CELEX: 51989PC0561
Language: en
Date: 1989-11-29
Title: AMENDED PROPOSAL FOR A COUNCIL DIRECTIVE AMENDING DIRECTIVE 78/660/EEC ON ANNUAL ACCOUNTS AND DIRECTIVE 83/349/EEC ON CONSOLIDATED ACCOUNTS WITH RESPECT TO THE EXEMPTIONS FOR SMALL AND MEDIUM-SIZED COMPANIES AND TO THE DRAWING UP AND PUBLICATION OF ACCOUNTS IN ECUS

COMMISSION OF THE EUROPEAN COMMUNITIES
                                              COM (89) 561 final - SYN 158
                                              Brussels,29  November 1989
                            Amended proposal for a
                                COUNCIL DIRECTIVE
  amending Directive 78/660/EBC on anmvil accounts and Directive 83/349/EBC
           on consolidated accounts with respect to the exemptions
                for small and medium-sized companies and to the
                drawing up and publication of accounts in ecus
           (presented by the Commission pursuant to Article 149 (3)
                               of the EEC Treaty)
 ---pagebreak---                                                        -e^fiïf
I.    T?yp1arwt.n-py iremrvraTYfrim
1. This proposal for a Directive based on Article 54 of the Treaty was
initially presented to the Council on 24 October I960.1
2. The Economic and Social Committee and the European Parliament delivered
their Opinions on 31 March 19892 and 25 Hay 1989 3 respectively.
3. While the Economio and Social Committee asked the Gcranlssion to
^TTr^^rtjiirA a substantial revision of the proposed amendments to the
Fourth Directive, Parliament largely approved the proposal for a Directive
subject to a few modifications. This amended proposal coincides for the
most part with Parliament's Opinion, bat on one specific point it draws on
the Opinion of the Economie and Social Committee. The amendments concern
the following points:
- in Article 1, with regard to the definition of small closely held
    companies, it 1 B stated, in line with Parliament's Opinion, that the
    withholding of consent for a transfer of shares does not affect either
    the preferential purchase right of the company's shareholders or
    members, or the right of the person requesting the transfer to have his
    shares purchased by the company;
- in Article 2, in accordance with the Opinion of the Economio and Social
    Committee, the wording is amended so as to enable small companies to
    publish more information than they are required to do by the
    Fourth Directive;
- in Articles 4 and 5, in conformity with the Opinion of Parliament, the
    measure of flexibility Member States are allowed in fixing the
     thresholds for small and medium-sized companies is reduced from 50% to
    25%.
1 OT No C 287, 11.11.1988, p. 5.
2 ESC 437/89, 31.3.1989.
3 EP 133.158, 25.5.1989.
 ---pagebreak---                                     - 3 -
4. Parliament's proposal that in Article 1(2) "penalties" be replaced by
"measures" has been rejected so as not to deviate from the terminology used
in the other company law Directives.
The Commission has likewise decided not to adopt the wording suggested by
Parliament for Article 12; without altering the provision's meaning, it
would have necessitated the amendment of other articles of a g-tm-na-T» legal
nature.
Lastly, Parliament declared itself in favour of simply deleting Article 7
of the original proposal. The purpose of that provision is to make it
possible, in the interests of privacy, for companies with single-member
boards not to provide (fetalis of the director's remuneration, or loans and
advances granted to him, in the notes on the accounts. To reflect, at
least in part, Parliament's Opinion, the amended proposal restricts the
scope of the exemption to the director's remuneration.
 ---pagebreak---                                    - 4 -
II.
Proposal for a                         Amended proposal for a
COUNCIL DIBEGUVE                       OTNC'IL DIRECTIVE
amending Directive 78/660/EBC on       amending Directive 78/660/EBC on
annual accounts and Directive          annual accounts and
83/349/EEC on consolidated accounts    Directive 83/349/EBC on consolidated
with respect to the exemptions for     accounts with respect to the
small and medium-sized companies and   exemptions for small and
to the preparation and publication of  medium-sized companies and to the
accounts in ecus                       drawing up and publication of
                                       accounts in ecus
THE COUNCIL OF THE EUROPEAN            THE COONCIL OF THE EUROPEAN
COMMUNITIES,                           COMMUNITIES
Having regard to the Treaty            unchanged
establishing the European Economic
Community, and in particular
Article 54 thereof,
Having regard to the proposal from
the Commission,
In cooperation with the European
Parliament,
Having regard to the opinion of the
Economic and Social Committee,
 ---pagebreak---                                     - 5 -
Whereas national provisions
concerning the presentation and
content of annual accounts and annual
reports of public and private limited
companies, concerning the valuation
methods used therein and concerning
the publication of such accounts and
reports have been harmonized by
Council Directive 76/660/EEC1, as
last amended by the Act of Accession
of Spain and Portugal;
Whereas the administrative burdens on
small and medium-sized companies
should be reduced in accordance with
the Council's resolution of
3 November 1986 2 and with the
Council's resolution of 30 June 1988
on the improvement of the Easiness
environment and the promotion of the
development of enterprises, in
particular SMEs, in the Community3,
which calls more especially for a
substantial alleviation of the
obligations arising from
Directive 78/660/EBC;
1 Otf No L 222, 14.8.1978, p. 11.
2 OJ No C 287, 14.11.1986, p. 1.
3 OJ No C 197, 27.7.1988, p. 6.
 ---pagebreak---   Whereas Directive 78/660/EEC allows
  Member States to grant exemptions for
  certain companies of minor economic
  and social importance; whereas
  Member States have made widely
  varying use of this possibility;
  whereas this variation in
  requirements may cause distortions of
  competition between small companies
  in different Member States, depending
  on whether or not the exemptions are
  available there, and undermines the
  objective of ensuring the
  comparability and equivalence of the
  information given in company
  accounts;
  Whereas, in order to simplify and
  harmonize the accounting obligations
  for small companies, the exemptions
  provided for in Directive 78/660/EEC
  in favour of small companies and
  relating to the drawing up, auditing
  and publication of accounts should be
  made mandatory;
  Whereas it is desirable for this
  purpose that some small closely held
  companies should be completely exempt
  from the rules prescribed by
  Directive 78/660/EEC, subject to
  appropriate safeguards for the
  interests of shareholders and third
  parties; whereas an exemption for
I such conpanies is justified fro» tte
\ point of view of the single European
£ market because they are unlikely to
 ---pagebreak---                                    - 7
engage in intra-Ctannnunity trade;
Whereas a certain flexibility in the
definition of small and medium-sized
companies is justified by a different
economic environment in
Member States;
Whereas provision should be made for   Whereas provision should be made for
exempting companies whose              exempting companies whose adminis-
adininistrative or management body     trative or management body consists
consists of only one person from the   of only one person from the require-
requirement of including details of    ment of including details of the
the director's remuneration and any    director's remuneration
advances or credits granted to him in  granted to him in the notes on the
the notes on the accounts;             accounts;
Whereas it is also necessary to
simplify the requirements imposed on
small companies for drawing up and
publishing notes on the accounts;
whereas such companies should be
exempt from the obligation to supply
certain items of information that can
be regarded as less important for the
smaller company; whereas for the same
reason such companies should be
exempt from the requirement to
present an annual report, provided
that certain important items of
information normally given in the
report are supplied in the notes on
the accounts;
 ---pagebreak---                                      8 -
Whereas small and medium-sized
companies should be allowed to keep
the accounting documents available to
the public at the registered office
of the company without disregarding
the basic idea that these documents
should be available to the public
without restriction;
Whereas it is important to promote
European monetary integration by
allowing companies to draw up and
publish their accounts in ecus; and
whereas Council Directives 78/660/EEC
and 83/349/EBC1, as amended by the
Act of Accession of Spain and
Portugal, should be clarified in this
respect so as to require companies
availing themselves of this
possibility to state the method they
have used for conversion into ecus in
the notes on the accounts,
HAS ADOPTED THIS DIRECTIVE:
1 OJ No L 193, 18.7.1983, p.l
 ---pagebreak---                                     - 9 -
Section 1:                              unchanged
Exemptions for small and medium-sized
companies
             Article 1                               Article 1
The following Article is inserted in
Directive 78/660/EBC:
"Article la
1. This Directive shall not apply to
companies falling within Article 11
where the following additional
conditions are fulfilled:
(a) the company is not affiliated       unchanged
with other undertakings within the
meaning of Article 41 of
Directive 83/349/EEC and is not
linked to another undertaking by
virtue of a participating interest;
(b) the shareholders or members of      unchanged
the company are the same persons as
the members of its administrative or
management body and are natural
persons;
(c) the shares of the company are       (c) the shares of the company are
registered and under its statutes or    registered and under its statutes or
instrument of incorporation may not     instrument of incorporation may not
be transferred without the company's    be transferred without the company's
consent;                                consent and always provided that the
 ---pagebreak---                                    - 10 -
                                       shareholders or members of the
                                       oompajiy havp a preferential, right Of
                                       purchase and that, should consent be
                                       withheld, the person requesting the
                                       transfer has a right to have his
                                       shares purchased by the company:
(d) the exemption is disclosed in      unchanged
accordance with Article 3 of
Directive 68/151/EEC.
2. The Member States shall provide     unchanged
appropriate penalties for failure by
such companies to keep proper
accounts.
3. When Member States require such     unchanged
companies to present their annual
accounts to the shareholders or
members of the company using a
layout, such layout may not go beyond
that which is prescribed by this
Directive for companies falling
within Article 11."
             Article 2                               Article 8
Article 2(6) of Directive 78/660/EEC   unchanged
is replaced by the following:
"6. Except in relation to companies     "6. The Member States may authorize
falling within Article 11, the         or require the disclosure in the
Member States may authorize or         annual accounts of other information
require the disclosure in the annual   as well as that which must be
accounts of other information as well  disclosed in accordance with this
as that which must be disclosed in     Directive. However, thft PTfifi1M'MtY
accordance with this Directive. "      of requiring *t\" Hj«n1 narra
 ---pagebreak---                                                - 11 -
                                                    nf nthgr infnrmatlcm in thg annna.1
                                                    accounts sha.11 not apply to
                                                    (Companies fa.11 ^^g within
                                                    Article 11."
             Article 5                                             Article g
The last sentence of Article 4(1) of                unchanged
Directive 78/660/EEC is replaced by
the following:
"Except in relation to companies
falling within Article 11, such
subdivision or new items may be
required by the Member States. "
             •t^K-jHBUKJMBàlii^^HBlL                                Article 4
Article 11 of Directive 78/660/EBC                  unchanged
is replaced by the following:
 'Article 11
1. Companies which on their balance
sheet dates do not exceed the limits
of two of the following three
criteria:
- balance sheet total: EOCJ 1 550 000,
- net turnover:                      ECU 3 200 000,
- average number of employees during
the financial year:                  50
may draw up abridged balance sheets
showing only those items preceded by
letters and Roman numerals in
Articles 9 and 10, disclosing
 ---pagebreak---                                    - 12 -
separately the information required
in brackets in D(II) under 'Assets'
and C under 'T.iahll 11 ties' in
Article 9 and in D(II) in Article 10,
but in total for each.
Article 15(3)(a) and (4) shall not
apply to abridged balance sheets.
2. However, Member States may          2. However, Member States may
simultaneously and in like m           simultaneously and in like
proportions increase or decrease by    proportions increase or decrease by
up to 50% the thresholds ooncerning    up to 25% the thresholds concerning
the balance sheet total and the net    the balance sheet total and the net
turnover referred to in paragraph 1.   turnover referred to in paragraph 1.
As to the average number of employees  As to the average number of
referred to in paragraph 1,            employees referred to in
Member States may adopt a lower        paragraph 1, Member States may adopt
figure with a minimum number of 25. "  a lower figure with a minimum number
                                       of 25."
            Article 5                                Article g
Article 27 of Directive 78/660/EEC is unchanged
replaced by the following:
"Article 27
1. Member States shall permit
companies falling within Article 11,
and may permit other companies which
on their balance sheet dates do not
exceed the limits of two of the
following three criteria:
 ---pagebreak---                                    - 13
- balance sheet total: ECU 6 200 000,
- net turnover:       ECU 12 800 000,
- average number of employees during
the financial year:    250
to adopt layouts different from those
prescribed in Articles 23 to 26
within the following limits:
(a) in Article 23: l to 5 inclusive
may be combined under one item called
'Gross profit or loss' ;
(b) in Article 24: A(l), A(2) and
B(l) to B(4) inclusive may be
combined under one item called 'Gross
profit or loss';
(c) in Article 25: (l), (2), (3) and
(6) may be combined under one item
called 'Gross profit or loss' ;
(d) in Article 26: A(l), B(l) and
B(2) may be combined under one item
called 'Gross profit or loss'.
Article 12 shall apply.
2. However, for the application of      2. However, for the application of
this Directive, Member States may       this Directive, Member States may
simultaneously and in like              simultaneously and in like
proportions increase by up to 50% the   proportions increase by up to 25&
thresholds concerning the balance       the thresholds concerning the
sheet total and the net turnover        balance sheet total and the net
referred to in paragraph 1. "           turnover referred to in
                                        paragraph 1."
 ---pagebreak---                                    - 14 -
             Article 6                           Article 6
Article 30 of Directive 78/660/EEC     unchanged
is replaced by the following:
"Article 3Q
Member States shall permit companies
falling within Article 11, and may
permit other companies, to show taxes
on the profit or loss on ordinary
activities and taxes on the
extraordinary profit or loss in tot$
as one item in the profit and loss
account before 'Other taxes not shown
under the above items'. In that
case, 'profit or loss on ordinary
activities after taxation' shall be
omitted from the layouts prescribed
in Articles 23 to 26.
Where this waiver is applied,
companies other than those falling
within Article 11 must disclose in
the notes on the accounts the extent
to which the taxes on the profit or
loss affect the profit or loss on
ordinary activities and the
 'Extraordinary profit or loss"."
 ---pagebreak---                                    - 15 -
             Article 7                                Article 7
The following paragraph is added to    unchanged
Article 43 of Directive 78/660/EEC:
"3. Member States may waive the         "3. Member States may waive the
requirement to provide the             requirement to provide the
information referred to in             information referred to in
paragraph 1(12) and (13) for           paragraph l£l2l for companies whose
companies whose administrative or      administrative or management body
management body consists of only one   consists of only one person."
person."
             Article 8                                Article S
Article 44 of Directive 78/660/EBC is unchanged
replaced by the following:
"Article 44
1. Companies falling within            unchanged
Article 11 may draw up abridged notes
on their accounts without the
information referred to in
Article 43(1) (5) to (13). However,
the notes must disclose the
information referred to in
Article 43(1)(6) isx total for all the
items oonofsmfld *
 ---pagebreak---                                    - 16 -
2. The companies referred to in        unchanged
paragraph 1 shall also be exempt from
the obligation to disclose in the
notes on the accounts the information
referred to in Article 15(3)(a) and
(4), Articles 18, 21 and 29(2),
Article 34(2), Article 40(2) , and
the second subparagraph of
Article 42.
3. Article 12 shall apply."            unchanged
              Article 9                           Article 9
The introductory phrase of             unchanged
Article 45(1) of Directive 78/660/EBC
is replaced by'the following:
 "1. Member States shall permit
companies falling within Article 11
and may permit other companies to
treat the disclosures prescribed in
Article 43(1)(2) in such a way as:"
              Article 1Q                         Article 10
The following paragraph is added to    unchanged
Article 46 of Directive 78/660/EBC:
"3. Companies falling within
Article 11 shall not be required to
prepare an annual report, provided
that the information referred to in
paragraph 2(a) and (d) is given in
the notes on the accounts."
 ---pagebreak---                                    - 17 -
              Article 11                         Article 11
Article 47 of Directive 78/660/EEC     unchanged
is amended as follows:
1. Paragraph 2 is replaced by the
following:
"2. Notwithstanding paragraph 1,
companies falling within Article 11
may publish:
(a) abridged balance sheets in
accordance with Article 11,
(b) abridged notes on the accounts
in accordance with Article 44;
Article 12 shall apply.
Such companies shall not be required
to publish their profit and loss
account."
2. The following paragraph 4 is
added:
'4. Notwithstanding the first
subparagraph of paragraph 1,
Member States shall permit companies
falling within Article 11 and may
permit companies falling within
Article 27 to make the accounting
documents which must be published in
accordance with the present Directive
available to the public at the
company's registered office. It must
be possible for anyone to obtain a
copy of these documents upon request,
InohTdlng by mail. The price of such
a copy must not exceed its
administrative cost.
 ---pagebreak---                                    - 18 -
Member States shall provide that the
place where the public can obtain
these documents is published by means
of a reference, in accordance with
Article 3(4) of Directive 68/151/EEC.
Member States shall also provide
appropriate sanctions for failure by
companies to publish these documents
in accordance with the present
paragraph.
This paragraph shall not apply to
companies having made a public issue
of securities."
              Article 12                         Article 18
Article 51(2) of Directive 78/60/EBC   unchanged
is replaced by the following:
 "2. Companies falling within
Article 11 shall be exempt from the
requirement referred to in
paragraph 1.
Article 12 shall apply."
 ---pagebreak---                                    - 19 -
Section 2:                             unchanged
Drawing up and publication of
accounts in ecus
                                                 Article lg
            Article 13
                                       unchanged
The following section 11a is inserted
in Directive 78/660/EBC:
"Section 11a
Drawing up and publication of
accounts in ecus
Article 51a
Companies may draw up and publish
their accounts in ecus at the
exchange rate prevailing on the
balance sheet date. The method used
for conversion into ecus shall be
described in the notes on the
accounts."
                                                 Article 14
            Article 14
                                       unchanged
The following section 5a is inserted
in Directive 83/349/EEC:
"Section 5a
Drawing up and pnfrMmTlOD, <?f
nnngnHHAted accounts in ecus
Article 58a
Consolidated accounts may be drawn up
and published in ecus at the exchange
rate prevailing on the balance sheet
date. The method used for conversion
into ecus shall be described in the
notes on the consolidated accounts."
 ---pagebreak---                                              - 20 -
Section 3:                                      unchanged
Final positions
               Article 15                                Article 15
1.   The   Member    States     shall   bring
 into force the laws, regulations and
administrative      provisions     necessary
to comply with       this Directive by 1
January    1990. They      shall   forthwith
 inform the Commission thereof.
2.    A Member State may provide that
the   provisions      of    this   Directive
shall   first    apply    to   accounts   for
financial      years     beginning     on   1
January   1992 or during the calendar
year 1992.
3.       The     Member      States     shall
communicate     to   the    Commission    the
texts    of   the   main     provisions    of
national    law which they adopt       in the
field covered by this Directive.
                                                4.   The   provisions adopted  pursuant
                                                to  the   first  paragraph  shall  make
                                                express reference to this Directive.
           Article 16                                     Article 16
This Directive      Is addressed      to the    Unchanged
Member States
 ---pagebreak---                                          - 2-»-
                                                                      KSN 0254-1475
                                                               COM(89) 561 final
                                                      DOCUMENTS
EN                                                                             10
                                 Catalogue number : CB-CO-89-522-EN-C
                                                             ISBN 92-77-54742-1
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