CELEX: 51974PC0191
Language: en
Date: 1974-02-21
Title: AMENDED PROPOSAL FOR A FOURTH COUNCIL DIRECTIVE for coordination of national legislation regarding the annual accounts of limited liability companies (presented by the Commission to the Council pursuant to the second paragraph of Article 149 of the EEC Treaty)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (74) 191
Vol. 1974/0029
 ---pagebreak--- Disclaimer
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concernant l'ouverture au public des archives historiques de la Communauté économique
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In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983
concerning the opening to the public of the historical archives of the European Economic
Community and the European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as
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In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1.
Februar 1983 über die Freigabe der historischen Archive der Europäischen
Wirtschaftsgemeinschaft und der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983,
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 ---pagebreak--- COMMISSION OF THE EURO'rEiVN COMMUMTÎBS
                                                           COM(74)191 final
                                                           Brussels , 21 February 1974
                MEET BED PROPOSAL FOR A FOURTH COUNCIL DIRECTIVE
               for coordination of national legislation regarding
               the annual accounts of limited liability companies
               (presented by the Commission to the Council pursuant to
                the second paragraph of Article 149 of the EEC Treaty)
   COM(74 ) 191 final
 ---pagebreak---                                EXPi.AiJ/.TORY vmopmwm
       Both the European Parliament and. the Economic and Social Committee have
delivered their Opinions on the Proposal for a Fourth Council Directive
on the basis of Article 54(3 ) (g)"'".
       The Commission considered that , in order to take account of these
Opinions , its proposal should "be amended pursuant to the second paragraph
of Article 149       "the F3EC Treaty.                                     '
     . The opportunity has been taken also to rn^ke certain further amendments
to the original proposal to take into; account , the lawn of the now Member
States .     ■    .  .              ;                 .
       The EEC Accountants Study Group , in which the professional organiza­
tions of the new Member States are also represented , has submitted two me-
moranda to the Commission on the proposal for a fourth .Directive , dated 26
June 1972 and 21 February 1973 respectively. "The 'Commission has also made cer­
tain amendments to its proposal on tho basis of suggestions contained in
these memoranda.
Artide 1
       The scope of the Directive has been, extended to cover those forms of
company under United Kingdom , Danish and Irish law which correspond to the
forms of company which were taken into account in the original Member Sta­
tes . For this purpose the same distinctions haVe been made as in Directive
68/15 l/EEC of 9 March 1968 and more particularly in Article 2(l)(f) thereof ,
                                           2
as amended by the Act of Accession . As regards Ireland , "private companies ",
end as regards the United Kingdom , "private companies " in Norther Ireland ,
■'•Opinion of. the European Parliament , OJ No C 129 » 11 December 1972 » pp. 3&
  et seq.
   Opinion of the Economic a^d Social ,Comrn ttee , OJ No C 39 » 7 June 1973 , '
   pp. 31 ,et seq      ,
 2
   Act concerning tho Conditions of Accession and the Adjustments to the
   Treaties , Annex I , III (h ), OJ No L 73 » 27 Harch 1972 , p. 89 .
 ---pagebreak--- are treated as "sociétés à responsabilité limitée ". For a définition of
such "private companies " reference is made to Article 6 (ll)(l ) of Direc­
tive                    of                          \
Article 2
   1  " 1 1 "■                                                      v
        The new wording has been drafted in response to the wiehos of "both
the Jluropean Parliament and the Economic and Social Committee . It "brings
out more cle?rly the essential principle that the annual accounts should
be drawn up in such a way as to give a true and fair view of the position
of the company . This principle implies that should the specific provisions
of the Directive be of themselves insufficient to ensure that this objec­
tive is attained , the company will be legally obliged to provide further
information.
        It has been possible to delete the reference to the principles of re­
gular and proper accounting since the requirement of a true sjid fair view
necessarily implies that such principles must be observed. 1
Article 4
        Paragraph 2 is a alight 1; " Tended version of a suggestion made by the
Parliament . The words " In exceptional cases " have been deleted , since , where
the special nature of an undertaking requires a different lay-out for the
accounts , the lay-out must be chosen so as to give a true and fair view of
the position of the company.
        Under Paragraph 3 , in the circumstances mentioned in sub-paragraphs
( a) and (b), companies may regroup various items without prior authorization
  Amendment to the proposal for a Second Council Directive , presented by
the Commission to the Council pursuant to the second paragraph of Article
149 .
                                                                ^  ./•   '
 ---pagebreak---    )                                                      .
                                        - IXÏ -
from the Member State concerned ; this was to take accountof comments from
the Uconomic and. Social Committee . Regrouping under subparagraph .(b ) » which
does not entail any less information being provided and merely enables some
items to be dealt with either in the accounts or in the notes , was made
poss?Lble so as to allow greater flexibility in the lay-out of accounts .
Articles 3 and 9     '
     So as to permit what is a fairly common practice in certain of the new
Member States , authorisation is given for losses to appear on the liabili­
ties side of the balance sheet as a deduction from the total of capital sub­
scribed plus reserves .
     The possibility of showing value adjustments as a separate balance sheet
item ( Article 8 , Liabilities 0 ; Article 9 » J ) has been excluded. Firstly ,
it is in the interests of clarity that the assets side should show the net
value of the various assets . Secondly , the inclusion of value adjustments
as a separate item on the liabilities side increases the balance sheet to­
tal artificially.
     Value adjustments must appear either in the balance sheet , as clear
deductions from the items concerned , or in the notes on the accounts ( see
amended version of Article 12 ),
Article 12         -                              ;
      See commentary on Articles 8 and 9 .
Articles 15 and 13
      The improper inclusion under the items "Prepayments " and " Accruals "
of anticipatory items , that is to say , of earnings not yet received and
payments not yet made , is to be avoided. Tor this reason , in accordance
with a suggestion from the Parliament , it is provided that such items must
be explained in the notes on the accounts where the amount involved is
 considerable .
 ---pagebreak--- Articles 20 to 22                 ' ,
       As suggested, "by the Parliament and the Economic and Social Committee ,
the item "Staff costs " has been subdivided , particularly to show the amount
of wagos and salaries as opposed to social security costs .
       The numbering of Articles 20 ( ill 19 ) and 22 (ill 17 ) has been changed
because , as the Economic and Social Committee rightly pointed out , the item
"Sub-total " is not a part of the item "Exceptional Result ", but the total
of results under I , II and III .
Article 24
       This amendment was necessary because value adjustments may no longer
appear on the liabilities side of the balance sheet . Articles 49(2 ) and
50(2 ) ( a ) have been similarly amended.
Article 2b                                ■ 1
       Additions must be made to the general principles of valuation enumera­
ted in Article 28 , so as to take account of certain principles which are
more particularly observed in professional practice in certain of the new
Member States . The principle of conservative valuation , already referred to '
by implication in paragraph l(b), ( c ) ?nd ( d) in the original version , is
now stated expressly in paragraph l(c ) and two further principles have been
added . The first is the general rule that the valuations in the annual
accounts must be made on the basis that the company will not be wound up
but will continue to carry on business ( par?.graph 1(a)). Paragraph l(d)
sets forth the principle whereby earnings and charges arising during the course
of a particular year must be taken in relation to each other .
       The wording of paragraph l(f ) has been improved also on a suggestion
by - the Economic and Social Committee .
 ---pagebreak--- Article 30
       '.'lie choice open "to Member States Tinder this Article of introducing or
maintaining- methods of valuation which depart from the . classic method laid
down "by Article 29 is considerably widened in the amended version . Economic
developments have shown the desirability of having the greatest possible
flexibility in this respect . New methods of valuation have recently been
developed which allow for the effects of inflation on the accounts unlilce
those based on replacement value . What the final outcome of such develop­
ments will be cannot as yet be foreseen . Prom the point of view of harmo­
nization , however , there is nothing against such new valuation methods .
being allowed provided that they can be compered with existing methods . .
Paragraph l(b ) therefore authorizes the Member States to introduce other
valuation methods , based on current values , whilst Articles 30(2 ), 12(3)(c )
and 4 (^) provide for the comparison of such methods with existing methods .
       The valuation methods envisaged by paragraph l(b) are those whereby the
trend in current values from one "accounting period to another is regularly
followed by and reflected in the annual accounts , as opposed to revaluation ,
as authorized by Article 31 , which will take place only onco ia a while .
       Paragraphs 2 , 4 and 6 have been amended to take account of the new pro­
visions of paragraph l(b ). '
       The amendment to the last subparagraph of the first paragraph was made
in the interests of clarity .
       l-Ihere necessary , future taxation must be shown as a clear deduction
from items carried to the revaluation reserve ( paragraph 2 ). This provision
is designed to prevent the reader of the balance sheet from being misled
as . to the amount of the company 's own capital .
 ---pagebreak---                                        - VI -
Article 31
       The -text o; "the second subparagraph of paragraph 1 has been amended in
the same way as the last subparagraph of Article 30(l ).
Article 33
      value adjustments may no longer be made in respect of fixed assets to
taice account of depreciations in value which may or may not be permanent
 ( paragraph l(;c)(aa). With the exception of participating interests and other
financial assets , it is not advisable to take account of fluctuations in
the values of items of fixed assets which may turn out to be only tempo­
rary .
       The wording of paragraph l(d) has been improved. Furthermore , a pro­
vision has been introduced which requires future taxation in respect of
which value adjustments are made to be indicated in the notes on the ac­
counts , to avoid misunderstanding as to the effect of the amount of such
adjustments on the trading profit .
   » 'In paragraph 3(b ) it has been made mandatory , as opposed to permissi­
ble , to add to the production cost a reasonable proportion of the manufac­
turing costs which are only indirectly attributable to the product in
question . The compulsory addition of indirect manufacturing costs to the
production cost is coming to be considered more and more in business
practice as being in accordance with basic accounting principles .
       Paragraph 4 has been amended in accordance with the wishes of the
Economic and Social Committee . Companies are given the choice of including
interest on borrowed capital in the production cost . The possibility of
including interest on ^the company * s own capital in the production cost has
been excluded , since the economic justification for such a measure is a
matter of some controversy .
 ---pagebreak---                                           - VII -
Article 36
      The te;rfc of paragraph. l(e ) has been amended in the same way as Article
33(l ) ( d). and for the same reasons .
Article 37
      The rmount at which stocks are valued in the balance sheet may vary
considerably depending on the method used for calculating the purchase pri-
be or production cost . Article 37 gives companies a wide discretion as to
the method to be used . It is therefore provided that where the value of
stocks in the balance sheet as calculated by a given method differ by a
considerable amount from the value on the basis of the actual purchase
price , an indication oi the difference must be included in the notes on
the accounts .
Article 40
      The text of this Article has been, amended to accord with the amended
text of Article 2(2 ).
Article 41
      In view of the increasing volume of international business transacted
between companies and the continued fluctuations in currency valu.es , the
method used by the company ^ or calculating its rate of. exchange for cre­
ditors and debtors in '"oreign currency should , for completeness of infor­
mation , be indicated in the notes on the accounts ( l ).
 ---pagebreak---                                       - VIII -
     The recording of the net amount of turnover as a separate item is of
great importance for an appraisal of the company 's position , and particular­
ly of its profitability. Since most undertakings have diversified activities ,
this information will be all the more valuable if an indication is given of
the respective contributions of the various commercial and industrial acti­
vities of the company to the turnover and to the year 's results . A break­
down of the turnover figure by geographical markets is also of interest ,
particularly to show to what extent the company is dependent on exports
and to which country. These item3 of information are moreover already requi­
red of companies in one of the new Member States . In the interests of pro­
viding adequate information for shareholders and third parties this practice
should be extended throughout the Community.
     Article 41(6 ) obviously cannot apply to any companies which have been
exempted under Article 24 from showing their net amounts of turnover. This
is provided for by Article 42(2 ). However, this provision may be applied
independently of Article 24 . Thus , Member States who do not exercise the
option given them by Article 24 and therefore require companies to which
that Article applies to publish their net amounts of turnover , may never­
theless exempt them from giving the information required by Article 41 (6 ) •
     The requirement of additional information concerning the number of
persons employed , and staff costs , was included in response to a proposal
by the Parliament and the Economic and Social Committee ( 7 )» ' -
     The requirement of information concerning retirement pensions for ex-
managers of the company ( 10) was also included at the request of the Par­
liament .
Article 42
     See the commentary on Article 41(6 ).
Article 43
     The activities of the company in the field of research and development
are important elements for the appreciation o:" the company 's future evolu­
tion. This information must therefore be given in the annual report , as
has been suggested by the Parliament .
 ---pagebreak---                                     - IX
Article 44
      The auditor 's report which Article 44 requires to be published is not
the report submitted by the auditor to the: management organ of . the company .
As the Parliament and the Economic . and Social Committee rightly pointed out ,
publication of the latter would not be , advisable , firstly because it would
be too detailed , and secondly because it often . contains confidential infor­
mation . The report to which Article 44 refers is an extract from that ra-
port . To ;avoid any misunderstanding , it is specified that the content of
the report to be published is defined in Article 60 of Directive
of          1.
Article 49
      The annual report , as referred to in Article 43 ? will necessarily con­
tain statements of opinion by the managers of the company on present and
future developments . Obviously the auditor cannot in his certificate give
any guarantee as to the outcome of such forecasts .
      He c?n on the other hand verify and certify that there is no incon­
sistency between the information given in the annual report and the view
given by the annual accounts of the company 's position ( paragraph l(b)).
      As regards the amendment to paragraph 2 , see the commentary on Ar­
ticle 24 .
 OJ NO 0 131 , 13 December 1972 , pp . 49 et se q
  (Proposal for a fifth Directive , on the basis of Article 54(3 ) ( g), sub­
   mitted by the Commission to the Council on 9 October 1972 ).
                                                                ./•
 ---pagebreak---                                            - χ - -
     Article 50
          , As regards the amendments to paragraph 2(a), see the commentary on
     Article 24 •                                                   ;
            In paragraph 2(b), it is provided that in the abridged balance sheet ,
     as defined by that paragraph , debtors and creditors must be broken down
     by reference to the time when such items become due and payable , as requi­
     red by Articles 8 arid 9 « ?his is to ensure that , in abridged balance sheets
     also , the lay-outs required under Articles 8 and 9i ^nd more particular­
     ly under liabilities item E in Article 8 and items P and I in Article 9 »
     are the same .
 I
   I
■ I
I',
 ---pagebreak---               ORIGINAL PROPOSAL
           AMENDED PROPOSAL FOR A
          FOURTH COUNCIL DIRECTIVE
on the "basis of Article 54(3 ) (g ) for
coordination of tho safeguards required
from companies in the Member States to
protect the interests both of members
and of third parties , as regards the
presentation and content of the annual
accounts and report , methods of valuation
and publication of those documents
(presented "by the Commission to the
Counoil on 16th November 1971 )
THE COUNCIL OF THE EUROPEAN COMMUNITIES
     Having regard to the Treaty establishing
tho European Economic Corcmuniijr, and in
particular Article 54(3 ) (g ) thereof 5
     Having regard to tho proposal from
the Commissions         ■
     Having regard to tho Opinion of the
European Parliament !
     Having regard to the Opinion of tho
Economic and Social Committoej
     "Whereas coordination of tho national
provisions concerning the presentation and
contonts of the annual accounts and report ,
methods of valuation and publication of
those documents in respect of the societa
anonyme , the Aktiengosellschaf t , the
Societa per azioni and the naamloze vei>-
nootschap and in respect of the socilte
a rosponsabilite limitee , the Gesellschaft
mit bcschranktor Haf tung, the Societa a
responsabilita limitata and tho vennoot-
schap met beperkte aansprakelijkheid is
of special importance for the protection
of members and third parties !
   . Whereas simultaneous coordination is
requisite in these fields for those forms
of company beoause , on the one hand, the
activities of those companies frequently
 ---pagebreak---                                               -2-
  extend "beyond the frontiers of their
  national territory and, on the other .
  hand, thoy offer no safeguards to third
  parties "beyond the amount of their net
  assets ; whereas moreover the necessity
  and urgently of such coordination have
 "been recognised and confirmed in Article 2
  (l)(f ). of Directive Ho. 68/15I/EEC of
  9 Ilaroh 19685
         TJheroas it is also neoessary to
  establish in the Community equivalent
  legal requirements as regards the extent
  of the financial information that should
 "bo made available to the public by
  companies that are in competition with
  ono another and have the same legal forms
   s •
         Whereas the annual accounts must re­         whereas the annual accounts must
  flect as accurately as possible the             give a true and fair view of the
  company 's assets and liabilities ,             company 's assets and liabilities ,
  financial position and results ; whereas        financial position and results ; whereas
  to this end a Ssy-out compromising items        to this end a lay-out compromising items
  that in principle are obligatory must be        that in principle are obligatory nust be
  proscribed for drawing up the balanco           prescribed for drawing up the balance
  sheet and profit and loss account ; and         sheet and profit and loss account ; and
  whoroas on the other hand the different         whereas on the other hand the different
  jE.otii.ods pormitted in the Member States      methods permitted in the Member States
- r^or valuation of assets and liabilities        for valuation of assets and liabilities
  must bo coordinated to ensure that              must be coordinated to ensure that
  annual accounts present equivalent in­          annual accounts present equivalent in-
  formation ;                                     formations
 ---pagebreak---        Choreas the annual accounts of societes       -» unchanged     .
 anonymos , Aktiengosellschaf ton, societa per ,
 azioni and naamlozo vcnnootschappon must "bo
 availa"blo in the fullest possible measure
 to shareholders and third parties ; and           .          , -
whorcas to that end it is essential that                    ,                        -
 they "bo published in full in a national
gazettes
       Whereas so far as regards societes a                                                     ■
responsabilite limitee , Gesellschaften
Bit beschrankter Haftung , societä a
rosponsabilita limitata and vennoots chap-
pen net "boporkto aansprakclijkheid a                                              .
distiiaction nay he made "between the
information to ho given to the members
and that to be given to third parties ;
whereas tho members thereof should be
givon the same information as tho share­
holders in a societe anonym©, Aktien-
gesollschaf t, societa per azioni and
naamloze , vonnootschap ; .whereas for tho
information of third parties the same
particulars should as a general rule be                                          ■    '   "
disclosed as in the case of these latter                                                .   r
"types of company by - reason of the fact                                  . . ■                  -   .
 that the liabiliiy of tho members is                                                             *
limited, but some relief can nevertheless                                                     '     '
bo allowed' in the case of the smaller
companies ;
                                                 '         Tihcrrsas when a company belongs to
... ..       .                                       ..a group , only the presentation of .
                                                       consolidated . accounts of tho groun ca
                                                       give a true and fair , as well as a cor^
                                                       view of the situation of tho companies
                                 ■                     concerned ; wheroas in anticipation of
                                           ■ • ;       tho coordination of national rules in
                       ...                             this field and in view of tho fact t!-.;.
                                                       the Commission has committed itcolf i.3
                                                       submit a proposal as soon aa possible?
                                                       Member States will take caro that cor<~
                                   .... ,.             solidated accounts provided for by tl - .
       - ...      .. . .                               legislation are established in confer \
               . • . -     . ■..                       with the principles of this directive ,
IIAS ADOPTED THIS DIE3CTIVE ;                          HAS ADOPTED THIS DIRECTIVES
 ---pagebreak---                           Article 1                                     Article 1
 1 . ( a ) The coordination measures prescribed - unchanged           r
 "by Articles 2 to 47 of this Directive ;
 apply ' to the laws ? regulations and
 administrative provisions of the Member
  States relating to the folio-wing iypes
 of oompanys
– m Gornany :                                   - m Germany s
       die Aktiengesellschaft, die Kommandit­         die Aktiengesellschaft , die Kommandit­
       gesellschaft auf Aktions                       gesellschaft auf Aktien ;
– in Bolgium :                                  - in Belgiums
       la société anonyme , de naamloze ven-          la société anonyme , do naamloze ven-
       nootschap, la société en commandite            nootschap, la société en commandite
       par actions , de commanditaire ven-            par actions , do commanditaire ven-
       noots^ihap op aandelen ;                       nootschap op aandelen ;
                                                - in Donmark :
                                                      Ak ti e s el skab , K ommandi t-Ak ti e s el skab ;
«■*' xn France s                                - xn Fi-ance :
    . la société anonyme , la société en              la société anonyme , la société en
       commandite par actions ;                  ' commandite par actions ;
                                                - in Irelandî
                                                      companies incorporated with limited
                                                    . liability , with ; the exception of
                                                      those referred to in Article 6 ( il )
                                                      ( l ) of Directive no,                of'
                                                . ( 1)5
– in Italy :                                    - in Italy : ....
       la sooieta per azioni , la società in          la società por azioni , la società in
       accxixrixcSKifc.' por azioni *                 accomandita per azioni ;
 -■ in Luxembourg ;                             – in Luxembourg :
■      la société anonyme , la société en             la société anonyme , la société en
       commandite par actions ;                       commandite par actions;' - -
– in the Ncthorlands :                          - in the Nethorlandss
     . de naamloze vennootschap , de comman-          de naamloze vennootschap , de commanr»
  ,    ditaire vennootschap op aandelen ;             ditaire vennootschap op aandelen ;
                                                - in the United Kingdom :
                                                      companies incorporated -with limited
                                                      liability , with the exception as
                                                      regards Northern Ireland , of those
                                                      referred to in Article 6 (ll)(l);of
                                                      Directive no.               of               ( l ).
                                                  ( l ) Amendment to the Proposal for a
                                                          Second Council Directive , sub­
                                                          mitted to the Council by the
                                                          Commission pursuant to the second
                                                          paragraph of Article 149 «
 ---pagebreak---  . (b ) Tho coordination mcasuros prescribed – unchanged '
by Articles 48 to 5° of this Directive
apply to the laws , regulations and
administrative provisions of the Member
States relating to the following types
of company :
- m Gormany                                  - m Germanys
   die Gesellschaft mit "beschrankter           die Gesellschaft mit beschränkter
   Haftung ;                                    Haftung ;
- in Eolgiums                                – in Belgiumt
   la société de personnes à responsa­          la société de personnes à rosponsa~
   bilité limitée , de personenvennoot-         bilité limitée, do porsonenvonnoot-
   sohap met boporkte aansprakolijkhoid}        cchap mot boperkte aansprakelijkheid ;
                                             - in Denmarks
                                                anpartsselskabcr;
- in Franoo :                                - in Prances
   la société à responsabilité limitées         la société à responsabilité limitées
                                             – in Irelands
                                                 companies incorporated with limited
                                                liability , as referred to in Article
                                                6 (ll)(l ) of Directive no.            of
                                                            (1)5
- xn Italys                                  - in Italys
   la società a responsabilità limitata }    - la sccicta a responsabilità limitata }
- in Luxembourg s                            - in Luxembourg s
   la société a responsabilité limitée }        la société à responsabilité limitée ;
- in the Nethorlandss                        - in the Netherlands :
   do besloten vennootschap mot beperkte        de besloten vennootschap met beperkts
   aansprakelijkheids                           aansprakelijkheid }
                                             – in tho United ICingdoms
                                                as regards Northern Ireland^ companion
                                                incorporated with limited liability ,
                                                as referred to in Article 6(11 ) (/l )
                                                 of Directive No ,          of
                                                 ( 1 ).
                                             ( l ) Amendment to the Proposal for a
                                                     Second Council Directive , sub­
                                                    mitted to the Council by tho
                                                     Commission pursuant to the socond
                                                    paragraph of Article 14.9 *
 ---pagebreak---                                          - 6–
,2;    Until tho safeguards required of     ■_ - unchanged "
 credit institutions and insurance companies      ' ■
 are in duo course coordinated, it shall "be
 permissible for the Member States not to
 apply tho provisions of this Dirootivo
 to thoso undertakings .
 ---pagebreak---                                            -7~
                SECTIOM 1                                     S5STICTT 1
           General requiremcnts                          General requirements
                Article 2                                     Article 2
1.     Tho annual accounts shall compromise    – uncnanged
the "balance sheet , the profit and loss
account and tho notes on the accounts .
These documents shall constitute a
composito whole .
2.     Tho annual accounts shall oonform       2.   ' The annual accounts shall give
to tho principles of regular and proper        a true . and fair view of the company 's
accounting .                                   assets , liabilities , financial position
                                               and results ,
3.     Thoy shall he drawn op clearly and,     3.     They shall he drawn up clearly .
in the context of the provisions regarding     and in conformity with the provisions
the valuation of assets and . liabilities      of this Directive.
and tho lay-out of accounts, shall re­
flect as accurately as possible the
company 's assets , liabilities , financial
position and results .
                                                                            • • * (• * •
 ---pagebreak---                                               r -t
                      SECTION 2
                                              ii               SECÏT'OîT 2
     ■' Lay-cu tr of t the-varrnua^aacoourits       Lay-out of the annual accounts
                     Article 3                                Arti ole 3
         The lay-out of the balance sheet          uncharged
 and of tho profit and loss account,
 particularly as regards tho form adopted
for thoir presentation, may not "be
 ohangod from one year to the next.
 Departures from this principle . shall
"be permitted in exceptional cases .
Whore it is doparted from , an indication
 thereof shall "bo given in the notes on
 tho aocounts togothor with an explanation
 of the reasons therefore .
 ---pagebreak---                    Irti Ole 4                                 Article 4 "
„!«■ , ' In the balance sheet , and also in 1.      . - unchanged .
 the profit and loss account, the items
 referred to in Articles 8, 9* an<! 20 to
 23 of this Directive shall "be shown
separately. A more detailed sub–division
 of the items that are preceded "by Arabic
numerals is authorized,
2.       In exceptional cases a different   2.        No different lay-out shall be
lay-out shall , whore the special nature    permitted for the balance sheet and
of the undertaking 30 requires , "bo        profit and loss account items that are
permitted for the balance sheet and         preceded by Arabic numerals unless the
profit and loss account items that are      special nature of the undertaking so
preceded "by Arabic numerals. Any such      requires . Any such different lay-out
different lay-out shall, however, present   shall , however, prosent an equivalent
an equivalent view and be explained in      view . and be explained in the notes on
the notes on the accounts .                 the accounts.            "
3.       Bio Member States may authorize a  3.        The balance sheet and profit and
regrouping of the balance sheet and         loss eocount items that are preceded
profit and loss account items that are      by Arabic numerals may be regrouped
preceded by Arabic numerals where they      where 1
are of secondary interests only in             (a ) they are of secondary interest
relation to the object of Article 2(3 )               only in relation to the object of .
of this Directive .
                                                     Article 2(2 ) of this Directive ? or
                                               (b ) such regrouping makes for greater
                                                      clarity , provided that the re­
                                                      grouped items are dealt with
                                                      separately in the notes to the
                                                      accounts .
4.       in respect of each balance sheet   4.        - unchanged
and profit and loss account item the
figures for the preceding financial year
shall bo shown.
 ---pagebreak---                                          - 10-
                 Article 5                                  Article 5
       The Member States may authorize         – unchanged
adaptation of the lay-out of the "balance
sheet and profit and loss account in
order to "bring out the allocation of the
results .
                 Article 6                                   Article 6
      Any set-off between assets and           - unchanged
liabilities , or between expenditure and
inoomo , is prohibited.
                  SSCH01T 3                                  SEC II ON 3
           Balance sheet lay-out                      Balance sheet lay-out
                 .A rticle 7                                 Article 7
      For the presentation of the balance      – unchanged '
sheet, the Member States shall introduce
into their legislation the lay-outs
prescribed by Articles 8 and 9     this
Directive, and shall leave the companies
to choc so between them.
 ---pagebreak---                                                - 11-
                      Articla 8                                    Article 8
   i
                        Assets                                      Assets
A.    Subscribed capital U1TPAID                    A.   - unchanged
      -   of which there has "been called.
B.    Formation expenses in so far as the ...       B. , – unchangod
      national law permits thorn - to : "be
      rocordodas assets ,
C,    Fixed assets                                  C.   Fixed assets
      I. Intangible assets                               I , - unchanged
          1 . Cost of research and development
              in so far as the national law
              permits them to "be recorded as
              assets ,
          2 . Concessions , patents , licences ,
              trade marks ,, and similar rights .
              and values , if they weres
              ( a ) acquired for valuable'
                    consideration and are
                    not to be shown Tinder
                    C L(3 ),
              (b ) created by the undertaking
                    itsolf , in so far as the
                    national law permits them
                    to be recorded as assets ,
          3 , Goodwill ^ to the extent that it
              was acquired for valuable consi­
              deration,
          4 . Payments on account .
     II . Tangible assets :                             II . - unchanged
          1 . Land and buildings,
          2 . Plant and machinezy ,                                  i
          3 . Other fixtures , tools and
              équipaient ,
          4 . Payments on account and tangible
              assets in process of construc­
              tion .
 ---pagebreak---                                                 - 12-
  III.- Participating interests and other             III . - unchangod
        fmancial assetsr
        1 . Holdings in associated under-
               takings ,
        2. Claims on associated - undertakings ,
        3. Participating interests ,
        4. Claims on undertakings/ with' which,
              the company is associated by
              ■virtue of a participating irt-
              terest ,     ■
        5 . Securities ranking as fixed 1
              assets ,
        6, Other claims ,
        7 . O-vm shares ( indicating their
              nominal value or proportionate
              value ) to the extent that tho
            . national law permits thorn to "be
              included in the balanoe sheet.
Dj  Currcnt as3etsî                                     Cixrrent assets
    I. Stocks                                           I. - unchanged
        1 . Itaw and auxiliary materials ,
        2. Goods in course of production
              and waste products .
        3 « Finished products and stock xn
              hand,
        4» Payments on account.
   II . Debtors :                                      II , - uncharged
         (Amounts becoming duo and payable
          within one year shall he shown
           separately for each item )
        1 . Claims in respect of sales and
               servioes rendered.
 ---pagebreak---                                                 - 1 3-
            2. Claiins on associated undertakings
         ; 3 » Claims on undertakings in which
                 the company has a participating
                 interest ,
            4 . Othcr claims .
     III , Securities forming part of the                 III . - unchanged
            current assets , and liquid assets s
            1 . Holdings in associated under-
                 takings ,
            2. Bill s of exchange ,
            3 -. Bank balances , postal cheque
                 account balances , cheques and
                 cash in hand ,
            4. Own shares ( indicating their
                 nominal value or proportionate
                 value ) to the extent that the
                 national law permits them to
                 be included in the balance
                 sheet,
            5 . Other securities .
D»     Pre-payments .                                  E.   - unchanged
r' .   Losss                                           F,   Losss
                                                             ( in so far as the losses are not
                                                               shown under liabilities )
       I , For the year,                                    I. For the year,
      II . Brought forward.                                II . Brought forward .
                        Liabilities                                    Liabilities
Am      Subscribed capital                             A.    – unchanged
        ( ihe shares must be shown by classes ,
          indicating their nominal value or
          proportionate value ).
 ---pagebreak---                                       -14-*
Baserves :                                  B. - uncharged
I. Legal reservo ,
2 . Share premiun acoount ,
3 , Revaluation reserve ,
4 » Reserve for own shares ,
5# Statutory reserves ,
6 , Optional reserves .
Value adjustments to the extent that        C. Total of subscribed capital and
these do not appear amoug the assets           reserves , less losses , in so far
or in the notes on the accounts s              as these are not shown under assets
                                               ( the result for the year and result
1 . On formation expenses ,                    brought forward must be shown as
2. On intangible fixed assets ,
                                               separate items ).
3 . On tangible fixed assets ,
4 . On participating interests ana
      other financial assets ,
5 . On stocks ,
0 . On claims forming part of the
      current assets ,
7 . On securities forming part of
      the current assets and liquid
      assets .
,(As regards the figures mentioned in
items 2 to 7 > a corresponding break­
down to that used on the assets side
should "be included).
Provisions for contingencies and            D. – uncharged
charges :
1 . Provisions for pensions and similar
      obligations , -
 2. Provisions for taxation including
      future taxation,
 3 . Other provisions ,
 Creditors :                                E. – unchanged
 (Amounts beooming duo and payable
 id. thin one year , amounts becoming
 due and payable after more than five
 years , and amounts covered by
 ---pagebreak---                                                ■15-
        valualle security furnished "by thé-.'
        company , must "bo showi separately
   y r .£o?' each item)
        1 . Debenture loans , showing convertible
            loans separately ,                     L
        2. Délits to crédit institutions ,
        3 . Payments received on account - of
            orders ,
        4 • Do"bts in respeot of purchases and
            services received ,
            Debts represented "by hills of ex­
            change ,
        6 , Dehts to associated undertakings ,
        7 . Debts to undertakings with which
            the company is associated "by virtue
            of a participating interest ,
        8 . Othor creditors .
F.      Accruals                                   F, - unchanged
G«      Profits                        '           G. - unchanged
                               /
        I. For the year
     II . .Brought forward.         /
 ---pagebreak---                                               - 16-
                     Article 9                                    Article 9
A.   Subscribed capital UNPAID                      A.  - unchanged
     - of which there has "been called.
B,   Formation expenses in so far as the            B.  - unchar-god
     national law permits them to "be
     reoorded as assets .
C.   Fixed assets :                                 C.  - unchanged
     I , Intangible assets :                            I. - unchanged
         1 . Cost of research and development
             in so far as the national law
             permits them to "be rocorded as
             assets-
         2.  Concessions , patents , licences ,
             trade marks , and similar rights
             and values , if they were :
             ( a ) acquired for valuable
                   consideration and are
                   not to he shown under
                   C 1.(3 ),
             (b ) created "by the undertaking
   '               itself , in so far as the
                   national law permits them
                   to be recorded as assets ,
         3. Goodwill , to the extent that it
             was acquired for valuable consi­
             deration,
         4» Payments on account.
                                                                                         y
   II . Tangible assets :                              II . - unchanged
         1 . Land and buildings ,
         2, Plant and machinery,
         3 - Other fixtures, tools and
             equipment ,
         4 . Payments on account and tangible
             assets in process of construc­
              tion .
                                                                            * • • J• * »
 ---pagebreak---                                               -17-
   III , Participating interests and other          III , - unchanged
          fmancial assetss
          1 , Holdings in associated under­
               takings ,
          2. Claims on associated undertakings , •         . -' . 1
          3 , Participa txng interests ,
          4, Claims on undertakings with, which
               the company is associated "by
               virtue of a participating in­
               terest,
          5 » Securities ranking as fixed
             . assets ,
          6, Cther claims ,
          7 , Own shares ( indicating their
               nominal value or proportionate
               value ) to the extent that the                         :
               national law permits them to "be
               included in the "balance sheet,
D,    Qurront assets                              D. , - unchanged
    ..I , Stocks i                                     I , - unchanged
          1, Raw and auxiliary materials ,
          2, Goods in course of production
               and waste products ,
          3 . Fmished products and stock in
               hand,
          4. Payments on aocount.
    II ,. Debtors J                                  II , - unchanged
          (Amounts "becoming due and payable .
           - within one yoar must he shown      " !
             separately in each case )                              <
          1 , Claims in respect of sales and
               services rendered,
 ---pagebreak---            2, Claims on associated' under­
              . takings ,
          3» Claims on undertakings with
                    which the company is associated
                   by virtue of a participating
                    interest,
          4 . Other claims .
   III , Socuritios forming part of the                 III » – unchanged
          current assets , and liquid assets s
          1 , Holdings in associated undo3>-
              . takings ,
          2. Bills of exchange,
          3 . Bank . balances , postal cheque
                    aocount "balances , cheques and
                    cash in hand,
          4. Oun shares ( indicating their
                    nominal value or proportionate
                    value ) to the extent that the
                    national law permits them to .
                   "be inoludod in the "balance
              .     sheet .
          5 » Othor securities .
E.   Pre-paymcnts                                   E,    – unchanged
F.   Debts "becoming duo and payable in. thin       F.,   – unchanged
     one year :
     (Amounts covered by valuable security
     furnished by the company must be shown
     separately for each item )
     1 . Debenture loans , showing convertible
           loans separately ,
     2« Debts to crédit institutions ,
         « ■>   • w  1
 ---pagebreak---                                        -19-
   3« Payments received on account of
      . orders ,
   4« Debts in respect of purchases
      . and services received,
   5« Debts represented "by "bills of
        exchange ,
   6, Debts to associated undertakings ,
   7 . Debts to undertakings with which
        the company is associated "by
        virtue of a participating
        interest ,
   8 . Other debts .
G, Current assets in excess of the debts     G, – unchanged
   becoming due and payable within one
   year.
E, Total amount of asset items after         H. - unchanged
   deduction of the debts becoming due
   and payable within one year.
I, Creditors for amounts becoming due        I. - unchanged
   and payable after nore than one
   yearï
   (Amounts becoming duo and payable
   after more than five years and
   amounts covered by valuable security
   furnished by the company must be
   shown separately for each item )
   l t Debenture loans , showing convertible
        loans separately ,
   2, Dobts to crédit institutions ,
   3 . Payments received on account of
        orders ,
   4 . Debts in respect of purchases and
        services received,
 ---pagebreak---                                            - 20-
    5 . Debts represented "by bills of
         exchange ,
   6 , Debts to associated undertalcings ,
   7 . Debts to undertakings with which
         the company is associated by
        virtuo of a participatif                      '
        interest,
   8 . Other creditors#
J. value adjustmonts to ths extent that         J.  - deleted
   these do not appear in the notes on
   the accounts :
   1. On formation expenees,
   2. On intangiblo fixod assets ,
   3 . On tangiblo fixed assots ,                          '        ,           '
   4» On participating interests and
        other financial assets ,
   5 » On stocks .                                                ,
   6, On claims in respect of current
        assets ,
   7 « On securities forming part cf tho
        current assets and liquid assets .
   (As regards tho figures mentioned in
   items 2 to 7 } a corresponding break­
   down to that used under C and D                                                  '
   should be included)                                        l
K. Provisions for contingencies and             J.# Provisions for contingencies and
   charges :                                        charges
   1 . Provisions for pensions and                  1 to 3   -  unchanged
        similar obligations ,
   2» Provisions for taxation,
        including future taxation,
   3 » Other provisions »
L, Accruals .                                   K.  Accruals.
 ---pagebreak---                                           - 21-
M.   Subscribed capital .                       L.  Subscribed capital
     ( The shares must be shewn by classes ,        – unchanged
     indicating their nominal' value or
     proportionate value )
ÏT . Réserves !                                 M*  Réserves î
     1 . Légal reserve .                            1 to o *•. unchanged
     2» Share premiuin account ,
     3 . Revaluation reserve ,
     4« Reserve for own sharos ,
     5 . Statutory reserves ,
     6, Optional reserves ,
 C.  Result   for the year,                     IT, Result for the year.
P,   Results, brought forward.                  0.  Results brought forward.
 ---pagebreak---                                          - 22-
                               i
               Article 10                                  Article 10
1.    Tnore a component of tho assets or       - unchanged
liabilities pertains to several items in
the balanoe sheet, its relationship to
other items shall "be indicated either
under the item whore it appears or in
the notes on the accounts , unless such
indication is not essential "to the
comprehension of the annual accounts .
2,    Own shares and holdings in
assooiaiod undertakings shall "be shown
only under the item respectively that
relates thereto.
               Article 11                                  Article 11
      All oommitmont3 "by way of guarantee     - unchanged
of any kind entered into for account of
third parties shall , if there is no
obligation to show them under liabilities ,
be clearly sot out below tho balance sheet
or in tho notes on the accounts , distinguish­
ing botwoon tho various types of guarantee
which tho national law recognizes , and
specifying what valuable security , if
any, has been provided. Commitments of
this kind existing in respect of associated
undertakings shall be shown separately*
 ---pagebreak---                                            - 23-
                  SECTICŒT 4                                     SECTION 4 .
       Special provisions relating to                Special provisions relating to
    certain items in the "balance sheet           certain items in the balance sheet
                  Article 12                                     Article 12
1.      Whether particular assets are            1,       – unchanged
to bo classified as fixed assets or
current assets shall depend upon the
purpose for which they are intended,
2.      Fixed assets shall comprise those        2,       - unchanged
elements which are intended to "be used
on a continuing "basis to enable the
undertaking to operate ,
3. ( a) Movements in the various item3           3 , (a ) Movements in the various items
of fixed assets shall be shown in the            of fixed assets shall bo shown in the
balanoo shoot or in the notes on the            balance sheet or in the. notes cn the
accounts* To this end there shall bo             accounts . To this end there shall be
shown, starting with the initial                 shown, starting with the purchase
purchase prioo or production cost,               price cr production cost,
soparately for each of the items of              separately for each of the items of
fixed assets , on the one hand the               fixed -assets, on the one hand the
additions , disposals , transfers and            additions , disposals, transfers and
upward corrections during the year,             upward corrections during the year,
and on the other hand the cumulative             and on the other hand the cumulative
valuo adjustments as at the date of              value adjustments as at the date of
the balance sheet. If the valuo adjust­          the balance sheet, Valuo adjustments
ments are indicated in the balance sheet         shall be shown either in the balance
they nay bo shown under either assets or         sheet, as a cloar deduction from the
liabilities .                                    relevant item, cr in the notes on the
                                                 accounts ,
   (b ) TChoro at the time the first annual          (b ) - unchanged
accounts arc drawn up in accordance with
 ---pagebreak---                                                24-
 this Directive , tho purchase price or
production cost of an element of fixed
assets . cani-ot bo ..detormined without
untoward expense or delay, the residual
value at tho "beginning of the year may
be treated as tho purchase prioe or                                 .
produotion cost. Any use made of this        ■
provision must "be mentioned in the
notes on tho accounts ,,
   ( o) In tho case of application of                 ((oo ) - unchanged
Articles 30 and 31 of this Directive,
tho presentation of the movements in
the various items of fixed assosts
referred to under ( a ) shall he
supplemented "by separate mention, for
each of tho various items , of the         •
cumulative amounts at the date of the
balanoe sheet, on the one hand of the                                       .
differences referred to in Article 30
( 2) and in Article 31 ( 2), and on tho
other hand of the additional value
adjustments.
4» ( a) Movements in the various items'            4. ( a ) Movements in the various items
of current assets shall be presented               of current assets shall be presented
in the balance sheet or the notos on               in the balanoe sheet or the notes on
the accounts. To this end there shall              the accounts . To this end there shall
bo sho*m, separately for each of tho               be shown, separately for' each of the
items of current assets , on the ono               items of current assets, on the one
hand tho purchase price or production              hand the purchase prioe or production
cost of the elements shown in the        t         cost of the elements shown in the
balance sheet, and on the other hand               balance sheet, and on the other hand
the value adjustments. If the value                the value adjustments. Value adjust-
adjustmonts are indicated in the                   ments shall be shown either in the
balance shoot they nay b's shorn undenr            balance sheet, as a clear deduction
either assets or liabilities .                     from the relevant item , or in the
                                                • notes on the accounts .
 ---pagebreak---                                           25~    ~ ■
   (h ) The provisions of paragraph 3(o )        (h ) – unchanged .
shall apply to the presentation of the
item relating to stocks .
5.      The provisions of paragraph 3(a)      5*     ' – unchanged
and ("b ) shall apply to the presentation
of tho item "formation expenses "*
 ---pagebreak---                                          - 26-
                  Article 13                              Article 13
        Under the item "land and buildings "    - unchanged
shall "bo shown land not "built on as well
as the land "built on and the buildings
thereon , . together with fixtures and
fittings.
        where national law authorizes the
inclusion under assets of rights in real
estate which are of like nature to rights
of ownership, they shall "be included
under the item "land and "buildings ".
                  Article 14                              Article 14
        The term "participating interests " . ' - unchanged
is used in this Directive to mean rights
in the capital of other undertakings ,
whether or not represented "by certificates
which "by creating a durable link with
them, are intended to contribute to the
activities of the company. A holding of
10°/o of the subscribed capital of another
under talcing shall be presumed to
oonstitute a participating interest.
 ---pagebreak---                                         - 27-
                                                           Article • 15
      Under "Pre~payments " on ..the                Under "Pre-payments " on the
assets side shall "be shewn expenditure       assets side shall ho shown expenditure
incurred during the year hut relating         incurred during the year hut relating
to a subsequent year , together with          to a subsequent year, together with
the earnings relating to the year to          the earnings relating to the year to
tho extent that they will not he              the extent that they will not be -
rcoeived until after the close of the         received until after the close of the
year. The latter, however, nay also he        year. The latter, however, may also be
shown under debtors .                         shown under debtors. Where the amount
                                              involved is considerable , an explanation
                                              must be given in the note3 on the
                                              accounts .
 ---pagebreak---                                              - 28-
                    Article 16                             Article 16
          The valuo adjustments aro adjust-        unchangod
  menf items relating to elements of assets
  and aro intended to take account of
  depreciation established in respect of
  those . olonents at the date of the "balance
  shoot , whether that depreciation is
  dofirifcive or not.
                    Article 17                             Article 17
          Ehe provisions for contingencies         unchanged
  and charges are intended to cover either
  the certain cost of major maintenance
  work or of major repairs -which -will ho
1 incurred in the course of subsequent
  yoars , or losses or charges the nature
  of which is clearly defined "but which
  at the date of the "balance sheet aro
  either likely to "be incurrod, or are
  oortain to "bo incurred "but are
  indotemiinate as to amount or as to
  the date on which they will arise#
          The provisions for contingencies
  and chargos shall not "be used to adjust
  the value of elements of assets .
 ---pagebreak---                                          - 29-
                Articlo 18                                    Article 18
       Under "Accruals " on the                      Under "Accruals " on the
liabilitios si de shall "be shown             .liabilities side shall bo shown
income recoived befoye the date of             income received before the date of
                        *
the "balance sheet "but attributable           tho balance sheet but attributablo
to a subsequent year, together with            to a subsequent year, togother with
charges which, though relating to the          charges which , though relating to tho
year in quQstion, will only bo paid            year in question, will only be paid
in the course of a subsequent year.            In tho ocuree of a subsequent year.
    latter, however, may also " be shown       Tho latter, however, nay also be shown
under creditors.                               under creditors . Whore tho amount
                                               involved is considerable, an explana­
                                               tion must be given in tho notes on
                                               tho accounts .
                                                                          # • •/ • •#
 ---pagebreak---                                         -30-
                 SECTION 5                              SECTION 5
           Lay-out of the Profit                  Lay-out of the Profit
              and Loss account                     . and Loss Account
                Article 19                             Article 19
      For the presentation of the profit     – unchanged
and loss account , the Member States shall
adopt into their laws the lay-outs
appearing in Articles 20 to 23 of this
Directive , and shall leave tho companies
to ohoose "between them.
                                                                    /
 ---pagebreak---                                             31-
                  Article 20                                       Article 20               .*
I. Operating result ( excluding any earnings X; -« unchanged
   and charges shown under II )*              ■ \     . •
   1 . Net turnover,                                   1 to 5>- unchanged
   2. Changes in stooks of finished and
        semi-finished products ,
   3 . Work effected "by the undertaking                              "     .
        for its own account and shown
      . under assets ,
   4« Other operating receipts ,
   5 . Cost of raw and auxiliary- matorials ,
   6β          οο3ΐ;β·                                 6 # 5Ί)αίί οοδΐβί ,ι Λ
                                                            ( d ) Wages and salaries ,
                          v                                 (h ) Compulsory social socurity
                                                                  costs ,
                                                            ( c ) Other social security . cost^
                                                                  showing as ,. a separate item
                                                                  those relating to old -ago
                                                                  pensions.
   7 . ( a ) Yalue adjustments in respect of            7 "t° 9»«"" unchanged
             formation expansés and of .
             tangible and intangible fixed
             assets ,
        (b ) Value adjustments in respect of
             olements of current assets ,                                     '   ''
   8« Other operating expenses ,
                               •                                          »
   9 . Operating resuit.
I. Financial result : .                          xl» ~ unchanged
  10« Earnings from participating interests ,
        showing separately those derived from                 . "
        associated undertakings ,
  11 , Earnings from other securities and -
        from claims forming part of the
        fixed assets , showing separately
        those derived from associated under­
        takings .
                                                                                     • ••/•»«
 ---pagebreak---                                        -i 12 -
                                         «• > ' ■'
      12 , Other interest -and similar
           earnings , showing separately
           those derived from associated
           undertakings ,; •
      13 . Value adjustments in respect
           of participating interests and
           other financial assets and of
           securities forming part of the
           current assets ,
      14 * Ihterest and similar charges ,                            . ,
           showing separately those con­
           cerning associated undertakings ,
      15 » Financial resuit »
III . Exceptional result                        III . - unchanged
      16 . Exceptional earnings ,                       16 to 18 . ,- unchanged
      17» Exceptional charges ,
      18. Exceptional resuit ,
      19 . Sub-total .                                  19 . - deleted
                                                   IV . Sub-total .
 IV . Taxes :                                       v . Taxes :
      20 . Taxes on the resuit :                        19 . Taxes on the result :
           - actual ,                                        - actual ,
           - future ,                                        - future ,
      21 . Other taxes not shown under                  20 . Other taxes not shown under
           I , II or III above .                             I , II or III above .
  V. Resuit for the year .                         VIo Result for the year .
                                                                                •' ./ • . •
 ---pagebreak---               Article 21                                 Article 21
Charges                                 A. - unchanged
  I. Operating expenses ( excluding           I , - unchanged
      eny shown under II ):
      l a Reduction in the stock of               1 and 2 . - unchanged
          finished and semi-finished
          products ,
      2 . Cost of raw and auxiliary                                    ■
          materials-
      3a Staff costs ,             ,              3 . Staff costs :
                                                      a) Wages and salaries ,
                                                      b ) Compuls ory social
                                                           security costs .
                                                      c ) Other social security
                                                           costs , showing as a
                                                           separate item those relet-
                                                           ting to old age pensions ,
      4® a) Value adjustments in                  4 and 5« - unchanged
              respect of formation
              expenses and of tangible
              and intangible fixed
              assets ,
          b ) Value adjustments in
              respect of elements of
            ■ current assets ,
      5 « Other operating expenses .
 II« Financial charges :                    II« - unchanged
      1 » Value ad justments in respect
          of participating interests                                        >
          and other financial assets        ■ *          .
          and of securities forming
          part of the current assets ,
      2a Interest and similar char­
          ges , showing separately those
          concerning associated under­
          takings a
III » Exceptional chargesa                 III « - unchanged
 ---pagebreak---                                        - 34 -
   IV. Tnxes :                                IV . - unchanged
        1 . Taxes on the resuit :
            - actual ,
      i     - future ,
        2 . Other taxes not shown under
            I , II and III above .
    V. Result for the year .                   V. - unchanged
B. Receipts                                B. Receipts
    Im Operating receipts (excluding           I. - unchanged
        any shovm under II ):
        1 . Net turnover ,
        2 . Increase in stocks of fini­
            shed and semi-finished pro­
            ducts ,
        3 . Work effected "by the under­
            taking for its own account
            and shown under assets ,
        4 » Other operating receipts .
   II. Financial earnings :                   II. - unchanged
        1 . Earnings from participating .
            interests , showing separa­
            tely those derived from asso­
            ciated undertakings ,
        2 . Earnings from other securi­
            ties and from claims forming
            part of the fixed assets ,
            showing separately those de­
            rived from associated under­
            takings ,
 ---pagebreak---       3 * Or, her interest and similar
          earrings , showing sey wrately
          those darived from associated
          uncle rialcings .
Ill# Exceptional earnings .              III . - unchanged
 IV . Resuit for the year .               IV, - unchanged
 ---pagebreak---                   Article 22                              Article 22
 I. Operating result ( excluding any         I. - unchanged
     earnings and charges shown under
     II ):
      1 » Net turnover ,
      2 . Production costs of output sup­
           plied and making-up the turnover
           ( including value adjustments ),
      3 » Gross result achieved from
           turnover ,
      4 » Distribution expenses ( inclu­
           ding value adjustments ),
      5 . Administrative expenses ( inclu­
           ding value adjustments ),
      6 « Other operating receipts ,
      7« Operating resuit .
II . Financial result ;                     II . - unchanged
      8 * Earnings from participating in­
           terests , showing separately
           those derived from associated
           undertakings ,
      9 « Earnings from other securities
           and from claims forming part
           of the fixed assets , showing
           separately those derived from
           associated untertakings ,
     10 . Other interest and similar
           earnings , showing separately
           those derived from associated
           undertakings ,
     11 . Value adjustments in respect
           of participating interests and
           other financial fixed assets
           and of securities forming part
           of the current assets ,
                                                                     • • •/•••
 ---pagebreak---                                        37 -
      12# Interest and similar charges ,
           showing separately those con­
           cerning associated underta­
           kings ,
      13 » Financial resuit .
III . Exceotional resuit :               III . - unchanged
      14 . Exceptional earnings ,              14 to 16 . - unchanged
      15 . Exceptional charges ,
      16 . Exceptional result ,
      17» Sub-total .                          17 . - deleted
                                          IV . Sub-total »
 TV. Taxes :                               V. Taxes :
      18 . Taxes on the resuit :               17. Taxes on the resuit :
           - actual ,                               - actual ,
           - future ,                               - future ,
      ly . Other taxe3 not shown under         18 . Other taxes not shown -under
           I , II or III above .                    I , II or III above .. '
                                           /
  V. Resuit for the year .                VI . Resuit for the year .
                                                                   • o /• • •
 ---pagebreak---                                            - 38 -
                      Artxcle 23                    "      Article 23
A' Chax^s                                       •' - unchanged
      I. Operating expenses (excluding
             any shown under II );
                                                            V
             1 ». Production costs of output
                  supplied and making-up the
                  turnover ( including value
                  adjustments ) ,                     1         i
            2 . Distribution expenses
                  ( including value adjust­
                  ments ), ....
            3 » Administrative expenses
                  ( including value adjust­
                 ments ) ,
    II* Financial charges ?
            1 . Value adjustments in respect
                 of participating interests
                 and other financial fixed
                 assets and of securities
                 forming part of the current
                 assets ,
           2# Interest and similar charges ,
                 showing separately those
                 concerning associated under­
                 takings .
  III . Exceptional charges .
   Xv . Taxes :
           1 . Taxes on the resuit :
       1 ,      - actual ,
                – future ,
         2# Other taxes not shown under
                I , II or III above .
    V. Result for the year.
 ---pagebreak---                                        - 39 -
B. Receipts
     I* Operating receipts ( exclu-
        . ding any shown under II ):
          1 . Eet turnover ,
          2 . Other operating receipts .
    II . Financial earnings :
          1 . Earnings from participating
              interests , showing separately
              those derived from associa­
              ted undertakings ,
          2 . Earnings from other secu­
              rities and from claims for­
              ming part of the fixed
              assets , showing separately
              those derived from associa­
              ted undertakings ,
          3 . Other interest and similar
              earnings , showing separately
              those derived from asso­
              ciated undertakings .
   III . Exceptional earnings .
    IV» Resuit for the year »
                                              • • * /• • •
 ---pagebreak---                                         - 40 -
                Article 24                                Article 24
       The Member States may authorize            The Member States may autorize
companies for which at the date of           companies for which at the date of
the "balance sheet :                        the balance sheet : 1
- the balance sheet total reduced           - the balance sheet total does not
    by the value adjustments , if these        exceed one million units of account ,
    are entered under liabilities , does
    not exceed one million units of ac­
    count ,
- the net turnover does not exceed           ■ unchanged
                                             -
    two million units of account ,
- the average number of employees            ■ unchanged
                                             -
    during the year did not exceed one
    hundred ,
to adopt lay-outs different from •          j- unchanged
those appearing in Articles 20 to
23 of this Directive within the
foil ox-iing limits :
a)     in Article 20, under I , items 1
to 5 inclusive may be grouped together
under one item called Gross result ;
b)     in Article 21 , items A X , 1 and
2 , and B I , 1 to 4 inclusive may be
 grouped together under one item cal­
 led Gross earnings or Gross charges
 as the case may be ;
 c)     in Article 22 , under I , items 1 ,
 2 , 3 and 6 may be grouped together
under one item called Gross result ;
 d)     in Article 23 f items A I , 1 and
 B I , 1 and 2 , may be grouped together
 under one item called Gross earnings or
 Gross charges aa the case may be .
                                                                        • * •/• • •
 ---pagebreak---                                     - 41 -
     I? subsequently any one of the        - unchanged
numerical limits set out above is
exceeded , the exemptions provided
for in this provision may again be
applied only if all the conditions
specified above are satisfied for
two consecutive years .
     The amounts in units of account       - unchanged
specified in this provision may vary
by not more tan lOfo up or down for
purposes of conversion into national
currencies#
 ---pagebreak---                                       42 -
              SECTIOiT 6                            SECTION 6
    Special provisions relating            Special provisions relating
      to certain items in the                to certain items in the
      profit and loss account                profit and loss account
             Article 25                             Article 25
     The net amount of turnover in­         - unchanged
cludes receipts from sales of products ,
goods and services falling within the
usual operations of the company , after
allowing for any price-reduction in
respect of those sales , and for value-
added tax and other taxes directly
tied to the turnover .
             Article 26                             Article 26
1.   Under the items Exceptional              unchanged
earnings and Exceptional charges ,
shall he shown earnings and charges
that are attributable to another year ,
together with any earnings and charges
that do not arise out of the usual
operations of the undertaking#
2»   Unless such earnings and charges
are of no importance in the assessment
of the results , explanations of their
amount and nature shall be given in
the notes on the accounts .
              Article 27                            Article 2 ?
     Under the item Taxes on the Result     - unchanged
shall be shown the actual amount of
taxes payable for the year , and sepa­
rately , the amount of the future lia­
bility to tax.
 ---pagebreak---                                        - 43 -
                SECTION 7                                 SECTIOÏT 7
             Valuation rules                           Valuation rules
               Article 28                                 Article . 28
1,     The Ilember States shall ensure     1.    - unchanged
thfcit the valuation of the items shown
in the annual accounts is made in ac­
cordance with the. following general -
principles :    -
a)     The methods, of valuation may       a)     The company shall be presumed
not "be changed from, one year to          to continue . its business as a going
another .              .                ^  concern .
b)     Only the profits earned at the      b)    The methods of valuation may not
date of the balance sheet may be in­       bo changed from one year to another .
cluded in it ; account shall neverthe­
less be taken of all contingencies
foreseeable at that date ,
c)     Account shall be taken of any       c)     Valuation must be made on . a conser­
deficiencies that do not become ap­        vative basis , anqL in particular :
parent until after the date of the         aa) Only the profits earned at the
balance sheet , but before it is                date of the balance sheet may be
                                                included in it ; account shall
drawn up , if they arose in the course          nevertheless be taken of all con-'
of the year to which the annual ac­             tingencies foreseeable at that
                                                date .
counts relate .
                                           bb ) Account shall be taken of any
                                                deficiencies that do not become
                                                apparent until after the date of
                                                the balance sheet , but which do
                                                become apparent before it is drawn
                                                up , if they arise in the course of
                                                the year to which the annual ac­
                                                counts relate .
                                           cc ) Account shall be taken of any
                                                depreciation , whether the year
                                                closes with a loss or with a
                                                profit .
                                                                            D /• • *
 ---pagebreak---                                        T 44 -
d)    Account shall "be taken of any        d)    Account shall be taken of earnings
depreciation , whether the year closes      and charges arising during the year
with a loss or with a profit#               to which the accounts relate , irrespec­
                                            tive .of the date of or receipt of
                                            payment of such, earnings or charges .
e)    The components of the asset and       e)    The components of the asset and
liability itens shall "be valued sepa­      liability itens shall be valued sepa­
rately.                                     rately.
f)    The balance sheet at the close        f)    The opening balance sheet for
of one year shall correspond to the         each year shall correspond to the
opening balance sheet for the follo­        closing balance sheet for the prece-
wing year .                               . ding year .
2.   Departures from these general          2.    - unchanged
principles shall be permitted in
exceptional cases . Where they are
departed from, an indication thereof
shall be given in the note3 on the
accounts together with an explanation
of the reasons and an assessment of
the effect on the assets , liabilities ,
financial position and result.'    \ .
 ---pagebreak---        The valuation, of the items     - unchanged.
shown in the annual accounts shall
he made in accordance with Articles
32 to 39 of this Directive , based, on
purchase price or production cost .
 ---pagebreak---                                /
                                     - 46 -
              Article 30                                 Article 30
1.   Notwithstanding the provisions      1 . Notwithstanding the provisions
of Article 29 of this Directive , the    of article 29 of this Directive , the
Member States, may authorize valuation   Member States may authorise :
on the basis of replacement value for
                                         a) for tangible fixed assets with a
tangible fixed assets with a limited
                                             limited useful life and for stocks ,
useful life , and for stocks .
                                             valuation by the replacement value
     They shall make provision that          method ; and
in cases where this method is employed
                                         b ) for tangible fixed assets , for
an indication thereof shall be given
                                             participating interests and other
in the notes on the accounts , speci­
                                             financial assets and for stocks ,
fying the items concerned , and that         valuation by methods other than
the use of that method is justified          that mentioned in paragraph a) and
as regards the value shown .                 which take into account current
                                             values .
                                                Where such authorization is given
                                         and is implemented , an indication
                                         thereof shall be given in the notes
                                         on the accounts , specifying the ba­
                                         lance sheet or profit and loss account
                                         items concerned , and the method by
                                         which the value shown is calculated .
2.   Where paragraph 1 is applied the    2.     Where paragraph 1 is applied , the
amount of the difference in valuation    amount of the difference between valua­
on the basis of replacement value and    tion by the replacement value method
valuation in accordance with the ge­     or other method     as aforesaid an$
neral rule contained in Article 29       valuation in accordance with the general
shall be shown under liabilities in      rule contained in Article 29 shall be
the item Revaluation Reserve . This      shown under liabilities in . the item
item shall be sub-divided into :         Revaluation Reserve , with any future
                                         taxation being shown clearly as a de­
                                         duction . This item shall be sub-divided
                                         into :
 ---pagebreak---                                       - 47 -
- Reserve for tangible fixed assets ,    - Reserve for tangible fixed assets ,
                                         - Reserve for participating interests
                                            and other financial assets ,
- Reserve for stocks .                   - Re serve for stocks .
3.   The Revaluation reserve may be      3•    - unchanged
capitalized at any time .
                                                        I:
4*   The Revaluation, reserve shall be   4*    The Revaluation reserve shall be
reduced to the; extent that the amounts reduced to the extent that the amounts
transferred thereto are no longer re­    transferred thereto are no longer neces­
quired for the purpose of replacement    sary to maintain the potential of the
of the asset items concerned . The'      undertaking .- The amounts in question
amounts in question shall be added to    shall be added to the result Tor the
the result for the year . They shall     year . They shall be shown separately
be shown separately in the profit        in the' profit arid loss account .
and loss account .
5.   Save as provided in paragraphs      5. •  - unchanged   -      • 1
3 and 4 "the Revaluation reserve shall
not be reduced .
6m   The value adjustments shall be      6.    Value adjustments- shall be calcu­
calculated each year on the basis of     lated each year on the basis of the    "
the replacement value adopted for the    value shown for the year in* question..
year in question .
 ---pagebreak---                                        - 48 -
                Artide 31                                Artide 31
1«    ITotvd.thstan.ding Article 29 of     1*   notwithstanding the provisions of
this Directive the Member States may       Article 29 of this Directive , the Member
authorize revaluation of the tangible      States may authorize revaluation of the
fixed assets and        the participating  tangible fixed assets , participating
interests and other financial assets ,     interests and other financial assets .
      They shall male provision that            Where such authorization is given
in cases where ^evaluation takes place and is implemented , an indication
an indication thereof shall be given       thereof shall be given in the notes on
in the notes on the accounts , speci-      the accounts specifying the balance
fying the items concerned and that         sheet or profit and loss account items
the making of the revaluation is           concerned,' and the method by which the
justified as regards the value shown ,     value shown is calculated .
2.    In. the event of paragraph 1 being 2 ..   - unchanged
applied , the amount pf the difference
in valuation made in accordance with
paragraph 1 above and the valuation
made in accordance with the general
rule contained in Article 29 shall be
shown under liabilities in the Reva^-
luation Reserve . This item shall be
sub-divided into :
- Reserve for tangible fixed assets .
- Reserve for participating interests
   and other financial assets .
3.    The Revaluation reserve may be       3.   - unchanged
capitalized at any tine .
 ---pagebreak---                                        - 49-
4«     The Revaluation -reserve -shall     4* - unchanged
"L>e reduced to the extent that the
 increases in value concerned have
been actually realised . The amounts
 in question shall be added to the re­
sult for the year . They shall bo
cho:m separately in. the .profit–and
Ices- acc-ouni; » --
0*     oave as provided in paragraphs      5- - unchanged
3 arid 4 "the Revaluation reserve shall
not be reduced .
 ---pagebreak---                                     -.50 -
              Article 32         .            ■    Article 32
1.   a) Where the national law autho-      - unchanged
rizes the inclusion of formation
expenses under assets , they shall
be written off over a maximum period
of five years .
     b ) In so far as the formation
expenses have not been completely
written off , no distribution of pro­
fits shall take place unless the
amount of the optional reserves is
at least ecmal to the amount of the
expenses not written off .
2#   The amounts entered under this
item shall be explained in the notes
on the accounts .
                                                              • O •/ • • •
 ---pagebreak---                                       - 51 -
                Ai tic le 33 . -                         "Article 33
1 . a) . The items of fixed assets        1*    a) - unchanged
shall T without prejudice to the pro­
visions of b ) and c ) below, be valued
at piuxjtiase- price or production cost .
     b ) The purchase price cr produc­         b ) - unchanged
tion cost of the items of fixed assets
which have a limited useful life shall
be reduced by value adjustments calcu­
lated c.cccrding to a method that sa­
tisfies the requirements of good ma­
nagement •
        c ) -aa) Value adjustments may          c ) -aa) Value adjustments may
be made in respect of the items of        be made in respect of the participating
fixed assets, whether or not their        interests and other financial interests ,
useful life is limited , so that they     so that they are valued at the lowest
are valued at the lowest figure attri­ figure to be attributed to theni at
butable to them at the date of the        the date of the balance sheet .
balance sheet .
            -bb ) Value adjustments shall           -bb ) Value adjustments shall
be made if the depreciation in value      be made in respect of the items of
is expected to be permanent .             fixed assets , whether or not their
                                          useful life is limited , so that they
                                          are valued at the lowest figure to be
                                          attributed to them at the date of the
                                          balance sheet , if it is expected that
                                          the depreciation in value will be
                                          permanent .
                                                                        * • ©/ » • •
 ---pagebreak---                                         - .5? -
          –cc ) The value adjustments                 -cc ) - -orchanged
referred to in aa) and bb)' shall be
 shown separately in the profit and
Iocs account or in the notes on the
accounts .
          -dd ) Valuation at the lowest               -dd / - unchanged
value provided for in aa) and bb ) shall
be discontinued if the reasons for
which the value adjustments were made
have ceased to apply.
                            [
      d) If the items of fixed assets                          iteras of fixed assets
                                                  d) If the items
are the subject of exceptional value        are the subject of exceptional value
adjustments under fiscal .law, the          adjustments solely for the purpose of
amount of the adjustments shall be          fiscal law , the amount of the adjust-
indicated in the notes on the account s.ments and the reasons for making them ,
                                            together with the relevant future taxa­
                                            tion , shall be indicated in the notes
                                            on the accounts .
2.    The purchase price    shall be cal- 2 .     - unchanged
culated by adding to the price paid
the ezpenses incidental thereto .
3.    a) The production cost shc.ll be      3<    a) - unchanged
calculated by adding to the purchase
price of the raw and auxiliary mate­
rials the manufacturn ng costs directly
attributable to the product in question.
      b ) A reasonable proportion of the          b ) A reasonable proportion of the
manufacturing costs which are only in– manufacturing costs which are only in­
directly, attributable to the product       directly attribuaole to the product
in question may be added to the pro­        in question shall be added to the pro­
duction cost to the extent that they        duction costs to the extent that they
relate to the period of manufacture .       relate to the period of manufacture .
      c ) Costs of distribution shall             c ) - unchanged
not be included in production cost .
                                                                              • • •/• • •
 ---pagebreak---                                      - 53 -
4.   a) The Member States may autho­     4«   Interest on capital borrowed to
rize the inclusion in production cost    finance the manufacture of fixed as­
of interest on capital borrowed to       sets may be included in production
finance the manufacture of fixed as­     cost to the extent that it relates
sets to the exrtent that it relates      to the period of manufacture . In
to the period of such manufacture . In   that event , an indication shall be
that event they shall make provision     given in the notes on the accounts
for an indication to be given in the     that such interest is included under
notes on the accounts that such inte­    assets .      ■■     ■
rest  is included under assets .
     b ) TLey may also authorize the          b ) - deleted
inclusion in the produotion cost of
interest on own capital utilized for
the purpose cf financing the manufac­
ture of fixed assets to the extent
that it relates to the period of such
canufacture.j In that event they shall
make provision for the amount thereof
to be shown in the notes on the ac­
counts .
                                                                    • ••/•••
 ---pagebreak---                                         - 54 -
               Artikel 34
                               ' »       +
1.   Article 32 of. this directive shall         unchpjif-ced
apply to the item " Cost of research and
development ".
2.   Article 32(l ) ( a) shall apply to
item C I 3 tinder Articles 8 and 9 .
               Article 35
     Tangible fixed assets , raw and           - imchm^ei
auxiliary materials , which are constant­
ly being replaced and of which the
overall value is of secondary importance
to the undertaking may be shown under
assets at a fixed quantity and value ,
if the quantity , value and composition
thereof do not vary appreciably.
 ---pagebreak---                                          - 55 -
                Article 36                              Article 36
1.    a) The items of current assets shall      a) unchanged
be valued at purchase price or produc­
tion cost , without prejudice to the pro­
visions of ( b ) and ( c ) below.
      b) Vr-lue adjustments shall be made       b ) unchanged
in respect of the items of current as­
sets so that they are valued at the
lowest figure attributable to them at
the date of the balance sheet .
      c ) The Keraber States may authorize      c ) unchanged
exceptional value adjustments if , on
the basis of a reasonable commercial
assessment , these are necessary so that
tlie valuation of these items does not
have to bo modified in the near future
because of fluctuations in value . The
amount of these value adjustments shall
be shown separately in the profit and
loss account or in the note3 on the
accounts ,
      d ) Valuation at the lowest value         d) unchanged
provided for in b ) and c ) shall be
discontinued if the reasons for which
the value adjustments were made have
ceased to aoply.
 ---pagebreak---                                           - 56 -
        e ) If the items of current assets             e ) If the items of current assets
   are the subject of exceptional value          are the subject of exceptional vr.lue
   adjustments under fiscal law , the            adjustments solely for the purpose of
   amount of the adjustments shall be in­        fiscal laxr , the amount of the adjust­
   dicated in the notes on the accounts .       ments and the reasons for making
                                                 them , together with the relevant fu­
                                                 ture taxation , shall be indicated in
                                                 the notes on the accounts .
2.      The definitions of purchase price    2.        - unchanged
and of production cost contained in Ar­
ticle 33(2 ) to (4 ) shall apply.
 ---pagebreak---                                       - 57 -
              Article 37                               Article 37
     The purchase price or production       1.   - unchanged
cost of stocks of goods in the same
category msy also be calculated either
on the basis of weighted average prices
or by the ,;First in - First out " (Fifo )
method or Last in - first out ;i ( Lifo )
method , or some similar method.
                                            2.   Where the value shown in the
                                            balance sheet as a result of the
                                            method used differs considerably
                                            from the value on the basis of the
                                            actual purchase price , the difference
                                            shall be indicated in the notes on
                                            the accounts­
 ---pagebreak---                                        - 58 -
               Article 3°                               Article 38
1.   Where the amount of any debt re­         unchanged
payable is greater than the amount
received , the difference may be shown
as on asset . It shall be shown separa­
tely in the balance sheet or in the
notes on the accounts .
2.   The amount of such difference shall
be written off not later than the time
when repayment of the debt is made .
               Article 39                              Article 39
     Provisions for contingencies and         unchanged
charges shall not exceed in amount the
sums which a reasonable businessman would
consider necessary .
     The provisions shown in the balance
sheet under the item 'Other provisions "
shall be specified in the notes on the
accounts if they are at all substantial .
 ---pagebreak---                                         - 59 -
              SECTION 8                                   SECTION 8
       Contents of the notes                        Contents of the notes
          on the accounts                             on the accounts
                                                            /
              Article 40                                  Article âO
     The notes on the accounts shall             The notes on the accounts shall
contain commentary on the balance           contain commentary on the balance
sheet and profit and loss account           sheet and profit- and loss account in
in such manner as to give as true and       such manner as to give a true and 1
fair a view as possible of the compa­       fair view of the company 's assets ,
ny's assets , liabilities , ' financial     liabilities , financial position and
position and results .                      results .
 ---pagebreak---               Article 41                              Article 41
     In addition "to the information          - unchanged
required under other provisions of
this Directive , the notes on the ac­
counts shall set out inforuation in
respect of the following matters in
any event :
1*   The valuation methods applied      1 » . The valuation methods applied to
to the various items in the annual      the various items in the annual accounts ,
accounts , and the methods employed      and the methods employed in calcula­
in calculating the value adjustments;' ting the value adjustments . For foreign
                                         currency debtors and creditors , the
                                        method used for calculating the rate
                                         of exchange must "be shown ;
2,   The name and head office address   2,    - unchanged
of each of the undertakings in whioh
the company holds at least 10^ of the
capital , showing the proportion of
the capital held and the amount of the
subscribed capital , the amount of the
reserves and the resuls for the latest
business year of the undertaking
concerned 4
3.   The way in which the authorized    3.    - unchanged
capital has been employed , if any
such capital has been created ;
4 . Whether, there are any entitle-     4«    - unchanged
ments carrying the right to a share
of profits , and whether there are any
convertible debentures or similar se­
curities or rights , specifying the num­
ber thereof and what rights they confer ;
5.   The overall amount of the finan-    5«   - unchanged
cial commitments that are not shown in
the balance sheet , in so far as this
 ---pagebreak---                                           61 –
information is of assistance in asses- .
sing the financial position . Commit- . .                                       • " .
ments existing with regard to associa­
ted undertakings shall be shown sepa-                                         "
rately :                                                 ,
- new                               . *     6m    The net amount of turnover within
                                            the meaning of Article 25 of this Di­
                                            rective , broken down by categories of
                                            products and activities and by geogra­
                                            phical markets . The amount contributed
                                            by each category and market to the result
                                            for the year must be indicated :
6.    The whole of the personnel costs       7*   The number of persons . employed
relating to the accounting period un-       during the year , "broken down by cate-
less they are shown separately in the       gories and , if they are not    shown se-
profit and loss account :                   parately in the profit and loss account ,,
                                            the whole of the personnel costs rela^
                                            ting to the accounting period , broken
                                            down as provided by Article 20.1.6 ;
7.    The taxes included in the opera-       8.   The taxes included in the opera­
ting result , the financial result or       ting result , the financial result or
exceptional resuit :                         exceptional resuit :
8.    The amount of the changes in          9»    The amount of the changes in the
the result for the year due to the      '   result for the year due to the appli-
application of fiscal laws                   cation of fiscal laws :
 ---pagebreak---                                         *r , 62 –
                                      -  . t..
  9«    The amount of the emoluments           , 10 .  The amount of the emoluments gran-
  granted during the year to the mem-            ted during the year to the members of
  lbers of the administrative , manage- .        the administrative , managerial and su-
  rial and supervisory "bodies "by reason . pervisory bodies by reason of their
  of their responsibilities , showing the responsibilities , and any commitments
  total for each category :                      arising or entered into in respect of
                                                 retirement pensions for ex-members - of
                                                 those bodies , showing the total for
                                                 each category :
  10 .  The amount of advances and ere-          11 .  The amount of advances and credits
  dits granted to the members of admi-           grnnted to the members of adninistra-
  nistrative , managerial and supervisory tive , managerial and supervisory bodies ,
  bodies , and commitments entered into          and commitments entered into on their
i
  on their account by way of guarantees          account by way. of guarantees of any
  of any kind , showing the total for            kind , showing the total for each
  each category .                                category.
 ---pagebreak---                 Article 42                              Article 42
        The Member States may allow the   1.    - unchanged
particulars prescribed, by Article 41 »
2 ):
a) to take the form of a statement de-      * •
     posited in accordance sith Article
     3 , paragraphes 1 and 2 of Directi­
     ve 6 8/151/CEE of 9 March 1968. This
   • shall be mentioned in the notes on
     the accounts }                                                      ! .
b ) to be omitted when their nature is
     such that , in the view of a reaso­
     nable business man , they would be
     seriously prejudicial to any of the
     undertakings to which this provi­
     sion relates . The omission of the
     particulars shall be mentioned in
     the notes on the accounts ,
                                          2*    Subject to the provisions of the
                                          second paragraph of Article 24 of this
                                          Directive , the Member States may autho­
                                          rize the omission by companies to which
                                          that Article applies of the informa­
                                          tion required under Article 41 » 6 ).
 ---pagebreak---               rscTiON 9                              SECTION 9
    Contents of the annual report         Contents of the annual report
              Article 43                            .Article 43
!•    The annual report shall contain 1•    - unchanged
a detailed review of the development
of the company 's business and of its
position .
2,    The report shall also give par­ 2,    The report shall also give par­
ticulars of :                         ticulars of :
a) any important events that have     a) - unchanged
    occurred since the close of the
    business year ;
b ) the company's likely future deve­ b ) - unchanged         y
    lopment .
                                      c ) the activities iri the field of"
                                          research and development and the
                                          costs thereof .
 ---pagebreak---                                         r.'j . -
                                           - 65 -
                  SECTIOU 10                                           SECïIOft 10
                  Publication      - ■                  •              Publication
                  Article 44                          ■                Article 44
 1»   The annual accounts duly approved           1 ..     The annual accounts duly approved
 and the annual report , together with            and the annual report , together with
the report submitted fey the person res­          the report submitted by the person res­
ponsible for auditing the accounts , shall        ponsible for auditing the accounts , as
"be deposited without delay in accordance         referred to in Article 60 of
with Article 3(l ) and ( 2 ) of Directive        Directive No                      of           (^1 )
68/15l/ESC of 9 March I968 .                      shall be deposited without delay in
                                                  accordance with Article 3(1 )           (2)
                                                  of Directive 68/15I/SEC cf 9 March
                                                  1968 .
2.    In derogation from Article 3 (4 )           2.       In derogation from Article 3 (4 )
of that Directive , the annual accounts           of that Directive , the annual accounts
shall he published in full in a national          shall be published in full in a national
gazette designated by the member Ste.te .         gaZette designated by the Member State .
The report submitted by the person res­          The report submitted by the person res­
ponsible for auditing the accounts shall         ponsible for auditing the accounts , as
be published therein at the seme time .           referred to in paragraph 1 , shall be
                                                 published therein at the same time .         -
3.    The annual report shall be publi­           3.       - uncha
shed in accordance with the require­
ments of Article 3(4 ) of the Directive
referred to in paragraph 1 .
                                                 ,( l ) 0J No C 131 , 13 December. 1972 pp. 49
                                                          et seer . ( Proposal for a fifth Direc­
                                                          tive under Article 54(3)(g)» ' submit­
                                                          ted to the Council by the , Commission
                                                          on 9 October 1972 .
 ---pagebreak---                                              - 66 -
                     Article 45                          Article 45
          On any other occasion when publica­       unchanged
tion is made in full , the annual accounts
and report shall be reproduced in the
form and text on the basis of which the
person responsible for auditing the
accounts drew up his report . They shall
be accompanied by the' full text of the
certificate. If the person' responsible!
for auditing the accounts made any qua­
lifications or refused to certify the
accounts , the fact shall be stated rnd
the reasons given.
                     Article 4°                          Article 46
          If the annual accounts are not pu­        unchan,^ed
blished in full , it shall be pointed out •
that the version published is abridged ,
and reference shall be made to the natio­
nal gazette in which they were published.
The certificate of the person respon­
sible for auditing the accounts shall
not accompany this publication , but it
shall be stated whether the certificate
was made with or without qualification ,
or was refused .
                     Article 47
                                                         Article 47
    ' ■ There shall be published along with         unchanged
the annual accounts , and in like- manner :
        ; - the proposed allocation of the
            result ,
          - the allocation of the results
in cases where these items do not appear
in the annual accounts.
 ---pagebreak---                SECTION 11                           S3CTI0N 11
Special provisions relating to the       Special previsions i\=l yfcir.~ tj the
 societe a responsatilite limitee ,      societe a responsabilice linitee ,
the Gesellschaft mit boschrahkter        the Gesellschaft mit beschrankter
Haftung, the Societa a responsabilita    Eaftung , the Societa a responsabilita
limitata and the Vennootschap met be-    limitata and the Vennootschap met be-
perkte asnsprakeli jkheid                perkte aanspralceli jkheid
               Article 4°                           Article 43
       The companies referred to in           - unchanged
Article l(l)(b) shall draw up their
annual accounts and report for the
information of their members in accor­
dance with the requirements of Article
2 to 23 and 25 to 43 of this Direc­
tive , subject to the following qualifi­
cations :
^ a) In Article 8 a separate item ,
' Claims on members    shall be inclu­
ded under assets at C III and D II
end a further separate it.-n , 'Debts
to cambers' j under liabilities at E ;
( b ) In Article 9 a separate item ,
" Claims on members ", shall be inclu­
ded at C III and D II and a further
separate item , "Debts to members at
P aid I.
 ---pagebreak---                 Article 49                               Article 49
1,    The companies referred to in       1 . ( a) The companies referred to in
Article 1 , ( l)(t>) shall cause their   Article 1 , ( l)(b ) shall cause their
annual accounts and report to be au­     annual accounts to be audited by one
dited by one or more persons authori­    or more persons authorized by the na­
zed by the law of the country to audit   tional law to audit accounts .
accounts .
                                             ( b ) The person or persons responsi­
                                         ble for auditing the accounts shall
                                         also verify that the annual report is
                                         consistent with the annual accounts of
                                         the year to which it refers .
2.    The Member States may exempt from  2.        - unchanged
the obligation imposed under paragraph
1 companies of which at the date of
their balance sheet :
- the balcnce sheet total reduced by     - the balance sheet total does not
   the value adjustments , if these are     exceed one hundred thousand units
   entered under liabilities , does not      of account ,
   exceed one hundred thousand units
   of account ,
- the net turnover as defined in         - unchanged
   Article 25 of this Directive does
   not exceed two hundred thousand units
   of account ,
- the average number of employees        - unchanged                    1
   during the year did not exceed
   twenty . ,
      In that case they sha,n introduce            - unchrnged
appropriate sanctions into their law for
cases in which the annual accounts and
reports of such compenies are not drawn
up in accordance with the requirements
of thi3 Directive .
 ---pagebreak---                                        - 69 -
      If subsequently any one of the          - unchanged
numerical limits set out above is
exceeded , the exemption provided for
in this provision may again be applied
only if all the conditions specified
above are satisfied for two consecutive
years .
     The amounts in units of account          - unchanged
specified in this provision may vary by
not mora than 10$ up or down for purposes
of conversion into national currencies .
 ---pagebreak---                                         - 70 -
               Article 50                                    Article 50
1. ( a) The companies referred to in        1 . ( a) - unchanged
Article l,(l)(b ) shall publish their
annual accounts and report , and the
report drawn up by the person respon­
sible for auditing the accounts , in
accordance with Article 44 of this
Directive .
    ( b) Articles 45 "to 47 of this Di­         ( b ) - unchanged
rective shall equally apply to the
companies referred to in paragraph l(a).
2.       Notwithstanding paragraph l(a),    2 . - unchanged
the Member States may permit
    ( a) companies other than those re­         ( a) - unchanged
ferred to in Article 49(2 ), in the case
of which at the date of their balance
sheet :
- the balance sheet total reduced by        - the balance sheet total does not
   the value adjustments , if these are        exceed one million units of ac­
   enterod under liabilities , does not        count .
   exceed one million units of account ;
- the net turnover as defined in            - unchanged
   Article 25 of this Directive does not
   exceed two million units of account }
- the average number of employees during - unchanged
   the year did not exceed one hundred ,
 ---pagebreak--- -to publish their profit and loss account       - unchanged
in the abridged form provided for in
Article 24 of this Directive . If subse­
quently any one of the numerical limits
set out above is exceeded , the exemption
provided for in this provision may again
be applied only if all the conditions
specified above are satisfied for two
consecutive years.
      The amounts in units of account           - unchanged
specified in this provision may vary by
not more than 10$ up or down for pur­
poses of conversion into national cur­
rencies .
      ( b) the companies referred to in         (b) the companies referred to in
Article 49(2 ) of this Directive to pu­    Article 49(2 ) of this Directive to pu-'
blish merely an abridged balance sheet     blisb merely an abridged balance sheet
showing only the items preceded by         showing only the items preceded by
letters and Roman numerals set out in      letters and Roman numerals set out in
Articles 8 and 9 with separate particu­    Articles 8 end 9 with separate parti­
lars of the claims on and debts to mem- .  culars of :
bers and notes on the accounts but not     - the information required by the
necessarily including the explanations       provisions in brackets under items
                                             D II of the assets and E of the
required under Article 41(4 ) to ( l0 ):     liabilities in Article 8 and under
                                             items D II , U1 and I in Article 9 »
                                             but showing the total for the items
                                             concerned;
                                           - claims on and debts to members ,
                                           and notes cn the accounts
                                           but not necessarily including the
                                           explanations required under Article
                                           41(4 ) to ( 11 );
        ( c ) the publication requirements      ( c ) - unchanged
laid down for the companies referred
to in ( a) -and (b) to be effected in
manner prescribed by Article 3 of
Directive 68/151/EEC of 9 March 1968 .
 ---pagebreak---                                            - 72 -
                 SECTIOÏT 12                                     SÏÏCTIOÎT 12
              Final provisions                              Pir. al provisions
                 Article 51                                     Article 51
1 . ( a) The Member States shall , within            - unchanged
eighteen months of notification of this
Directive , m?ice all the necessary amend­
ments to their laws , regulations and
administrative provisions so as to com­
ply with the provisions of this Direc­
tive , and shall inform the Commission
thereof immediately . They shall bring
the amendments into force within thirty
months of notification of this Direc­
tive .
      (b ) The Government s of the l'enter
States shall communicate to the Commis -           ■
sion for information the draft texts            ,       .
of the laws and regulations together
with the statements of grounds , rela­
ting to the . matters covered by this
Directive . Those shall be conuaxmicated
at least six months before tne. date
envisaged for final adoption of tho
texts .                                                                  -
2.     The obligation to show in the an­
nual accounts the itens prescribed by
Articles 8 , 9       20 to 23 which relate
to associated undertakings } and the '
obligation to provide information con­
cerning these undertakings in accordance
with Articles 10(2 ), 11 or 4l(5 ) of
this Directive shall enter into force '          .    .   :
simultaneously with a Council Directive
relating to consolidated accounts .
 ---pagebreak---                                       - 73 -
                Article 52                           Article 52
     This Directive is addressed to the      - unchanged
Member States .