the thresholds may have an adverse impact on the 
collection  of  statistical  data  especially  in  Member  States  where  the  proportion  of  small 
companies  is  high.  In  order  to  estimate  national  economic  indicators  these  Member  States 
may  need  to  revise  the  way  they  collect  statistical  data  from  companies.  The  Commission 
proposal  to  interconnect  the  central,  commercial  and  companies  registers8  should,  as  a 
mitigating factor,  improve cross-border access to company information. Tax authorities will 
retain the power to decide how profits for tax purposes should be computed and what should 
be the associated reporting requirements. 

In terms of the social impact of the proposal, simplified accounting requirements should foster 
a  business  climate  that  encourages  company  formation  and  entrepreneurship.  The  impact 
assessment  considered  that  by  freeing  up  resources  available  to  companies,  the  initiative  is 
expected  to  contribute,  at  least  marginally,  to  the  creation  of  jobs  in  the  EU.  Some  of  the 
savings at company level would stem from a reduction in fees paid to accountancy firms or 
external  accountants.  The  impact  on  jobs  due  to  this  transfer  of  resources  is  expected  to  be 
neutral  or  only  marginally  negative  in  terms  of  overall  employment  levels.  No  measurable 
environmental  impacts  are  expected.  It  is  not  expected  that  the  introduction  of  simpler 
accounting regimes would create disincentives for small companies to grow as accounting is 
less burdensome than tax or social legislation in this regard. In addition, the "think small first" 
approach of this proposal allows for accounting regimes to fit different sizes of company. 

2.2.2. Reporting of payments to governments 

The  Commission  has  publicly  expressed  support  for  the  international  Extractive  Industry 
Transparency  Initiative  (EITI),  and  envisaged  willingness  to  present  legislation  mandating 
disclosure requirements for extractive industry companies.9 A similar pledge was made in the 
concluding  Declaration  of  the  G8  Summit  in  Deauville  of  May  201110,  where  the  G8 
governments committed "to setting in place transparency laws and regulations or to promoting 
voluntary standards that require or encourage oil, gas, and mining companies to disclose the 
payments they make to governments." Furthermore, the European Parliament has presented a 

8 

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10 

Proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  amending  Directives 
89/666/EEC, 2005/56/EC and 2009/101/EC as regards the interconnection of central, commercial and 
companies registers, 24.2.2011, COM(2011) 79. 
http://www.liberation.fr/monde/01012339133-lutter-contre-l-opacite-des-industries-extractives 
http://ec.europa.eu/commission_2010-2014/president/news/speeches-statements/pdf/deauville-g8-
declaration_en.pdf 

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Resolution11  reiterating  its  support  for  country-by-country  reporting  requirements,  in 
particular for the extractive industries.  

EU legislation does not currently require companies to disclose, on a country basis, payments 
to  government  made  in  countries  where  they  operate.  Therefore    such  payments  made  to 
governments in a specific country are normally not disclosed, even though such payments by 
the extractive industry (oil, gas and mining) or loggers12 of primary forests13can represent a 
significant  proportion  of  a  country's  revenues,  especially  in  third  countries  that  are  rich  in 
natural  resources.  In  order  to  make  governments  accountable  for  the  use  of  these  resources 
and  promote  good  governance,  it  is  proposed  to  require  the  disclosure  of  payments  to 
governments  at  the  individual  or  consolidated  level  of  a  company.  This  proposal  is 
comparable  to  the  US  Dodd-Frank  Act14,  which  was  adopted  in  July  2010,  and  requires 
extractive industry companies (oil, gas and mining companies) registered with the Securities 
and Exchange Commission (SEC) to publicly report payments to governments15 on a country- 
and project-specific basis. The SEC's implementing rules are scheduled to be adopted by the 
end of 2011. 

The  Impact  Assessment16  analysed  five  broad  policy  options  starting  from  the  baseline 
scenario  (policy  option  0),  next  examining  possible  schemes  that  would  result  in  a  global 
agreement for country-by-country reporting for EU and non-EU MNCs (policy option 1), and 
finally  assessing  several  policy  options  that  would  oblige  only  EU  companies  to  disclose 
country  by  country  information  (policy  options  2  to  4).  Whilst  policy  option  2  requires  the 
disclosure of payments to governments on a country basis from the extractive industry and the 
loggers  of  primary  forests,  policy  option  3  requires  the  disclosure  of  such  information  on  a 
country- and project- basis. In addition to a report on payments to government, policy option 
4 would require a complete set of country-by-country accounts to be prepared by companies 
active in the extractive industry and loggers of primary forests. 

The option of requiring country-by-country reporting (CBCR) of payments to government on 
a  country-and-project  basis  by  EU  Multinational  Companies  (MNCs)  in  the  extractive 
industry and logging of primary forests (policy option 3) was retained. The extractive industry 
covers  all  companies  with  activities  which  involve  the  exploration,  discovery,  development 
and extraction of minerals, oil and natural gas deposits. The logging of primary forests covers 
all companies with activities which involve the clear-cutting, selective logging or thinning of 
primary forests. The disclosure of payments to government on a country-and, as the case may 

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14 
15 

16 

Resolution INI/2010/2102  
Whether  clear-cutting,  selective  logging  or  thinning,  on  land  classified  as  containing  primary  forest 
areas  or  other  disturbance  of  such  forest  or  forest  land  caused  by  mining,  mineral,  water,  oil  or  gas 
exploration or extraction or other detrimental activities. 
Defined  in  Directive  2009/28/EC  as  "naturally  regenerated  forest  of  native  species,  where  there  is  no 
clearly  visible  indication  of  human  activities  and  the  ecological  processes  are  not  significantly 
disturbed."  
http://www.sec.gov/about/laws/wallstreetreform-cpa.pdf 
Taxes,  royalties,  fees  (including  license  fees),  production  entitlements,  bonuses,  and  other  material 
benefits. 
On 22 July 2011 the Impact Assessment Board gave its positive opinion on the impact assessment. The 
comments expressed by the Board were incorporated in the final version (website address), namely: The 
report  needed  to  establish  more  clearly  the  scope  and  core  objective  of  the  initiative.  Secondly,  it 
needed to provide a fuller baseline scenario. Thirdly, options needed to be better presented. Fourthly, 
the  report  needed  to  better  consider  the  costs  and  benefits  of  the  policy  options  and  strengthen  the 
proportionality  analysis  of  the  proposed  measures.  Finally,  the  report  needed  to  provide  more 
information on stakeholders' views.  

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be, on a project- basis would better satisfy the demands of stakeholders calling for enhanced 
disclosures whilst the costs of such a policy option would remain acceptable, on condition that 
an  appropriate  materiality  threshold  is  introduced.  This  approach  would  strike  a  balance 
between  more  transparency  without  overburdening  companies,  and  without  excessively 
putting  EU  companies  at  a  competitive  disadvantage.  This  should  not  compromise  future 
efforts  by  the  EU  to  obtain  international  agreement,  and  to  create  via  negotiations  with 
international partners a worldwide level playing field with respect to CBCR.  

The  issue  of  a  potential  conflict  between  an  EU  disclosure  requirement  and  a  recipient 
country's national legislation prohibiting the publication of such information has been raised 
by  some  companies  within  the  scope  of  the  proposal.  Calls  have  been  made  to  create  an 
exemption in such cases from reporting  the  relevant payments to government. Although the 
Commission  has  found  very  few  examples  of  countries  prohibiting  disclosures,  a  strictly 
circumscribed  exemption  has  been  provided  for  situations  in  which  a  company  complying 
with the disclosure obligations would find itself in clear contravention of the criminal law of 
the country concerned.  

Energy security figures high on the EU's agenda for several reasons inter alia because energy 
generated  in  EU  Member  States  does  not  cover  current  demand.  Some  argue  that  the  EU 
extractive  operators  may  find  it  harder  to  operate  in  third  countries  which  could  have  a 
consequent  effect  on  security  of  oil  and  gas  supplies  to  Europe.  While  some  companies 
already  disclose  payments  to  governments  on  a  country  basis  without  impediments  to  their 
activities, this might be different for others Therefore a review should inter alia evaluate the 
issue of security of energy supply in Europe. The issue has been raised that such disclosure 
might result in a competitive disadvantage for EU industry. The Commission takes the view 
that in majority of cases the disclosure of payments to government on a country and project 
basis    where  those  payments  have  been  attributed  to  a  specific  project  (with  a  materiality 
threshold) would not give direct insight into confidential company information such as levels 
of turnover, costs and profits. The strengthening of the EITI would also militate against any 
possible short-term loss of competitive position, as it may lead to a more global application 
and enhanced reputation of compliant companies. 

2.3. 

Budgetary Implications 

The proposal has no implications for the Union budget. 

3. 

ADDITIONAL INFORMATION 

3.1. 

Simplification 

The proposal introduces a specific regime for small companies that will considerably reduce 
the  administrative  burden  currently  borne  by  small  companies  when  they  prepare  their 
financial statements. It will limit disclosures by way of notes to the accounts to (i) accounting 
policies;  (ii)  guarantees,  commitments,  contingencies  and  arrangements  that  are  not 
recognised in the balance sheet; (iii) post-balance sheet events not recognised in the balance 
sheet; (iv) long-term and secured debts; and (v) related party transactions. It should be noted 
that mandating the disclosure of items (iii) and (v) will result in new obligations imposed for 
small  companies,  as  a  majority  of  Member  States  have  provided  for  exemptions  from  these 
disclosures for such companies.  

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The  proposal  also  seeks  to  harmonise  thresholds  to  ensure  that  the  administrative  burden 
reduction actually reaches all small companies in the EU. Currently many companies that are 
small  under  EU  definitions  enter  the  medium-sized  or  large  company  category  because  the 
definitions foreseen in the Directives are lower when transposed at Member State level.  

The  table  below  provides  a  summarised  overview  of  the  main  simplification  effects  of  this 
proposal: 

Small Companies 

~ 1,1 million companies 

~21 % of companies 

– 

– 

– 

– 

that 
Maximum  harmonisation  will  ensure 
companies of the same size benefit from a level 
playing field across the EU.  

Notes  to  the  accounts  will  be  limited  to  only 
five key areas. 

No requirement for a statutory audit. 

Small  groups  will  be  exempt  from  preparing 
consolidated financial statements. 

3.2. 

Other measures 

The proposal seeks to improve the comparability and clarity of financial statements prepared 
by medium-sized and large companies, and by small companies to a limited extent. 

To this end, the proposal seeks to reduce the number of options currently available to Member 
States,  insofar  as  these  options  are  detrimental  to  the  comparability  of  the  financial 
statements. General principles such as "substance over form" will become mandatory so as to 
increase the clarity of financial statements. 

As  regards  amendments  to  existing  provisions,  the  table  below  provides  a  summarised 
overview of the main modifications: 

Medium-sized /Large 

Companies 

~ 0.3 million companies  

– 

– 

~ 4% of companies 

3.3. 

IFRS for SMEs 

Introduction 
"materiality" and "substance over form" 

general 

principles 

of 

of 

Reduction  in  the  number  of  Member  State 
options. 

Adopting  the  International  Financial  Reporting  Standards  for  SMEs  (IFRS  for  SMEs)  for 
mandatory  use  within  the  EU  was  considered  as  an  option.  Stakeholders,  notably  public 
authorities,  were,  however,  divided  on  this  idea  and  the  Impact  Assessment  also  concluded 
that  introducing  this  new  standard  would  not  serve  the  objectives  of  simplification  and 
reduction  of  administrative  burden.  Moreover,  considering  that  the  IFRS  for  SMEs  is  a 
relatively new standard, experience with its implementation worldwide was still lacking.  

Mandatory  adoption  of  the  IFRS  for  SMEs  is  not  being  pursued  as  a  policy  within  this 
proposal, and differences between this proposed Directive and the IFRS for SMEs in the areas 
of presentation of unpaid subscribed share capital and the amortisation periods for goodwill 

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whose expected useful life cannot be reliably estimated mean that explicit full adoption of the 
IFRS for SMEs will not be possible. 

3.4. 

Reporting of payments to governments  

In  order  to  promote  governments'  accountability  and  good  governance,  the  proposal 
introduces  new  reporting  requirements  for  companies  active  in  the  extractive  industry  or  in 
the logging of primary forests. It is proposed that companies shall disclose the payments they 
make  to  governments  in  each  country  where  they  operate  and  for  each  project,  where  the 
payment  has  been  attributed  to  a  certain  project  and    when  material  to  the  recipient 
government.  In  line  with  the  overall  objective  and  in  order  to  limit  the  additional 
administrative burden, the new requirement is limited to large companies and public interest 
entities.  

3.5. 

Proposed Directive and repeal of existing legislation 

The proposal takes the form of a new Directive repealing the 1978 and 1983 Directives and 
their subsequent amendments. 

3.6. 

Legal basis, subsidiarity and proportionality 

The  proposal  is  based  on  Article  50(1)  of  the  Treaty,  which  is  the  legal  basis  for 
adoptingUnion measures aimed at achieving an Internal Market in company law. 

The  proposal  provides  that  limited  liability  companies  should  prepare  financial  statements 
under  a  set  of  requirements  devised  to  improve  the  EU-wide  comparability  of  financial 
statements with the objective of contributing to a better functioning of the Single Market and 
to an increased level of cross-border trade. According to the principle of subsidiarity the EU 
should act only where it can provide better results than intervention at Member State level and 
action  should  be  limited  to  what  is  necessary  and  proportionate  in  order  to  attain  the 
objectives  of  the  policy  pursued.  The  objectives  of  this  review  are  such  that  they  cannot  be 
fulfilled by unilateral action at the level of Member States. 

Being subject only to a single set of basic EU level requirements would be advantageous for 
small  companies  under  a  "think  small  first"  approach.  Small  companies  should  be  treated 
equally  across  the  EU  in  order  for  them  to  benefit  from  access  to  the  single  market  on 
homogenous  terms.  Member  States  should  not  impose  unnecessary  additional  requirements. 
This can be best achieved through coordinated EU law. As far as r medium-sized and large 
companies are concerned, financial reporting needs to be made more comparable at EU level 
as the activities of these companies are often EU-wide and relevant to stakeholders throughout 
the  internal  market.  Nevertheless,  Member  States  should  have  a  degree  of  leeway  as  far  as 
additional reporting requirements for these types of companies are concerned. To this end, a 
Directive is the most appropriate legal instrument as it allows a certain margin of manoeuvre 
for  Member  States.  A  Directive  also  ensures  that  the  content  and  form  of  the  proposed  EU 
action  does  not  go  beyond  what  is  necessary  and  proportionate  in  order  to  achieve  the 
regulatory objective of simplification and reduction of administrative burdens. 

4. 

COMMENTS ON THE ARTICLES 

The following Articles remain the same in substance as corresponding Articles in the Fourth 
Council Directive 78/660/EEC and the Seventh Council Directive 83/349/EEC, although their 

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numbering in most cases differs from the numbering originally used. These include Articles 
1(1) (including Annexes I and II), 2(2) to 2(8), 3(6) to 3(9), 4, 5(2) to 5(3), 6(2) to 6(3), 7, 
8(1) to 8(5), 10, 11(1) to 11(7) and 11(11), 12(2), 19(2), 20, 21, 22, 28(2), 29(2) and 29(3), 
30,  32,  33(1)  to  33(2),  34(1),  35  except  35(3),  44,  45,  47,  and  51.  A  correlation  table  is 
provided in Annex III. 

For the sake of conciseness and clarity, explanations are provided in this section only where 
this  proposal  brings  about  substantial  modifications  compared  to  the  Directives  that  will  be 
repealed. 

A number of changes have been introduced throughout the text in order to bring terminology 
within the proposed Directive in line with modern accounting language, with no impact on the 
substance  of  the  relevant  articles.  These  include:  replacing  "company"  with  the  term 
"undertaking", all references to "accounts" have been replaced by "financial statements", and 
all references to "annual report" have been replaced by "management report". 

4.1. 

Chapter 1 - Scope, definitions and categories of undertakings 

Article 2 groups together a number of definitions that were previously dispersed throughout 
the  original  Directives.  Public  interest  entities  are  defined,  taking  the  definition  used  in 
Directive  2006/43/EC  on  Statutory  Audits.  Definitions  for  parent,  subsidiary  and  affiliated 
undertakings  have  been  set  out  more  clearly  than  in  the  Seventh  Council  Directive 
83/349/EEC.  However,  there  is  no  change  in  the  underlying  meaning.  Similarly  associated 
undertakings are defined more clearly than at present, and in presuming significant influence 
to exist where an investor holds 20% or more of the voting rights the definition follows the 
relevant international accounting standard – IAS 28.  

Article  3  creates  a  legal  basis  for  the  expressions  "small",  "medium-sized"  and  "large" 
undertaking, and maintains the practice of determining an undertaking's size by reference to 
its net turnover, balance sheet total and number of employees. Depending on the purpose of 
EU  policies,  the  Union  may  use  definitions  that  differ  to  a  certain  extent  from  those  in  this 
Article17.  The  proposal  is  to  fully  harmonise  size  criteria,  whereas  previously  the  Member 
States could choose whether or not different sizes of undertaking should be recognised within 
their jurisdiction and, within limits, the relevant size criteria. 

Small and medium-sized groups are defined in clearer terms than those used in the Seventh 
Council  Directive  83/349/EEC.  The  net  turnover  and  balance  sheet  total  size  criteria  are 
increased in line with the level of inflation since they were last revised in 2006. 

17 

For instance, the Commission promotes definitions of micro, small and medium-sized enterprises that 
are defined only for certain matters, such as State aid, implementation of the Structural Funds or 
Community programmes, particularly the Framework Programme on Research and Technological 
Development. These are given by the Commission Recommendation 2003/361/EC of 6 May 2003 
concerning the definition of micro, small and medium-sized enterprises [Official Journal L 124 of 
20.05.2003]. Under this frame, a medium-sized enterprise is defined as an enterprise which employs 
fewer than 250 persons and whose annual turnover does not exceed EUR 50 million or whose annual 
balance-sheet total does not exceed EUR 43 million. A small enterprise is defined as an enterprise 
which employs fewer than 50 persons and whose annual turnover and/or annual balance sheet total does 
not exceed EUR 10 million. And a microenterprise is defined as an enterprise which employs fewer 
than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 
million. See also http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-
definition/index_en.htm 

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The  definitions  and  exemptions  for  "financial  holding  companies"  and  "investment 
companies" have been removed, as industry specific accounting treatments act as a barrier to 
harmonisation. Furthermore these provisions have not been widely used across the EU. 

4.2. 

Chapter 2 - Main provisions and principles 

Article 4, together with Article 17 (see 4.4 below), create a fully harmonised regime for the 
preparation of small undertakings' financial statements consisting in the preparation of a profit 
and loss account, balance sheet and limited notes. The Member States should not require the 
presentation of further information. 

A  general  principle  of  materiality  is  introduced  in  Article  5.  It  provides  that  recognition, 
measurement,  presentation  and  disclosure  in  financial  statements  should  be  subject  to 
materiality  constraints.  This  will  allow,  for  example,  the  combination  of  line  items  in  the 
profit  and  loss  account  or  balance  sheet,  or  the  omission  of  note  disclosures  where  the 
relevant  information  is  immaterial.  Similarly  non-material  accruals,  prepayments  and 
provisions would not need to be recognised. Detemining materiality will remain a company's 
primary responsibility, whether that company is subject to an audit or not. 

A requirement to present the economic reality of a transaction in the financial statements, and 
not just its legal form is also introduced as a general principle within Article 5 to provide for 
common  general  principles,  and  hence  harmonisation,  across  the  EU.  Previously,  such  a 
method of presentation was permitted within the Directives but the Member States were not 
required to adopt the principle into their national law. 

In Article 6 the option for Member States to allow revaluation accounting for fixed assets, as 
an alternative to historic cost accounting is retained whilst, to ensure greater harmonisation of 
valuation  bases,  the  Member  State  options  that  allowed  replacement  cost  accounting  and 
inflation methods of accounting methods have been removed. 

4.3. 

Chapter 3 - Balance sheet and profit and loss account 

General provisions in Article 8 have been amended to express more clearly that the Member 
States  may  require  or  permit  an  associated  undertaking  to  be  accounted  for  in  the  annual 
financial statements using the equity method. 

The  proposed  Directive  proposes  only  one  balance  sheet  layout  (see  Article  9),  whereas 
previously  the  Member  States  could  choose  between two different layouts. This will ensure 
better comparability of the financial statements from one jurisdiction to another in the EU. In 
addition,  formation  expenses  are  removed  as  a  category  of  asset,  as  their  recognition  was 
dependent  upon  their  being  defined  in  Member  States'  law.  A  consequential  amendment  is 
necessary to the distributable profits test set out in Article 11. 

Article 11 also introduces a requirement that the amount recognised in respect of a provision 
should correspond to the undertaking's best estimate of the liability or future expenditure, and 
this  Article  also  excludes  the  "last  in,  first  out",  (LIFO)  method  of  valuation  as  a  permitted 
valuation  method  for  stocks  and  fungible  items.  These  changes  will  ensure  better 
comparability of financial statements. 

Articles 12 to 15 provide for only two profit and loss account layouts – one on a "by nature" 
basis,  one  on  a  "by  function"  basis.  Previously  four  layouts  were  permitted.  The  objective 
here is to bring more comparability whilst retaining a presentation which will be familiar to 

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financial statements' users. The previous distinction between ordinary and extraordinary items 
within  the  profit  and  loss  account  is  removed,  thereby  countering  an  inherent  bias  which 
favoured the presentation of "large" or "unusual" items of expense as extraordinary, so as not 
to distort the headline profit after tax figure. Conversely there was an inherent bias to present 
"large"  or  "unusual"  items  of  income  as  ordinary  to  bolster  the  headline  profit  figure.  To 
ensure  a  neutral  presentation  of  such  items  of  income  and  expenditure  there  is  a  new 
requirement  to  disclose  them  separately  within  the  profit  and  loss  account,  with  an 
explanatory note. Therefore all such items will be recognised in arriving at profit after tax. 

The  abridged  financial  statements  regime  is  subject  to  consequential  amendments  in 
Article 16, reflecting the reduced number of layouts. 

4.4. 

Chapter 4 - Notes to the financial statements 

Numerous  Member  State  options  existed  around  the  note  disclosures  in  the  previous 
Directives. This approach has been replaced by a harmonised approach, which will mean that 
undertakings of the same size category throughout the EU will have the same or a comparable 
disclosure regime. 

This chapter creates a "bottom-up" approach to the provision of information by way of notes 
to the financial statements. Article 17 sets out the note disclosures that all undertakings shall 
make.  Small  undertakings  will,  overall,  have  a  more  limited  disclosure  regime,  when 
compared  to  the  previous  Directives,  and  consistent  with  the  requirements  of  Article  4  (see 
4.2  above),  it  is  proposed  that  the  Member  States  should  not  require  these  categories  of 
undertaking to disclose further information, given that a wide range of consultees agreed that 
these were the key disclosures for small undertakings.  

Medium-sized  undertakings  shall  disclose  the  information  required  by  Articles  17  and  18, 
whilst large undertakings and public interest entities shall disclose the information required by 
Articles 17, 18 and 19. 

Article 17 introduces a requirement for all undertakings to disclose post-balance sheet events 
in the notes to the financial statements. This key information was previously disclosed only in 
the  management  report  and  Member  States  had  the  option  of  exempting  its  disclosure.  To 
ensure  a  greater  level  of  transparency,  the  disclosure  of  related  party  transactions  also 
becomes  mandatory  for  all  sizes  of  undertaking,  including  those  between  wholly  owned 
subsidiaries  in  their  respective  annual  financial  statements  –  previously  the  Member  States 
could exempt their disclosure regardless of an undertakings' size. 

4.5. 

Chapter 5 – Management report 

There  are  no  substantive  changes  to  the  provisions  governing  the  content  of  this  report 
compared  to  those  currently  provided  by  the  Fourth  Council  Directive  78/660/EEC  and  the 
Seventh Council Directive 83/349/EEC. 

4.6. 

Chapter 6 - Consolidated financial statements 

This  chapter  incorporates  the  provisions  of  the  Seventh  Council  Directive  83/349/EEC  on 
consolidated accounts, thereby creating a single Directive on the form and content of annual 
and consolidated financial statements. 

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To simplify the text and avoid repetition, large parts of the text of Directive 83/349/EEC have 
been  removed  and  replaced  with  a  principle  that  in  preparing  consolidated  financial 
statements the accounting treatment in annual financial statements should be followed taking 
account  of  the  essential  adjustments  resulting  from  the  particular  characteristics  of 
consolidated financial statements as compared with annual financial statements. 

The changes of substance compared to the current provisions in the Fourth Council Directive 
78/660/EEC and the Seventh Council Directive 83/349/EEC are: 

To  create  a  set  of  harmonised  consolidation  criteria,  in  Article  23  consolidation  will  be 
required  in  situations  where  one  undertaking  exerts  dominant  influence  or  control  over 
another  undertaking;  or  where  undertakings  are  managed  on  a  unified  basis.  Previously  the 
Member States were able to choose whether to consolidate in these circumstances.  

In  Article  24  small  groups  are  exempted  from  the  requirement  to  prepare  consolidated 
financial statements, whereas previously the Member States had the option of exempting such 
undertakings.  This  harmonises  the  exemption  across  the  EU  and  reduces  administrative 
burden in line with the approach taken for the annual financial statements of small company 
undertakings. 

The  options  for  Member  States  to  permit  merger  accounting  and  to  permit  the  immediate 
write-off of goodwill to reserves (respectively Articles 20 and 30 of Directive 83/349/EEC) 
have been removed as they were little used and their removal creates a more harmonised set 
of  consolidation  principles.  Article  25  also  creates  a  principles-based  treatment  for  the 
recognition of negative goodwill in the consolidated profit and loss account. 

4.7. 

Chapter 7 – Publication 

There  are  no  substantive  changes  to  the  publication  provisions  compared  to  those  currently 
provided  by  the  Fourth  Council  Directive  78/660/EEC  and  the  Seventh  Council  Directive 
83/349/EEC. 

4.8. 

Chapter 8 – Auditing 

General requirements laid down in Article 34 have been amended to reflect the "think small 
first"  approach  presiding  the  proposal.  As  a  result,  small  companies  will  be  totally  exempt 
from  an  audit  from  an  EU  company  law  perspective.  This  Article  also  specifies  that  public 
interest entities shall be subject to a statutory audit, regardless of their size. 

An addition in Article 35.3 brings clarification on how the audit requirements apply to groups 
of undertakings. 

4.9. 

Chapter 9 – Report on payments to governments 

New  reporting  requirements  are  introduced  for  large  companies  and  public  interest  entities 
active in the extractive industry or in the logging of primary forests. For each country where 
they operate, they shall, where the amount is material to the recipient government, disclose on 
an  annual  basis  the  payments  they  make  to  governments  in  the  financial  year,  and  where 
payments  have  been  attributed  to  a  project,  payments  for  each  such  project.  Where 
appropriate,  reports  shall  be  prepared  at  a  consolidated  level.  If  a  consolidated  report  is 
prepared,  the  subsidiaries  and  the  parent  company  preparing  the  report  are  exempted.  The 

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report  shall  be  published  in  accordance  with  the  requirements  of  Chapter  2  of  Directive 
2009/101/EC.  

4.10.  Chapter 10 - Final Provisions 

The  Contact  Committee  created  by  the  Fourth  Council  Directive  78/660/EEC  has  become 
obsolete and in this proposal is no longer provided for. 

To  take  account  of  economic  developments  and  inflation,  Article  42  would  empower  the 
Commission  to  revise  periodically  the  thresholds  for  determining  the  undertakings'  size 
contained in Article 3. This is necessary to preserve the thresholds' real value over time. 

The  Commission  should  also  be  empowered  to  update  the  types  of  entity  contained  in 
Annexes I and II in order to ensure that they correspond to any changes in the Member States.  

It is necessary to specify and develop further the concept of materiality of payments in order 
to ensure the relevant and appropriate level of disclosure of payments to governments by the 
extractive industry and  loggers  of  primary forests. It is appropriate to use delegated acts, in 
order  to  ensure  technically  sound  and  effective rules,  allowing  the  Commission  to  take  into 
account all the available expertise. 

The  exact  scope  and  modalities  of  such  delegated  powers  are  carefully  circumscribed  in 
Article 42. 

Finally, Article 46 has been introduced to specify that as a general rule public interest entities 
shall, in principle, not be entitled to the exemptions within the Directive. 

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2011/0308 (COD) 

Proposal for a 

DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the annual financial statements, consolidated financial statements and related reports 
of certain types of undertakings 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union, and in particular 

Article 50(1) thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national Parliaments, 

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

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

18 
19 

20 

21 

The Commission Communication "Smart Regulation in the European Union"18 aims at 
designing and delivering regulation of the highest quality, in respect of the principles 
of subsidiarity and proportionality, while ensuring that the administrative burdens are 
proportionate  to  the  benefits  they  bring.  The  Commission  Communication  "Think 
Small  First"  -  "Small  Business  Act"  for  Europe  (SBA)19,  adopted  in  June  2008  and 
revised in February 201120, recognises the central role played by small and medium-
sized  enterprises  (SMEs)  in  the  Union  economy,  and  aims  at  improving  the  overall 
approach to entrepreneurship and to anchor the “think small first” principle in policy-
making from regulation to public service. The European Council of 24 and 25 March 
201121  welcomed  the  Commission's  intention  to  present  the  Single  Market  Act  with 
measures  creating  growth  and  jobs,  bringing  tangible  results  to  citizens  and 

COM(2010)543 

Communication  from  the  Commission  to  the  Council,  the  European  Parliament,  the  European 
Economic and Social Committee and the Committee of the Regions - “Think Small First” - A “Small 
Business Act” for Europe {SEC(2008) 2101} {SEC(2008) 2102}. 

Communication from the Commission to the European Parliament, the Council, Economic and Social 
Committee  and  the  Committee  of  the  Regions  -  Review  of  the  “Small  Business  Act”  for  Europe, 
COM(2011) 78 final. 
European Council of 24 and 25 March 2011 - Conclusions, Nr: EUCO 10/1/11, Brussels, 25/3/2011 

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businesses. The "Single Market Act"22 adopted in April 2011 proposes to simplify the 
Accounting  Directives  as  regards  financial  information  obligations  and  to  reduce 
administrative  burden,  particularly for  SMEs.  The  Europe  2020  Strategy23  for  smart, 
sustainable and inclusive growth aims to reduce administrative  burdens and improve 
the 
the  business  environment,  particularly 
internationalisation of SMEs . The above-mentioned European Council called  for the 
overall regulatory burden, in particular for SMEs, to be reduced at both European and 
national levels and suggests measures to increase productivity such as by removing red 
tape  and  improving  the  regulatory  framework  for  SMEs.  This  proposal  takes  into 
account  the  better  regulation  programme  of  the  European  Commission,  and  in 
particular the Communication on "Smart Regulation in the EU" of October 2010.24 

for  SMEs  and 

to  promote 

(2) 

(3) 

(4) 

(5) 

(6) 

22 

23 

24 

25 

On 18 December 2008, the European Parliament adopted a non-legislative Resolution 
on  accounting  requirements  as  regards  small  and  medium-sized  companies, 
particularly  micro-entities25,  stating  that  Directives  78/660/EEC  and  83/349/EEC  are 
often  very  burdensome  for  small  and  medium-sized  companies,  and  in  particular  for 
micro-entities,  and  asking  the  Commission  to  continue  its  efforts  to  review  those 
Directives. 

The  coordination  of  national  provisions  concerning  the  presentation  and  content  of 
annual  financial  statements  and  management  reports,  the  measurement  bases,  used 
therein and their publication in respect of certain undertakings with limited liability is 
of  special  importance  for  the  protection  of  shareholders,  members  and  third  parties. 
Simultaneous coordination is necessary in those fields for such forms of undertaking 
because, on the one hand, some undertakings operate in more than one Member State 
and, on the other hand, they offer no safeguards to third parties beyond the amounts of 
their net assets. 

There is a substantial number of partnerships and limited partnerships of which all of 
the fully liable members are constituted either as public or as private limited liability 
companies, and therefore they should be subject to the coordination measures of this 
Directive. 

It  is  necessary,  moreover,  to  establish  at  a  Union  level  minimum  equivalent  legal 
requirements  as  regards  the  extent  of  the  financial  information  that  should  be  made 
available to the public by undertakings that are in competition with one another. 

Annual financial statements should give a true and fair view of an undertaking's assets 
and  liabilities,  financial  position  and  profit  or  loss.  To  this  end  a  mandatory  layout 
should  be  prescribed  for  the  balance  sheet  and  the  profit  and  loss  account  and  the 
minimum content of the notes to the financial statements and the management report 

Communication  from  the  Commission  to  the  Council,  the  European  Parliament,  the  European 
Economic and Social Committee and the Committee of the Regions, Single Market Act - Twelve levers 
to  boost  growth  and  strengthen  confidence  -  "Working  together  to  create  new  growth",  COM(2011) 
206. 
Communication from the Commission - EUROPE 2020 - A strategy for smart, sustainable and inclusive 
growth, COM(2010) 2020. 
Communication from the Commission to the European Parliament, the Council, the EuropeanEconomic 
and  Social  Committee  and  the  Committee  of  the  Regions,  Smart  Regulation  in  the  European  Union, 
COM(2010) 543 final. Please also see: http://ec.europa.eu/governance/better_regulation/index_en.htm 
OJ 2010/C 45 E/10. 

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should  be  laid  down.  According  to  the  "think-small-first"  principle  the  mandatory  
requirements  for  small  undertakings  should    be  fully  harmonised  in  legislation.  In 
order to avoid disproportionate burdens on these entities, Member States should not be 
entitled  to  require  the  presentation  of  further  information.  Member  States  may 
however impose further requirements on medium-sized and large undertakings..  

(7) 

(8) 

(9) 

Small,  medium-sized  and  large  undertakings  should  be  defined  and  distinguished  by 
reference to total assets, turnover and the average number of employees, as these items 
typically provide objective evidence as to the size of an enterprise.  

To  ensure  the  disclosure  of  comparable  and  equivalent  information,  recognition  and 
measurement  principles  should  include  the  going  concern,  the  prudence,  and  the 
accrual bases. Set-offs between asset and liability items and income  and  expenditure 
items  should  not  be  permitted,  and  components  of  assets  and  liabilities  should  be 
valued separately. The presentation of items in financial statements should have regard 
to  the  economic  reality  or  commercial  substance  of  the  underlying  transaction  or 
arrangement.  The  principle  of  materiality  should  govern  recognition,  measurement, 
presentation and disclosure in the financial statements. 

Items recognised in the annual financial statements should be measured on the basis of 
the  principle  of  purchase  price  or  production  cost  to  ensure  the  reliability  of 
information  within  financial  statements.  However,  Member  States  should  be 
authorised to permit or require undertakings to revalue fixed assets in order that more 
relevant information may be provided to the users of financial statements.  

(10)  The  need  for  comparability  of  financial  information  throughout  the  Union  makes  it 
necessary  to  require  Member  States  to  allow  a  system  of  fair  value  accounting  for 
certain  financial  instruments.  Furthermore  systems  of  fair  value  accounting  provide 
information  that  can  be  of  more  relevance  to  the  users  of  financial  statements  than 
purchase  price  /  production  cost  based  information.  Accordingly,  the  Member  States 
should permit the adoption of a fair value system of accounting by all undertakings or 
any  classes  of  undertaking  in  respect  of  both  the  annual  and  consolidated  financial 
statements  or  in  respect  of  consolidated  financial  statements  only.  Furthermore, 
Member States should be allowed to permit or require fair value accounting for assets, 
other than financial instruments.  

(11)  A single layout for the balance sheet is necessary to allow users of financial statements 
to compare the financial position of undertakings within the Union. However, Member 
States  should  be  able  to  permit  or  require  undertakings  to  modify  the  layout  and 
present a balance sheet distinguishing between current and non-current items. A profit 
and loss account layout showing the nature of expenses and a profit and loss account 
layout showing  the  function of expenses should be permitted. Member States should 
prescribe  the  use  of  one  or  both  of  those  layouts.  Member  States  should  also  be 
entitled to allow undertakings to present a statement of performance instead of a profit 
and  loss  account  prepared  in  accordance  with  one  of  the  permitted  layouts. 
Simplifications  from  the  required  layouts  should  be  made  available  for  small  and 
medium-sized undertakings. 

(12)  For  comparability  reasons,  a  common  framework  for  recognition,  measurement  and 
presentation of inter alia value adjustments, goodwill, provisions, stocks of goods and 

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fungible assets, and income and expenditure of exceptional size or incidence should be 
provided. 

(13)  The information presented in the balance sheet and profit and loss account should be 
supplemented  by  disclosures  by  way  of  notes  to  the  financial  statements.  Users  of 
financial statements typically have a limited need for supplementary information from 
small  undertakings,  and  it  can  be  costly  to  small  undertakings  to  collate  the 
supplementary information that needs to be disclosed. A limited disclosure regime for 
small  undertakings  is  therefore  justified.  However  where  a  small  undertaking 
considers that it is beneficial to provide additional disclosures of the types required by 
medium-sized and large undertakings it shall not be prevented from doing so. 

(14)  Users  of  financial  statements  prepared  by  medium-sized  and  large  undertakings 
typically  have  more  sophisticated  needs.  Therefore,  further  disclosures  should  be 
provided  in  certain  areas.  Exemption  from  certain  of  these  disclosure  obligations 
should  be  justified  when  they  would  be  prejudicial  to  certain  persons  or  to  the 
undertaking.  

(15)  The  management  report  and  the  consolidated  management  report  are  important 
elements of financial reporting. A fair review of the development of the business and 
of its position should be provided, in a manner consistent with the size and complexity 
of the business. The information should not be restricted to the financial aspects of the 
undertaking's  business,  and  there  should  be  an  analysis  of  environmental  and  social 
aspects  of  the  business  necessary  for  an  understanding  of  the  undertaking's 
development,  performance  or  position.  In  the  cases  where  the  consolidated 
management report and the parent undertaking management report are presented in a 
single report, it may be appropriate to give greater emphasis to those matters which are 
significant  to  the  undertakings  included  in  the  consolidation  taken  as  a  whole. 
However, having regard to the potential burden placed on medium-sized undertakings, 
it is appropriate to provide that Member States may choose to waive the obligation to 
provide  non-financial  information  in  the  case  of  the  management  report  of  such 
undertakings. 

(16)  Member States should have the possibility of exempting small undertakings from the 
obligation to draw up a management report provided that they include, in the notes to 
the financial statements, the data concerning the acquisition of own shares referred to 
in Article 22(2) of the Second Council Directive 77/91/EEC of 13 December 1976 on 
coordination of  safeguards which, for the protection  of  the  interests  of  members  and 
others, are required by Member States of companies within the meaning of the second 
paragraph  of  Article  58  of  the  Treaty,  in  respect  of  the  formation  of  public  limited 
liability companies and the maintenance and alteration of their capital, with a view to 
making such safeguards equivalent26. 

(17)  Given that public interest entities can have a prominent role in the economies in which 
they  operate,  the  provisions  of  this  Directive  concerning  the  corporate  governance 
statement should apply to all public interest entities.  

26 

OJ L 26, 31.1.1977, p. 1. 

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(18)  Many  undertakings  are  members  of  bodies  of  undertakings.  Consolidated  financial 
statements should be drawn up so that financial information concerning such bodies of 
undertakings may be conveyed to members and third parties. National law governing 
consolidated financial statements should therefore be coordinated in order to achieve 
the objectives of comparability and equivalence in the information which undertakings 
should publish within the Union. 

(19)  Consolidated financial statements should, in principle, present the activities of a parent 
undertaking  and  its  subsidiaries  as  a  single  economic  entity  (a  group);  undertakings 
controlled by the parent undertaking should be considered as subsidiary undertakings. 
Control should be based on holding a majority of voting rights, but control may also 
exist  where  there  are  agreements  with  fellow  shareholders  or  members.  In  certain 
circumstances control may be effectively exercised where the parent holds a minority 
of  shares  in  the  subsidiary.  Member  States  should  be  entitled  to  require  that 
undertakings  not  subject  to  a  controlling  relationship,  that  are  managed  on  a  unified 
basis, or have a common administrative, managerial or supervisory body be included 
in consolidated financial statements. 

(20)  A  subsidiary  undertaking  which  is  itself  a  parent  undertaking  should  draw  up 
consolidated  financial  statements.  Nevertheless,  Member  States  should  be  entitled  to 
exempt such a parent undertaking in certain circumstances from the obligation to draw 
up such consolidated financial statements, provided that its members and third parties 
are sufficiently protected. 

(21)  Small groups should be exempt from the obligation to prepare consolidated financial 
statements  as  the  users  of  small  undertakings'  financial  statements  do  not  have 
sophisticated information needs and it can be costly to prepare consolidated financial 
statements in addition to the annual financial statements of the parent and subsidiary 
undertakings. Member States should be entitled to exempt medium-sized groups from 
the  obligation  to  prepare  consolidated  financial  statements  on  the  same  cost/benefit 
grounds. 

(22)  Consolidation  requires  the  full  incorporation  of  the  assets  and  liabilities  and  of  the 
income and expenditure of those undertakings and the separate disclosure of the non 
controlling interests in the consolidated balance sheet within capital and reserves and 
the separate disclosure of the non-controlling interests in the profit or loss of the group 
in  the  consolidated  profit  and  loss  accounts.  However,  the  necessary  corrections 
should  be  made  to  eliminate  the  effects  of  the  financial  relations  between  the 
undertakings  consolidated.  In  particular,  debts  and  claims  between  the  undertakings; 
income and expenditure relating to transactions between the undertakings; and profits 
and  losses  resulting  from  transactions  between  the  undertakings,  where  they  are 
included  in  the  book  values  of  assets,  shall  be  eliminated  from  the  consolidated 
financial statements. 

(23)  Recognition  and  measurement  principles  applicable  in  the  preparation  of  annual 
financial  statements  should  apply  also  to  the  preparation  of  consolidated  financial 
statements. 

(24)  Associated undertakings should be included in consolidated accounts by means of the 
equity  method.  Member  States  should  be  entitled  permit  or  require  that  a  jointly 

EN 

18 

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managed  undertaking  be  proportionately  consolidated  within  consolidated  financial 
statements. 

(25)  The  consolidated  financial  statements  should  include  all  the  disclosures  by  way  of 
notes  to  the  financial  statements  for  the  undertakings  included  in  the  consolidation 
taken as a whole. The names, registered offices and group interest in the undertakings' 
capital  should  also  be  disclosed  in  respect  of  subsidiaries,  associated  undertakings, 
jointly managed undertakings and participating interests. 

(26)  The  annual  financial  statements  of  all  undertakings  to  which  this  Directive  applies 
should  be  published  in  accordance  with  Directive  2009/101/EC.  It  is  however 
appropriate  to  provide  that  certain  derogations  may  be  granted  also  in  this  area  for 
small and medium-sized undertakings. 

(27)  The Member States are strongly encouraged to develop electronic publication systems 
that  allow  undertakings  to  file  accounting  data,  including  statutory  financial 
statements,  only  once  and  in  a  form  that  allows  multiple  users  to  access  and  use  the 
data easily. Such systems should, however, not be burdensome to small and medium-
sized undertakings. 

(28)  The  Members  of  the  administrative,  management  and  supervisory  bodies  of  an 
undertaking  should,  as  a  minimum  requirement,  be  collectively  responsible  towards 
the  undertaking  for  drawing  up  and  publishing  annual  financial  statements  and 
management  reports.  The  same  approach  should  also  apply  to  members  of  the 
administrative,  management  and  supervisory  bodies  of  undertakings  drawing  up 
consolidated  financial  statements.  Those  bodies  act  within  the  competences  assigned 
to  them  by  national  law.  This  should  not  prevent  Member  States  from  going  further 
towards  shareholders  or  even  other 
and  providing  for  direct  responsibility 
stakeholders.  

(29)  Liability for drawing up and publishing annual financial statements and consolidated 
financial  statements  as  well  as  management  reports  and  consolidated  management 
reports  is  based  on  national  law.  Appropriate  liability  rules,  as  laid  down  by  each 
Member  State  under  its  national  law,  should  be  applicable  to  members  of  the 
administrative,  management  and  supervisory  bodies.  Member  States  should  be 
permitted to determine the extent of the liability. 

(30) 

In order to promote credible financial reporting processes across the Union, members 
of  the  undertaking  body  that  is  responsible  for  the  preparation  of  the  undertaking's 
financial reports should have the duty to ensure that the financial information included 
in an undertaking's annual financial statements and annual management reports should 
give a true and fair view. 

(31)  The  annual  financial  statements  and  consolidated  financial  statements  should  be 
audited.  The  requirement  that  an  audit  opinion  should  state  whether  the  annual  or 
consolidated  financial  statements  give  a  true  and  fair  view  in  accordance  with  the 
relevant financial reporting framework does not represent a restriction of the scope of 
that  opinion  but  clarifies  the  context  in  which  it  is  expressed.  The  annual  financial 
statements  of  small  undertakings  should  not  be  covered  by  this  audit  obligation,  as 
audit  can  be  a  significant  administrative  burden  for  this  category  of  undertaking, 
whilst  for  many  small  undertakings  the  same  persons  are  both  shareholders  and 

EN 

19 

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management and therefore have limited need for third party assurance on the financial 
statements. 

(32) 

In order to provide for enhanced transparency of payments made to governments, large 
undertakings and public interest entities which are active in the extractive industry or 
logging  of  primary  forests27  should  disclose  in  a  separate  report  on  an  annual  basis 
material payments made to governments in the countries in which they operate. Such 
undertakings  are  active  in  countries  rich  in  natural  resources,  in  particular  minerals, 
oil, natural gas as well as primary forests. The report should include types of payments 
comparable  to  those  disclosed  by  an  undertaking  participating  in  the  Extractive 
Industries Transparency Initiative (EITI). The initiative is also complementary to the 
EU FLEGT Action Plan (Forest Law Enforcement, Governance and Trade)28 and the 
Timber Regulation29 which require traders of timber products to exercise due diligence 
in order to prevent illegal wood from entering into the EU market. 

(33)  The  reports  should  serve  to  facilitate  governments  of  resource-rich  countries  in 
implementing  the  EITI  Principles  and  Criteria30  and  account  to  their  citizens  for 
payments  such  governments  receive  from  undertakings  active  in  the  extractive 
industry  or  loggers  of  primary  forests  operating  within  their  jurisdiction.  The  report 
should  incorporate  disclosures  on  a  country  and  project  basis,  where  a  project  is 
considered as the lowest level of operational  reporting unit at which the undertaking 
prepares  regular  internal  management  reports,  such  as  a  concession,  geographical 
basin, etc and where payments have been attributed to such projects. In the light of the 
overall objective of promoting good governance in these countries, the materiality of 
payments  to  be  reported  should  be  assessed  in  relation  to  the  recipient  government. 
Various  criteria  on  materiality  could  be  envisaged  such  as  payments  of  an  absolute 
amount,  or  a  percentage  threshold  (such  as  payments  in  excess  of  a  percentage  of  a 
country's GDP) and these can be defined through a delegated act. The reporting regime 
should be subject to a review and a report by the Commission within five years of the 
entry into force of the Directive. The review should consider the effectiveness of the 
regime  and  take  into  account  international  developments  including  issues  of 
competitiveness  and  energy  security.  The  review  should  also  take  into  account  the 
experience of preparers and users of the payments information and consider whether it 
would be appropriate to include additional payment information such as effective tax 
rates and recipient details, such as bank account information. 

(34) 

In line with the conclusions of the G8 Summit in Deauville of May 2011 and in order 
to  promote  an  international  level-playing-field,  the  Commission  should  continue  to 
encourage all the international partners to introduce similar requirements. The pursuit 
of the work on the relevant international accounting standard is particularly important 
in this context. 

27 

28 
29 

30 

Defined  in  Directive  2009/28/EC  as  "naturally  regenerated  forest  of  native  species,  where  there  is  no 
clearly  visible  indication  of  human  activities  and  the  ecological  processes  are  not  significantly 
disturbed."  
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:347:0001:0006:EN:PDF 
Regulation  (EU)  No  995/2010  of  the  European  Parliament  and  of  the  Council  of  20  October  2010. 
Companies  that  import  wood  products  under  EU  voluntary  agreements  will  be  exempt  from 
this requirement. 
EITI(2005),  Extractive 
http://eiti.org/document/sourcebook.  

Initiative,  Source  book, 

Industries  Transparency 

available 

at: 

EN 

20 

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(35) 

In order to take account of future changes to the laws of the Member States and in the 
legislation  of  the  Union  concerning  company  types,  the  Commission  should  be 
empowered  to  adopt  delegated  acts  in  accordance  with  Article  290  of  the  Treaty  in 
respect of updating the lists of undertakings contained in Annexes I and II. The use of 
delegated  acts  is  also  necessary  to  adapt  the  undertaking  size  criteria,  as  with  the 
passage of time inflation will erode their real value. It is of particular importance that 
the  Commission  carry  out  appropriate  consultations  during  its  preparatory  work, 
including  at  expert  level.  In  order  to  ensure  a  relevant  and  appropriate  level  of 
disclosure  of  payments  to  governments  by  the  extractive  industry  and  loggers  of 
primary  forests  and  to  ensure  uniform  application  of  this  Directive,  the  Commission 
should  be  empowered  to  adopt  delegated  acts  in  accordance  with  Article  290  of  the 
Treaty in respect of the specification of the concept of materiality of payments.  

(36)  The  Commission,  when  preparing  and  drawing  up  delegated  acts,  should  ensure  a 
simultaneous,  timely  and  appropriate  transmission  of  relevant  documents  to  the 
European Parliament and to the Council. 

(37)  Since the objectives of this Directive, namely facilitating cross-border investments and 
improving  Union-wide  comparability  and  public  confidence  in  financial  statements 
and  reports  through  enhanced  and  consistent  specific  disclosures,  cannot  be 
sufficiently achieved by the Member States and can therefore, by reason of the scale 
and  the  effects  of  this  Directive,  be  better  achieved  at  Union  level,  the  Union  may 
adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 
of the Treaty on European Union. In accordance with the principle of proportionality, 
as set out in that Article, this Directive does not go beyond what is necessary in order 
to achieve those objectives. 

(38)  This Directive respects the fundamental rights and observes the principles recognised 
in particular by the Charter of the Fundamental Rights of the European Union, 

HAVE ADOPTED THIS DIRECTIVE: 

CHAPTER I 

SCOPE, DEFINITIONS AND CATEGORIESOF UNDERTAKINGS 

Article 1 

Scope 

1. 

The coordination measures prescribed by this Directive shall apply to: 

(a) 

(b) 

the  laws,  regulations  and  administrative  provisions  of  the  Member  States 
relating to the types of undertakings listed in Annex I; 

the  laws,  regulations  and  administrative  provisions  of  the  Member  States 
relating  to  the  types  of  undertaking  listed  in  Annex  II  where  all  members 
having  unlimited  liability  are  undertakings  of  the  types  listed  in  Annex  I  or 

EN 

21 

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undertakings which are not governed by the laws of a Member State but which 
have  a  legal  form  comparable  to  those  listed  in  Article  1  of  Directive 
2009/101/EC; 

(c) 

the  types  of  undertakings  listed  in  Annex  II  where  all  members  having 
unlimited liability are: 

(i) 

undertakings of the types listed in Annex I or undertakings which are not 
governed  by  the  laws  of  a  Member  State  but  which  have  a  legal  form 
comparable to those listed in Article 1 of Directive 2009/101/EC or  

(ii)  undertakings  of  the  types  listed  in  Annex  II  where  all  members  having 
unlimited  liability  are  themselves  undertakings  of  the  type  set  out  in 
Annex  I  or  undertakings  which  are  not  governed  by  the  laws  of  a 
Member State but which have a legal form comparable to those listed in 
Article 1 of Directive 2009/101/EC. 

2. 

The  Commission  shall  be  empowered  to  adapt,  by  means  of  delegated  acts  in 
accordance with Article 42, the lists of undertakings contained in Annexes I and II 
referred to in paragraph 1. 

Article 2 

Definitions 

For the purposes of this Directive, the following definitions shall apply: 

(1) 

(2) 

(3) 

(4) 

(5) 

‘Public  interest  entities’  means  entities  governed  by  the  law  of  a  Member  State  as 
defined in point (13) of Article 2 of Directive 2006/43/EC31; 

‘Participating interest’ means rights in the capital of other undertakings, whether or 
not  represented  by  certificates,  which,  by  creating  a  durable  link  with  those 
undertakings,  are  intended  to  contribute  to  the  activities  of  the  undertaking  which 
holds  these  rights;  The  holding  of  part  of  the  capital  of  another  undertaking  is 
presumed to constitute a participating interest where it exceeds a percentage fixed by 
the Member States which is lower or equal to 20%; 

'Related party’ shall have the same meaning as in international accounting standard 
24 adopted by Regulation (EC) No 1126/2008; 

'Fixed assets' means those assets which are intended for use on a continuing basis for 
the purposes of the undertaking's activities; 

'Net turnover' means the amounts derived from the sale of products and the provision 
of services after deducting sales rebates and value added tax and other taxes directly 
linked to turnover; 

31 

OJ L 157, 9.6.2006, p. 87. 

EN 

22 

   EN 

 
                                                 
(6) 

(7) 

(8) 

(9) 

(10) 

(11) 

(12) 

(13) 

'Purchase price' means the price payable and any incidental expenses thereto. 

'Production cost' means the purchase price of raw materials, consumables and other 
costs  directly  attributable  to  the  item  in  question.  A  reasonable  proportion  of  other 
costs indirectly attributable to the item in question may be included to the extent that 
they relate to the period of production. Distribution costs shall not be included; 

'Value adjustment' means the adjustments intended to take account of reductions in 
the  values  of  individual  assets  established  at  the  balance  sheet  date  whether  the 
reduction is final or not; 

'Parent  undertaking'  means  an  undertaking  which  controls  one  or  more  subsidiary 
undertakings; 

'Subsidiary  undertaking'  means  an  undertaking  which  is  controlled  by  a  parent 
undertaking; 

A group' means a parent undertaking and all its subsidiary undertakings included in a 
consolidation; 

"Affiliated  undertakings"  means  any  two  or  more  undertakings  connected  to  one 
another within a group; 

'Associated  undertaking'  means  an  undertaking  in  which  another  undertaking  has  a 
participating  interest  and  over  whose  operating  and  financial  policies  the  other 
undertaking exercises significant influence. An undertaking is presumed to exercise a 
significant  influence  over  another  undertaking  where  it  has  20%  or  more  of  the 
shareholders' or members' voting rights in that undertaking; 

Article 3 

Categories of undertakings and groups 

1. 

Small undertakings shall be undertakings which on their balance sheet dates do not 
exceed the limits of two of the three following criteria: 

(a)  balance sheet total: EUR 5 000 000; 

(b)  net turnover: EUR 10 000 000; 

(c) 

average number of employees during the financial year: 50 

2. 

Medium-sized undertakings shall be undertakings which are not small undertakings 
and  on  their  balance  sheet  dates  do  not  exceed  the  limits  of  two  of  the  three 
following criteria:  

(a)  balance sheet total: EUR 20 000 000; 

(b)  net turnover: EUR 40 000 000;, 

(c) 

average number of employees during the financial year: 250. 

EN 

23 

   EN 

 
3. 

Large undertakings shall be undertakings which on their balance sheet dates exceed 
two of the three following criteria: 

(a)  balance sheet total: EUR 20 000 000; 

(b)  net turnover: EUR 40 000 000; 

(c) 

average number of employees during the financial year: 250. 

Small  groups  shall  be  parent  and  subsidiary  undertakings  which  on  a  consolidated 
basis  do  not  exceed  the  limits  of  two  of  the three  following  criteria  on  the  balance 
sheet date of the parent undertaking: 

(a)  balance sheet total: EUR 5 000 000; 

(b)  net turnover: EUR 10 000 000; 

(c) 

average number of employees during the financial year: 50. 

Medium-sized  groups  shall  be  parent  and  subsidiary  undertakings  which  are  not 
small groups and on a consolidated basis do not exceed the limits of two of the three 
following criteria on the balance sheet date of the parent undertaking: 

(a)  balance sheet total: EUR 20 000 000; 

(b)  net turnover: EUR 40 000 000; 

(c) 

average number of employees during the financial year: 250. 

Member  States  shall  permit  that  the  set-off  referred  to  in  Article  25(3)  first  sub-
paragraph and the elimination referred to in Article  25(7) not be  effected when the 
limits in paragraphs 4 and 5 of this Article are calculated. In such cases, the limits for 
the balance sheet total and net turnover criteria shall be increased by 20 %. 

In the case of those Member States which have not adopted the euro, the amount in 
national currency equivalent to the amounts set out in paragraphs 1 to 5 shall be that 
obtained  by  applying  the  exchange  rate  published  in  the  Official  Journal  of  the 
European  Union  on  the  date  of  the  entry  into  force  of  any  Directive  setting  those 
amounts.  

Where  on  its  balance  sheet  date,  an  undertaking  exceeds  or  ceases  to  exceed  the 
limits of two of the three criteria set out in paragraphs 1 to 5, that fact shall affect the 
application of the derogations provided for in this Directive only if it occurs in two 
consecutive financial years. 

The balance sheet total referred to in paragraphs 1 to 5 of this Article shall consist of 
the assets in A to D under ‘Assets’ in the layout prescribed in Article 9. 

In  order  to  adjust  for  the  effects  of  inflation,  the  Commission  shall  examine 
periodically and, where necessary, amend, by means of delegated acts in accordance 
with Article 42, the definitions referred to in paragraphs 1 to 5 of this Article, taking 

4. 

5. 

6. 

7. 

8. 

9. 

10. 

EN 

24 

   EN 

 
into  account  measures  of  inflation  as  published  in  the  Official  Journal  of  the 
European Union 

CHAPTER 2 

GENERAL PROVISIONS AND PRINCIPLES 

Article 4 

General provisions 

1. 

2. 

3. 

4. 

5. 

The annual financial statements shall constitute a composite whole and shall for all 
undertakings comprise, as a minimum, the balance sheet, the profit and loss account 
and the notes to the financial statements. 

Member  States  may  require  undertakings  other  than  small  undertakings  to  include 
other  statements  in  the  annual  financial  statements  in  addition  to  the  documents 
referred to in the first subparagraph. 

The annual financial statements shall be drawn up clearly and in accordance with the 
provisions of this Directive. 

The annual financial statements shall give a  true  and fair view of the undertaking's 
assets,  liabilities,  financial  position  and  profit  or  loss.  Where  the  application  of  the 
provisions of this Directive would not be sufficient to give a true and fair view of the 
undertaking's  assets,  liabilities,  financial  position  and  profit  or  loss,  additional 
information shall be given. 

Where  in  exceptional  cases  the  application  of  a  provision  of  this  Directive  is 
incompatible  with  the  obligation  laid  down  in  paragraph  3,  that  provision  shall  be 
departed  from  in  order  to  give  a  true  and  fair  view  of  the  undertaking's  assets, 
liabilities, financial position and profit or loss. Any such departure shall be disclosed 
in the notes to the financial statements together with an explanation of the reasons for 
it and a statement of its effect on the assets, liabilities, financial position and profit or 
loss. 

Member  States  may  require  undertakings  other  than  small  undertakings  to  disclose 
information in their annual financial statements which is additional to that required to 
be disclosed in accordance with this Directive. 

Article 5 

General Financial Reporting Principles 

1. 

Items presented in the annual financial statements shall be recognised and measured 
in accordance with the following general principles: 

EN 

25 

   EN 

 
(a) 

(b) 

the  undertaking  shall  be  presumed  to  be  carrying  on  its  business  as  a  going 
concern 

accounting policies and valuation bases shall be applied consistently from one 
financial year to another; 

(c) 

recognition and measurement shall be on a prudent basis, and in particular: 

(i) only profits made at the balance sheet date may be recognised, 

(ii)  all  liabilities  arising  in  the  course  of  the  financial  year  concerned  or  of  a 
previous one shall be recognised, even if such liabilities become apparent only 
between the date of the balance sheet and the date on which it is drawn up, 

(iii) all depreciation shall be recognised, whether the result of the financial year 
is a loss or a profit; 

(d) 

(e) 

amounts  recognised  in  the  balance  sheet  and  profit  and  loss  account  shall  be 
computed on the accrual basis; 

the opening balance sheet for each financial year shall reconcile to the closing 
balance sheet for the preceding financial year; 

(f) 

the components of asset and liability items shall be valued separately; 

(g) 

(h) 

(i) 

(j) 

any  set-off  between  asset  and  liability  items,  or  between  income  and 
expenditure items, shall be prohibited; 

items in the profit and loss account and balance sheet shall be presented having 
regard to the substance of the reported transaction or arrangement; 

items  recognised  in  the  financial  statements  shall  be  measured  in  accordance 
with the principle of purchase price or production cost; 

recognition,  measurement,  presentation,  and  disclosure  in  annual  financial 
statements shall have regard to the materiality of the relevant items. 

In  addition  to  those  amounts  recognised  pursuant  to  paragraph  1(c)(ii),  Member 
States  may  permit  or  require  recognition  of  all  foreseeable  liabilities  and  potential 
losses 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. 

Departures  from  these  general  principles  shall  be  permitted  in  exceptional  cases  in 
order  to  give  a  true  and  fair  view  of  the  undertaking's  assets,  liabilities,  financial 
position and profit or loss. Any such departures shall be disclosed in the notes to the 
financial  statements  and  the  reasons  for  them  shall  be  given  together  with  an 
assessment  of  their  effect  on  the  assets,  liabilities,  financial  position,  and  profit  or 
loss. 

2. 

3. 

EN 

26 

   EN 

 
 
 
 
Article 6 

1. 

2. 

3. 

Alternative measurement basis of fixed assets at revalued amounts 

By way of derogation from Article 5(1)(i), Member States may permit or require in 
respect of all undertakings or any classes of undertaking measurement of fixed assets 
at  revalued  amounts.  Where  national  law  provides  for  such  measurement,  it  shall 
define its content and limits and the rules for its application. 

Where paragraph 1 is applied, the amount of the difference between measurement on 
a  purchase  price  or  production  cost  basis  and  measurement  on  a  revaluation  basis 
shall be entered in the revaluation reserve under 'Capital and reserves'. 

The revaluation reserve may be capitalized in whole or in part at any time. 

The  revaluation  reserve  shall  be  reduced  where  the  amounts  transferred  thereto  are 
no  longer  necessary  for  the  implementation  of  the  revaluation  basis  of  accounting. 
The Member States may lay down rules governing the application of the revaluation 
reserve,  provided  that  transfers  to  the  profit  and  loss  account  from  the  revaluation 
reserve  may  be  made  only  where  the  amounts  transferred  have  been  entered  as  an 
expense  in  the  profit  and  loss  account  or  reflect  increases  in  value  which  have 
actually been realised. No part of the revaluation reserve may be distributed, either 
directly or indirectly, unless it represents a gain actually realised. 

Save  as  provided  under  the  second  and  third  sub-paragraphs  of  this  paragraph  the 
revaluation reserve may not be reduced. 

Value adjustments shall be calculated each year on the basis of the revalued amount. 
However, by way of derogation from Articles 8 and 12, Member States may permit 
or  require  that  only  the  amount  of  the  value  adjustments  arising  as  a  result  of  the 
purchase  price  or  production  cost  measurement  basis  be  shown  under  the  relevant 
items in the layouts prescribed in Articles 13 and 14 and that the difference arising as 
a  result  of  the  measurement  on  a  revaluation  basis  under  this  Article  be  shown 
separately in the layouts. 

Article 7 

Alternative measurement basis of fair value 

1. 

By way of derogation from Article 5(1)(i) and subject to the conditions set out in this 

Article: 

(a)  Member  States  shall  permit  or  require  in  respect  of  all  undertakings  or  any 
classes  of  undertaking  measurement  of  financial  instruments,  including 
derivative financial instruments, at fair value.  

(b)  Member  States  may  permit  or  require  in  respect  of  all  undertakings  or  any 
classes of undertaking measurement of specified categories of assets other than 
financial instruments at amounts determined by reference to fair value. 

EN 

27 

   EN 

 
Such  permission  or  requirement  may  be  restricted  to  consolidated  financial 
statements. 

2. 

For  the  purpose  of  this  Directive,  commodity-based  contracts  that  give  either 
contracting party the right to settle in cash or some other financial instrument shall be 
considered  to  be  derivative  financial  instruments,  except  when  the  following 
conditions are complied with: 

(a) 

they  were  entered  into  and  continue  to  meet  the  undertaking's  expected 
purchase, sale or usage requirements; 

(b) 

they were designated as commodity-based contracts at their inception;  

(c) 

they are expected to be settled by delivery of the commodity. 

3. 

Paragraph 1(a) shall apply only to the following liabilities: 

(a) 

liabilities held as part of a trading portfolio;  

(b)  derivative financial instruments. 

4. 

Measurement according to paragraph 1(a) shall not apply to the following: 

(a)  non-derivative financial instruments held to maturity; 

(b) 

(c) 

loans  and  receivables  originated  by  the  undertaking  and  not  held  for  trading 
purposes;  

interests  in  subsidiaries,  associated  undertakings  and  joint  ventures,  equity 
instruments issued by the undertaking, contracts for contingent consideration in 
a business combination as well as other financial instruments with such special 
characteristics  that  the  instruments,  according  to  what  is  generally  accepted, 
shall be accounted for differently from other financial instruments. 

By  way  of  derogation  from  Article  5(1)(i),  Member  States  may  in  respect  of  any 
assets  and  liabilities  which  qualify  as  hedged  items  under  a  fair  value  hedge 
accounting  system,  or  identified  portions  of  such  assets  or  liabilities,  permit 
measurement at the specific amount required under that system. 

By way of derogation from paragraphs 3 and 4 of this Article, Member States may 
permit  or  require  the  recognition,  measurement  and  disclosure  of  financial 
instruments  in  conformity  with  international  accounting  standards  adopted  in 
accordance with Regulation (EC) No 1606/2002. 

The fair value within the meaning of this Article shall be determined by reference to 
one of the following values: 

(a) 

a market value, for those financial instruments for which a reliable market can 
readily  be  identified.  Where  a  market  value  is  not  readily  identifiable  for  an 
instrument but can be identified for its components or for a similar instrument, 
the market value may be derived from that of its components or of the similar 
instrument;  

5. 

6. 

7. 

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28 

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(b) 

a value resulting from generally accepted valuation models and techniques, for 
those instruments for which a reliable market cannot be readily identified. Such 
valuation  models  and  techniques  shall  ensure  a  reasonable  approximation  of 
the market value. 

Financial  instruments  that  cannot  be  measured  reliably  by  any  of  the  methods 
described  in  points  (a)  and  (b),  shall  be  measured  in  accordance  with  the  principle 
ofpurchase price or production cost.  

8. 

Notwithstanding  Article  5(1)(c),  where  a  financial  instrument  is  measured  at  fair 
value, a change in value shall be included in the profit and loss account. However, 
such a change shall be included directly in a fair value reserve, where: 

(a) 

the instrument accounted for is a hedging instrument under a system of hedge 
accounting that allows some or all of the change in value not to be shown in the 
profit and loss account; or 

(b) 

the  change  in  value  relates  to  an  exchange  difference  arising  on  a  monetary 
item that forms part of an undertaking's net investment in a foreign entity. 

Member States may permit or require a change in the value of an available for sale 
financial asset, other than a derivative financial instrument, to be included directly in 
the fair value reserve. The fair value reserve shall be adjusted when amounts shown 
therein are no longer necessary for the implementation of points (a) and (b). 

9. 

Notwithstanding Article 5(1)(c), Member States may permit or require in respect of 
all undertakings or any classes of undertaking that, where assets other than financial 
instruments are measured at fair value, a change in the value shall be included in the 
profit and loss account. 

CHAPTER 3 

BALANCE SHEET AND PROFIT AND LOSS ACCOUNT 

Article 8 

General provisions concerning the balance sheet and the profit and loss account 

1. 

2. 

The  layout  of  the  balance  sheet  and  of  the  profit  and  loss  account,  shall  not  be 
changed from one financial year to the next. Departures from this principle shall be 
permitted  in  exceptional  cases  in  order  to  give  a  true  and  fair  view  of  the 
undertaking's  assets,  liabilities,  financial  position  and  profit  or  loss.  Any  such 
departure shall be disclosed in the notes to the financial statements together with an 
explanation of the reasons therefor. 

In the balance sheet and in the profit and loss account the items prescribed in Articles 
9,  13  and  14  shall  be  shown  separately  in  the  order  indicated.  A  more  detailed 
subdivision  of  the  items  shall  be  authorized  provided  that  the  layouts  are  complied 

EN 

29 

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with. New items may be added provided that their contents are not covered by any of 
the items prescribed by the layouts. The Member States may require such subdivision 
or new items.  

The  layout,  nomenclature  and  terminology  of  items  in  the  balance  sheet  and  profit 
and  loss  account  that  are  preceded  by  Arabic  numerals  shall  be  adapted  where  the 
special  nature  of  an  undertaking  so  requires.  The  Member  States  may  require  such 
adaptations for undertakings which form part of a particular economic sector. 

In respect of each balance sheet and profit and loss account item the figure relating to 
the corresponding item for the preceding financial year shall be shown. Any case of 
non-comparability  or  any  adjustment  of  the  figures  shall  be  disclosed,  with 
explanations, in the notes to the financial statements. 

Member  States  may  permit  or  require  adaptation  of  the  layout  of  the  balance  sheet 
and  profit  and  loss  account  in  order  to  include  the  appropriation  of  profit  or  the 
treatment of loss. 

3. 

4. 

5. 

6. 

In respect of an associated undertaking: 

(a)  Member  States  may  permit  or  require  an  associated  undertaking  to  be 
accounted  for  in  annual  financial  statements  using  the  equity  method  as 
provided for in Article 27(2) to (8), taking account of the essential adjustments 
resulting  from  the  particular  characteristics  of  annual  financial  statements  as 
compared to consolidated financial statements. 

(b)  Member States may permit or require that the proportion  of the profit or loss 
attributable  to  the  associated  undertaking  be  recognised  in  the  profit  and  loss 
account  only  to  the  extent  of  the  amount  corresponding  to  dividends  already 
received or the payment of which can be claimed. 

(c)  Where the profit or loss attributable to the associated undertaking recognised in 
the profit and loss account exceeds the amount of dividends already received or 
the  payment  of  which  can  be  claimed,  the  amount  of  the  difference  shall  be 
placed in a reserve which cannot be distributed to shareholders. 

Article 9 

Layout of the balance sheet 

For the presentation of the balance sheet the Member States shall prescribe the layout below: 

A. Subscribed capital unpaid 

of which there has been called 

EN 

Assets 

30 

   EN 

 
(unless national law provides that called-up capital be shown under ‘capital and reserves’. In 
that case, the part of the capital called but not yet paid shall appear as an asset either under A 
or under C (II) (5)). 

B. Fixed assets 

I. Intangible assets 

1. 

2. 

3. 

4. 

Costs  of  research  and  development,  in  so  far  as  national  law  permits  their  being 
shown as assets. 

Concessions,  patents,  licences,  trade  marks  and  similar  rights  and  assets,  if  they 
were: 

(a) 

acquired for valuable consideration and need not be shown under B (I) (3); or 

(b) 

created by the undertaking itself, in so far as national law permits their being 
shown as assets. 

Goodwill, to the extent that it was acquired for valuable consideration. 

Payments on account. 

II. Tangible assets 

1. 

2. 

3. 

4. 

Land and buildings. 

Plant and machinery. 

Other fixtures and fittings, tools and equipment. 

Payments on account and tangible assets in course of construction. 

III. Financial assets 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

Shares in affiliated undertakings. 

Loans to affiliated undertakings. 

Participating interests. 

Loans to undertakings with which the undertaking is linked by virtue of participating 
interests. 

Investments held as fixed assets. 

Other loans. 

Own shares (with an indication of their nominal value or, in the absence of a nominal 
value, their accounting par value) to the extent that national law permits their being 
shown in the balance sheet. 

C. Current assets 

EN 

31 

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I. Stocks 

1. 

2. 

3. 

4. 

Raw materials and consumables. 

Work in progress. 

Finished goods and goods for resale. 

Payments on account. 

II. Debtors 

(Amounts becoming due and payable after more than one year shall be shown separately for 
each item.) 

1. 

2. 

3. 

4. 

5. 

6. 

Trade debtors. 

Amounts owed by affiliated undertakings. 

Amounts  owed  by  undertakings  with  which  the  undertaking  is  linked  by  virtue  of 
participating interests. 

Other debtors. 

Subscribed  capital  called  but  not  paid  (unless  national  law  provides  that  called-up 
capital be shown as an asset under A). 

Prepayments and accrued income (unless national law provides for such items to be 
shown as an asset under D). 

III. Investments 

1. 

2. 

Shares in affiliated undertakings. 

Own shares (with an indication of their nominal value or, in the absence of a nominal 
value, their accounting par value) to the extent that national law permits their being 
shown in the balance sheet. 

3. 

Other investments. 

IV. Cash at bank and in hand 

D. Prepayments and accrued income 

(unless national law provides for such items to be shown as an asset under C (II) (6)). 

Capital, reserves and liabilities 

A. Capital and reserves 

I. Subscribed capital 

EN 

32 

   EN 

 
(unless national law provides for called-up capital to be shown under this item. In that case, 
the amounts of subscribed capital and paid-up capital shall be shown separately). 

II. Share premium account 

III. Revaluation reserve 

IV. Reserves 

1. 

2. 

3. 

4. 

Legal reserve, in so far as national law requires such a reserve. 

Reserve  for  own  shares,  in  so  far  as  national  law  requires  such  a  reserve,  without 
prejudice to Article 22(1)(b) of Directive 77/91/EEC. 

Reserves provided for by the articles of association. 

Other reserves, including the fair value reserve. 

V. Profit or loss brought forward 

VI. Profit or loss for the financial year 

B. Provisions 

1. 

2. 

3. 

Provisions for pensions and similar obligations. 

Provisions for taxation. 

Other provisions. 

C. Creditors 

(Amounts becoming due and payable within one year and amounts becoming due and payable 
after  more  than  one  year  shall  be  shown  separately  for  each  item  and  for  the  aggregate  of 
these items.) 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

Debenture loans, showing convertible loans separately. 

Amounts owed to credit institutions. 

Payments received on account of orders in so far as they are not shown separately as 
deductions from stocks. 

Trade creditors. 

Bills of exchange payable. 

Amounts owed to affiliated undertakings. 

Amounts  owed  to  undertakings  with  which  the  undertaking  is  linked  by  virtue  of 
participating interests. 

Other creditors including tax and social security. 

EN 

33 

   EN 

 
9. 

Accruals  and  deferred  income  (unless  national  law  provides  for  such  items  to  be 
shown under D under ‘Accruals and deferred income’). 

D. Accruals and deferred income 

(unless national law provides for such items to be shown under C (9) under ‘Creditors’). 

Article 10 

Alternative presentation of the balance sheet 

Member  States  may  permit  or  require  undertakings,  or  certain  classes  of  undertaking,  to 
present items on the basis of a distinction between current and non-current items in a different 
layout  than  that  prescribed  in  Article  9,  provided  that  the  information  given  is  at  least 
equivalent to that otherwise required by Article 9. 

1. 

2. 

3. 

4. 

5. 

Article 11 

Special provisions relating to certain balance sheet items 

Where  an  asset  or  liability  relates  to  more  than  one  layout  item,  its  relationship  to 
other items shall be disclosed either under the item where it appears or in the notes to 
the financial statements. 

Own shares and shares in affiliated undertakings shall be shown only under the items 
prescribed for that purpose. 

Whether  particular  assets  are  to  be  shown  as  fixed  assets  or  current  assets  shall 
depend upon the purpose for which they are intended. 

Rights  to  immovables  and  other  similar  rights  as  defined  by  national  law  shall  be 
shown under ‘Land and buildings’. 

The purchase  price or  production cost of fixed  assets  with  limited  useful  economic 
lives shall be reduced by value adjustments calculated to write off the value of such 
assets systematically over their useful economic lives, subject to the following: 

(a) 

(b) 

(c) 

 value adjustments may be made in respect of financial fixed assets, so that they 
are valued at the lower figure to be attributed to them at the balance sheet date; 

 value adjustments shall be made in respect of fixed assets, whether their useful 
economic lives are limited or not, so that they are valued at the lower figure to 
be  attributed  to  them  at  the  balance  sheet  date  if  it  is  expected  that  the 
reduction in their value will be permanent; 

 the value adjustments referred to in points (a) and (b) shall be charged to the 
profit  and  loss  account  and  disclosed  separately  in  the  notes  to  the  financial 
statements  if  they  have  not  been  shown  separately  in  the  profit  and  loss 
account; 

EN 

34 

   EN 

 
6. 

7. 

8. 

9. 

10. 

11. 

(d) 

 valuation at the lower of the values provided for in points (a) and (b) may not 
be  continued  if  the  reasons  for  which  the  value  adjustments  were  made  have 
ceased  to  apply.  This  provision  shall  not  apply  to  value  adjustments  made  in 
respect of goodwill. 

Value adjustments shall be made in respect of current assets with a view to showing 
them at the lower market value or, in particular circumstances, another lower value to 
be attributed to them at the balance sheet date. 

Valuation  at  the  lower  value  provided  for  in  the  first  subparagraph  may  not  be 
continued if the reasons for which the value adjustments were made no longer apply. 

Interest on capital borrowed to finance the production of fixed or current assets may 
be  included  within  production  costs  to  the  extent  that  it  relates  to  the  period  of 
production.  Any  application  of  this  provision  shall  be  disclosed  in  the  notes  to  the 
financial statements. 

Member States may permit the purchase price or production cost of stocks of goods 
of  the  same  category  and  all  fungible  items  including  investments  to  be  calculated 
either on the basis of weighted average prices or on the basis of the ‘first in, first out’ 
(FIFO) method, or a similar method. 

Where  national  law  authorizes  the  inclusion  of  costs  of  research  and  development 
under ‘Assets’, they shall be written off within a maximum period of five years. In so 
far as the costs of research and development have not been completely written off, no 
distribution of profits shall take place unless the amount of the reserves available for 
distribution  and  profits  brought  forward  is  at  least  equal  to  that  of  the  costs  not 
written off. 

In exceptional cases the Member States may permit derogations from the provisions 
of  the  preceding  subparagraph.  Such  derogations  and  the  reasons  for  them  shall  be 
disclosed in the notes to the financial statements. 

Goodwill shall be written off systematically over its useful life. Where its useful life 
cannot  be  reliably  estimated  it  shall  be  written  off  within  a  maximum  period  of  5 
years.  An  explanation  of  the  period(s)  over  which  goodwill  is  written  off  shall  be 
provided within the notes to the financial statements. 

Provisions shall cover liabilities the nature of which is clearly defined and which at 
the  balance  sheet  date  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. 

The Member States may also authorize the creation of provisions intended to cover 
expenses 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. 

A provision shall represent the best estimate of the expenses likely to be incurred, or 
in the case of a liability, the amount required to settle it at the balance sheet date. 

EN 

35 

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Article 12 

Layout of the profit and loss account 

For the presentation of the profit and loss account, the Member States shall prescribe 
one  or  both  of  the  layouts  provided  for  in  Articles  13  and  14.  If  a  Member  State 
prescribes both layouts, it may allow undertakings to choose the layout. 

By  way  of  derogation  from  Article  4(1),  Member  States  may  permit  or  require  all 
undertakings,  or  any  classes  of  undertaking,  to  present  a  statement  of  their 
performance instead of the presentation of profit and loss items in accordance with 
Articles 13 and 14, provided that the information given is at least equivalent to that 
otherwise required by Articles 13 and 14. 

Article 13 

Layout of the profit and loss account – by nature of expense 

Net turnover. 

Variation in stocks of finished goods and in work in progress. 

Work performed by the undertaking for its own purposes and capitalized. 

Other operating income. 

(a)  Raw materials and consumables. 

(b)  Other external expenses. 

1. 

2. 

1. 

2. 

3. 

4. 

5. 

5. 

Staff costs: 

(a)  wages and salaries; 

(b) 

 social security costs, with a separate indication of those relating to pensions. 

7. 

(a)  Value adjustments in respect of tangible and intangible fixed assets. 

(b)  Value  adjustments  in  respect  of  current  assets,  to  the  extent  that  they  exceed 
the  amount  of  value  adjustments  which  are  normal  in  the  undertaking 
concerned. 

8. 

9. 

10. 

Other operating expenses. 

Income  from  participating  interests,  with  a  separate  indication  of  that  derived  from 
affiliated undertakings. 

Income  from  other  investments  and  loans  forming  part  of  the  fixed  assets,  with  a 
separate indication of that derived from affiliated undertakings. 

EN 

36 

   EN 

 
 
11. 

12. 

13. 

14. 

15. 

16. 

17. 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

10. 

11. 

12. 

13. 

Other  interest  receivable  and  similar  income,  with  a  separate  indication  of  that 
derived from affiliated undertakings. 

Value  adjustments  in  respect  of  financial  assets  and  of  investments  held  as  current 
assets. 

Interest payable and similar expenses, with a separate indication of amounts payable 
to affiliated undertakings. 

Tax on profit or loss. 

Profit or loss after taxation. 

Other taxes not shown under the items 1 to 15. 

Profit or loss for the financial year. 

Article 14 

Layout of the profit and loss account – by function of expense 

Net turnover. 

Cost of sales (including value adjustments). 

Gross profit or loss. 

Distribution costs (including value adjustments). 

Administrative expenses (including value adjustments). 

Other operating income. 

Income  from  participating  interests,  with  a  separate  indication  of  that  derived  from 
affiliated undertakings. 

Income  from  other  investments  and  loans  forming  part  of  the  fixed  assets,  with  a 
separate indication of that derived from affiliated undertakings. 

Other  interest  receivable  and  similar  income  with  a  separate  indication  of  that 
derived from affiliated undertakings. 

Value  adjustments  in  respect  of  financial  assets  and  of  investments  held  as  current 
assets. 

Interest payable and similar expenses, with a separate indication of amounts payable 
to affiliated undertakings. 

Tax on profit or loss. 

Profit or loss after taxation. 

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37 

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14. 

15. 

Other taxes not shown under the items 1 to 13. 

Profit or loss for the financial year. 

Article 15 

Special provision relating to the profit and loss account 

Where  individual  items  of  income  or  expense  are  of  exceptional  size  or  incidence,  an 
undertaking  shall  disclose  them  separately  in  the  profit  and  loss  account  and  shall  provide 
explanations of their amount and nature in the notes to the financial statements. 

Article 16 

Simplifications for small and medium-sized undertakings 

1. 

2. 

Member  States  shall  permit  small  undertakings  to  draw  up  abridged  balance  sheets 
showing  only  those  items  preceded  by  letters  and  roman  numerals  in  Article  9, 
disclosing  separately  the  information  required  in  brackets  in  C  (II)  under  ‘Assets’ 
and C under ‘Capital, reserves and liabilities’, but in total for each. 

Member  States  shall  permit  small  and  medium-sized  undertakings  to  draw  up 
abridged profit and loss accounts within the following limits: 

(a) 

(b) 

in Article 13, items 1 to 5 may be combined under one item called ‘Gross profit 
or loss’; 

in  Article  14,  items  1,  2,  3  and  6  may  be  combined  under  one  item  called 
‘Gross profit or loss’. 

CHAPTER 4 

NOTES TO THE FINANCIAL STATEMENTS 

Article 17 

Content of the notes to the financial statements relating to all undertakings 

1. 

In the notes to the financial statements all undertakings shall, in addition to any other 
information  required  under  other  provisions  of  this  Directive,  at  least  disclose 
information in respect of the following matters: 

(a) 

accounting policies adopted, in particular the measurement basis applied to the 
various items in the annual financial statements; 

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38 

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(b)  where  fixed  assets  are  measured  at  revalued  amounts  a  table  showing 
movements in the revaluation reserve in the financial year, with an explanation 
of the tax treatment of items therein; the carrying amount in the balance sheet 
that would have been recognised had the fixed assets not been revalued. 

(c)  Where financial instruments are measured at fair value, the following shall be 

disclosed: 

(i) 

the  significant  assumptions  underlying  the  valuation  models  and 
techniques  where  fair  values  have  been  determined  in  accordance  with 
Article 7(7)(b); 

(ii)  per category of financial instruments, the fair value, the changes in value 
included  directly  in  the  profit  and  loss  account  as  well  as  changes 
included in the fair value reserve; 

(iii)  for  each  class  of  derivative  financial  instruments,  information  about  the 
extent and the nature of the instruments, including significant terms and 
conditions that may affect the amount, timing and certainty of future cash 
flows;  

(iv)  a table showing movements in the fair value reserve during the financial 

year. 

the  total  amount  of  any  financial  commitments,  guarantees  or  contingencies 
that are not included in the balance sheet, and an indication of the nature and 
form  of  any  valuable  security  which  has  been  provided;  any  commitments 
concerning  pensions  and  affiliated  or  associated  undertakings  shall  be 
disclosed separately; 

the nature and business purpose of the undertaking's arrangements that are not 
included  in  the  balance  sheet  and  the  financial  impact  on  the  undertaking  of 
those arrangements; 

the  nature  of  material  events  arising  after  the  end  of  the  year  which  are  not 
reflected in the profit and loss account or balance sheet, and the financial effect 
of those events. 

amounts owed by the undertaking becoming due and payable after more than 
five years as well as the undertaking's entire debts covered by valuable security 
furnished by the undertaking with an indication of the nature and form of the 
security; 

transactions  which  have  been  entered  into  with  related  parties  by  the 
undertaking,  including  the  amount  of  such  transactions,  the  nature  of  the 
related  party  relationship  and  other  information  about  the  transactions 
necessary for an understanding of the financial position of the undertaking, if 
such  transactions  have  not  been  concluded  under  normal  market  conditions. 
Information about individual transactions may be aggregated according to their 
nature except where separate information is necessary for an understanding of 
the  effects  of  related  party  transactions  on  the  financial  position  of  the 
undertaking. 

(d) 

(e) 

(f) 

(g) 

(h) 

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2. 

3. 

1. 

Member  States  shall  not  require  further  disclosure  for  small  undertakings  beyond 
what is required by this Article. 

Where  notes  to  the  balance  sheet  and  profit  and  loss  account  are  presented  in 
accordance  with  this  Chapter,  the  notes  shall  be  presented  following  the  order  that 
items are presented in the balance sheet and profit and loss account. 

Article 18 

Additional disclosures for medium-sized and large undertakings and public interest 
entities 

In  the  notes  to  the  financial  statements  medium-sized  and  large  undertakings  and 
public interest entities shall, in addition to the information required under Article 17 
and  any  other  provisions  of  this  Directive,  set  out  information  in  respect  of  the 
following matters: 

(a)  For the various fixed asset items: 

(i) 

the  purchase  price  or  production  cost,  or  where  an  alternative  basis  of 
measurement has been followed, the fair value or revalued amount at the 
beginning and end of the financial year; 

(ii) 

additions, disposals and transfers during the financial year; 

(iii) 

the  accumulated  value  adjustments  at  the  beginning  and  end  of  the 
financial year; 

(iv)  value adjustments charged during the financial year; 

(v)  Movements  in  accumulated  value  adjustments  in  respect  of  additions, 

disposals and transfers during the financial year. 

(vi)  Where interest is capitalised in accordance with Article 11(7), the amount 

capitalised during the year. 

(b) 

if  fixed  or  current  assets  are  the  subject  of  value  adjustments  for  taxation 
purposes  alone,  the  amount  of  the  adjustments  and  the  reasons  for  making 
them; 

(c)  Where financial instruments are measured at purchase price or production cost: 

(i) 

for each class of derivative financial instrument: 

– 

– 

the fair value of the instruments, if such a value can be determined 
by any of the methods prescribed in Article 7(7)(a); 

information about the extent and the nature of the instruments;  

(ii) 

for  financial  fixed  assets  carried  at  an  amount  in  excess  of  their  fair 
value: 

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40 

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– 

– 

the book value and the fair value of either the individual assets or 
appropriate groupings of those individual assets; 

the reasons for not reducing the book value, including the nature of 
the  evidence  that  provides  the  basis  for  the  assumption  that  the 
book value will be recovered; 

(d) 

the  amount  of  the  emoluments  granted  in  respect  of  the  financial  year  to  the 
members of the administrative, managerial and supervisory bodies by reason of 
their responsibilities, and any commitments arising or entered into in respect of 
retirement pensions for former members of those bodies, with an indication of 
the total for each category. 

(e) 

(f) 

(g) 

(h) 

Member States may waive the requirement to provide that information where it 
makes it possible to identify the position of a specific member of such a body; 

the  amount  of  advances  and  credits  granted  to  the  members  of  the 
administrative,  managerial  and  supervisory  bodies,  with  indications  of  the 
interest rates, main conditions and any amounts repaid or written off or waived, 
as  well  as  commitments  entered  into  on  their  behalf  by  way  of  guarantees  of 
any kind, with an indication of the total for each category; 

the  average  number  of  persons  employed  during  the  financial  year,  broken 
down  by  categories  and,  if  they  are  not  disclosed  separately  in  the  profit  and 
loss account, the staff costs relating to the financial year, broken down between 
wages and salaries, social security costs and pension costs; 

the  deferred  tax  balances  at  the  end  of  the  financial  year,  and  the  movement 
therein during the financial year; 

the  name  and  registered  office  of  each  of  the  undertakings  in  which  the 
undertaking, either itself or through a person acting in his own name but on the 
undertaking's  behalf,  holds  a  participating  interest,  showing  the  proportion  of 
the capital  held,  the amount  of capital and reserves, and the profit or loss for 
the  latest  financial  year  of  the  undertaking  concerned  for  which  financial 
statements have been adopted; the information concerning capital and reserves 
and  the  profit  or  loss  may  be  omitted  where  the  undertaking  concerned  does 
not publish its balance sheet and it is not controlled by the undertaking. 

Member States may allow the information required to be disclosed by the first 
subparagraph  above  to  take  the  form  of  a  statement  deposited  in  accordance 
with  Article  3(1)  and  (3)  of  Directive  2009/101/EC;  the  depositing  of  such  a 
statement  shall  be  disclosed  in  the  notes  to  the  financial  statements.  Member 
States  may  also  allow  that  information  to  be  omitted  when  its  nature  is  such 
that  it  would  be  seriously  prejudicial  to  any  of  the  undertakings  to  which  it 
relates.  The  Member  States  may  make  such  omissions  subject  to  prior 
administrative or judicial authorization. Any such omission shall be disclosed 
in the notes to the financial statements; 

(i) 

the  number  and  the  nominal  value  or,  in  the  absence  of  a  nominal  value,  the 
accounting par value of the shares subscribed during the financial year within 

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the  limits  of  an  authorized  capital,  without  prejudice  as  far  as  the  amount  of 
this  capital  is  concerned  to  Article  2(1)(e)  of  Directive  2009/101/EC  or  to 
Article 2(c) of Directive 77/91/EEC; 

(j)  where there is more than one class of shares, the number and the nominal value 

or, in the absence of a nominal value, the accounting par value for each class; 

(k) 

(l) 

(m) 

(n) 

the existence of any participation certificates, convertible debentures, warrants, 
options  or  similar  securities  or  rights,  with  an  indication  of  their  number  and 
the rights they confer; 

the  name,  the  head  or  registered  office  and  the  legal  form  of  each  of  the 
undertakings  of  which  the  undertaking  or  firm  is  a  member  having  unlimited 
liability. 

the  name  and  registered  office  of  the  undertaking  which  draws  up  the 
consolidated financial statements of the largest body of undertakings of which 
the undertaking forms part as a subsidiary undertaking; 

the  name  and  registered  office  of  the  undertaking  which  draws  up  the 
consolidated financial statements of the smallest body of undertakings of which 
the  undertaking  forms  part  as  a  subsidiary  undertaking  and  which  is  also 
included in the body of undertakings referred to in point (m); 

(o) 

the  place  where  copies  of  the  consolidated  financial  statements  referred  to  in 
points (m) and (n) may be obtained provided that they are available; 

(p) 

the proposed appropriation of the profit or treatment of the loss; 

(q) 

the appropriation of the profit or treatment of the loss. 

2. 

Member States shall not be required to apply point (h) to an undertaking governed by 
their national laws which is a parent undertaking in the following cases: 

(a)  where  the  undertaking  concerned  is  included  in  consolidated  financial 
statements drawn up by that parent undertaking, or in the consolidated financial 
statements of a larger body of undertakings as referred to in Article 24(5);  

(b)  where the holdings in the undertaking concerned have been dealt with by the 
parent undertaking in its annual financial statements in accordance with Article 
8(6),  or  in  the  consolidated  financial  statements  drawn  up  by  that  parent 
undertaking in accordance with Article 27(1) to (8). 

Article 19 

Additional disclosures for large undertakings and public interest entities 

1. 

In the notes to the financial statements large undertakings and public interest entities 
shall, in addition to the information required under Articles 17 and 18 and any other 
provisions of this Directive, disclose information in respect of the following matters: 

EN 

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(a) 

(b) 

the  net  turnover  broken  down  by  categories  of  activity  and  into  geographical 
markets in so far as these categories and markets differ substantially from one 
another,  taking  account  of  the  manner  in  which  the  sale  of  products  and  the 
provision of services are organized;  

the  total  fees  for  the  financial  year  charged  by  the  statutory  auditor  or  audit 
firm for the statutory audit of the annual financial statements, and the total fees 
charged by the statutory auditor or audit firm for other assurance services, for 
tax advisory services and for other non-audit services. 

2. 

Member States may allow the information referred to in paragraph 1(a) to be omitted 
where  the  disclosure  of  that  information  would  be  seriously  prejudicial  to  the 
to  prior 
undertaking.  Member  States  may  make  such  omissions  subject 
administrative or judicial authorization. Any such omission shall be disclosed in the 
notes to the financial statements. 

CHAPTER 5 

MANAGEMENT REPORT 

Article 20 

Contents of the management report 

1. 

The  management  report  shall  include  at  least  a  fair  review  of  the  development  and 
performance  of  the  undertaking's  business  and  of  its  position,  together  with  a 
description of the principal risks and uncertainties that it faces. 

The review shall be a balanced and comprehensive analysis of the development and 
performance of the undertaking's business and of its position, consistent with the size 
and complexity of the business. 

To  the  extent  necessary  for  an  understanding  of  the  undertaking's  development, 
performance  or  position,  the  analysis  shall  include  both  financial  and,  where 
appropriate,  non-financial  key  performance  indicators  relevant  to  the  particular 
business, including information relating to environmental and employee matters. 

In  providing  the  analysis,  the  management  report  shall,  where  appropriate,  include 
references to and additional explanations of amounts reported in the annual financial 
statements. 

2. 

The management report shall also give an indication of: 

(a) 

any important events that have occurred since the end of the financial year; 

(b) 

the undertaking's likely future development; 

(c) 

activities in the field of research and development; 

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3. 

4. 

1. 

(d) 

the  information  concerning  acquisitions  of  own  shares  prescribed  by  Article 
22(2) of Directive 77/91/EEC; 

(e) 

the existence of branches of the undertaking; 

(f) 

in relation to the undertaking's use of financial instruments and where material 
for the assessment of its assets, liabilities, financial position and profit or loss: 

(i) 

the  undertaking's  financial  risk  management  objectives  and  policies, 
including its policy for hedging each major type of forecasted transaction 
for which hedge accounting is used; 

(ii) 

the  undertaking's  exposure  to  price  risk,  credit  risk,  liquidity  risk  and 
cash flow risk. 

Member  States  may  exempt  small  undertakings  from  the  obligation  to  prepare 
management  reports,  provided  that  the  information  referred  to  in  Article  22(2)  of 
Directive 77/91/EEC concerning the acquisition by an undertaking of its own shares 
is given in the notes to the financial statements. 

Member States may exempt medium-sized undertakings from the obligation set out 
in  the  third  subparagraph  of  paragraph  1  in  so  far  as  it  relates  to  non-financial 
information. 

Article 21 

Corporate governance statement 

A  public  interest  entity  shall  include  a  corporate  governance  statement  in  its 
management  report.  That  statement  shall  be  included  as  a  specific  section  of  the 
management report and shall contain at least the following information: 

(a) 

a reference to one or more of the following: 

(i) 

the corporate governance code to which the undertaking is subject; 

(ii) 

the  corporate  governance  code  which  the  undertaking  may  have 
voluntarily decided to apply; 

(iii)  all relevant information about the corporate governance practices applied 

beyond the requirements under national law. 

Where reference is made to a corporate governance code referred to in points 
(i)  and  (ii),  the  undertaking  shall  also  indicate  where  the  relevant  texts  are 
publicly  available;  where  reference  is  made  to  the  information  referred  to  in 
point  (iii),  the  undertaking  shall  make  its  corporate  governance  practices 
publicly available; 

(b)  where  an  undertaking,  in  accordance  with  national  law,  departs  from  a 
corporate governance code referred to in points (a)(i) or (ii), an explanation by 

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the undertaking as to which parts of the corporate governance code it departs 
from  and  the  reasons  for  doing  so;  where  the  undertaking  has  decided  not  to 
refer  to  any  provisions  of  a  corporate  governance  code  referred  to  in  points 
(a)(i) or (ii), it shall explain its reasons for doing so; 

(c) 

(d) 

a description of the main features of the undertaking's internal control and risk 
management systems in relation to the financial reporting process; 

the  information  required  by  Article  10(1)(c),  (d),  (f),  (h)  and  (i)  of  Directive 
2004/25/EC  of  the  European  Parliament  and  of  the  Council32,  where  the 
undertaking is subject to that Directive; 

(e)  unless  the  information  is  already  fully  provided  for  in  national  law,  the 
operation  of  the  shareholder  meeting  and  its  key  powers  and  a  description  of 
shareholders’ rights and how they can be exercised; 

(f) 

the  composition  and  operation  of  the  administrative,  management  and 
supervisory bodies and their committees. 

Member States may permit the information required by paragraph 1 of this Article to 
be set out in a separate report published together with the management report or by 
means  of  a  reference  in  the  management  report  where  such  document  is  publicly 
available on the undertaking's website.  

In the event of a separate report, the corporate governance statement may contain a 
reference to the management report where the information required in paragraph 1(d) 
of this  Article  is made available. Concerning the provisions of paragraph 1 (c) and 
(d) of this Article, the statutory auditor shall express an opinion in accordance with 
the  second  sub-paragraph  of  Article  34(1).  For  the  information  referred  to  in 
paragraph 1(a), (b), (e) and (f), Member States shall ensure that the statutory auditor 
checks that the corporate governance statement has been produced. 

Without prejudice to Article 46, Member States may exempt public interest entities 
which have only issued securities other than shares admitted to trading on a regulated 
market,  within  the  meaning  of  point  (14)  of  Article  4(1)  of  Directive  2004/39/EC, 
from  the  application  of  paragraph  1(a),  (b),  (e)  and  (f),  unless  such  public  interest 
entities have issued shares which are traded in a multilateral trading facility, within 
the meaning of point (15) of Article 4(1) of Directive 2004/39/EC. 

2. 

3. 

32 

OJ L 142, 30.4.2004, p. 12. 

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45 

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CHAPTER 6 

CONSOLIDATED FINANCIAL STATEMENTS AND REPORTS 

Article 22 

Scope 

For the purposes of this Chapter, a parent undertaking and all of its subsidiary undertakings 
shall be undertakings to be consolidated where either the parent undertaking or one or more 
subsidiary undertakings is established as one of the types of undertaking listed in Annex I or 
Annex II. 

Article 23 

The requirement to prepare consolidated financial statements 

1. 

A Member State shall require any undertaking governed by its national law to draw 
up  consolidated  financial  statements  and  a  consolidated  management  report  if  that 
undertaking  (a  parent  undertaking)  controls  one  or  more  other  undertakings 
(subsidiary undertaking(s)) in any of the following situations:  

(a) 

(b) 

(c) 

(d) 

(e) 

it  has  a  majority  of  the  shareholders'  or  members'  voting  rights  in  the  other 
undertaking(s); 

it  has  the  right  to  appoint  or  remove  a  majority  of  the  members  of  the 
administrative,  management  or  supervisory  body  of  the  other  undertaking(s) 
and is at the same time a shareholder in or a member thereof;  

it has the right to exercise a dominant influence over the other undertaking(s) 
of  which  it  is  a  shareholder  or  a  member,  pursuant  to  a  contract  entered  into 
with  the  undertaking(s)  or  to  a  provision  in  its  memorandum  or  articles  of 
association,  where  the  law  governing  the  other  undertaking(s)  permits  such 
contracts or provisions.  

it  has  the  power  to  exercise,  or  actually  exercises,  dominant  influence  or 
control over the other undertaking(s);  

it  and  the  other  undertaking(s)  are  managed  on  a  unified  basis  by  the  parent 
undertaking;  

(f) 

it is a shareholder in or member of the other undertaking(s), and: 

(i) 

a  majority  of  the  members  of  the  administrative,  management  or 
supervisory  bodies  of  the  other  undertaking(s)  who  have  held  office 
during  the  financial  year,  during  the  preceding  financial  year  and  up  to 

EN 

46 

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the time when  the consolidated  financial statements are drawn  up, have 
been appointed solely as a result of the exercise of its voting rights; or 

(ii) 

controls  alone,  pursuant  to  an  agreement  with  other  shareholders  in  or 
members  of  the  other  undertaking(s),  a  majority  of  shareholders'  or 
members' voting rights.  

However, point (i) shall not apply where a third party has the rights referred to 
in points (a), (b) or (c) with regard to the other undertaking(s). 

For  the  purposes  of  paragraph  1(a),  (b)  and  (f),  the  voting  rights  and  the  rights  of 
appointment and removal of any other subsidiary undertaking as well as those of any 
person acting in his own name but on behalf of the parent undertaking or of another 
subsidiary undertaking shall be added to those of the parent undertaking. 

For the purposes of paragraph 1(a), (b) and (f), the rights mentioned in paragraph 2 
shall be reduced by the rights: 

(a) 

(b) 

attaching  to  shares  held  on  behalf  of  a  person  who  is  neither  the  parent 
undertaking nor a subsidiary thereof; or 

attaching to shares held by way of security, provided that the rights in question 
are  exercised  in  accordance  with  the  instructions  received,  or  held  in 
connection  with  the  granting  of  loans  as  part  of  normal  business  activities, 
provided  that  the  voting  rights  are  exercised  in  the  interests  of  the  person 
providing the security. 

For the purposes of paragraph 1(a) and (f), the total of the shareholders' or members' 
voting  rights  in  the  subsidiary  undertaking  shall  be  reduced  by  the  voting  rights 
attaching to the shares held by that undertaking itself by a subsidiary undertaking of 
that  undertaking  or  by  a  person  acting  in  his  own  name  but  on  behalf  of  those 
undertakings. 

Without  prejudice  to  Article  24(10)  a  parent  undertaking  and  all  of  its  subsidiary 
undertakings  shall  be  undertakings  to  be  consolidated  regardless  of  where  the 
registered offices of such subsidiary undertakings are situated. 

For  the  purposes  of  paragraph  5  any  subsidiary  undertaking  of  a  subsidiary 
undertaking  shall  be  considered  a  subsidiary  undertaking  of  the  parent  undertaking 
which is the parent of the undertaking to be consolidated. 

Without prejudice to this Article and Articles 22 and 24, a Member State may require 
any  undertaking  governed  by  its  national  law  to  draw  up  consolidated  financial 
statements and a consolidated management report if: 

2. 

3. 

4. 

5. 

6. 

7. 

(a) 

that undertaking and one or more other undertakings to which it is not related 
as described in paragraphs 1(a) to (f), are managed on a unified basis pursuant 
to  a  contract  concluded  with 
the 
memorandum or articles of association of those undertakings; or 

that  undertaking  or  provisions 

in 

(b) 

the administrative, management or supervisory bodies of that undertaking and 
of  one  or  more  other  undertakings  to  which  it  is  not  related,  as  described  in 

EN 

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paragraphs 1(a) to (f), consist for the major part of the same persons in office 
during  the  financial  year  and  until  the  consolidated  financial  statements  are 
drawn up. 

Where the first sub-paragraph is applied, undertakings which are related as described 
in  that  sub-paragraph  shall,  together  with  all  of  their  subsidiary  undertakings,  be 
consolidated  where  one  or  more  of  those  undertakings  is  established  as  one  of  the 
types of undertaking listed in Annex I or Annex II. 

Paragraphs 5 and 6 of this Article and Articles 24(1) to 24(3), 24(10) and 25 to 29 
shall apply to the consolidated financial statements and the consolidated management 
report  referred  to  in  this  paragraph.  References  to  parent  undertakings  shall  be 
understood to refer to all the undertakings specified in the first sub-paragraph above. 
Without prejudice to Article 25(3) second sub-paragraph, the items ‘capital’, ‘share 
premium account’, ‘revaluation reserve’, ‘reserves’, ‘profit or loss brought forward’, 
and ‘profit or loss for the financial year’ to be included in the consolidated accounts 
shall be the aggregate amounts attributable to each of the undertakings specified in 
the first sub-paragraph of this paragraph. 

Article 24 

Exemptions from consolidation 

1. 

2. 

3. 

4. 

Small groups shall be exempt from the obligation to draw up consolidated financial 
statements  and  a  consolidated  management  report,  except  where  any  affiliated 
undertaking is a public interest entity. 

Member  States  may  provide  for  an  exemption  for  medium-sized  groups  from  the 
obligation  to  draw  up  consolidated  financial  statements  and  a  consolidated 
management  report,  except  where  any  affiliated  undertaking  is  a  public  interest 
entity. 

Member States may grant an exemption from the obligation to draw up consolidated 
financial  statements  and  a  consolidated  management  report  where  the  parent 
undertaking is not constituted as one of the types of undertaking listed in Annex I or 
Annex II. 

Notwithstanding paragraphs 1, 2 and 3 of this Article, a Member State shall exempt 
from the obligation to draw up consolidated financial statements and a consolidated 
management  report  any  parent  undertaking  governed  by  its  national  law  which  is 
also a subsidiary undertaking, if its own parent undertaking is governed by the law of 
a Member State in the following two cases: 

(a) 

that  parent  undertaking  holds  all  of  the  shares  in  the  exempted  undertaking. 
The  shares  in  that  undertaking  held  by  members  of  its  administrative, 
management  or  supervisory  bodies  pursuant  to  an  obligation  in  law  or  in  the 
memorandum or articles of association shall be ignored for this purpose;  

EN 

48 

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(b) 

that  parent  undertaking  holds  90  %  or  more  of  the  shares  in  the  exempted 
undertaking and the remaining shareholders in or members of that undertaking 
have approved the exemption. 

5. 

Exemptions referred to in paragraph 4 shall be subject to the compliance with all of 
the following conditions: 

(a) 

(b) 

(c) 

the  exempted  undertaking  and,  without  prejudice  to  paragraph  10,  all  of  its 
subsidiary  undertakings  shall  be  consolidated  in  the  financial  statements  of  a 
larger  body  of  undertakings,  the  parent  undertaking  of  which  is  governed  by 
the law of a Member State; 

the  consolidated  financial  statements  referred  to  in  point  (a)  and  the 
consolidated  management  report  of  the  larger  body  of  undertakings  shall  be 
drawn up by the parent undertaking  of that body,  according to the  law  of the 
Member  State  by  which  the  parent  undertaking  of  that  larger  body  of 
undertakings is governed, in accordance with this Directive; 

the  consolidated  financial  statements  referred  to  in  point  (a)  and  the 
consolidated  management  report  referred  to  in  point  (b),  the  report  by  the 
person  responsible  for  auditing  those  financial  statements  and,  where 
appropriate, the appendix referred to in paragraph 7 below, shall be published 
for  the  exempted  undertaking  in  the  manner  prescribed  by  the  law  of  the 
Member  State  governing  that  undertaking  in  accordance  with  Article  30;  that 
Member  State  may  require  that  those  documents  be  published  in  its  official 
language and that the translation be certified; 

(d) 

the notes to the annual financial statements of the exempted undertaking shall 
disclose the following: 

(i) 

the  name  and  registered  office  of  the  parent  undertaking  that  draws  up 
the consolidated financial statements referred to in point (a); 

(ii) 

the  exemption  from  the  obligation  to  draw  up  consolidated  financial 
statements and a consolidated management report. 

6. 

In  cases  not  covered  by  paragraph  4,  a  Member  State  may,  without  prejudice  to 
paragraphs  2  and  3  of  this  Article  and  Article  3(6),  exempt  from  the  obligation  to 
draw up consolidated financial statements and a consolidated management report any 
parent  undertaking  governed  by  its  national  law  which  is  also  a  subsidiary 
undertaking,  the  parent  undertaking  of  which  is  governed  by  the  law  of  a  Member 
State, provided that all the conditions set out in paragraph 5 are fulfilled and that the 
shareholders  in  or  members  of  the  exempted  undertaking  who  own  a  minimum 
proportion  of  the  subscribed  capital  of  that  undertaking  have  not  requested  the 
preparation of consolidated financial statements at least six months before the end of 
the financial year. Member States may fix that proportion at not more than 10 % for 
public limited liability companies and for limited partnerships with share capital, and 
at not more than 20 % for undertakings of other types. 

EN 

49 

   EN 

 
7. 

8. 

9. 

A  Member  State  may  not  make  it  a  condition  for  this  exemption  that  the  parent 
undertaking  which  prepared  the  consolidated  financial  statements  described  in 
paragraph 5(a) shall also be governed by its national law. 

A Member State may not make this exemption subject to conditions concerning the 
preparation  and  auditing  of  the  consolidated  financial  statements  referred  to  in 
paragraph 5(a). 

A  Member  State  may  make  the  exemptions  provided  for  in  paragraphs  4,  5  and  6 
subject to the disclosure of additional information, in accordance with this Directive, 
in  the  consolidated  financial  statements  referred  to  in  paragraph  5(a),  or  in  an 
appendix  thereto,  if  that  information  is  required  of  undertakings  governed  by  the 
national  law  of  that  Member  State  which  are  obliged  to  prepare  consolidated 
financial statements and are in the same circumstances. 

Paragraphs 4 to 7 shall not affect any Member State's legislation on the drawing up 
of consolidated financial statements or consolidated management reports in so far as 
those documents are required 

(i) 

for the information of employees of their representatives; or 

(ii)  by an administrative or judicial authority for its own purposes. 

Without prejudice to paragraphs 2 and 3 of this Article and Article 3(6), a Member 
State may exempt from the obligation to draw up consolidated financial statements 
and  a  consolidated  management  report  any  parent  undertaking  governed  by  its 
national  law  which  is  also  a  subsidiary  undertaking  of  a  parent  undertaking  not 
governed  by  the  law  of  a  Member  State,  if  all  of  the  following  conditions  are 
fulfilled: 

(a) 

(b) 

the  exempted  undertaking  and,  without  prejudice  to  paragraph  10,  all  of  its 
subsidiary undertakings are consolidated in the financial statements of a larger 
body of undertakings; 

the  consolidated  financial  statements  referred  to  in  point  (a)  and,  where 
appropriate,  the  consolidated  management  report  are  drawn  up  in  accordance 
with  this  Directive  or  in  a  manner  equivalent  to  consolidated  financial 
statements and consolidated management reports drawn up in accordance with 
this Directive; 

(c) 

the consolidated financial statements referred to in point (a) have been audited 
by  one  or  more  persons  authorized  to  audit  financial  statements  under  the 
national law governing the undertaking which drew them up. 

Paragraphs 5(c) and (d), and 6 to 8 shall apply. 

Member States may provide for exemptions under this paragraph only if it provides 
for the same exemptions under paragraphs 4 to 8. 

10. 

An  undertaking  need  not  be  included  in  consolidated  financial  statements  where  at 
least one of the following conditions is complied with: 

EN 

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(a) 

severe long-term restrictions substantially hinder: 

(i) 

the  parent  undertaking  in  the  exercise  of  its  rights  over  the  assets  or 
management of that undertaking; or 

(ii) 

the exercise of unified management of that undertaking where it is in one 
of the relationships defined in Article 23(7); 

(b) 

the  information  necessary  for  the  preparation  of  consolidated  financial 
statements  in  accordance  with  this  Directive  cannot  be  obtained  without 
disproportionate expense or undue delay;  

(c) 

the  shares  of  that  undertaking  are  held  exclusively  with  a  view  to  their 
subsequent resale. 

This paragraph shall also apply to public interest entities. 

Article 25 

The preparation of consolidated financial statements 

Chapters  2  and  3  shall  apply  in  respect  of  the  consolidated  financial  statements, 
taking  into  account  the  essential  adjustments  resulting  from  the  particular 
characteristics  of  consolidated  financial  statements  as  compared  with  annual 
financial statements. 

The  assets  and  liabilities  of  undertakings  included  in  a  consolidation  shall  be 
incorporated in full in the consolidated balance sheet. 

The book values of shares in the capital of undertakings included in a consolidation 
shall be set off against the proportion which they represent of the capital and reserves 
of those undertakings in accordance with the following: 

(a) 

(b) 

(c) 

that set-off shall be effected on the basis of book values as they stand on the 
date  on  which  such  undertakings  are  included  in  a  consolidation  for  the  first 
time. Differences arising from such set-offs shall as far as possible be entered 
directly  against  those  items  in  the  consolidated  balance  sheet  which  have 
values above or below their book values; 

a  Member  State  may  permit  or  require  set-offs  on  the  basis  of  the  values  of 
identifiable assets and liabilities as at the date of acquisition of the shares or, in 
the  event  of  acquisition  in  two  or  more  stages,  as  at  the  date  on  which  the 
undertaking became a subsidiary; 

any difference remaining after the application of point (a) or resulting from the 
application of point (b) shall be shown as goodwill in the consolidated balance 
sheet. The methods used to calculate the goodwill and any significant changes 
in relation to the preceding financial year shall be explained in the notes to the 
financial statements. Where the offsetting of positive and negative goodwill is 
authorized by a Member State, an analysis of the goodwill shall also be given 

1. 

2. 

3. 

EN 

51 

   EN 

 
in the notes to the financial statements. Negative goodwill may be transferred 
to  the  consolidated  profit  and  loss  account  where  such  a  treatment  is  in 
accordance with the principles laid out in Chapter 2. 

However, the first sub-paragraph shall not apply to shares in the capital of the parent 
undertaking held either by that undertaking itself or by another undertaking included 
in  the  consolidation.  In  the  consolidated  financial  statements  such  shares  shall  be 
treated as own shares in accordance with Chapter 3. 

The  amount  attributable  to  shares  in  subsidiary  undertakings  included  in  the 
consolidation  held  by  persons  other  than  the  undertakings  included  in  the 
consolidation  shall  be  shown  in  the  consolidated  balance  sheet  as  non-controlling 
interests. 

The  income  and  expenditure  of  undertakings  included  in  a  consolidation  shall  be 
incorporated in full in the consolidated profit and loss account. 

The  amount  of  any  profit  or  loss  attributable  to  shares  in  subsidiary  undertakings 
included in the consolidation held by persons other than the undertakings included in 
the  consolidation  shall  be  shown  in  the  consolidated  profit  and  loss  account  as  the 
profit or loss attributable to non-controlling interests. 

Consolidated  financial  statements  shall  show  the  assets,  liabilities,  financial 
positions, profits or losses of the undertakings included in a consolidation as if there 
were a single undertaking.  

Consolidated financial statements shall be drawn up as at the same date as the annual 
financial statements of the parent undertaking. 

A Member State may, however, require or permit consolidated financial statements 
to be drawn up as at another date in order to take account of the balance sheet dates 
of  the  largest  number  or  the  most  important  of  the  undertakings  included  in  the 
consolidation.  Where  use  is  made  of  this  derogation,  that  fact  shall  be  disclosed  in 
the notes to the consolidated financial statements together with the reasons thereof. 
In addition, account shall be taken or disclosure made of important events concerning 
the assets and liabilities, the financial position or the profit or loss of an undertaking 
included in a consolidation which have occurred between that undertaking's balance 
sheet date and the consolidated balance sheet date. 

Where  an  undertaking's  balance  sheet  date  precedes  the  consolidated  balance  sheet 
date by more than three months, that undertaking shall be consolidated on the basis 
of interim financial statements drawn up as at the consolidated balance sheet date. 

If  the  composition  of  the  undertakings  included  in  a  consolidation  has  changed 
significantly  in  the  course  of  a  financial  year,  the  consolidated  financial  statements 
shall  include  information  which  makes  the  comparison  of  successive  sets  of 
consolidated  financial  statements  meaningful.  Where  such  a  change  is  significant, 
this  obligation  may  be  fulfilled  by  the  preparation  of  an  adjusted  comparative 
balance sheet and an adjusted comparative profit and loss account. 

4. 

5. 

6. 

7. 

8. 

9. 

10. 

Assets  and  liabilities  to  be  included  in  consolidated  financial  statements  shall  be 
measured on a uniform basis and in accordance with Chapter 2. 

EN 

52 

   EN 

 
11. 

12. 

13. 

14. 

1. 

2. 

1. 

2. 

An  undertaking  which  draws  up  consolidated  financial  statements  shall  apply  the 
same  measurement  bases  as  in  its  annual  financial  statements.  However,  Member 
States  may  permit  or  require  that  other  measurement  bases  in  accordance  with 
Chapter  2  are  used  in  consolidated  financial  statements.  Where  use  is  made  of  this 
derogation  that  fact  shall  be  disclosed  in  the  notes  to  the  consolidated  financial 
statements and the reasons therefore given. 

Where assets and liabilities to be included in consolidated financial statements have 
been  measured  by  undertakings  included  in  the  consolidation  using  bases  differing 
from those used for the consolidation, those assets and liabilities shall be remeasured 
in  accordance  with  the  bases  used  for  the  consolidation.  Departures  from  this 
principle  shall  be  permitted  in  exceptional  cases.  Any  such  departures  shall  be 
disclosed  in  the  notes  to  the  consolidated  financial  statements  and  the  reasons  for 
them given. 

Deferred  tax  balances  shall  be  recognised  on  consolidation  provided  that  it  is 
probable that an actual charge to tax will arise within the foreseeable future for one 
of the undertakings included in the consolidation. 

Where  assets  to  be  included  in  consolidated  financial  statements  have  been  the 
subject of value adjustments solely for tax purposes, they shall be incorporated in the 
consolidated financial statements only after those adjustments have been eliminated. 

Article 26 

Proportional consolidation 

Where  an  undertaking  included  in  a  consolidation  manages  another  undertaking 
jointly  with  one  or  more  undertakings  not  included  in  that  consolidation,  Member 
States  may  permit  or  require  the  inclusion  of  that  other  undertaking  in  the 
consolidated financial statements in proportion to the rights in its capital held by the 
undertaking included in the consolidation. 

Article  24(10)  and  Article  25  shall  apply  mutatis  mutandis  to  the  proportional 
consolidation referred to in paragraph 1 of this Article. 

Article 27 

Equity accounting of associated undertakings 

Where an undertaking included in a consolidation has an associated undertaking, that 
associated undertaking shall be shown in the consolidated balance sheet as a separate 
item. 

When  this  Article  is  applied  for  the  first  time,  the  associated  undertaking  shall  be 
shown  in  the  consolidated  balance  sheet  at  an  amount  corresponding  to  the 
proportion  of  the  associated  undertaking's  capital  and  reserves  represented  by  the 
participating  interest.  The  difference  between  that  amount  and  the  book  value 

EN 

53 

   EN 

 
calculated  in  accordance  Chapters  2  and  3  shall  be  disclosed  separately  in  the 
consolidated  balance  sheet  or  in  the  notes  to  the  consolidated  financial  statements. 
That difference shall be calculated as at the date as at which that method is used for 
the first time. 

In addition, Member States may permit or require the calculation of the difference as 
at the date of acquisition of the shares or, where the shares were acquired in two or 
more  stages,  as  at  the  date  on  which  the  undertaking  became  an  associated 
undertaking. 

Where an associated undertaking's assets or liabilities have been valued by methods 
other than those used for consolidation in accordance with Article 25(11), they may, 
for the purpose of calculating the difference referred to in paragraph 2 of this Article, 
be remeasured using the methods used for consolidation. Where such remeasurement 
has not been carried out, that fact shall be disclosed in the notes to the consolidated 
financial statements. Member States may require such remeasurement. 

The  amount  corresponding  to  the  proportion  of  the  associated  undertaking's  capital 
and reserves referred to in paragraph 2 shall be increased or reduced by the amount 
of any variation which has taken place during the financial year in the proportion of 
the  associated  undertaking's  capital  and  reserves  represented  by  the  participating 
interest. That amount shall be reduced by the amount of the dividends received from 
the associated undertaking. 

Where  the  positive  difference  referred  to  in  paragraph  2  of  this  Article  cannot  be 
related  to  any  category  of  assets  or  liabilities,  it  shall  be  considered  as  goodwill  in 
accordance with Article 9, 11(5)(d), 11(10) and 25(3)(c). 

The proportion of the profit or loss of the associated undertakings attributable to the 
participating interests shall be shown in the consolidated profit and loss account as a 
separate item under an appropriate heading. 

In  so  far  as  the  facts  are  known  or  can  be  ascertained,  profits  and  losses  resulting 
from  transactions  between  the  associated  undertakings  and  other  undertakings 
included  in  the  consolidation  shall  be  eliminated  from  the  consolidated  financial 
statements, where they are included in the book values of assets. 

Where  an  associated  undertaking  draws  up  consolidated  financial  statements, 
paragraphs 1 to 7 shall apply to the capital and reserves shown in such consolidated 
financial statements. 

Article 28 

The notes to the consolidated financial statements 

The  notes  to  the  consolidated  financial  statements  shall  set  out  the  information 
required  by  Articles  17,  18  and  19,  in  addition  to  any  other  information  required 
under other provisions of this Directive, taking account of the essential adjustments 
resulting  from  the  particular  characteristics  of  consolidated  financial  statements  as 
compared  to  annual  financial  statements,  so  that  the  information  is  of  assistance  in 

3. 

4. 

5. 

6. 

7. 

8. 

1. 

EN 

54 

   EN 

 
assessing  the  financial  position  of  the  undertakings  included  in  the  consolidation 
taken as a whole. 

The  following  adjustments  to  the  information  required  by  Articles  17,  18  and  19 
shall apply: 

(a) 

(b) 

(c) 

In disclosing transactions between related parties, transactions between related 
parties  included  in  a  consolidation  that  are  eliminated  on  consolidation  shall 
not be disclosed; 

In disclosing the average number of employees employed during the financial 
year  there  shall  be  separate  disclosure  of  the  average  number  of  employees 
employed by undertakings that are proportionately consolidated; 

In disclosing the amounts of emoluments and advances and credits granted to 
members  of  the  administrative,  managerial  and  supervisory  bodies,  only 
amounts granted to members of the administrative, managerial and supervisory 
bodies of the parent undertaking shall be disclosed; the disclosure shall cover 
amounts granted by the parent undertaking and its subsidiary undertakings. 

2. 

The  notes  to  the  consolidated  financial  statements  shall,  in  addition  to  the 
information required in paragraph 1, set out the following information: 

(a)  The  names  and  registered  offices  of  the  undertakings  included  in  the 
consolidation, the proportion of the capital held in undertakings included in the 
consolidation, other than the parent undertaking, by the undertakings included 
in the consolidation or by persons acting in their own names but on behalf of 
those undertakings, and information as to which of the conditions referred to in 
Articles 23(1) and 23(7) following application of Article 23(2), (3) and (4) has 
formed  the  basis  on  which  the  consolidation  has  been  carried  out.  The  latter 
disclosure may, however, be omitted where consolidation has been carried out 
on the basis of Article 23(1)(a) and where the proportion of the capital and the 
proportion of the voting rights held are the same. 

The same information shall be given in respect of undertakings excluded from 
a consolidation pursuant to Article 5(1)(j) and an explanation shall be given for 
the exclusion of the undertakings referred to in Article 24(10). 

(b)  The  names  and  registered  offices  of  associated  undertakings  included  in  the 
consolidation  as  described  in  Article  27(1)  and  the  proportion  of  their  capital 
held by undertakings included in the consolidation or by persons acting in their 
own names but on behalf of those undertakings; 

(c)  The  names  and  registered  offices  of  undertakings  proportionally  consolidated 
pursuant to Article 26, the factors on which joint management is based, and the 
proportion  of  their  capital  held  by  the  undertakings  included  in  the 
consolidation or  by  persons acting in  their  own  names  but  on  behalf  of  those 
undertakings. 

(d)  The  name  and  registered  office  of  each  of  the  undertakings,  other  than  those 
referred  to  in  points  (a),  (b)  and  (c),  in  which  undertakings  included  in  the 
consolidation, either themselves or through persons acting in their own names 

EN 

55 

   EN 

 
but  on  behalf  of  those  undertakings,  hold  a  participating  interest.  The 
proportion of the capital held, the amount of the capital and reserves, and the 
profit  or  loss  for  the  latest  financial  year  of  the  undertaking  concerned  for 
which  financial  statements  have  been  adopted  shall  also  be  disclosed.  The 
information concerning capital and reserves and the profit or loss may also be 
omitted where the undertaking concerned does not publish its balance sheet. 

(e)  Member States may allow the information required by points (a) to (d) to take 
the form of a statement deposited in accordance with Article 3(3) of Directive 
2009/101/EC.  The  depositing  of  such  a  statement  shall  be  disclosed  in  the 
notes  to  the  financial  statements.  Member  States  may  also  allow  this 
information  to  be  omitted  when  its  nature  is  such  that  it  would  be  seriously 
prejudicial to any of the undertakings to which it relates. Member States may 
make  such  omissions  subject  to  prior  administrative  or  judicial  authorization. 
Any such omission shall be disclosed in the notes to the financial statements. 

Article 29 

The consolidated management report 

1. 

The  consolidated  management  report  shall,  in  addition  to  any  other  information 
required  under  other  provisions  of  this  Directive,  set  out  at  least  the  information 
required by Articles 20 and 21, taking account of the essential adjustments resulting 
from the particular characteristics of a consolidated management report as compared 
to  a  management  report  so  that  the  information  is  of  assistance  in  assessing  the 
undertakings included in the consolidation taken as a whole. 

2. 

The  following  adjustments  to  the  information  required  by  Articles  20  and  21  shall 
apply: 

(a) 

(b) 

in  reporting  details  of  own  shares  acquired,  the  consolidated  management 
report  shall  indicate  the  number  and  nominal  value  or,  in  the  absence  of  a 
nominal  value,  the  accounting  par  value  of  all  of  the  parent  undertaking's 
shares  held  by  that  undertaking  itself,  by  subsidiary  undertakings  of  that 
undertaking  or  by  a  person  acting  in  his  own  name  but  on  behalf  of  those 
undertakings.  A  Member  State  may  permit  or  require  the  disclosure  of  those 
particulars in the notes to the consolidated financial statements; 

in  reporting  on  internal  control  and  risk  management  systems,  the  corporate 
governance  statement  shall  refer  to  the  main  features  of  the  internal  controls 
the 
and  risk  management  systems  for 
consolidation taken as a whole. 

the  undertakings 

included 

in 

3. 

Where a consolidated management report is required in addition to the management 
report, the two reports may be presented as a single report. 

EN 

56 

   EN 

 
CHAPTER 7 

PUBLICATION 

Article 30 

1. 

2. 

General publication requirement 

Member  States  shall  ensure  that  undertakings  publish  the  duly  approved  annual 
financial statements and the management report, together with the opinion submitted 
by  the  statutory  auditor  referred  to  in  Article  34,  as  laid  down  by  the  laws  of  each 
Member State in accordance with Chapter 2 of Directive 2009/101/EC. 

Member  States  may,  however,  exempt  undertakings  from  the  obligation  to  publish 
the management report. In such a case it shall be possible to obtain a copy of all or 
part of any such report upon request. The price of such  a copy shall  not exceed its 
administrative cost. 

The  Member  State  of  an  undertaking  referred  to  in  Annex  II  may  exempt  that 
undertaking from publishing its financial statements in accordance with Article 3 of 
Directive 2009/101/EC, provided that those financial statements are available to the 
public at its head office, in the following cases: 

(a) 

all  the  members  having  unlimited  liability  of  the  undertaking  concerned  are 
undertakings  referred  to  in  Annex  I  governed  by  the  laws  of  Member  States 
other than the Member State whose law governs that undertaking, and none of 
those  undertakings  publishes  the  financial  statements  of  the  undertaking 
concerned with its own financial statements;  

(b) 

all  the  members  having  unlimited  liability  are  undertakings  which  are  not 
governed  by  the  laws  of  a  Member  State  but  which  have  a  legal  form 
comparable to those referred to in Directive 2009/101/EC. 

Copies of the financial statements shall be obtainable upon request. The price of such 
a copy may not exceed its administrative cost. 

3. 

Paragraph  1  shall  apply  with  respect  to  consolidated  financial  statements  and 
consolidated management reports. 

Where  the  undertaking  drawing  up  the  consolidated  financial  statements  is  not 
established as one of the types of undertaking listed in Annex I and is not required by 
its  national  law  to  publish  the  documents  referred  to  in  paragraph  1  in  the  same 
manner  as  prescribed  in  Article  3  of  Directive,  2009/101/EC,  it  shall  at  least  make 
those  documents  available  to  the  public  at  its  head  office.  It  shall  be  possible  to 
obtain  a  copy  of  such  documents  upon  request.  The  price  of  such  a  copy  shall  not 
exceed its administrative cost. 

EN 

57 

   EN 

 
1. 

2. 

1. 

2. 

Article 31 

Simplifications for small and medium-sized undertakings 

Member States may exempt small undertakings from the obligation to publish their 
profit and loss accounts and management reports. 

Member States may permit medium-sized undertakings to publish: 

(a) 

abridged  balance  sheets  showing  only  those  items  preceded  by  letters  and 
roman numerals in Article 9 disclosing separately, either in the balance sheet or 
in the notes to the financial statements: 

(i)  B (I) (3), B (II) (1), (2), (3) and (4), B (III) (1), (2), (3), (4) and (7), C (II) 
(2), (3) and (6) and C (III) (1) and (2) under ‘Assets’ and C, (1), (2), (6), 
(7) and (9) under 'Capital, reserves and liabilities', 

(ii) 

the information required in brackets in C (II) under ‘Assets’ and C under 
‘Capital, reserves and liabilities" in total for all the items concerned and 
separately for C (II) (2) and (3) under ‘Assets’ and C (1), (2), (6), (7) and 
(9) under ‘Capital, reserves and liabilities’, 

(b) 

abridged notes to their financial statements without the information required in 
Article 18 (1)(g) and (k). 

This  paragraph  shall  be  without  prejudice  to  Article  30(1)  where  it  relates  to  the 
profit  and  loss  account,  the  management  report  and  the  opinion  of  the  statutory 
auditor. 

Article 32 

Other publication requirements 

Where  the  annual  financial  statements  and  the  management  report  are  published  in 
full, they shall be reproduced in the form and text on the basis of which the statutory 
auditor has drawn up his opinion. They shall be accompanied by the full text of the 
report of the statutory auditor. 

If the annual financial statements are not published in full, it shall be indicated that 
the version published is abridged and reference shall be made to the register in which 
the  financial  statements  have  been  filed  in  accordance  with  Article  3  of  Directive 
2009/101/EC . Where the financial statements have not yet been filed, the fact shall 
be disclosed. The report of the statutory auditor shall not accompany this publication, 
but  it  shall  be  disclosed  whether  an  unqualified,  qualified  or  adverse  audit  opinion 
was  expressed,  or  whether  the  statutory  auditor  were  unable  to  express  an  audit 
opinion. It shall also be disclosed whether the report of the statutory auditor included 
a  reference  to  any  matters  to  which  the  statutory  auditor  drew  attention  by  way  of 
emphasis without qualifying the audit opinion. 

EN 

58 

   EN 

 
Article 33 

Duty and liability for drawing up and publishing the financial statements and the 
management report 

1. 

2. 

3. 

Member States shall ensure that the members of the administrative, management and 
supervisory  bodies  of  the  undertaking  collectively  have  the  duty  to  ensure  that  the 
annual  financial  statements,  the  management  report  and,  when  provided  separately, 
the corporate governance statement are drawn up and published in accordance with 
the  requirements  of  this  Directive  and,  where  applicable,  in  accordance  with  the 
international  accounting  standards  adopted  in  accordance  with  Regulation  (EC)  No 
1606/2002.  Such  bodies  shall  act  within  the  competences  assigned  to  them  by 
national law. 

Member States shall ensure that the members of the administrative, management and 
supervisory  bodies  of  the  undertaking  collectively  have  the  duty  to  ensure  that  the 
consolidated  financial  statements,  consolidated  management  reports  and,  when 
provided  separately,  the  consolidated  corporate  governance  statement  are  drawn  up 
and  published  in  accordance  with  the  requirements  of  this  Directive  and,  where 
applicable,  in  accordance  with  the  international  accounting  standards  adopted  in 
accordance  with  Regulation  (EC)  No  1606/2002.  Such  bodies  shall  act  within  the 
competences assigned to them by national law.  

Member States shall ensure that their laws, regulations and administrative provisions 
on liability apply to the members of the administrative, management and supervisory 
bodies of the undertakings, at least towards the undertaking, for breach of the duties 
referred to in paragraphs 1 and 2. 

CHAPTER 8 

AUDITING 

Article 34 

General requirement 

1. 

Member  States  shall  ensure  that  the  financial  statements  of  public  interest  entities, 
medium-sized and large undertakings are audited by one or more persons approved 
by Member States to carry out statutory audits on the basis of Directive 2006/43/EC 
of the European Parliament and of the Council33. 

The statutory auditor shall also express an opinion concerning the consistency of the 
management report with the financial statements for the same financial year. 

33 

OJ L 157, 9.6.2006, p. 87.  

EN 

59 

   EN 

 
                                                 
2. 

The  first  sub-paragraph  of  paragraph  1  shall  apply  with  respect  to  consolidated 
financial  statements.  The  second  sub-paragraph  of  paragraph  1  shall  apply  with 
respect to consolidated financial statements and consolidated management reports. 

Article 35 

Content of the audit report 

1. 

The report of the statutory auditor shall include: 

(a) 

(b) 

(c) 

(d) 

(e) 

an introduction which shall at least identify the financial statements that are the 
subject of the statutory audit, together with the financial reporting framework 
that has been applied in their preparation; 

a description of the scope of the statutory audit which shall at least identify the 
auditing standards in accordance with which the statutory audit was conducted; 

an audit opinion which shall state clearly the opinion of the statutory auditor as 
to  whether  the  annual  financial  statements  give  a  true  and  fair  view  in 
accordance  with  the  relevant  financial  reporting  framework  and,  where 
appropriate,  whether  the  annual  financial  statements  comply  with  statutory 
requirements;  the  audit  opinion  shall  be  either  unqualified,  qualified,  an 
adverse  opinion  or,  if  the  statutory  auditor  is  unable  to  express  an  audit 
opinion, a disclaimer of opinion; 

a  reference  to  any  matters  to  which  the  statutory  auditor  draws  attention  by 
way of emphasis without qualifying the audit opinion; 

an  opinion  concerning  the  consistency  of  the  management  report  with  the 
annual financial statements for the same financial year. 

The report shall be signed and dated by the statutory auditor. 

The  report  of  the  statutory  auditor  on  the  consolidated  financial  statements  shall 
comply with the requirements set out in of paragraphs 1 and 2. In reporting on the 
consistency  of  the  management  report  and  the  financial  statements  as  required  by 
paragraph  1(e),  the  statutory  auditor  shall  consider  the  consolidated  financial 
statements  and  the  consolidated  management  report.  Where  the  annual  financial 
statements  of  the  parent  undertaking  are  attached  to  the  consolidated  financial 
statements,  the  reports  of  the  statutory  auditors  required  by  this  Article  may  be 
combined. 

2. 

3. 

EN 

60 

   EN 

 
CHAPTER 9 

Report on payments to governments 

Article 36 

Definitions  

For the purpose of this chapter, the following definitions shall apply: 

1. 

2. 

3. 

4. 

"Undertaking  active  in  the  extractive  industry"  means  an  undertaking  with  any 
activity  involving  the  exploration,  discovery,  development,  and  extraction  of 
minerals, oil and natural gas deposits, as referred to in Section B-Divisions 05 to 08 
of Annex I to Regulation (EC) No 1893/2006 of the European Parliament and of the 
Council34.  

"Undertaking  active  in  the  logging  of  primary  forests"  means  an  undertaking  with 
activities as referred to in Section A-Division 2.2 of Annex I to Regulation (EC) No 
1893/2006 of the European Parliament and of the Council35, in primary forests.  

"Government" means any national, regional or local authority of a Member State or 
of a third country. It includes a department, agency or undertaking controlled by that 
authority as laid down in Article 23 (1) to (6) of this Directive. 

"Project"  is  equivalent  to  a  specific  operational  reporting  unit  at  the  lowest  level 
within the undertaking at which regular internal management reports are prepared to 
monitor its business. 

Article 37 

Undertakings required to report on payments to governments  

1. Member States shall require large undertakings and all public interest entities active in the 
extractive industry or the logging of primary forests to prepare and make public a report on 
payments made to governments on an annual basis. 

2. This obligation shall not apply to any undertaking governed by the law of a Member State 
which  is  a  subsidiary  or  parent  undertaking,  where  both  of  the  following  conditions  are 
fulfilled: 

(a) 

the parent undertaking is subject to the laws of a Member State;  

34 
35 

OJ L 393, 30.12.2006, p. 1.  
OJ L 393, 30.12.2006, p. 1.  

EN 

61 

   EN 

 
                                                 
(b) 

the  payments  to  governments  of  such  an  undertaking  are  included  in  the 
consolidated  report  on  payment  to  governments  drawn  up  by  the  parent 
undertaking in accordance with Article 39. 

Article 38 

Content of the report 

1. 

The report shall specify the following when material to the recipient government:  

(a) 

(b) 

(c) 

 the  total  amount  of  payments,  including  payments  in  kind,  made  to  each 
government within a financial year; 

the  total  amount  per  type  of  payment,  including  payments  in  kind,  made  to 
each government within a financial year; 

 where those payments have been attributed to a specific project the amount per 
type  of  payment,  including  payments  in  kind,  made  for  each  such  project 
within a financial year, and the total amount of payments for each such project. 

2. 

The following types of payments shall be reported: 

(a) 

 production entitlements; 

(b) 

 taxes on profits; 

(c) 

 royalties; 

(d) 

 dividends; 

(e) 

 signature, discovery and production bonuses; 

(f) 

 licence fees, rental fees, entry fees and other considerations for licences and/or 
concessions; 

(g) 

 other direct benefits to the government concerned. 

3. 

4. 

5. 

Where payments in kind are made to a government, they shall be reported in value or 
in  volume.  Where  they  are  reported  in  terms  of  value,  supporting  notes  shall  be 
provided to explain how their value has been determined.  

The  Commission  shall  be  empowered  to  adopt  delegated  acts  in  accordance  with 
Article 42 in order to specify the concept of materiality of payments.  

The  report  shall  exclude  any  type  of  payments  made  to  a  government  in  a  country 
where  the  public  disclosure  of  this  type  of  payment  is  clearly  prohibited  by  the 
criminal  legislation  of  that  country. In  such  cases  the  undertaking  shall  state  that  it 
has not reported payments in accordance with paragraphs 1 to 3, and shall disclose 
the name of the government concerned. 

EN 

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Article 39 

Consolidated report on payments to goverments 

1. 

A  Member  State  shall  require  any  large  undertaking  or  any  public  interest  entity 
active in the extractive industry or the logging of primary forests and governed by its 
national  law  to  draw  up  a  consolidated  report  on  payments  to  governments  in 
accordance with Articles 37 and 38 if that parent undertaking is under the obligation 
to prepare consolidated financial statements as laid down in Article 23(1) to 23(6) of 
this Directive.  

2. 

The obligation to draw up the consolidated report referred to in paragraph 1 shall not 
apply to:  

(a) 

(b) 

(c) 

 a parent undertaking of a small group as defined in Article 3(4) except where 
any affiliated undertaking is a public interest entity; 

 a parent undertaking of a medium-sized group as defined in Article 3(5) except 
where any affiliated undertaking is a public interest entity;  

 a parent  undertaking governed by the law of a Member State which is also a 
subsidiary undertaking, if its own parent undertaking is governed by the law of 
a Member State. 

3. 

An  undertaking  need  not  be  included  in  a  consolidated  report  on  payments  to 
government where at least one of the following conditions is fulfilled: 

(a) 

(b) 

severe long-term restrictions substantially hinder the parent undertaking in the 
exercise of its rights over the assets or management of that undertaking;  

the  information  necessary  for  the  preparation  of  the  consolidated  report  on 
payments to government in accordance with this Directive cannot be obtained 
without disproportionate expense or undue delay. 

Article 40 

Publication  

The  report  referred  to  in  Article  37  and  the  consolidated  report  referred  to  in  Article  39  on 
payments to governments shall be published as laid down by the laws of each Member State 
in accordance with Chapter 2 of Directive 2009/101/EC.  

Article 41 

Review 

The  Commission  shall  review  and  report  on  the  implementation  and  effectiveness  of  this 
Chapter, in particular as regards the scope of the reporting obligations and the modalities of 

EN 

63 

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the  reporting  on  a  project  basis.  The  review  should  also  take  into  account  international 
developments  and  consider  the  effects  on  competitiveness  and  security  of  energy  supply.  It 
should be completed at the latest five years after the date of entry into force of this Directive. 
The  report  shall  be  submitted  to  the  European  Parliament  and  the  Council,  together  with  a 
legislative proposal, if appropriate. 

CHAPTER 10 

FINAL PROVISIONS 

Article 42 

Exercise of delegated powers 

1. 

2. 

3. 

4. 

5. 

The  power  to  adopt  delegated  acts  is  conferred  on  the  Commission  subject  to  the 
conditions laid down in this Article. 

The delegation of power referred to in Article 1(2), Article 3(10) and Article 38(4) 
shall  be  conferred  on  the  Commission  for  an  indetermined  period  of  time  from  the 
date referred to in Article 50. 

The delegation of power referred to in Article 1(2), Article 3(10) and Article 38(4) 
may  be  revoked  at  any  time  by  the  European  Parliament  or  by  the  Council.  A 
decision  of  revocation  shall  put  an  end  to  the  delegation  of  the  power  specified  in 
that decision. It shall take effect the day following the publication of the decision in 
the Official Journal of the European Union or at a later date specified therein. It shall 
not affect the validity of any delegated acts already in force. 

As soon as it adopts a delegated act, the Commission shall notify it simultaneously to 
the European Parliament and to the Council. 

A delegated act adopted pursuant to Article 1(2), Article 3(10) and Article 38(4) shall 
enter  into  force  only  if  no  objection  has  been  expressed  either  by  the  European 
Parliament or the Council within a period of two months of notification of that act to 
the European Parliament and the Council or if, before the expiry of that period, the 
European Parliament and the Council have both informed the Commission that they 
will not object. That period shall be extended by two months at the initiative of the 
European Parliament or the Council. 

Article 43 

Exemption for subsidiary undertakings 

Notwithstanding the provisions of Directives 2009/101/EC and 77/91/EEC, a Member State 
shall not be required to apply the provisions of this Directive concerning the content, auditing 
and publication of the annual financial statements and the management report to undertakings 

EN 

64 

   EN 

 
governed  by  their  national  laws  which  are  subsidiary  undertakings,  where  the  following 
conditions are fulfilled: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

the parent undertaking is subject to the laws of a Member State; 

all  shareholders  or  members  of  the  subsidiary  undertaking  have  declared  their 
agreement to the exemption from such obligation; this declaration shall be made in 
respect of every financial year; 

the parent undertaking has declared that it guarantees the commitments entered into 
by the subsidiary undertaking; 

the declarations referred to in points (2) and (3) of this Article are published by the 
subsidiary undertaking as laid down by the laws of the Member State in accordance 
with Chapter 2 of Directive 2009/101/EC; 

the subsidiary undertaking is included in the consolidated financial statements drawn 
up by the parent undertaking in accordance with this Directive; 

the exemption is disclosed in the notes to the consolidated financial statements drawn 
up by the parent undertaking; 

the  consolidated  financial  statements  referred  to  in  point  (5)  of  this  Article,  the 
consolidated  management  report,  and  the  report  by  the  statutory  auditor  are 
published  for  the  subsidiary  undertaking  as  laid  down  by  the  laws  of  the  Member 
State in accordance with Chapter 2 of Directive 2009/101/EC. 

Article 44 

Undertakings which are members having unlimited liability of other undertakings 

1. 

Member States may require undertakings referred to in Annex I which are governed 
by  their  law  and  which  are  members  having  unlimited  liability  of  any  undertaking 
referred  to  in  Article  1(1)(b)  and  (c)  ('entity  concerned'),  to  draw  up,  have  audited 
and publish, with their own financial statements, the financial statements of the entity 
concerned in conformity with the provisions of this Directive. 

In this case, the requirements of this Directive shall not apply to the entity concerned. 

2. 

Member States shall not be required to apply the requirements of this Directive to the 
entity concerned where: 

(a) 

the  financial  statements  of  the  entity  concerned  are  drawn  up,  audited  and 
published in conformity with the provisions of this Directive by an undertaking 
which is a member having unlimited liability of that entity and is governed by 
the law of another Member State; 

(b) 

the entity concerned is included in consolidated financial statements drawn up, 
audited  and  published  in  accordance  with  this  Directive  by  a  member  having 
unlimited liability or where the entity concerned is included in the consolidated 

EN 

65 

   EN 

 
financial  statements  of  a  larger  body  of  undertakings  drawn  up,  audited  and 
published in conformity with this Directive by a parent undertaking governed 
by the law of a Member State. This exemption shall be disclosed in the notes to 
the consolidated financial statements. 

3. 

In cases referred to in paragraph 2, the entity concerned shall reveal the name of the 
entity publishing the financial statements upon request. 

Article 45 

Profit and loss account exemption for parent undertakings preparing consolidated 
financial statements 

A Member State shall not be required to apply the provisions of this Directive concerning the 
auditing  and  publication  of  the  profit  and  loss  account  to  undertakings  governed  by  their 
national laws which are parent undertakings where the following conditions are fulfilled: 

(1) 

(2) 

(3) 

(4) 

the parent undertaking draws up consolidated financial statements in accordance with 
this Directive and is included in the consolidated financial statements; 

the  exemption  is  disclosed  in  the  notes  to  the  annual  financial  statements  of  the 
parent undertaking; 

the exemption is disclosed in the notes to the consolidated financial statements drawn 
up by the parent undertaking; 

the  profit  or  loss  of  the  parent  undertaking,  determined  in  accordance  with  this 
Directive, is shown in the balance sheet of the parent undertaking. 

Article 46 

Restriction of exemptions for public interest entities 

Unless  expressly  provided  for  in  this  Directive,  the  Member  States  shall  not  make  the 
simplifications and exemptions set out in this Directive available to public interest entities. 

Article 47 

Penalties 

Member  States  shall  lay  down  the  rules  on  penalties  applicable  to  infringements  of  the 
national  provisions  adopted  pursuant  to  this  Directive  and  shall  take  all  the  measures 
necessary to ensure that they are implemented. The penalties provided for shall be effective, 
proportionate and dissuasive. 

EN 

66 

   EN 

 
Article 48 

Repeal 

Directives 78/660/EEC and 83/349/EEC are repealed. 

References  to  the  repealed  Directives  shall  be  construed  as  references  to  this  Directive  and 
shall be read in accordance with the correlation table in Annex III. 

Article 49 

Transposition 

1. 

Member  States  shall  bring  into  force  the  laws,  regulations  and  administrative 
provisions necessary to comply with this Directive by 1 July 2014 at the latest. They 
shall  forthwith  communicate  to  the  Commission  the  text  of  those  provisions  and  a 
correlation table between those provisions and this Directive. 

When  Member  States  adopt  those  provisions,  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. 

2. 

Member States shall communicate to the Commission the text of the main provisions 
of national law which they adopt in the field covered 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 Union. 

Article 50 

Article 51 

This Directive is addressed to the Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President 

EN 

67 

   EN 

 
Types of undertaking referred to in the first subparagraph of Article 1(1) 

ANNEX I 

– 

Belgium: 

la société anonyme/de naamloze vennootschap, la société en commandite par actions 
/  de  commanditaire  vennootschap  op  aandelen,  la  société  de  personnes  à 
responsabilité limitée/de personenvennootschap met beperkte aansprakelijkheid; 

– 

Bulgaria: 

акционерно  дружество,  дружество  с  ограничена  отговорност,  командитно 
дружество с акции; 

– 

– 

– 

– 

– 

the Czech Republic: 

společnost s ručením omezeným, akciová společnost; 

Denmark: 

aktieselskaber, kommanditaktieselskaber, anpartsselskaber;  

Germany: 

die  Aktiengesellschaft,  die  Kommanditgesellschaft  auf  Aktien,  die  Gesellschaft  mit 
beschränkter Haftung; 

Estonia: 

aktsiaselts, osaühing; 

Ireland: 

public  companies  limited  by  shares  or  by  guarantee,  private  companies  limited  by 
shares or by guarantee; 

– 

Greece: 

η ανώνυµη εταιρία, η εταιρία περιωρισµένης ευθύνης, η ετερόρρυθµη κατά µετοχές 
εταιρία; 

– 

Spain: 

la  sociedad  anónima,  la  sociedad  comanditaria  por  acciones,  la  sociedad  de 
responsabilidad limitada; 

– 

France: 

la société anonyme, la société en commandite par actions, la société à responsabilité 
limitée; 

– 

Italy: 

EN 

68 

   EN 

 
la società per azioni, la società in accomandita per azioni, la società a responsabilità 
limitata; 

– 

Cyprus: 

∆ηµόσιες  εταιρείες  περιορισµένης  ευθύνης  µε  µετοχές  ή  µε  εγγύηση,  ιδιωτικές 
εταιρείες περιορισµένης ευθύνης µε µετοχές ή µε εγγύηση; 

– 

– 

– 

– 

– 

Latvia: 

akciju sabiedrība, sabiedrība ar ierobežotu atbildību; 

Lithuania: 

akcinės bendrovės, uždarosios akcinės bendrovės; 

Luxembourg: 

la société anonyme, la société en commandite par actions, la société à responsabilité 
limitée; 

Hungary: 

részvénytársaság, korlátolt felelősségű társaság; 

Malta: 

kumpanija  pubblika  —public  limited  liability  company,  kumpannija  privata  —
private limited liability company, 

soċjeta 
commandite with the capital divided into shares; 

in  akkomandita  bil-kapital  maqsum 

f'azzjonijiet  —partnership  en 

– 

the Netherlands: 

– 

– 

naamloze 
de 
aansprakelijkheid; 

vennootschap, 

Austria: 

de 

besloten 

vennootschap  met 

beperkte 

die Aktiengesellschaft, die Gesellschaft mit beschränkter Haftung; 

Poland: 

spółka  akcyjna,  spółka  z  ograniczoną  odpowiedzialnością,  spółka  komandytowo-
akcyjna; 

– 

Portugal: 

a  sociedade  anónima,  de  responsabilidade  limitada,  a  sociedade  em  comandita  por 
acões, a sociedadepor quotas de responsabilidade limitada; 

– 

Romania: 

EN 

69 

   EN 

 
– 

– 

– 

– 

– 

societate  pe  acțiuni,  societate  cu  răspundere  limitată,  societate  în  comandită  pe 
acțiuni. 

Slovenia: 

delniška družba, družba z omejeno odgovornostjo, komanditna delniška družba; 

Slovakia: 

akciová spoločnosť, spoločnosť s ručením obmedzeným; 

Finland: 

osakeyhtiö/aktiebolag; 

Sweden: 

aktiebolag; 

the United Kingdom: 

public  companies  limited  by  shares  or  by  guarantee,  private  companies  limited  by 
shares or by guarantee 

EN 

70 

   EN 

 
Types of undertaking referred to in the second subparagraph of Article 1(1) 

ANNEX II 

– 

Belgium 

la  société  en  nom  collectif/de  vennootschap  onder  firma,  la  société  en  commandité 
simple/de gewone commanditaire vennootschap; 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

Bulgaria: 

събирателно дружество, командитно дружество; 

the Czech Republic: 

veřejná obchodní společnost, komanditní společnost, družstvo; 

Denmark: 

interessentskaber, kommanditselskaber; 

Germany: 

die offene Handelsgesellschaft, die Kommanditgesellschaft; 

Estonia: 

täisühing, usaldusühing; 

Ireland: 

partnerships, limited partnerships, unlimited companies; 

Greece: 

η οµόρρυθµος εταιρία, η ετερόρρυθµος εταιρία; 

Spain: 

sociedad colectiva, sociedad en comandita simple; 

France: 

la société en nom collectif, la société en commandite simple; 

Italy: 

la società in nome collettivo, la società in accomandita semplice; 

Cyprus: 

Οµόρρυθµες και ετερόρρυθµες εταιρείες (συνεταιρισµοί); 

EN 

71 

   EN 

 
– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

Latvia: 

pilnsabiedrība, komanditsabiedrība; 

Lithuania: 

tikrosios ūkinės bendrijos, komanditinės ūkinės bendrijos; 

Luxembourg: 

la société en nom collectif, la société en commandite simple; 

Hungary: 

közkereseti társaság, betéti társaság, közös vállalat, egyesülés; 

Malta: 

Soċjeta  f'isem  kollettiv  jew  soċjeta  in  akkomandita,  bil-kapital  li  mhux  maqsum 
f'azzjonijiet  meta  s-soċji  kollha  li  għandhom  responsabbilita'  llimitata  huma 
soċjetajiet  in  akkomandita  bil-kapital  maqsum  f'azzjonijiet  —Partnership  en  nom 
collectif  or  partnership  en  commandite  with  capital  that  is  not  divided  into  shares, 
when all the partners with unlimited liability are partnership en commandite with the 
capital divided into shares ; 

the Netherlands: 

de vennootschap onder firma, de commanditaire vennootschap; 

Austria: 

die offene Handelsgesellschaft, die Kommanditgesellschaft; 

Poland: 

spółka jawna, spółka komandytowa; 

Portugal: 

sociedade em nome colectivo, sociedade em comandita simples; 

Romania: 

societate în nume colectiv, societate în comandită simplă; 

Slovenia: 

družba z neomejeno odgovornostjo, komanditna družba; 

Slovakia: 

verejná obchodná spoločnosť, komanditná spoločnosť; 

EN 

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   EN 

 
– 

– 

– 

Finland: 

avoin yhtiö/ öppet bolag, kommandiittiyhtiö/kommanditbolag; 

Sweden: 

handelsbolag, kommanditbolag; 

the United Kingdom: 

partnerships, limited partnerships, unlimited companies 

EN 

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 ANNEX III 

CORRELATION TABLE  

Directive 78/660/EEC 

Directive 83/349/EEC 

This Directive 

1 

(1), 

Article 
subparagraph, 
introductory wording 

first 

1(1), 

Article 
subparagraph, 
twenty seventh indents  

first 
to 

first 

- 

- 

Article 
subparagraph 

1(1), 

second 

- 

Article 
second 
1(1), 
subparagraph,  points  (a) 
to (aa) 

- 

Article  1 
subparagraph 

(1), 

third 

- 

Article 1(2) 

Article 2(1)  

Article 2(2)  

Article 2(3)  

Article 2(4) 

Article 2(5) 

Article 2(6) 

Article 3  

Article 4(1)  

Article 4(2)  

Article 4(3)  

Article 4(4)  

Article 4(5)  

Article 4(6) 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Article 1(a)  

Annex I  

Article 1(b)  

Annex II  

Article 1(c) 

- 

Article 4(1)  

Article 4(2) 

Article 4(3) 

Article 4(3) 

Article 4(4) 

Article 4(5) 

Article 8(1)  

Article 8(2) 

Article 8(3) 

- 

Article 8(4) 

- 

Article 5(1)(h)  

EN 

74 

   EN 

 
Article 5  

Article 6  

Article 7  

Article 8  

Article 9(A)  

Article 9(B)  

Article 9(C)  

Article 9(D)  

Article 9(E)  

Article 9(F)  

Liabilities  

Article 9(A)  

Article 9(B)  

Article 9(C)  

Article 9(D)  

Article 9(E)  

Article 10  

Article 10a  

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Article 
subparagraph 

11, 

first 

- 

Article 
11, 
subparagraph  

second 

- 

Article 
subparagraph 

11, 

third 

- 

Article 12(1)  

Article 12(2) 

- 

- 

- 

Article 8(5) 

Article 5(g)  

-  

Article 9(A) 

- 

Article 9(B) 

Article 9(C) 

Article 9(D) 

-  

Capital, 
liabilities  

reserves 

and 

Article 9(A) 

Article 9(B) 

Article 9(C) 

Article 9(D) 

-  

-  

Article 10  

Article 3(1) and Article 16(1)

- 

Article 3(7) 

Article 3(8) 

- 

EN 

75 

   EN 

 
 
Article 12(3) 

Article 13(1) 

Article 13(2) 

Article 14 

Article 15(1)  

Article 15(2) 

Article 15(3), point (a)  

Article 15(3), point (b) 

Article 15(3), point (c) 

Article 15(4) 

Article 16  

Article 17  

Article 18  

Article 19  

Article 20(1) 

Article 20(2)  

Article 20(3) 

Article 21  

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Article 
subparagraph 

22, 

first 

- 

Article 
22, 
subparagraph 

second 

- 

Article 23, items 1 to 15 

Article 23, items16 to 19 

Article  23,  items  20  and 
21  

Article 24 

- 

- 

- 

- 

EN 

Article 3(9)  

Article 11(1)  

Article 11(2)  

Article 17(1), point (d) 

Article 11(3) 

Article 2(4) 

Article 18(1), point (a) 

- 

Article 18(1), point (a)(i) 

-  

Article 11(4) 

Article 2(2) 

-  

Article 2(8) 

Article 
subparagraph 

11(11), 

first 

Article 
subparagraph 

11(11), 

second 

-  

-  

Article 12(1) 

Article 12(2) 

Article 13, items 1 to 15  

- 

Article 13, items 16 and 17 

-  

76 

   EN 

 
 
Article 25, items 1 to 13 

Article  25,  items  14  to 
17 

Article  25,  items  18  and 
19 

Article 26 

27, 

Article 
subparagraph, 
introductory wording 

first 

27, 

Article 
first 
subparagraph,  points  (a) 
and (c) 

27, 

Article 
first 
subparagraph,  points  (b) 
and (d) 

- 

- 

- 

- 

- 

- 

- 

Article 
27, 
subparagraph 

second 

- 

Article 28  

Article 29  

Article 30  

Article 31(1)  

Article 31(1a)  

Article 31(2)  

Article 32 

Article 
introductory wording  

33(1), 

Article 33 (1)(a) and (b), 
and the second and third 
subparagraphs 

Article 33 (1)(c) 

Article  33(2)(a), 
first 
and 
subparagraph, 
Article  33(2)(b),  (c)  and 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Article 14, items 1 to 13 

- 

Article 14, items 14 and 15 

- 

Article 3(2) 

Article  16(2),  points  (a)  and 
(b) 

-  

Article 3(7) 

Article 2(5) 

-  

- 

introductory 
Article  5(1), 
wording and points (a) to (f) 

Article 5(2)  

Article 5(3)  

Article 5(1), point (i) 

Article 6(1)  

-  

Article 6(1) 

Article 6(2)  

EN 

77 

   EN 

 
(d)  

Article  33(2)(a),  second 
subparagraph 

Article 33(3)  

Article 33(4)  

Article 33(5)  

Article 34  

Article 35(1)(a) 

Article 35(1)(b) and (c)  

Article 35(1)(d)  

Article 35(2) 

Article 35(3) 

Article 35(4) 

Article 36  

Article 37(1) 

Article 37(2) 

Article 38  

Article 39(1)(a) 

Article 39(1)(b) 

Article 39(1)(c) 

Article 39(1)(d) 

Article 39(1)(e) 

Article 39(2) 

Article 40(1) 

Article 40(2) 

Article 41  

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Article 17(1), point (b) 

Article 6(3) 

Article  17(1),  point  (b),  last 
sentence 

- 

- 

Article 5(1), point (i) 

Article 11(5) 

Article 18(1), point (b) 

Article 2(6) 

Article 2(7) 

Article  11(7)  and  Article 
18(1), point (a)(vi)  

-  

Article 11(9) 

Article 11(10)  

-  

Article 5(1), point (i) 

 Article 11(6) 

- 

Article 11(6) 

Article 18(1), point (b) 

Article 2(6) 

Article 11(8) 

- 

- 

EN 

78 

   EN 

 
 
Article 
subparagraph  

42, 

first 

- 

Article 
subparagraph 

11(11), 

third 

second 

- 

-  

Article 
42, 
subparagraph  

Article 42a(1)  

Article 42a(2) 

Article 42a(3) 

Article 42a(4) 

Article 42a(5) 

Article 42a(5a) 

Article 42b 

Article 42c 

Article 42d 

Article 42e 

Article 42f 

Article 
introductory wording 

43(1), 

Article 43(1), point (1) 

Article  43(1),  point  (2), 
first subparagraph 

Article  43(1),  point  (2), 
second subparagraph 

Article 43(1), point (3) 

Article 43(1), point (4) 

Article 43(1), point (5) 

Article 43(1), point (6) 

Article 43(1), point (7) 

Article 43(1), point (7a) 

Article 43(1), point (7b) 

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- 

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Article 7(1), point (a) 

Article 7(2) 

Article 7(3) 

Article 7(4) 

Article 7(5) 

Article 7(6) 

Article 7(7)  

Article 7(8) 

Article 17(1), point (c) 

Article 7(1), point (b)  

Article 7 (9)  

Article  17  (1),  introductory 
wording 

Article 17(1), point (a) 

Article  18(1),  point  (h)  first 
subparagraph 

Article 18(1), point (l) 

Article 18(1), point (h) 

Article 18(1), point (j) 

Article 18(1), point (k) 

Article 17(1), point (g)  

Article 17 (1), point (d) 

Article 17 (1), point (e) 

Article  2(3)  and  Article 

EN 

79 

   EN 

 
Article 43(1), point (8) 

Article 43(1), point (9) 

Article 43(1), point (10) 

Article 43(1), point (11) 

Article 43(1), point (12) 

- 

- 

- 

- 

- 

17(1), point (h) 

Article 19(1), point (a) 

Article 18(1), point (f) 

- 

Article 18(1), point (g) 

Article  18(1),  point  (d)  first 
subparagraph 

Article 43(1), point (13) 

- 

Article 18(1), point (e) 

Article 
(14)(a) 

Article 
(14)(b) 

43(1), 

point 

- 

Article 18(1), point (c)(i) 

43(1), 

point 

- 

Article 18(1), point (c)(ii) 

Article 43(1), point (15) 

Article 43(2) 

Article 43(3) 

Article 44  

Article 45(1) 

Article 45(2) 

Article 46  

Article 46a 

Article 47(1) and (1a)  

Article 47(2) 

Article 47(3) 

Article 48  

Article 49 

Article 50 

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- 

- 

- 

- 

Article 19(1), point (b) 

- 

Article  18(1),  point 
second subparagraph 

(d) 

-  

Article  18(1),  point 
second subparagraph 

(h) 

Article 28(2), point (e)  

Article 19(2) 

Article 20  

Article 21 

Article 30(1) and (2) 

Article 31(1) 

Article 31(2) 

Article 32(1) 

Article 32(2) 

Article  18(1),  points  (p)  and 
(g) 

EN 

80 

   EN 

 
Article 50a 

Article 50b 

Article 50c 

Article 51(1) 

Article 51(2) 

Article 51(3) 

Article 51a 

Article 52 

Article 53(2) 

Article 53a 

Article 55 

Article 56(1) 

Article 56(2) 

Article 57 

Article 57a 

Article 58 

Article 59(1)  

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- 

- 

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- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Article  59(2) 
point (a) 

to 

(6), 

- 

Article  59(6),  points  (b) 
and (c) 

Article 59(7) and (8)  

Article 59(9) 

Article 60  

Article 60a 

Article 61 

- 

- 

- 

- 

- 

- 

- 

Article 33(1) 

Article 33(2) 

Article 34(1) 

- 

- 

Article 35(1) and (2) 

- 

Article 3(10) 

Article 46 

- 

- 

Article 18(1), points (m), (n) 
and (o) 

Article 43 

Article 44 

Article 45 

Article 8(6), point (a)  

Article  8(6),  point  (a)  and 
Article 27 

Article  8(6),  points  (b)  and 
(c) 

Article  8(6),  point  (a)  and 
Article 27 

- 

- 

Article 47 

Article 18(2) 

EN 

81 

   EN 

 
Article 61a 

Article 62 

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Article 51 

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- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

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Article  1(1),  points  (a),  (b) 
and (c) 

Article  23(1),  points  (a),  (b) 
and (c) 

Article 1(1), point (d) 

Article 23(1), point (f) 

Article 1(2)  

Article  23(1),  points  (d)  and 
(e) 

Article 2(1), (2) and (3) 

Article 23(2), (3) and (4) 

Article 3(1) 

Article 3(2) 

Article 4(1) 

Article 4(2) 

Article 5 

Article 6(1) 

Article 6(2) 

Article 23(5) 

Article 23(6) 

Article 22 

Article 24(3) 

- 

Article 24(2) 

Article 3(6) 

Article 6(3) and (4) 

- 

Article 7(1) 

Article 7(2) 

Article 7(3) 

Article 8 

Article 9(1) 

Article 9(2) 

Article 10 

Article 11 

Article 12  

Article 24(4) 

Article 24(5) 

Article 46  

Article 24(6) 

Article 24(7)  

- 

Article 24(8) 

Article 24(9) 

Article 23(7) 

Article 13(1), (2) and (2a) 

- 

Article 13(3) 

Article 24(10) 

Article 15 

- 

EN 

82 

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- 

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- 

- 

- 

- 

- 

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- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Article 16 

Article 17(1) 

Article 17(2) 

Article 18 

Article 19 

Article 20 

Article 21 

Article 22 

Article 23 

Article 24 

Article 25(1) 

Article 25(2) 

Article  26(1), 
sentence 

Article 4 

Article 25(1) 

- 

Article 25(2) 

Article 25(3) 

- 

Article 25(4) 

Article 25(5) 

Article 25(6) 

- 

Article 5(1)(b) 

Article 5(3) 

introductory 

Article 25(7) 

Article  26(1),  points  (a),  (b) 
and (c) 

Article 26(2) and (3) 

- 

- 

Article 27 

Article 28 

Article 29(1) 

Article 29(2) 

Article 29(3) 

Article 29(4) 

Article 29(5) 

Article 30 

Article 31 

Article 25(8) 

Article 25(9) 

Article 25(10) 

Article 25(11) 

Article 25(12) 

Article 25(13) 

Article 25(14) 

- 

Article  25(3),  point  (c)  last 
sentence 

Article 32(1) and (2) 

Article 26 

EN 

83 

   EN 

 
- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Article 32(3) 

- 

Article 33(1), first sentence   Article 27(1)  

Article 
sentence  

33(1), 

second 

Article 2(13)  

Article 33(2) to (8) 

Article 27(2) to (8) 

Article 33(9) 

- 

34, 

Article 
introductory 
wording  and  Article  34(1), 
first sentence 

Article 17(1), point a 

Article 
sentence 

34(1), 

second 

- 

Article 34 (2) 

Article 28(2), point (a) 

Article 34(3), point (a) 

Article 28(2), point (b) 

Article 34(3), point (b) 

- 

Article 34(4) 

Article 34(5) 

Article 34(6)  

Article 34(7)  

Article 28(2), point (c) 

Article 28(2), point (d) 

Article 17(1), point (g) 

Article 17(1), point (d) 

Article 34(7a)  

Article 17(1), point (e) 

Article 34(7b)  

Article 17(1), point (h) 

Article 34(8)  

Article 19(1), point (a) 

Article 34(9), point (a) 

- 

Article 34(9), point (b) 

Article  18(1),  point  (d)  and 
Article 28(1), point (b) 

Article 34(10) and (11) 

- 

Article 34(12) and (13) 

Article 28(1), point (c) 

Article 34(14) 

Article 17(1), point (c) 

Article 17(1), point (c) 

Article 18(1), point (c) 

Article 34(16) 

Article 19(1), point (b) 

EN 

84 

   EN 

 
 
 
- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Article 35(1) 

Article 35(2) 

Article 36(1) 

Article 28(2), point (e) 

- 

Article  20(1)  and  Article 
29(1) 

Article  36(2),  points  (a),  (b) 
and (c) 

Article  20(2),  points  (a),  (b) 
and (c) 

Article 36(2), point (d)  

Article 29(2), point (a) 

Article 36(2), point (e) 

Article 20(2), point (f) 

Article 36(2), point (f) 

Article 29(2), point (b) 

Article 36(3) 

Articles 36a 

Articles 36b 

Article 37(1) 

Article 37(2) 

Article 37(3) 

Article 37(4) 

Article 38(1) 

Article 38(2) 

Article 38(3) 

Article 38(4) 

Article 29(3) 

Article 33(2) 

Article 33(3) 

Article 34(2) 

Article 35(1) 

Article 35(2) 

Article 35(3) 

30(1), 

Article 
first 
subparagraph and 30(3), first 
subparagraph 

Article 
subparagraph 

30(1), 

second 

- 

Article 
subparagraph 

30(3), 

second 

Article 38(5), (6) and (7) 

Article 38a 

Article 39 

Article 40 

- 

- 

- 

- 

Article 41(1) 

Article 2(12) 

EN 

85 

   EN 

 
- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Article 41(1a) 

Article 2(3) 

Article 41(2) to (5) 

Article 42 

Article 43 

Article 44 

Article 45 

Article 46 

Article 47 

Article 48  

Article 49 

Article 50 

Article 50a 

Article 51 

- 

- 

- 

- 

- 

- 

- 

Article 47  

- 

- 

- 

- 

EN 

86 

   EN