CELEX: 52011PC0684
Language: en
Date: 2011-10-25
Title: Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings

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		52011PC0684
		
			Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings /* COM/2011/0684 final - 2011/0308 (COD) */
			
				
		
		
			
			   	EXPLANATORY MEMORANDUM
1.           General comments
The Accounting Directives[1] (hereafter the
"Directives") deal with the annual and consolidated financial
statements of limited liability companies in Europe.
There are a number of key objectives in the
current Review:
(1)         
The reduction of administrative
burden/simplification targeting mainly small companies.
(2)         
To increase the clarity and comparability of
financial statements targeting the company categories for which these
considerations are important due to a more vigorous cross-border activity and a
larger number of external stakeholders.
(3)         
The protection of essential user needs aiming at
retaining necessary accounting information for users.
(4)         
The increased transparency on payments made to
governments by the extractive industry and loggers of primary forests.
Consultations have shown that stakeholders
are overall broadly content with the current framework which has generally
functioned well over the years. Those stakeholders include inter alia
preparers and users of financial statements, and public authorities. However
they do see room for simplification, especially to benefit the smallest
companies. During the past 30 years, amendments to the Directives have added
many requirements, such as new disclosures and valuation rules, including
detailed provisions on fair value accounting. Less attention has been paid to
considering whether existing requirements could be simplified or removed.
Whilst every amendment may have been justified in its own right, these
additions have tended to disregard the comparability and usefulness of the
financial statements, increased reporting requirements and the number of Member
State options, and have ultimately led to increased complexity and regulatory
burden for all companies. This increased burden bears down primarily on smaller
companies.
Stakeholders have also pointed to the need
to increase the clarity and comparability of financial statements, especially
for larger companies which tend to undertake more extensive cross-border
operations.
The raison d'être for the Directives
is to establish the requirement for limited liability companies to prepare
financial statements and set minimum requirements in order to improve the
EU-wide comparability of financial statements. This, in turn, should lead to a
better functioning of the Single Market and, more concretely, an increased
access to finance, reductions in the cost of capital and increased levels of
cross-border trade, merger and acquisition activity. Overall, the proposal
contributes to improving Europe's competitiveness through establishing a
regulatory environment conducive to job-rich growth.
The proposal complements the proposal for a
Directive of 2009[2]
on the financial statements of micro-entities, which is currently still being
negotiated by the EU co-legislators. Given that the Council and the Parliament
have now both agreed to the principle of a micro entity regime, the current
proposal does not contain any new policy proposal regarding micro companies as
assessed in the accompanying Impact Assessment. The European Commission is
willing to consider, together with the EU co-legislators, how best to integrate
into the current proposal the final inter-institutional agreement on the
Directive of 2009.
This proposal supports the Commission's approach
on companies outlined in a number of instances. The Europe 2020 Strategy[3] aims to make the EU a smarter,
more sustainable and inclusive economy. The Single Market Act[4] aims to simplify life for SMEs,
which make up more than 99% of Europe's businesses, and to improve these
companies' access to finance. The Small Business Act
(SBA) recognises the need to consider distinct needs for the SME group as well
as to have segments within that group. It supports a "think small
first" approach. The proposal also forms part of
the Commission's simplification rolling programme and administrative burden
reduction initiatives. As such, it delivers on the commitment made by the
Commission to review its acquis to ensure the
relevance, effectiveness and proportionality of the legislation in place, as
well as to reduce administrative burdens by simplifying the regulatory
environment[5].
The proposal repeals the current Accounting
Directives, replacing them and their subsequent amendments with a single new
Directive.
2.           Consultations of stakeholders and impact
assessment
2.1.        Consultation of
stakeholders and interested parties
The Commission Services have maintained a
regular dialogue with stakeholders throughout the Review. The objective was to
gather views from all interested parties, including preparers, users, standard
setters, public authorities, etc. Dialogue took place through:
–              
An informal ad hoc SME reflection group composed
of 10 experts with diverse experience and backgrounds.
–              
Two public consultations, respectively on the
Review of the Directives and on the International Financial Reporting Standard
for Small and Medium-Sized Entities, both followed by stakeholders' meetings to
consider and further discuss the results.
–              
Several targeted meetings with national standard
setters, representatives of small and medium-sized businesses, banks, investors
and accountants across the EU.
–              
Consultations with the EFRAG (European Financial
Reporting Advisory Group) Working Group on SMEs and the Accounting Regulatory
Committee (ARC) ad hoc Working Group on SMEs.
–              
A study into the effects on administrative
burden from changes to Directives conducted by the Centre
for Strategy and Evaluation Services (CSES).
With respect to country-by-country
reporting, the Commission Services have also maintained a regular dialogue with
different categories of stakeholders (such as preparers, users, and public
authorities). A public consultation was carried out in 2010/2011 and a series
of bilateral consultations with stakeholders (especially users and preparers)
took place in 2010 and 2011. Furthermore, the European
Financial Reporting Advisory Group (EFRAG) provided input on the evaluation of the administrative costs
associated with possibly requiring country-by-country financial reporting.
2.2.        Impact assessment
2.2.1.     Financial Statements
The preparation of financial statements has
been identified as one of the most burdensome regulatory obligations for
companies[6].
Small companies face proportionally higher administrative burdens in comparison
to medium-sized / large companies.
The Impact Assessment analysed five broad
policy options starting from the baseline scenario. The broad option of
revising and modernising selected requirements currently in the Accounting
Directives was finally retained as the preferred option. 
After examining more detailed options, it
appeared that a "mini-regime" specific to small companies would be
the best policy choice. The potential for administrative burden reduction of
this policy amounts to EUR 1.5 bn which arises from reduced reporting
requirements in the notes, further relaxation of statutory audit and the
exemption from preparing consolidated financial statements for small groups.
A second detailed option concerned the
increase of the thresholds for small and medium-sized companies as defined by
the Directive to reflect inflation in the period 2007 to 2011. The burden
reduction potential of this proposal amounts to around EUR 0.2 bn.
The estimated potential for savings from
the above is therefore estimated at EUR 1.7 bn overall.
Micro-companies will in any event benefit from the simplified regime offered to
small companies[7].
However, the impact on micro-entities of the above policy choices has been
disregarded as the proposal for a Directive on micro-entities that is pending
before the European Parliament and the Council specifically addresses these.
These policy choices will reduce the amount
of information available to users of small and medium-sized company financial
statements, including information which is publicly available. Creditor
protection would however be strengthened due to the fact that two disclosures
concerning guarantees and commitments and related party transactions would
become mandatory. There would be a slightly positive impact on the information
available in the case of medium-sized and large companies due to an improved
clarity and comparability of their financial statements.
Statistical authorities might need to
adjust their way of collecting some data from smaller companies although the
maximum harmonisation of thresholds would allow them to collect data for
companies that are objectively the same size across the EU, thereby improving
comparability. However, harmonisation of the thresholds may have an adverse
impact on the collection of statistical data especially in Member States where
the proportion of small companies is high. In order to estimate national
economic indicators these Member States may need to revise the way they collect
statistical data from companies. The Commission proposal to interconnect the
central, commercial and companies registers[8]
should, as a mitigating factor, improve cross-border
access to company information. Tax authorities will
retain the power to decide how profits for tax purposes should be computed and
what should be the associated reporting requirements.
In terms of the social impact of the
proposal, simplified accounting requirements should foster a business climate
that encourages company formation and entrepreneurship. The impact assessment
considered that by freeing up resources available to companies, the initiative
is expected to contribute, at least marginally, to the creation of jobs in the
EU. Some of the savings at company level would stem from a reduction in fees
paid to accountancy firms or external accountants. The impact on jobs due to
this transfer of resources is expected to be neutral or only marginally
negative in terms of overall employment levels. No measurable environmental
impacts are expected. It is not expected that the introduction of simpler accounting
regimes would create disincentives for small companies to grow as accounting is
less burdensome than tax or social legislation in this regard. In addition, the
"think small first" approach of this proposal allows for accounting
regimes to fit different sizes of company.
2.2.2. Reporting
of payments to governments
The Commission has publicly expressed
support for the international Extractive Industry
Transparency Initiative (EITI), and envisaged willingness to present legislation
mandating disclosure requirements for extractive industry companies.[9] A similar pledge was made in
the concluding Declaration of the G8 Summit in
Deauville of May 2011[10], where the G8 governments committed "to setting in place
transparency laws and regulations or to promoting voluntary standards that
require or encourage oil, gas, and mining companies to disclose the payments
they make to governments."
Furthermore, the European
Parliament has presented a Resolution[11]
reiterating its support for country-by-country reporting requirements, in
particular for the extractive industries. 
EU legislation does not currently require
companies to disclose, on a country basis, payments to government made in
countries where they operate. Therefore  such payments made to governments in a
specific country are normally not disclosed, even though such payments by the
extractive industry (oil, gas and mining) or loggers[12] of primary forests[13]can represent a significant
proportion of a country's revenues, especially in third countries that are rich
in natural resources. In order to make governments accountable for the use of these
resources and promote good governance, it is proposed to require the disclosure
of payments to governments at the individual or consolidated level of a
company. This proposal is comparable to the US
Dodd-Frank Act[14],
which was adopted in July 2010, and requires extractive industry companies
(oil, gas and mining companies) registered with the Securities and Exchange
Commission (SEC) to publicly report payments to governments[15] on a country- and
project-specific basis. The SEC's implementing rules are scheduled to be
adopted by the end of 2011.
The Impact Assessment[16] analysed five broad policy
options starting from the baseline scenario (policy option 0), next examining
possible schemes that would result in a global agreement for country-by-country
reporting for EU and non-EU MNCs (policy option 1), and finally assessing
several policy options that would oblige only EU companies to disclose country
by country information (policy options 2 to 4). Whilst policy option 2 requires
the disclosure of payments to governments on a country basis from the
extractive industry and the loggers of primary forests, policy option 3
requires the disclosure of such information on a country- and project- basis. In addition to a report on payments to government, policy option 4
would require a complete set of country-by-country accounts to be prepared by
companies active in the extractive industry and loggers of primary forests.
The option of requiring country-by-country
reporting (CBCR) of payments to government on a
country-and-project basis by EU Multinational Companies (MNCs) in the
extractive industry and logging of primary forests (policy
option 3) was retained. The extractive
industry covers all companies with activities which involve the exploration,
discovery, development and extraction of minerals, oil and natural gas
deposits. The logging of primary forests covers all companies with activities
which involve the clear-cutting, selective logging or thinning of primary forests. The disclosure of
payments to government on a country-and, as the case
may be, on a project- basis would better satisfy the
demands of stakeholders calling for enhanced disclosures whilst the costs of
such a policy option would remain acceptable, on condition that an appropriate
materiality threshold is introduced. This approach would strike a balance
between more transparency without overburdening companies, and without
excessively putting EU companies at a competitive disadvantage. This should not
compromise future efforts by the EU to obtain international agreement, and to
create via negotiations with international partners a worldwide level playing
field with respect to CBCR. 
The issue of a potential conflict between
an EU disclosure requirement and a recipient country's national legislation
prohibiting the publication of such information has been raised by some
companies within the scope of the proposal. Calls have been made to create an
exemption in such cases from reporting the relevant payments to government. Although
the Commission has found very few examples of countries prohibiting disclosures,
a strictly circumscribed exemption has been provided for situations in which a
company complying with the disclosure obligations would find itself in clear contravention
of the criminal law of the country concerned. 
Energy security figures high on the EU's
agenda for several reasons inter alia because energy generated in EU
Member States does not cover current demand. Some argue
that the EU extractive operators may find it harder to
operate in third countries which could have a consequent effect on security of
oil and gas supplies to Europe. While some companies already disclose payments
to governments on a country basis without impediments to their activities, this
might be different for others Therefore a review should inter alia
evaluate the issue of security of energy supply in Europe. The issue has been raised that such disclosure might result in a
competitive disadvantage for EU industry. The Commission takes the view that in
majority of cases the disclosure of payments to government on a country and project
basis  where those payments have been attributed to a specific project (with a
materiality threshold) would not give direct insight into confidential company
information such as levels of turnover, costs and profits. The strengthening of
the EITI would also militate against any possible short-term loss of
competitive position, as it may lead to a more global application and enhanced
reputation of compliant companies.
2.3.        Budgetary Implications
The proposal has no implications for the Union
budget.
3.           Additional information
3.1.        Simplification
The proposal introduces a specific regime
for small companies that will considerably reduce the administrative burden
currently borne by small companies when they prepare their financial
statements. It will limit disclosures by way of notes to the accounts to (i)
accounting policies; (ii) guarantees, commitments, contingencies and arrangements
that are not recognised in the balance sheet; (iii) post-balance sheet events
not recognised in the balance sheet; (iv) long-term and secured debts; and (v)
related party transactions. It should be noted that mandating the disclosure of
items (iii) and (v) will result in new obligations imposed for small companies,
as a majority of Member States have provided for exemptions from these
disclosures for such companies. 
The proposal also seeks to harmonise
thresholds to ensure that the administrative burden reduction actually reaches
all small companies in the EU. Currently many companies that are small under EU
definitions enter the medium-sized or large company category because the
definitions foreseen in the Directives are lower when transposed at Member
State level. 
The table below provides a summarised
overview of the main simplification effects of this proposal:
 Small Companies ~ 1,1 million companies ~21 % of companies || –                         Maximum harmonisation will ensure that companies of the same size benefit from a level playing field across the EU. –                         Notes to the accounts will be limited to only five key areas. –                         No requirement for a statutory audit. –                         Small groups will be exempt from preparing consolidated financial statements. 
3.2.        Other measures
The proposal seeks to improve the
comparability and clarity of financial statements prepared by medium-sized and
large companies, and by small companies to a limited extent.
To this end, the proposal seeks to reduce
the number of options currently available to Member States, insofar as these
options are detrimental to the comparability of the financial statements.
General principles such as "substance over form" will become
mandatory so as to increase the clarity of financial statements.
As regards amendments to existing
provisions, the table below provides a summarised overview of the main
modifications:
 Medium-sized /Large Companies ~ 0.3 million companies ~ 4% of companies || –                         Introduction of general principles of "materiality" and "substance over form" –                         Reduction in the number of Member State options. 
3.3.        IFRS for SMEs
Adopting the International Financial
Reporting Standards for SMEs (IFRS for SMEs) for mandatory use within the EU
was considered as an option. Stakeholders, notably public authorities, were,
however, divided on this idea and the Impact Assessment also concluded that
introducing this new standard would not serve the objectives of simplification
and reduction of administrative burden. Moreover, considering that the IFRS for
SMEs is a relatively new standard, experience with its implementation worldwide
was still lacking. 
Mandatory adoption of the IFRS for SMEs is
not being pursued as a policy within this proposal, and differences between
this proposed Directive and the IFRS for SMEs in the areas of presentation of
unpaid subscribed share capital and the amortisation periods for goodwill whose
expected useful life cannot be reliably estimated mean that explicit full
adoption of the IFRS for SMEs will not be possible.
3.4.        Reporting of payments to
governments 
In order to promote governments'
accountability and good governance, the proposal introduces new reporting
requirements for companies active in the extractive industry or in the logging
of primary forests. It is proposed that companies shall disclose the payments
they make to governments in each country where they operate and for each
project, where the payment has been attributed to a certain project and  when
material to the recipient government. In line with the overall objective and in
order to limit the additional administrative burden, the new requirement is
limited to large companies and public interest entities. 
3.5.        Proposed Directive and
repeal of existing legislation
The proposal takes the form of a new
Directive repealing the 1978 and 1983 Directives and their subsequent
amendments.
3.6.        Legal basis, subsidiarity
and proportionality
The proposal is based on Article 50(1) of
the Treaty, which is the legal basis for adoptingUnion measures aimed at
achieving an Internal Market in company law.
The proposal provides that limited
liability companies should prepare financial statements under a set of
requirements devised to improve the EU-wide comparability of financial
statements with the objective of contributing to a better functioning of the
Single Market and to an increased level of cross-border trade. According to the
principle of subsidiarity the EU should act only where it can provide better
results than intervention at Member State level and action should be limited to
what is necessary and proportionate in order to attain the objectives of the
policy pursued. The objectives of this review are such that they cannot be
fulfilled by unilateral action at the level of Member States.
Being subject only to a single set of basic
EU level requirements would be advantageous for small companies under a
"think small first" approach. Small companies should be treated
equally across the EU in order for them to benefit from access to the single
market on homogenous terms. Member States should not impose unnecessary additional
requirements. This can be best achieved through coordinated EU law. As far as r
medium-sized and large companies are concerned, financial reporting needs to be
made more comparable at EU level as the activities of these companies are often
EU-wide and relevant to stakeholders throughout the internal market. Nevertheless,
Member States should have a degree of leeway as far as additional reporting requirements
for these types of companies are concerned. To this end, a Directive is the
most appropriate legal instrument as it allows a certain margin of manoeuvre
for Member States. A Directive also ensures that the content and form of the
proposed EU action does not go beyond what is necessary and proportionate in
order to achieve the regulatory objective of simplification and reduction of
administrative burdens.
4.           Comments on the Articles
The following
Articles remain the same in substance as corresponding Articles in the Fourth
Council Directive 78/660/EEC and the Seventh Council Directive 83/349/EEC,
although their numbering in most cases differs from the numbering originally
used. These include Articles 1(1) (including Annexes I and II), 2(2) to 2(8),
3(6) to 3(9), 4, 5(2) to 5(3), 6(2) to 6(3), 7, 8(1) to 8(5), 10, 11(1) to
11(7) and 11(11), 12(2), 19(2), 20, 21, 22, 28(2), 29(2) and 29(3), 30, 32,
33(1) to 33(2), 34(1), 35 except 35(3), 44, 45, 47, and 51. A correlation table
is provided in Annex III.
For the sake of
conciseness and clarity, explanations are provided in this section only where this
proposal brings about substantial modifications compared to the Directives that
will be repealed.
A number of
changes have been introduced throughout the text in order to bring terminology
within the proposed Directive in line with modern accounting language, with no
impact on the substance of the relevant articles. These include: replacing
"company" with the term "undertaking", all
references to "accounts" have been replaced by "financial
statements", and all references to "annual report"
have been replaced by "management report".
4.1.        Chapter 1 - Scope,
definitions and categories of undertakings
Article 2 groups together a number of
definitions that were previously dispersed throughout the original Directives.
Public interest entities are defined, taking the definition used in Directive
2006/43/EC on Statutory Audits. Definitions for parent, subsidiary and
affiliated undertakings have been set out more clearly than in the Seventh
Council Directive 83/349/EEC. However, there is no change in the underlying
meaning. Similarly associated undertakings are defined more clearly than at
present, and in presuming significant influence to exist where an investor
holds 20% or more of the voting rights the definition follows the relevant
international accounting standard – IAS 28. 
Article 3 creates a legal basis for the
expressions "small", "medium-sized" and "large"
undertaking, and maintains the practice of determining an undertaking's size by
reference to its net turnover, balance sheet total and number of employees.
Depending on the purpose of EU policies, the Union may use definitions that
differ to a certain extent from those in this Article[17]. The proposal is to fully
harmonise size criteria, whereas previously the Member States could choose
whether or not different sizes of undertaking should be recognised within their
jurisdiction and, within limits, the relevant size criteria.
Small and medium-sized groups are defined
in clearer terms than those used in the Seventh Council Directive 83/349/EEC.
The net turnover and balance sheet total size criteria are increased in line
with the level of inflation since they were last revised in 2006.
The definitions and exemptions for
"financial holding companies" and "investment companies"
have been removed, as industry specific accounting treatments act as a barrier
to harmonisation. Furthermore these provisions have not been widely used across
the EU.
4.2.        Chapter 2 - Main
provisions and principles
Article 4, together with Article 17 (see
4.4 below), create a fully harmonised regime for the preparation of small
undertakings' financial statements consisting in the preparation of a profit
and loss account, balance sheet and limited notes. The Member States should not
require the presentation of further information.
A general principle of materiality is
introduced in Article 5. It provides that recognition, measurement,
presentation and disclosure in financial statements should be subject to
materiality constraints. This will allow, for example, the combination of line
items in the profit and loss account or balance sheet, or the omission of note
disclosures where the relevant information is immaterial. Similarly
non-material accruals, prepayments and provisions would not need to be
recognised. Detemining materiality will remain a company's primary
responsibility, whether that company is subject to an audit or not.
A requirement to present the economic
reality of a transaction in the financial statements, and not just its legal
form is also introduced as a general principle within Article 5 to provide for
common general principles, and hence harmonisation, across the EU. Previously,
such a method of presentation was permitted within the Directives but the
Member States were not required to adopt the principle into their national law.
In Article 6 the option for Member States
to allow revaluation accounting for fixed assets, as an alternative to historic
cost accounting is retained whilst, to ensure greater harmonisation of
valuation bases, the Member State options that allowed replacement cost
accounting and inflation methods of accounting methods have been removed.
4.3.        Chapter 3 - Balance sheet
and profit and loss account
General provisions in Article 8 have been
amended to express more clearly that the Member States may require or permit an
associated undertaking to be accounted for in the annual financial statements
using the equity method.
The proposed Directive proposes only one
balance sheet layout (see Article 9), whereas previously the Member States
could choose between two different layouts. This will ensure better
comparability of the financial statements from one jurisdiction to another in
the EU. In addition, formation expenses are removed as a category of asset, as
their recognition was dependent upon their being defined in Member States' law.
A consequential amendment is necessary to the distributable profits test set
out in Article 11.
Article 11 also introduces a requirement
that the amount recognised in respect of a provision should correspond to the
undertaking's best estimate of the liability or future expenditure, and this
Article also excludes the "last in, first out", (LIFO) method of
valuation as a permitted valuation method for stocks and fungible items. These
changes will ensure better comparability of financial statements.
Articles 12 to 15 provide for only two
profit and loss account layouts – one on a "by nature" basis, one on
a "by function" basis. Previously four layouts were permitted. The
objective here is to bring more comparability whilst retaining a presentation
which will be familiar to financial statements' users. The previous distinction
between ordinary and extraordinary items within the profit and loss account is
removed, thereby countering an inherent bias which favoured the presentation of
"large" or "unusual" items of expense as extraordinary, so
as not to distort the headline profit after tax figure. Conversely there was an
inherent bias to present "large" or "unusual" items of
income as ordinary to bolster the headline profit figure. To ensure a neutral
presentation of such items of income and expenditure there is a new requirement
to disclose them separately within the profit and loss account, with an
explanatory note. Therefore all such items will be recognised in arriving at
profit after tax.
The abridged financial statements regime is
subject to consequential amendments in Article 16, reflecting the reduced
number of layouts.
4.4.        Chapter 4 - Notes to the
financial statements
Numerous Member State options existed
around the note disclosures in the previous Directives. This approach has been
replaced by a harmonised approach, which will mean that undertakings of the
same size category throughout the EU will have the same or a comparable
disclosure regime.
This chapter creates a
"bottom-up" approach to the provision of information by way of notes
to the financial statements. Article 17 sets out the note disclosures that all
undertakings shall make. Small undertakings will, overall, have a more limited
disclosure regime, when compared to the previous Directives, and consistent
with the requirements of Article 4 (see 4.2 above), it is proposed that the
Member States should not require these categories of undertaking to disclose
further information, given that a wide range of consultees agreed that these
were the key disclosures for small undertakings. 
Medium-sized undertakings shall disclose
the information required by Articles 17 and 18, whilst large undertakings and
public interest entities shall disclose the information required by Articles
17, 18 and 19.
Article 17 introduces a requirement for all
undertakings to disclose post-balance sheet events in the notes to the
financial statements. This key information was previously disclosed only in the
management report and Member States had the option of exempting its disclosure.
To ensure a greater level of transparency, the disclosure of related party
transactions also becomes mandatory for all sizes of undertaking, including
those between wholly owned subsidiaries in their respective annual financial
statements – previously the Member States could exempt their disclosure
regardless of an undertakings' size.
4.5.        Chapter 5 – Management
report
There are no substantive changes to the
provisions governing the content of this report compared to those currently
provided by the Fourth Council Directive 78/660/EEC and the Seventh Council
Directive 83/349/EEC.
4.6.        Chapter 6 - Consolidated
financial statements
This chapter incorporates the provisions of
the Seventh Council Directive 83/349/EEC on consolidated accounts, thereby
creating a single Directive on the form and content of annual and consolidated
financial statements.
To simplify the text and avoid repetition,
large parts of the text of Directive 83/349/EEC have been removed and replaced
with a principle that in preparing consolidated financial statements the
accounting treatment in annual financial statements should be followed taking
account of the essential adjustments resulting from the particular
characteristics of consolidated financial statements as compared with annual
financial statements.
The changes of substance compared to the
current provisions in the Fourth Council Directive 78/660/EEC and the Seventh
Council Directive 83/349/EEC are:
To create a set of harmonised consolidation
criteria, in Article 23 consolidation will be required in situations where one
undertaking exerts dominant influence or control over another undertaking; or
where undertakings are managed on a unified basis. Previously the Member States
were able to choose whether to consolidate in these circumstances. 
In Article 24 small groups are exempted
from the requirement to prepare consolidated financial statements, whereas
previously the Member States had the option of exempting such undertakings.
This harmonises the exemption across the EU and reduces administrative burden
in line with the approach taken for the annual financial statements of small
company undertakings.
The options for Member States to permit
merger accounting and to permit the immediate write-off of goodwill to reserves
(respectively Articles 20 and 30 of Directive 83/349/EEC) have been removed as
they were little used and their removal creates a more harmonised set of
consolidation principles. Article 25 also creates a principles-based treatment
for the recognition of negative goodwill in the consolidated profit and loss
account.
4.7.        Chapter 7 – Publication
There are no substantive changes to the
publication provisions compared to those currently provided by the Fourth
Council Directive 78/660/EEC and the Seventh Council Directive 83/349/EEC.
4.8.        Chapter 8 – Auditing
General requirements laid down in Article
34 have been amended to reflect the "think small first" approach
presiding the proposal. As a result, small companies will be totally exempt
from an audit from an EU company law perspective. This Article also specifies
that public interest entities shall be subject to a statutory audit, regardless
of their size.
An addition in Article 35.3 brings
clarification on how the audit requirements apply to groups of undertakings.
4.9.        Chapter 9 – Report on
payments to governments
New reporting requirements are introduced
for large companies and public interest entities active in the extractive industry
or in the logging of primary forests. For each country where they operate, they
shall, where the amount is material to the recipient government, disclose on an
annual basis the payments they make to governments in the financial year, and
where payments have been attributed to a project, payments for each such project.
Where appropriate, reports shall be prepared at a consolidated level. If a
consolidated report is prepared, the subsidiaries and the parent company
preparing the report are exempted. The report shall be published in accordance
with the requirements of Chapter 2 of Directive 2009/101/EC. 
4.10.      Chapter 10 - Final
Provisions
The Contact Committee created by the Fourth
Council Directive 78/660/EEC has become obsolete and in this proposal is no
longer provided for.
To take account of economic developments
and inflation, Article 42 would empower the Commission to revise periodically
the thresholds for determining the undertakings' size contained in Article 3.
This is necessary to preserve the thresholds' real value over time.
The Commission
should also be empowered to update the types of entity contained in Annexes I
and II in order to ensure that they correspond to any changes in the Member
States. 
It is necessary
to specify and develop further the concept of materiality of payments in order
to ensure the relevant and appropriate level of disclosure of payments to
governments by the extractive industry and loggers of primary forests. It is
appropriate to use delegated acts, in order to ensure technically sound and
effective rules, allowing the Commission to take into account all the available
expertise.
The exact scope and modalities of such
delegated powers are carefully circumscribed in Article 42.
Finally, Article 46 has been introduced to
specify that as a general rule public interest entities shall, in principle,
not be entitled to the exemptions within the Directive.
2011/0308 (COD)
Proposal for a
DIRECTIVE OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL
on the annual financial statements,
consolidated financial statements and related reports of certain types of
undertakings
(Text with EEA relevance)
THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,
Having regard
to the Treaty on the Functioning of the European Union, and in particular
Article 50(1)
thereof,
Having regard
to the proposal from the European Commission,
After
transmission of the draft legislative act to the national Parliaments,
Having regard
to the opinion of the European Economic and Social Committee,
Acting in accordance with the ordinary
legislative procedure,
Whereas:
(1)              
The Commission Communication "Smart
Regulation in the European Union"[18]
aims at designing and delivering regulation of the highest quality, in respect
of the principles of subsidiarity and proportionality, while ensuring that the
administrative burdens are proportionate to the benefits they bring. The
Commission Communication "Think Small First" - "Small Business
Act" for Europe (SBA)[19],
adopted in June 2008 and revised in February 2011[20], recognises the central role
played by small and medium-sized enterprises (SMEs) in the Union economy, and
aims at improving the overall approach to entrepreneurship and to anchor the “think
small first” principle in policy-making from regulation to public service. The
European Council of 24 and 25 March 2011[21]
welcomed the Commission's intention to present the Single Market Act with
measures creating growth and jobs, bringing tangible results to citizens and
businesses. The "Single Market Act"[22]
adopted in April 2011 proposes to simplify the Accounting Directives as regards
financial information obligations and to reduce administrative burden,
particularly for SMEs. The Europe 2020 Strategy[23] for smart, sustainable and
inclusive growth aims to reduce administrative burdens
and improve the business environment, particularly for SMEs and to promote the internationalisation of SMEs . The above-mentioned
European Council called  for the overall regulatory burden, in particular for
SMEs, to be reduced at both European and national levels and suggests measures
to increase productivity such as by removing red tape and improving the
regulatory framework for SMEs. This proposal takes into
account the better regulation programme of the European Commission, and in
particular the Communication on "Smart Regulation in the EU" of
October 2010.[24]
(2)              
On 18 December 2008, the European Parliament
adopted a non-legislative Resolution on accounting requirements as regards
small and medium-sized companies, particularly micro-entities[25], stating that Directives
78/660/EEC and 83/349/EEC are often very burdensome for small and medium-sized
companies, and in particular for micro-entities, and asking the Commission to
continue its efforts to review those Directives.
(3)              
The coordination of national provisions
concerning the presentation and content of annual financial statements and
management reports, the measurement bases, used therein and their publication
in respect of certain undertakings with limited liability is of special
importance for the protection of shareholders, members and third parties.
Simultaneous coordination is necessary in those fields for such forms of
undertaking because, on the one hand, some undertakings operate in more than
one Member State and, on the other hand, they offer no safeguards to third
parties beyond the amounts of their net assets.
(4)              
There is a substantial number of partnerships
and limited partnerships of which all of the fully liable members are
constituted either as public or as private limited liability companies, and
therefore they should be subject to the coordination measures of this Directive.
(5)              
It is necessary, moreover, to establish at a
Union level minimum equivalent legal requirements as regards the extent of the
financial information that should be made available to the public by
undertakings that are in competition with one another.
(6)              
Annual financial statements should give a true
and fair view of an undertaking's assets and liabilities, financial position
and profit or loss. To this end a mandatory layout should be prescribed for the
balance sheet and the profit and loss account and the minimum content of the
notes to the financial statements and the management report should be laid
down. According to the "think-small-first" principle the mandatory  requirements
for small undertakings should  be fully harmonised in legislation. In order to
avoid disproportionate burdens on these entities, Member States should not be
entitled to require the presentation of further information. Member States may however
impose further requirements on medium-sized and large undertakings.. 
(7)              
Small, medium-sized and large undertakings
should be defined and distinguished by reference to total assets, turnover and
the average number of employees, as these items typically provide objective
evidence as to the size of an enterprise. 
(8)              
To ensure the disclosure of comparable and
equivalent information, recognition and measurement principles should include
the going concern, the prudence, and the accrual bases. Set-offs between asset
and liability items and income and expenditure items should not be permitted,
and components of assets and liabilities should be valued separately. The
presentation of items in financial statements should have regard to the
economic reality or commercial substance of the underlying transaction or
arrangement. The principle of materiality should govern recognition,
measurement, presentation and disclosure in the financial statements.
(9)              
Items recognised in the annual financial
statements should be measured on the basis of the principle of purchase price
or production cost to ensure the reliability of information within financial
statements. However, Member States should be authorised to permit or require
undertakings to revalue fixed assets in order that more relevant information
may be provided to the users of financial statements. 
(10)          
The need for comparability of financial
information throughout the Union makes it necessary to require Member States to
allow a system of fair value accounting for certain financial instruments.
Furthermore systems of fair value accounting provide information that can be of
more relevance to the users of financial statements than purchase price /
production cost based information. Accordingly, the Member States should permit
the adoption of a fair value system of accounting by all undertakings or any
classes of undertaking in respect of both the annual and consolidated financial
statements or in respect of consolidated financial statements only.
Furthermore, Member States should be allowed to permit or require fair value
accounting for assets, other than financial instruments. 
(11)          
A single layout for the balance sheet is
necessary to allow users of financial statements to compare the financial
position of undertakings within the Union. However, Member States should be
able to permit or require undertakings to modify the layout and present a
balance sheet distinguishing between current and non-current items. A profit
and loss account layout showing the nature of expenses and a profit and loss
account layout showing the function of expenses should be permitted. Member
States should prescribe the use of one or both of those layouts. Member States
should also be entitled to allow undertakings to present a statement of
performance instead of a profit and loss account prepared in accordance with
one of the permitted layouts. Simplifications from the required layouts should
be made available for small and medium-sized undertakings.
(12)          
For comparability reasons, a common framework
for recognition, measurement and presentation of inter alia value adjustments,
goodwill, provisions, stocks of goods and fungible assets, and income and
expenditure of exceptional size or incidence should be provided.
(13)          
The information presented in the balance sheet
and profit and loss account should be supplemented by disclosures by way of
notes to the financial statements. Users of financial statements typically have
a limited need for supplementary information from small undertakings, and it
can be costly to small undertakings to collate the supplementary information
that needs to be disclosed. A limited disclosure regime for small undertakings
is therefore justified. However where a small undertaking considers that it is
beneficial to provide additional disclosures of the types required by
medium-sized and large undertakings it shall not be prevented from doing so.
(14)          
Users of financial statements prepared by
medium-sized and large undertakings typically have more sophisticated needs.
Therefore, further disclosures should be provided in certain areas. Exemption
from certain of these disclosure obligations should be justified when they
would be prejudicial to certain persons or to the undertaking. 
(15)          
The management report and the consolidated
management report are important elements of financial reporting. A fair review
of the development of the business and of its position should be provided, in a
manner consistent with the size and complexity of the business. The information
should not be restricted to the financial aspects of the undertaking's
business, and there should be an analysis of environmental and social aspects of
the business necessary for an understanding of the undertaking's development,
performance or position. In the cases where the consolidated management report
and the parent undertaking management report are presented in a single report,
it may be appropriate to give greater emphasis to those matters which are
significant to the undertakings included in the consolidation taken as a
whole. However, having regard to the potential burden placed on medium-sized
undertakings, it is appropriate to provide that Member States may choose to
waive the obligation to provide non-financial information in the case of the
management report of such undertakings.
(16)          
Member States should have the possibility of
exempting small undertakings from the obligation to draw up a management report
provided that they include, in the notes to the financial statements, the data
concerning the acquisition of own shares referred to in Article 22(2) of the
Second Council Directive 77/91/EEC of 13 December 1976 on coordination of
safeguards which, for the protection of the interests of members and others,
are required by Member States of companies within the meaning of the second
paragraph of Article 58 of the Treaty, in respect of the formation of public
limited liability companies and the maintenance and alteration of their
capital, with a view to making such safeguards equivalent[26].
(17)          
Given that public interest entities can have a
prominent role in the economies in which they operate, the provisions of this
Directive concerning the corporate governance statement should apply to all
public interest entities. 
(18)          
Many undertakings are members of bodies of
undertakings. Consolidated financial statements should be drawn up so that
financial information concerning such bodies of undertakings may be conveyed to
members and third parties. National law governing consolidated financial
statements should therefore be coordinated in order to achieve the objectives
of comparability and equivalence in the information which undertakings should
publish within the Union.
(19)          
Consolidated financial statements should, in
principle, present the activities of a parent undertaking and its subsidiaries
as a single economic entity (a group); undertakings controlled by the parent
undertaking should be considered as subsidiary undertakings. Control should be
based on holding a majority of voting rights, but control may also exist where
there are agreements with fellow shareholders or members. In certain
circumstances control may be effectively exercised where the parent holds a minority
of shares in the subsidiary. Member States should be entitled to require that
undertakings not subject to a controlling relationship, that are managed on a
unified basis, or have a common administrative, managerial or supervisory body
be included in consolidated financial statements.
(20)          
A subsidiary undertaking which is itself a
parent undertaking should draw up consolidated financial statements.
Nevertheless, Member States should be entitled to exempt such a parent
undertaking in certain circumstances from the obligation to draw up such
consolidated financial statements, provided that its members and third parties
are sufficiently protected.
(21)          
Small groups should be exempt from the
obligation to prepare consolidated financial statements as the users of small
undertakings' financial statements do not have sophisticated information needs
and it can be costly to prepare consolidated financial statements in addition
to the annual financial statements of the parent and subsidiary undertakings.
Member States should be entitled to exempt medium-sized groups from the
obligation to prepare consolidated financial statements on the same
cost/benefit grounds.
(22)          
Consolidation requires the full incorporation of
the assets and liabilities and of the income and expenditure of those
undertakings and the separate disclosure of the non controlling interests in
the consolidated balance sheet within capital and reserves and the separate
disclosure of the non-controlling interests in the profit or loss of the group
in the consolidated profit and loss accounts. However, the necessary
corrections should be made to eliminate the effects of the financial relations
between the undertakings consolidated. In particular, debts and claims between
the undertakings; income and expenditure relating to transactions between the
undertakings; and profits and losses resulting from transactions between the
undertakings, where they are included in the book values of assets, shall be
eliminated from the consolidated financial statements.
(23)          
Recognition and measurement principles
applicable in the preparation of annual financial statements should apply also
to the preparation of consolidated financial statements.
(24)          
Associated undertakings should be included in
consolidated accounts by means of the equity method. Member States should be
entitled permit or require that a jointly managed undertaking be
proportionately consolidated within consolidated financial statements.
(25)          
The consolidated financial statements should
include all the disclosures by way of notes to the financial statements for the
undertakings included in the consolidation taken as a whole. The names,
registered offices and group interest in the undertakings' capital should also
be disclosed in respect of subsidiaries, associated undertakings, jointly
managed undertakings and participating interests.
(26)          
The annual financial statements of all
undertakings to which this Directive applies should be published in accordance
with Directive 2009/101/EC. It is however appropriate to provide that certain
derogations may be granted also in this area for small and medium-sized
undertakings.
(27)          
The Member States are strongly encouraged to
develop electronic publication systems that allow undertakings to file
accounting data, including statutory financial statements, only once and in a
form that allows multiple users to access and use the data easily. Such systems
should, however, not be burdensome to small and medium-sized undertakings.
(28)          
The Members of the administrative, management
and supervisory bodies of an undertaking should, as a minimum requirement, be
collectively responsible towards the undertaking for drawing up and publishing
annual financial statements and management reports. The same approach should
also apply to members of the administrative, management and supervisory bodies
of undertakings drawing up consolidated financial statements. Those bodies act
within the competences assigned to them by national law. This should not
prevent Member States from going further and providing for direct
responsibility towards shareholders or even other stakeholders. 
(29)          
Liability for drawing up and publishing annual
financial statements and consolidated financial statements as well as
management reports and consolidated management reports is based on national
law. Appropriate liability rules, as laid down by each Member State under its
national law, should be applicable to members of the administrative, management
and supervisory bodies. Member States should be permitted to determine the
extent of the liability.
(30)          
In order to promote credible financial reporting
processes across the Union, members of the undertaking body that is responsible
for the preparation of the undertaking's financial reports should have the duty
to ensure that the financial information included in an undertaking's annual
financial statements and annual management reports should give a true and fair
view.
(31)          
The annual financial statements and consolidated
financial statements should be audited. The requirement that an audit opinion
should state whether the annual or consolidated financial statements give a
true and fair view in accordance with the relevant financial reporting
framework does not represent a restriction of the scope of that opinion but
clarifies the context in which it is expressed. The annual financial
statements of small undertakings should not be covered by this audit
obligation, as audit can be a significant administrative burden for this
category of undertaking, whilst for many small undertakings the same persons
are both shareholders and management and therefore have limited need for third
party assurance on the financial statements.
(32)          
In order to provide for enhanced transparency of
payments made to governments, large undertakings and public interest entities
which are active in the extractive industry or logging of primary forests[27] should disclose in a separate report on an annual basis material
payments made to governments in the countries in which they operate. Such
undertakings are active in countries rich in natural resources, in particular minerals,
oil, natural gas as well as primary forests. The report should include types of
payments comparable to those disclosed by an undertaking participating in the
Extractive Industries Transparency Initiative (EITI). The initiative is also
complementary to the EU FLEGT Action Plan (Forest Law Enforcement, Governance
and Trade)[28]
and the Timber Regulation[29] which require traders of timber products to exercise due diligence
in order to prevent illegal wood from entering into the EU market.
(33)          
The reports should serve to facilitate
governments of resource-rich countries in implementing the EITI Principles and
Criteria[30]
and account to their citizens for payments such governments receive from
undertakings active in the extractive industry or loggers of primary forests
operating within their jurisdiction. The report should incorporate disclosures
on a country and project basis, where a project is considered as the lowest
level of operational reporting unit at which the undertaking prepares regular
internal management reports, such as a concession, geographical basin, etc and
where payments have been attributed to such projects. In the light of the
overall objective of promoting good governance in these countries, the
materiality of payments to be reported should be assessed in relation to the
recipient government. Various criteria on materiality could be envisaged such
as payments of an absolute amount, or a percentage threshold (such as payments
in excess of a percentage of a country's GDP) and these can be defined through
a delegated act. The reporting regime should be subject to a review and a
report by the Commission within five years of the entry into force of the
Directive. The review should consider the effectiveness
of the regime and take into account international developments including issues
of competitiveness and energy security. The review should also take into
account the experience of preparers and users of the payments information and consider
whether it would be appropriate to include additional payment information such
as effective tax rates and recipient details, such as bank account information.
(34)          
In line with the conclusions of the G8 Summit in Deauville of May 2011 and in order to promote an
international level-playing-field, the Commission should continue to encourage
all the international partners to introduce similar requirements. The pursuit
of the work on the relevant international accounting standard is particularly
important in this context.
(35)          
In order to take account of future changes to
the laws of the Member States and in the legislation of the Union concerning
company types, the Commission should be empowered to adopt delegated acts in
accordance with Article 290 of the Treaty in respect of updating the lists of
undertakings contained in Annexes I and II. The use of delegated acts is also
necessary to adapt the undertaking size criteria, as with the passage of time
inflation will erode their real value. It is of particular importance that the
Commission carry out appropriate consultations during its preparatory work,
including at expert level. In order to ensure a relevant and appropriate level
of disclosure of payments to governments by the extractive industry and loggers
of primary forests and to ensure uniform application of this Directive, the Commission should be empowered to adopt delegated acts in
accordance with Article 290 of the Treaty in respect of the specification of the concept of materiality of payments. 
(36)          
The Commission, when preparing and drawing up
delegated acts, should ensure a simultaneous, timely and appropriate
transmission of relevant documents to the European Parliament and to the
Council.
(37)          
Since the objectives of this Directive, namely
facilitating cross-border investments and improving Union-wide comparability
and public confidence in financial statements and reports through enhanced and
consistent specific disclosures, cannot be sufficiently achieved by the Member
States and can therefore, by reason of the scale and the effects of this
Directive, be better achieved at Union level, the Union may adopt measures, in
accordance with the principle of subsidiarity as set out in Article 5 of the
Treaty on European Union. In accordance with the principle of proportionality,
as set out in that Article, this Directive does not go beyond what is necessary
in order to achieve those objectives.
(38)          
This Directive respects the fundamental rights
and observes the principles recognised in particular by the Charter of the
Fundamental Rights of the European Union,
HAVE ADOPTED THIS DIRECTIVE:
Chapter I
Scope, definitions and categoriesof undertakings
Article 1
Scope
1.                      
The coordination measures prescribed by this
Directive shall apply to:
(a)         
the laws, regulations and administrative
provisions of the Member States relating to the types of undertakings listed in
Annex I;
(b)         
the laws, regulations and administrative
provisions of the Member States relating to the types of undertaking listed in
Annex II where all members having unlimited liability are undertakings of the
types listed in Annex I or undertakings which are not governed by the laws of a
Member State but which have a legal form comparable to those listed in Article
1 of Directive 2009/101/EC;
(c)         
the types of undertakings listed in Annex II
where all members having unlimited liability are:
(i)      undertakings of the types listed in
Annex I or undertakings which are not governed by the laws of a Member State
but which have a legal form comparable to those listed in Article 1 of
Directive 2009/101/EC or 
(ii)      undertakings of the types listed in
Annex II where all members having unlimited liability are themselves
undertakings of the type set out in Annex I or undertakings which are not
governed by the laws of a Member State but which have a legal form comparable
to those listed in Article 1 of Directive 2009/101/EC.
2.           The Commission shall be
empowered to adapt, by means of delegated acts in accordance with Article 42,
the lists of undertakings contained in Annexes I and II referred to in
paragraph 1.
Article 2
Definitions
For the purposes of this Directive, the following
definitions shall apply:
(1)          ‘Public interest entities’ means
entities governed by the law of a Member State as defined in point (13) of
Article 2 of Directive 2006/43/EC[31];
(2)          ‘Participating interest’ means
rights in the capital of other undertakings, whether or not represented by
certificates, which, by creating a durable link with those undertakings, are
intended to contribute to the activities of the undertaking which holds these
rights; The holding of part of the capital of another undertaking is presumed
to constitute a participating interest where it exceeds a percentage fixed by
the Member States which is lower or equal to 20%;
(3)          'Related party’ shall have the
same meaning as in international accounting standard 24 adopted by Regulation
(EC) No 1126/2008;
(4)          'Fixed assets' means those assets
which are intended for use on a continuing basis for the purposes of the
undertaking's activities;
(5)          'Net turnover' means the amounts
derived from the sale of products and the provision of services after deducting
sales rebates and value added tax and other taxes directly linked to turnover;
(6)          'Purchase price' means the price
payable and any incidental expenses thereto.
(7)          'Production cost' means the
purchase price of raw materials, consumables and other costs directly
attributable to the item in question. A reasonable proportion of other costs
indirectly attributable to the item in question may be included to the extent
that they relate to the period of production. Distribution costs shall not be included;
(8)          'Value adjustment' means the
adjustments intended to take account of reductions in the values of individual
assets established at the balance sheet date whether the reduction is final or
not;
(9)          'Parent undertaking' means an
undertaking which controls one or more subsidiary undertakings;
(10)        'Subsidiary undertaking' means an
undertaking which is controlled by a parent undertaking;
(11)        A group' means a parent
undertaking and all its subsidiary undertakings included in a consolidation;
(12)        "Affiliated
undertakings" means any two or more undertakings connected to one another
within a group;
(13)        'Associated undertaking' means an
undertaking in which another undertaking has a participating interest and over
whose operating and financial policies the other undertaking exercises
significant influence. An undertaking is presumed to exercise a significant
influence over another undertaking where it has 20% or more of the
shareholders' or members' voting rights in that undertaking;
Article 3
Categories
of undertakings and groups
1.                      
Small undertakings shall be undertakings which
on their balance sheet dates do not exceed the limits of two of the three
following criteria:
(a)          
balance sheet total: EUR 5 000 000;
(b)         
net turnover: EUR 10 000 000;
(c)          
average number of employees during the financial
year: 50
2.                      
Medium-sized undertakings shall be undertakings
which are not small undertakings and on their balance sheet dates do not exceed
the limits of two of the three following criteria: 
(a)          
balance sheet total: EUR 20 000 000;
(b)         
net turnover: EUR 40 000 000;,
(c)          
average number of employees during the financial
year: 250.
3.                      
Large undertakings shall be undertakings which
on their balance sheet dates exceed two of the three following criteria:
(a)          
balance sheet total: EUR 20 000 000;
(b)         
net turnover: EUR 40 000 000;
(c)          
average number of employees during the financial
year: 250.
4.                      
Small groups shall be parent and subsidiary
undertakings which on a consolidated basis do not exceed the limits of two of
the three following criteria on the balance sheet date of the parent
undertaking:
(a)          
balance sheet total: EUR 5 000 000;
(b)         
net turnover: EUR 10 000
000;
(c)          
average number of employees during the financial
year: 50.
5.                      
Medium-sized groups shall be parent and
subsidiary undertakings which are not small groups and on a consolidated basis
do not exceed the limits of two of the three following criteria on the balance
sheet date of the parent undertaking:
(a)          
balance sheet total: EUR 20 000 000;
(b)         
net turnover: EUR 40 000
000;
(c)          
average number of employees during the financial
year: 250.
6.                      
Member States shall permit that the set-off
referred to in Article 25(3) first sub-paragraph and the elimination referred
to in Article 25(7) not be effected when the limits in paragraphs 4 and 5 of
this Article are calculated. In such cases, the limits for the balance sheet
total and net turnover criteria shall be increased by 20 %.
7.                      
In the case of those Member States which have
not adopted the euro, the amount in national currency equivalent to the amounts
set out in paragraphs 1 to 5 shall be that obtained by applying the exchange
rate published in the Official Journal of the European Union on the date
of the entry into force of any Directive setting those
amounts. 
8.                      
Where on its balance sheet date, an undertaking
exceeds or ceases to exceed the limits of two of the three criteria set out in
paragraphs 1 to 5, that fact shall affect the application of the derogations
provided for in this Directive only if it occurs in two consecutive financial
years.
9.                      
The balance sheet total referred to in
paragraphs 1 to 5 of this Article shall consist of the assets in A to D under
‘Assets’ in the layout prescribed in Article 9.
10.                  
In order to adjust for the effects of inflation,
the Commission shall examine periodically and, where necessary, amend, by means
of delegated acts in accordance with Article 42, the definitions referred to in
paragraphs 1 to 5 of this Article, taking into account measures of inflation as
published in the Official Journal of the European Union
CHAPTER 2
General provisions and principles
Article 4
General
provisions
1.                      
The annual financial statements shall constitute
a composite whole and shall for all undertakings comprise, as a minimum, the
balance sheet, the profit and loss account and the notes to the financial
statements.
Member States may require undertakings other
than small undertakings to include other statements in the annual financial
statements in addition to the documents referred to in the first subparagraph.
2.                      
The annual financial statements shall be drawn
up clearly and in accordance with the provisions of this Directive.
3.                      
The annual financial statements shall give a
true and fair view of the undertaking's assets, liabilities, financial position
and profit or loss. Where the application of the provisions of this Directive
would not be sufficient to give a true and fair view of the undertaking's
assets, liabilities, financial position and profit or loss, additional
information shall be given.
4.                      
Where in exceptional cases the application of a
provision of this Directive is incompatible with the obligation laid down in
paragraph 3, that provision shall be departed from in order to give a true and
fair view of the undertaking's assets, liabilities, financial position and
profit or loss. Any such departure shall be disclosed in the notes to the
financial statements together with an explanation of the reasons for it and a
statement of its effect on the assets, liabilities, financial position and profit
or loss.
5.                      
Member States may require undertakings other
than small undertakings to disclose information in their annual financial
statements which is additional to that required to be disclosed in accordance
with this Directive.
Article 5
General
Financial Reporting Principles
1.                      
Items presented in the annual financial
statements shall be recognised and measured in accordance with the following
general principles:
(a)         
the undertaking shall be presumed to be carrying
on its business as a going concern
(b)         
accounting policies and valuation bases shall be
applied consistently from one financial year to another;
(c)         
recognition and measurement shall be on a
prudent basis, and in particular:
         (i) only profits made at the balance
sheet date may be recognised,
         (ii) all liabilities arising in the
course of the financial year concerned or of a previous one shall be
recognised, even if such liabilities become apparent only between the date of
the balance sheet and the date on which it is drawn up,
         (iii) all depreciation shall be recognised,
whether the result of the financial year is a loss or a profit;
(d)         
amounts recognised in the balance sheet and
profit and loss account shall be computed on the accrual basis;
(e)         
the opening balance sheet for each financial
year shall reconcile to the closing balance sheet for the preceding financial
year;
(f)           
the components of asset and liability items
shall be valued separately;
(g)         
any set-off between asset and liability items,
or between income and expenditure items, shall be prohibited;
(h)         
items in the profit and loss account and balance
sheet shall be presented having regard to the substance of the reported
transaction or arrangement;
(i)           
items recognised in the financial statements
shall be measured in accordance with the principle of purchase price or
production cost;
(j)           
recognition, measurement, presentation, and
disclosure in annual financial statements shall have regard to the materiality
of the relevant items.
2.                      
In addition to those amounts recognised pursuant
to paragraph 1(c)(ii), Member States may permit or require recognition of all
foreseeable liabilities and potential losses arising in the course of the
financial year concerned or of a previous one, even if such liabilities or
losses become apparent only between the date of the balance sheet and the date
on which it is drawn up.
3.                      
Departures from these general principles shall
be permitted in exceptional cases in order to give a true and fair view of the
undertaking's assets, liabilities, financial position and profit or loss. Any
such departures shall be disclosed in the notes to the financial statements and
the reasons for them shall be given together with an assessment of their effect
on the assets, liabilities, financial position, and profit or loss.
Article 6
Alternative
measurement basis of fixed assets at revalued amounts
1.                      
By way of derogation from Article 5(1)(i),
Member States may permit or require in respect of all undertakings or any
classes of undertaking measurement of fixed assets at revalued amounts. Where
national law provides for such measurement, it shall define its content and
limits and the rules for its application.
2.           Where paragraph 1 is
applied, the amount of the difference between measurement on a purchase price
or production cost basis and measurement on a revaluation basis shall be
entered in the revaluation reserve under 'Capital and reserves'.
The revaluation reserve may be capitalized in
whole or in part at any time.
The revaluation reserve shall be reduced where
the amounts transferred thereto are no longer necessary for the implementation
of the revaluation basis of accounting. The Member States may lay down rules
governing the application of the revaluation reserve, provided that transfers
to the profit and loss account from the revaluation reserve may be made only
where the amounts transferred have been entered as an expense in the profit and
loss account or reflect increases in value which have actually been realised.
No part of the revaluation reserve may be distributed, either directly or
indirectly, unless it represents a gain actually realised.
Save as provided under the second and third
sub-paragraphs of this paragraph the revaluation reserve may not be reduced.
3.           Value adjustments shall be
calculated each year on the basis of the revalued amount. However, by way of
derogation from Articles 8 and 12, Member States may permit or require that
only the amount of the value adjustments arising as a result of the purchase
price or production cost measurement basis be shown under the relevant items in
the layouts prescribed in Articles 13 and 14 and that the difference arising as
a result of the measurement on a revaluation basis under this Article be shown
separately in the layouts.
Article 7
Alternative
measurement basis of fair value
1.           By way of derogation from
Article 5(1)(i) and subject to the conditions set out in this Article:
(a)         
Member States shall permit or require in respect
of all undertakings or any classes of undertaking measurement of financial
instruments, including derivative financial instruments, at fair value. 
(b)         
Member States may permit or require in respect
of all undertakings or any classes of undertaking measurement of specified
categories of assets other than financial instruments at amounts determined by
reference to fair value.
Such permission or requirement may be restricted
to consolidated financial statements.
2.                      
For the purpose of this Directive,
commodity-based contracts that give either contracting party the right to
settle in cash or some other financial instrument shall be considered to be
derivative financial instruments, except when the following conditions are
complied with:
(a)         
they were entered into and continue to meet the
undertaking's expected purchase, sale or usage requirements;
(b)         
they were designated as commodity-based
contracts at their inception; 
(c)         
they are expected to be settled by delivery of
the commodity.
3.                      
Paragraph 1(a) shall apply only to the following
liabilities:
(a)         
liabilities held as part of a trading portfolio;

(b)         
derivative financial instruments.
4.                      
Measurement according to paragraph 1(a) shall
not apply to the following:
(a)         
non-derivative financial instruments held to
maturity;
(b)         
loans and receivables originated by the
undertaking and not held for trading purposes; 
(c)         
interests in subsidiaries, associated
undertakings and joint ventures, equity instruments issued by the undertaking,
contracts for contingent consideration in a business combination as well as
other financial instruments with such special characteristics that the
instruments, according to what is generally accepted, shall be accounted for
differently from other financial instruments.
5.                      
By way of derogation from Article 5(1)(i),
Member States may in respect of any assets and liabilities which qualify as
hedged items under a fair value hedge accounting system, or identified portions
of such assets or liabilities, permit measurement at the specific amount
required under that system.
6.                      
By way of derogation from paragraphs 3 and 4 of
this Article, Member States may permit or require the recognition, measurement
and disclosure of financial instruments in conformity with international
accounting standards adopted in accordance with Regulation (EC) No 1606/2002.
7.                      
The fair value within the meaning of this
Article shall be determined by reference to one of the following values:
(a)         
a market value, for those financial instruments
for which a reliable market can readily be identified. Where a market value is
not readily identifiable for an instrument but can be identified for its
components or for a similar instrument, the market value may be derived from
that of its components or of the similar instrument; 
(b)         
a value resulting from generally accepted
valuation models and techniques, for those instruments for which a reliable
market cannot be readily identified. Such valuation models and techniques shall
ensure a reasonable approximation of the market value.
Financial instruments that cannot be measured
reliably by any of the methods described in points (a) and (b), shall be
measured in accordance with the principle ofpurchase price or production cost. 
8.                      
Notwithstanding Article 5(1)(c), where a
financial instrument is measured at fair value, a change in value shall be
included in the profit and loss account. However, such a change shall be
included directly in a fair value reserve, where:
(a)         
the instrument accounted for is a hedging instrument
under a system of hedge accounting that allows some or all of the change in
value not to be shown in the profit and loss account; or
(b)         
the change in value relates to an exchange
difference arising on a monetary item that forms part of an undertaking's net
investment in a foreign entity.
Member States may permit or require a change in
the value of an available for sale financial asset, other than a derivative
financial instrument, to be included directly in the fair value reserve. The
fair value reserve shall be adjusted when amounts shown therein are no longer
necessary for the implementation of points (a) and (b).
9.                      
Notwithstanding Article 5(1)(c), Member States
may permit or require in respect of all undertakings or any classes of
undertaking that, where assets other than financial instruments are measured at
fair value, a change in the value shall be included in the profit and loss
account.
CHAPTER 3
BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
Article 8
General
provisions concerning the balance sheet and the profit and loss account
1.                      
The layout of the balance sheet and of the
profit and loss account, shall not be changed from one financial year to the
next. Departures from this principle shall be permitted in exceptional cases in
order to give a true and fair view of the undertaking's assets, liabilities,
financial position and profit or loss. Any such departure shall be disclosed in
the notes to the financial statements together with an explanation of the
reasons therefor.
2.                      
In the balance sheet and in the profit and loss
account the items prescribed in Articles 9, 13 and 14 shall be shown separately
in the order indicated. A more detailed subdivision of the items shall be
authorized provided that the layouts are complied with. New items may be added
provided that their contents are not covered by any of the items prescribed by
the layouts. The Member States may require such subdivision or new items. 
3.                      
The layout, nomenclature and terminology of
items in the balance sheet and profit and loss account that are preceded by
Arabic numerals shall be adapted where the special nature of an undertaking so
requires. The Member States may require such adaptations for undertakings which
form part of a particular economic sector.
4.                      
In respect of each balance sheet and profit and
loss account item the figure relating to the corresponding item for the
preceding financial year shall be shown. Any case of non-comparability or any
adjustment of the figures shall be disclosed, with explanations, in the notes
to the financial statements.
5.                      
Member States may permit or require adaptation
of the layout of the balance sheet and profit and loss account in order to
include the appropriation of profit or the treatment of loss.
6.                      
In respect of an associated undertaking:
(a)         
Member States may permit or require an
associated undertaking to be accounted for in annual financial statements using
the equity method as provided for in Article 27(2) to (8), taking account of
the essential adjustments resulting from the particular characteristics of
annual financial statements as compared to consolidated financial statements.
(b)         
Member States may permit or require that the
proportion of the profit or loss attributable to the associated undertaking be
recognised in the profit and loss account only to the extent of the amount
corresponding to dividends already received or the payment of which can be
claimed.
(c)         
Where the profit or loss attributable to the
associated undertaking recognised in the profit and loss account exceeds the
amount of dividends already received or the payment of which can be claimed,
the amount of the difference shall be placed in a reserve which cannot be
distributed to shareholders.
Article 9
Layout of
the balance sheet
For the presentation of the balance sheet
the Member States shall prescribe the layout below:
Assets
A. Subscribed capital unpaid
of which there has been called
(unless national law provides that
called-up capital be shown under ‘capital and reserves’. In that case, the part
of the capital called but not yet paid shall appear as an asset either under A
or under C (II) (5)).
B. Fixed
assets
I. Intangible assets
1.                      
Costs of research and development, in so far as
national law permits their being shown as assets.
2.                      
Concessions, patents, licences, trade marks and
similar rights and assets, if they were:
(a)         
acquired for valuable consideration and need not
be shown under B (I) (3); or
(b)         
created by the undertaking itself, in so far as
national law permits their being shown as assets.
3.                      
Goodwill, to the extent that it was acquired for
valuable consideration.
4.                      
Payments on account.
II. Tangible assets
1.                      
Land and buildings.
2.                      
Plant and machinery.
3.                      
Other fixtures and fittings, tools and
equipment.
4.                      
Payments on account and tangible assets in
course of construction.
III. Financial assets
1.                      
Shares in affiliated undertakings.
2.                      
Loans to affiliated undertakings.
3.                      
Participating interests.
4.                      
Loans to undertakings with which the undertaking
is linked by virtue of participating interests.
5.                      
Investments held as fixed assets.
6.                      
Other loans.
7.                      
Own shares (with an indication of their nominal
value or, in the absence of a nominal value, their accounting par value) to the
extent that national law permits their being shown in the balance sheet.
C. Current
assets
I. Stocks
1.                      
Raw materials and consumables.
2.                      
Work in progress.
3.                      
Finished goods and goods for resale.
4.                      
Payments on account.
II. Debtors
(Amounts becoming due and payable after
more than one year shall be shown separately for each item.)
1.                      
Trade debtors.
2.                      
Amounts owed by affiliated undertakings.
3.                      
Amounts owed by undertakings with which the
undertaking is linked by virtue of participating interests.
4.                      
Other debtors.
5.                      
Subscribed capital called but not paid (unless
national law provides that called-up capital be shown as an asset under A).
6.                      
Prepayments and accrued income (unless national
law provides for such items to be shown as an asset under D).
III. Investments
1.                      
Shares in affiliated undertakings.
2.                      
Own shares (with an indication of their nominal
value or, in the absence of a nominal value, their accounting par value) to the
extent that national law permits their being shown in the balance sheet.
3.                      
Other investments.
IV. Cash at bank and in hand
D. Prepayments and accrued income
(unless national law provides for such
items to be shown as an asset under C (II) (6)).
Capital, reserves and liabilities
A. Capital and reserves
I. Subscribed capital
(unless national law provides for called-up
capital to be shown under this item. In that case, the amounts of subscribed
capital and paid-up capital shall be shown separately).
II. Share premium account
III. Revaluation reserve
IV. Reserves
1.                      
Legal reserve, in so far as national law
requires such a reserve.
2.                      
Reserve for own shares, in so far as national
law requires such a reserve, without prejudice to Article 22(1)(b) of Directive
77/91/EEC.
3.                      
Reserves provided for by the articles of
association.
4.                      
Other reserves, including the fair value
reserve.
V. Profit or loss brought forward
VI. Profit or loss for the financial year
B. Provisions
1.                      
Provisions for pensions and similar obligations.
2.                      
Provisions for taxation.
3.                      
Other provisions.
C. Creditors
(Amounts becoming due and payable within
one year and amounts becoming due and payable after more than one year shall be
shown separately for each item and for the aggregate of these items.)
1.                      
Debenture loans, showing convertible loans
separately.
2.                      
Amounts owed to credit institutions.
3.                      
Payments received on account of orders in so far
as they are not shown separately as deductions from stocks.
4.                      
Trade creditors.
5.                      
Bills of exchange payable.
6.                      
Amounts owed to affiliated undertakings.
7.                      
Amounts owed to undertakings with which the
undertaking is linked by virtue of participating interests.
8.                      
Other creditors including tax and social
security.
9.                      
Accruals and deferred income (unless national
law provides for such items to be shown under D under ‘Accruals and deferred
income’).
D. Accruals and deferred income
(unless national law provides for such
items to be shown under C (9) under ‘Creditors’).
Article 10
Alternative
presentation of the balance sheet
Member States may permit or require
undertakings, or certain classes of undertaking, to present items on the basis
of a distinction between current and non-current items in a different layout
than that prescribed in Article 9, provided that the information given is at
least equivalent to that otherwise required by Article 9.
Article 11
Special
provisions relating to certain balance sheet items
1.                      
Where an asset or liability relates to more than
one layout item, its relationship to other items shall be disclosed either
under the item where it appears or in the notes to the financial statements.
2.                      
Own shares and shares in affiliated undertakings
shall be shown only under the items prescribed for that purpose.
3.                      
Whether particular assets are to be shown as
fixed assets or current assets shall depend upon the purpose for which they are
intended.
4.                      
Rights to immovables and other similar rights as
defined by national law shall be shown under ‘Land and buildings’.
5.                      
The purchase price or production cost of fixed
assets with limited useful economic lives shall be reduced by value adjustments
calculated to write off the value of such assets systematically over their
useful economic lives, subject to the following:
(a)         
 value adjustments may be made in respect of
financial fixed assets, so that they are valued at the lower figure to be
attributed to them at the balance sheet date;
(b)         
 value adjustments shall be made in respect of
fixed assets, whether their useful economic lives are limited or not, so that
they are valued at the lower figure to be attributed to them at the balance
sheet date if it is expected that the reduction in their value will be
permanent;
(c)         
 the value adjustments referred to in points (a)
and (b) shall be charged to the profit and loss account and disclosed
separately in the notes to the financial statements if they have not been shown
separately in the profit and loss account;
(d)         
 valuation at the lower of the values provided
for in points (a) and (b) may not be continued if the reasons for which the
value adjustments were made have ceased to apply. This provision shall not
apply to value adjustments made in respect of goodwill.
6.                      
Value adjustments shall be made in respect of
current assets with a view to showing them at the lower market value or, in
particular circumstances, another lower value to be attributed to them at the
balance sheet date.
Valuation at the lower value provided for in
the first subparagraph may not be continued if the reasons for which the value
adjustments were made no longer apply.
7.                      
Interest on capital borrowed to finance the
production of fixed or current assets may be included within production costs
to the extent that it relates to the period of production. Any application of
this provision shall be disclosed in the notes to the financial statements.
8.                      
Member States may permit the purchase price or
production cost of stocks of goods of the same category and all fungible items
including investments to be calculated either on the basis of weighted average
prices or on the basis of the ‘first in, first out’ (FIFO) method, or a similar
method.
9.                      
Where national law authorizes the inclusion of
costs of research and development under ‘Assets’, they shall be written off
within a maximum period of five years. In so far as the costs of research and
development have not been completely written off, no distribution of profits
shall take place unless the amount of the reserves available for distribution
and profits brought forward is at least equal to that of the costs not written
off.
In exceptional cases the Member States may
permit derogations from the provisions of the preceding subparagraph. Such
derogations and the reasons for them shall be disclosed in the notes to the
financial statements.
10.                  
Goodwill shall be written off systematically
over its useful life. Where its useful life cannot be reliably estimated it shall
be written off within a maximum period of 5 years. An explanation of the
period(s) over which goodwill is written off shall be provided within the notes
to the financial statements.
11.                  
Provisions shall cover liabilities the nature of
which is clearly defined and which at the balance sheet date are either likely
to be incurred, or certain to be incurred but uncertain as to amount or as to
the date on which they will arise.
The Member States may also authorize the
creation of provisions intended to cover expenses the nature of which is
clearly defined and which at the date of the balance sheet are either likely to
be incurred, or certain to be incurred but uncertain as to amount or as to the
date on which they will arise.
A provision shall represent the best estimate
of the expenses likely to be incurred, or in the case of a liability, the
amount required to settle it at the balance sheet date.
Article 12
Layout of
the profit and loss account
1.                      
For the presentation of the profit and loss
account, the Member States shall prescribe one or both of the layouts provided
for in Articles 13 and 14. If a Member State prescribes both layouts, it may
allow undertakings to choose the layout.
2.                      
By way of derogation from Article 4(1), Member
States may permit or require all undertakings, or any classes of undertaking,
to present a statement of their performance instead of the presentation of
profit and loss items in accordance with Articles 13 and 14, provided that the
information given is at least equivalent to that otherwise required by Articles
13 and 14.
Article 13
Layout of
the profit and loss account – by nature of expense
1.                      
Net turnover.
2.                      
Variation in stocks of finished goods and in
work in progress.
3.                      
Work performed by the undertaking for its own
purposes and capitalized.
4.                      
Other operating income.
5.           (a)     Raw materials and
consumables.
(b)     Other external expenses.
5.                      
Staff costs:
(a)         
wages and salaries;
(b)         
 social security costs, with a separate
indication of those relating to pensions.
7.           (a)     Value adjustments
in respect of tangible and intangible fixed assets.
              (b)     Value adjustments
in respect of current assets, to the extent that they exceed the amount of
value adjustments which are normal in the undertaking concerned.
8.                      
Other operating expenses.
9.                      
Income from participating interests, with a separate
indication of that derived from affiliated undertakings.
10.                  
Income from other investments and loans forming
part of the fixed assets, with a separate indication of that derived from
affiliated undertakings.
11.                  
Other interest receivable and similar income,
with a separate indication of that derived from affiliated undertakings.
12.                  
Value adjustments in respect of financial assets
and of investments held as current assets.
13.                  
Interest payable and similar expenses, with a
separate indication of amounts payable to affiliated undertakings.
14.                  
Tax on profit or loss.
15.                  
Profit or loss after taxation.
16.                  
Other taxes not shown under the items 1 to 15.
17.                  
Profit or loss for the financial year.
Article 14
Layout of
the profit and loss account – by function of expense
1.                      
Net turnover.
2.                      
Cost of sales (including value adjustments).
3.                      
Gross profit or loss.
4.                      
Distribution costs (including value
adjustments).
5.                      
Administrative expenses (including value
adjustments).
6.                      
Other operating income.
7.                      
Income from participating interests, with a
separate indication of that derived from affiliated undertakings.
8.                      
Income from other investments and loans forming
part of the fixed assets, with a separate indication of that derived from
affiliated undertakings.
9.                      
Other interest receivable and similar income
with a separate indication of that derived from affiliated undertakings.
10.                  
Value adjustments in respect of financial assets
and of investments held as current assets.
11.                  
Interest payable and similar expenses, with a
separate indication of amounts payable to affiliated undertakings.
12.                  
Tax on profit or loss.
13.                  
Profit or loss after taxation.
14.                  
Other taxes not shown under the items 1 to 13.
15.                  
Profit or loss for the financial year.
Article 15
Special
provision relating to the profit and loss account
Where individual items of income or expense
are of exceptional size or incidence, an undertaking shall disclose them
separately in the profit and loss account and shall provide explanations of
their amount and nature in the notes to the financial statements.
Article 16
Simplifications
for small and medium-sized undertakings
1.                      
Member States shall permit small undertakings to draw up abridged balance sheets showing only those items preceded
by letters and roman numerals in Article 9, disclosing separately the
information required in brackets in C (II) under ‘Assets’ and C under ‘Capital,
reserves and liabilities’, but in total for each.
2.                      
Member States shall permit small and
medium-sized undertakings to draw up abridged profit and loss accounts within
the following limits:
(a)         
in Article 13, items 1 to 5 may be combined
under one item called ‘Gross profit or loss’;
(b)         
in Article 14, items 1, 2, 3 and 6 may be
combined under one item called ‘Gross profit or loss’.
CHAPTER 4
Notes to the financial statements
Article 17
Content of
the notes to the financial statements relating to all undertakings
1.           In the notes to the
financial statements all undertakings shall, in addition to any other
information required under other provisions of this Directive, at least
disclose information in respect of the following matters:
(a)         
accounting policies adopted, in particular the
measurement basis applied to the various items in the annual financial
statements;
(b)         
where fixed assets are measured at revalued
amounts a table showing movements in the revaluation reserve in the financial
year, with an explanation of the tax treatment of items therein; the carrying
amount in the balance sheet that would have been recognised had the fixed
assets not been revalued.
(c)         
Where financial instruments are measured at fair
value, the following shall be disclosed:
(i)      the significant assumptions
underlying the valuation models and techniques where fair values have been
determined in accordance with Article 7(7)(b);
(ii)      per category of financial
instruments, the fair value, the changes in value included directly in the
profit and loss account as well as changes included in the fair value reserve;
(iii)     for each class of derivative
financial instruments, information about the extent and the nature of the
instruments, including significant terms and conditions that may affect the
amount, timing and certainty of future cash flows; 
(iv)     a table showing movements in the fair
value reserve during the financial year.
(d)         
the total amount of any financial commitments,
guarantees or contingencies that are not included in the balance sheet, and an
indication of the nature and form of any valuable security which has been
provided; any commitments concerning pensions and affiliated or associated
undertakings shall be disclosed separately;
(e)         
the nature and business purpose of the
undertaking's arrangements that are not included in the balance sheet and the
financial impact on the undertaking of those arrangements;
(f)           
the nature of material events arising after the
end of the year which are not reflected in the profit and loss account or
balance sheet, and the financial effect of those events.
(g)         
amounts owed by the undertaking becoming due and
payable after more than five years as well as the undertaking's entire debts
covered by valuable security furnished by the undertaking with an indication of
the nature and form of the security;
(h)         
transactions which have been entered into with
related parties by the undertaking, including the amount of such transactions,
the nature of the related party relationship and other information about the
transactions necessary for an understanding of the financial position of the
undertaking, if such transactions have not been concluded under normal market
conditions. Information about individual transactions may be aggregated
according to their nature except where separate information is necessary for an
understanding of the effects of related party transactions on the financial
position of the undertaking.
2.                      
Member States shall not require further
disclosure for small undertakings beyond what is required by this Article.
3.                      
Where notes to the balance sheet and profit and
loss account are presented in accordance with this Chapter, the notes shall be
presented following the order that items are presented in the balance sheet and
profit and loss account.
Article 18
Additional
disclosures for medium-sized and large undertakings and public interest
entities
1.                      
In the notes to the financial statements
medium-sized and large undertakings and public interest entities shall, in addition
to the information required under Article 17 and any other provisions of this
Directive, set out information in respect of the following matters:
(a)         
For the various fixed asset items:
(i)      the purchase price or production
cost, or where an alternative basis of measurement has been followed, the fair
value or revalued amount at the beginning and end of the financial year;
(ii)      additions, disposals and transfers
during the financial year;
(iii)     the accumulated value adjustments at
the beginning and end of the financial year;
(iv)     value adjustments charged during the
financial year;
(v)     Movements in accumulated value
adjustments in respect of additions, disposals and transfers during the
financial year.
(vi)     Where interest is capitalised in
accordance with Article 11(7), the amount capitalised during the year.
(b)         
if fixed or current assets are the subject of
value adjustments for taxation purposes alone, the amount of the adjustments
and the reasons for making them;
(c)         
Where financial instruments are measured at purchase
price or production cost:
(i)      for each class of derivative
financial instrument:
–              
the fair value of the instruments, if such a
value can be determined by any of the methods prescribed in Article 7(7)(a);
–              
information about the extent and the nature of
the instruments; 
(ii)      for financial fixed assets carried
at an amount in excess of their fair value:
–              
the book value and the fair value of either the
individual assets or appropriate groupings of those individual assets;
–              
the reasons for not reducing the book value,
including the nature of the evidence that provides the basis for the assumption
that the book value will be recovered;
(d)         
the amount of the emoluments granted in respect
of the financial year to the members of the administrative, managerial and supervisory
bodies by reason of their responsibilities, and any commitments arising or
entered into in respect of retirement pensions for former members of those
bodies, with an indication of the total for each category.
Member States may waive the requirement to
provide that information where it makes it possible to identify the position of
a specific member of such a body;
(e)         
the amount of advances and credits granted to
the members of the administrative, managerial and supervisory bodies, with
indications of the interest rates, main conditions and any amounts repaid or
written off or waived, as well as commitments entered into on their behalf by
way of guarantees of any kind, with an indication of the total for each
category;
(f)           
the average number of persons employed during
the financial year, broken down by categories and, if they are not disclosed
separately in the profit and loss account, the staff costs relating to the
financial year, broken down between wages and salaries, social security costs
and pension costs;
(g)         
the deferred tax balances at the end of the
financial year, and the movement therein during the financial year;
(h)         
the name and registered office of each of the
undertakings in which the undertaking, either itself or through a person acting
in his own name but on the undertaking's behalf, holds a participating
interest, showing the proportion of the capital held, the amount of capital and
reserves, and the profit or loss for the latest financial year of the
undertaking concerned for which financial statements have been adopted; the
information concerning capital and reserves and the profit or loss may be
omitted where the undertaking concerned does not publish its balance sheet and
it is not controlled by the undertaking.
Member States may allow the information
required to be disclosed by the first subparagraph above to take the form of a
statement deposited in accordance with Article 3(1) and (3) of Directive
2009/101/EC; the depositing of such a statement shall be disclosed in the notes
to the financial statements. Member States may also allow that information to
be omitted when its nature is such that it would be seriously prejudicial to
any of the undertakings to which it relates. The Member States may make such
omissions subject to prior administrative or judicial authorization. Any such
omission shall be disclosed in the notes to the financial statements;
(i)           
the number and the nominal value or, in the
absence of a nominal value, the accounting par value of the shares subscribed
during the financial year within the limits of an authorized capital, without
prejudice as far as the amount of this capital is concerned to Article 2(1)(e)
of Directive 2009/101/EC or to Article 2(c) of Directive 77/91/EEC;
(j)           
where there is more than one class of shares,
the number and the nominal value or, in the absence of a nominal value, the
accounting par value for each class;
(k)         
the existence of any participation certificates,
convertible debentures, warrants, options or similar securities or rights, with
an indication of their number and the rights they confer;
(l)           
the name, the head or registered office and the
legal form of each of the undertakings of which the undertaking or firm is a
member having unlimited liability.
(m)       
the name and registered office of the
undertaking which draws up the consolidated financial statements of the largest
body of undertakings of which the undertaking forms part as a subsidiary
undertaking;
(n)         
the name and registered office of the
undertaking which draws up the consolidated financial statements of the
smallest body of undertakings of which the undertaking forms part as a
subsidiary undertaking and which is also included in the body of undertakings
referred to in point (m);
(o)         
the place where copies of the consolidated
financial statements referred to in points (m) and (n) may be obtained provided
that they are available;
(p)         
the proposed appropriation of the profit or
treatment of the loss;
(q)         
the appropriation of the profit or treatment of
the loss.
2.                      
Member States shall not be required to apply
point (h) to an undertaking governed by their national laws which is a parent
undertaking in the following cases:
(a)         
where the undertaking concerned is included in
consolidated financial statements drawn up by that parent undertaking, or in
the consolidated financial statements of a larger body of undertakings as
referred to in Article 24(5); 
(b)         
where the holdings in the undertaking concerned
have been dealt with by the parent undertaking in its annual financial
statements in accordance with Article 8(6), or in the consolidated financial
statements drawn up by that parent undertaking in accordance with Article 27(1)
to (8).
Article 19
Additional
disclosures for large undertakings and public interest entities
1.                      
In the notes to the financial statements large
undertakings and public interest entities shall, in addition to the information
required under Articles 17 and 18 and any other provisions of this Directive,
disclose information in respect of the following matters:
(a)         
the net turnover broken down by categories of
activity and into geographical markets in so far as these categories and
markets differ substantially from one another, taking account of the manner in
which the sale of products and the provision of services are organized; 
(b)         
the total fees for the financial year charged by
the statutory auditor or audit firm for the statutory audit of the annual
financial statements, and the total fees charged by the statutory auditor or
audit firm for other assurance services, for tax advisory services and for
other non-audit services.
2.                      
Member States may allow the information referred
to in paragraph 1(a) to be omitted where the disclosure of that information
would be seriously prejudicial to the undertaking. Member States may make such
omissions subject to prior administrative or judicial authorization. Any such
omission shall be disclosed in the notes to the financial statements.
CHAPTER 5
Management report
Article 20
Contents of
the management report
1.                      
The management report shall include at least a
fair review of the development and performance of the undertaking's business
and of its position, together with a description of the principal risks and
uncertainties that it faces.
The review shall be a balanced and
comprehensive analysis of the development and performance of the undertaking's business
and of its position, consistent with the size and complexity of the business.
To the extent necessary for an understanding of
the undertaking's development, performance or position, the analysis shall
include both financial and, where appropriate, non-financial key performance
indicators relevant to the particular business, including information relating
to environmental and employee matters.
In providing the analysis, the management
report shall, where appropriate, include references to and additional
explanations of amounts reported in the annual financial statements.
2.                      
The management report shall also give an
indication of:
(a)         
any important events that have occurred since
the end of the financial year;
(b)         
the undertaking's likely future development;
(c)         
activities in the field of research and
development;
(d)         
the information concerning acquisitions of own
shares prescribed by Article 22(2) of Directive 77/91/EEC;
(e)         
the existence of branches of the undertaking;
(f)           
in relation to the undertaking's use of
financial instruments and where material for the assessment of its assets,
liabilities, financial position and profit or loss:
(i)      the undertaking's financial risk
management objectives and policies, including its policy for hedging each major
type of forecasted transaction for which hedge accounting is used;
(ii)      the undertaking's exposure to price
risk, credit risk, liquidity risk and cash flow risk.
3.                      
Member States may exempt small undertakings from
the obligation to prepare management reports, provided that the information
referred to in Article 22(2) of Directive 77/91/EEC concerning the acquisition
by an undertaking of its own shares is given in the notes to the financial
statements.
4.                      
Member States may exempt medium-sized
undertakings from the obligation set out in the third subparagraph of paragraph
1 in so far as it relates to non-financial information.
Article 21
Corporate
governance statement
1.                      
A public interest entity shall include a
corporate governance statement in its management report. That statement shall
be included as a specific section of the management report and shall contain at
least the following information:
(a)         
a reference to one or more of the following:
(i)      the corporate governance code to
which the undertaking is subject;
(ii)      the corporate governance code which
the undertaking may have voluntarily decided to apply;
(iii)     all relevant information about the
corporate governance practices applied beyond the requirements under national
law.
Where reference is made to a corporate
governance code referred to in points (i) and (ii), the undertaking shall also
indicate where the relevant texts are publicly available; where reference is
made to the information referred to in point (iii), the undertaking shall make
its corporate governance practices publicly available;
(b)         
where an undertaking, in accordance with
national law, departs from a corporate governance code referred to in points
(a)(i) or (ii), an explanation by the undertaking as to which parts of the
corporate governance code it departs from and the reasons for doing so; where
the undertaking has decided not to refer to any provisions of a corporate
governance code referred to in points (a)(i) or (ii), it shall explain its
reasons for doing so;
(c)         
a description of the main features of the
undertaking's internal control and risk management systems in relation to the
financial reporting process;
(d)         
the information required by Article 10(1)(c),
(d), (f), (h) and (i) of Directive 2004/25/EC of the European Parliament and of
the Council[32],
where the undertaking is subject to that Directive;
(e)         
unless the information is already fully provided
for in national law, the operation of the shareholder meeting and its key
powers and a description of shareholders’ rights and how they can be exercised;
(f)           
the composition and operation of the
administrative, management and supervisory bodies and their committees.
2.                      
Member States may permit the information
required by paragraph 1 of this Article to be set out in a separate report
published together with the management report or by means of a reference in the
management report where such document is publicly available on the
undertaking's website. 
In the event of a separate report, the
corporate governance statement may contain a reference to the management report
where the information required in paragraph 1(d) of this Article is made
available. Concerning the provisions of paragraph 1 (c) and (d) of this
Article, the statutory auditor shall express an opinion in accordance with the
second sub-paragraph of Article 34(1). For the information referred to
in paragraph 1(a), (b), (e) and (f), Member States shall ensure that the
statutory auditor checks that the corporate governance statement has been
produced.
3.                      
Without prejudice to Article 46, Member States
may exempt public interest entities which have only issued securities other
than shares admitted to trading on a regulated market, within the meaning of
point (14) of Article 4(1) of Directive 2004/39/EC, from the application of
paragraph 1(a), (b), (e) and (f), unless such public interest entities have
issued shares which are traded in a multilateral trading facility, within the
meaning of point (15) of Article 4(1) of Directive 2004/39/EC.
CHAPTER 6
Consolidated Financial Statements And Reports
Article 22
Scope
For the purposes of this Chapter, a parent
undertaking and all of its subsidiary undertakings shall be undertakings to be
consolidated where either the parent undertaking or one or more subsidiary
undertakings is established as one of the types of undertaking listed in Annex
I or Annex II.
Article 23
The
requirement to prepare consolidated financial statements
1.                      
A Member State shall require any undertaking
governed by its national law to draw up consolidated financial statements and a
consolidated management report if that undertaking (a parent undertaking)
controls one or more other undertakings (subsidiary undertaking(s)) in any of
the following situations: 
(a)         
it has a majority of the shareholders' or
members' voting rights in the other undertaking(s);
(b)         
it has the right to appoint or remove a majority
of the members of the administrative, management or supervisory body of the
other undertaking(s) and is at the same time a shareholder in or a member
thereof; 
(c)         
it has the right to exercise a dominant
influence over the other undertaking(s) of which it is a shareholder or a
member, pursuant to a contract entered into with the undertaking(s) or to a
provision in its memorandum or articles of association, where the law governing
the other undertaking(s) permits such contracts or provisions. 
(d)         
it has the power to exercise, or actually
exercises, dominant influence or control over the other undertaking(s); 
(e)         
it and the other undertaking(s) are managed on a
unified basis by the parent undertaking; 
(f)           
it is a shareholder in or member of the other undertaking(s),
and:
(i)      a majority of the members of the
administrative, management or supervisory bodies of the other undertaking(s)
who have held office during the financial year, during the preceding financial
year and up to the time when the consolidated financial statements are drawn
up, have been appointed solely as a result of the exercise of its voting
rights; or
(ii)      controls alone, pursuant to an
agreement with other shareholders in or members of the other undertaking(s), a
majority of shareholders' or members' voting rights. 
However, point (i) shall not apply where a
third party has the rights referred to in points (a), (b) or (c) with regard to
the other undertaking(s).         
2.                      
For the purposes of paragraph 1(a), (b) and (f),
the voting rights and the rights of appointment and removal of any other
subsidiary undertaking as well as those of any person acting in his own name
but on behalf of the parent undertaking or of another subsidiary undertaking
shall be added to those of the parent undertaking.
3.                      
For the purposes of paragraph 1(a), (b) and (f),
the rights mentioned in paragraph 2 shall be reduced by the rights:
(a)         
attaching to shares held on behalf of a person
who is neither the parent undertaking nor a subsidiary thereof; or
(b)         
attaching to shares held by way of security, provided
that the rights in question are exercised in accordance with the instructions
received, or held in connection with the granting of loans as part of normal
business activities, provided that the voting rights are exercised in the
interests of the person providing the security.
4.                      
For the purposes of paragraph 1(a) and (f), the
total of the shareholders' or members' voting rights in the subsidiary
undertaking shall be reduced by the voting rights attaching to the shares held
by that undertaking itself by a subsidiary undertaking of that undertaking or
by a person acting in his own name but on behalf of those undertakings.
5.                      
Without prejudice to Article 24(10) a parent
undertaking and all of its subsidiary undertakings shall be undertakings to be
consolidated regardless of where the registered offices of such subsidiary
undertakings are situated.
6.                      
For the purposes of paragraph 5 any subsidiary
undertaking of a subsidiary undertaking shall be considered a subsidiary
undertaking of the parent undertaking which is the parent of the undertaking to
be consolidated.
7.                      
Without prejudice to this Article and Articles
22 and 24, a Member State may require any undertaking governed by its national
law to draw up consolidated financial statements and a consolidated management
report if:
(a)         
that undertaking and one or more other
undertakings to which it is not related as described in paragraphs 1(a) to (f),
are managed on a unified basis pursuant to a contract concluded with that
undertaking or provisions in the memorandum or articles of association of those
undertakings; or
(b)         
the administrative, management or supervisory
bodies of that undertaking and of one or more other undertakings to which it is
not related, as described in paragraphs 1(a) to (f), consist for the major part
of the same persons in office during the financial year and until the
consolidated financial statements are drawn up.
Where the first sub-paragraph is applied,
undertakings which are related as described in that sub-paragraph shall,
together with all of their subsidiary undertakings, be consolidated where one
or more of those undertakings is established as one of the types of undertaking
listed in Annex I or Annex II.
Paragraphs 5 and 6 of this Article and Articles
24(1) to 24(3), 24(10) and 25 to 29 shall apply to the consolidated financial
statements and the consolidated management report referred to in this
paragraph. References to parent undertakings shall be understood to refer to
all the undertakings specified in the first sub-paragraph above. Without prejudice
to Article 25(3) second sub-paragraph, the items ‘capital’, ‘share premium
account’, ‘revaluation reserve’, ‘reserves’, ‘profit or loss brought forward’,
and ‘profit or loss for the financial year’ to be included in the consolidated
accounts shall be the aggregate amounts attributable to each of the
undertakings specified in the first sub-paragraph of this paragraph.
Article 24
Exemptions
from consolidation
1.                      
Small groups shall be exempt from the obligation
to draw up consolidated financial statements and a consolidated management
report, except where any affiliated undertaking is a public interest entity.
2.                      
Member States may provide for an exemption for
medium-sized groups from the obligation to draw up consolidated financial
statements and a consolidated management report, except where any affiliated
undertaking is a public interest entity.
3.                      
Member States may grant an exemption from the
obligation to draw up consolidated financial statements and a consolidated
management report where the parent undertaking is not constituted as one of the
types of undertaking listed in Annex I or Annex II.
4.                      
Notwithstanding paragraphs 1, 2 and 3 of this
Article, a Member State shall exempt from the obligation to draw up
consolidated financial statements and a consolidated management report any
parent undertaking governed by its national law which is also a subsidiary
undertaking, if its own parent undertaking is governed by the law of a Member
State in the following two cases:
(a)         
that parent undertaking holds all of the shares
in the exempted undertaking. The shares in that undertaking held by members of
its administrative, management or supervisory bodies pursuant to an obligation
in law or in the memorandum or articles of association shall be ignored for
this purpose; 
(b)         
that parent undertaking holds 90 % or more of
the shares in the exempted undertaking and the remaining shareholders in or
members of that undertaking have approved the exemption.
5.                      
Exemptions referred to in paragraph 4 shall be
subject to the compliance with all of the following conditions:
(a)         
the exempted undertaking and, without prejudice
to paragraph 10, all of its subsidiary undertakings shall be consolidated in
the financial statements of a larger body of undertakings, the parent
undertaking of which is governed by the law of a Member State;
(b)         
the consolidated financial statements referred
to in point (a) and the consolidated management report of the larger body of
undertakings shall be drawn up by the parent undertaking of that body,
according to the law of the Member State by which the parent undertaking of
that larger body of undertakings is governed, in accordance with this
Directive;
(c)         
the consolidated financial statements referred
to in point (a) and the consolidated management report referred to in point
(b), the report by the person responsible for auditing those financial
statements and, where appropriate, the appendix referred to in paragraph 7
below, shall be published for the exempted undertaking in the manner prescribed
by the law of the Member State governing that undertaking in accordance with
Article 30; that Member State may require that those documents be published in
its official language and that the translation be certified;
(d)         
the notes to the annual financial statements of
the exempted undertaking shall disclose the following:
(i)      the name and registered office of the
parent undertaking that draws up the consolidated financial statements referred
to in point (a);
(ii)      the exemption from the obligation to
draw up consolidated financial statements and a consolidated management report.
6.                      
In cases not covered by paragraph 4, a Member
State may, without prejudice to paragraphs 2 and 3 of this Article and Article
3(6), exempt from the obligation to draw up consolidated financial statements
and a consolidated management report any parent undertaking governed by its
national law which is also a subsidiary undertaking, the parent undertaking of
which is governed by the law of a Member State, provided that all the
conditions set out in paragraph 5 are fulfilled and that the shareholders in or
members of the exempted undertaking who own a minimum proportion of the
subscribed capital of that undertaking have not requested the preparation of
consolidated financial statements at least six months before the end of the
financial year. Member States may fix that proportion at not more than 10 % for
public limited liability companies and for limited partnerships with share
capital, and at not more than 20 % for undertakings of other types.
A Member State may not make it a condition for
this exemption that the parent undertaking which prepared the consolidated
financial statements described in paragraph 5(a) shall also be governed by its
national law.
A Member State may not make this exemption
subject to conditions concerning the preparation and auditing of the
consolidated financial statements referred to in paragraph 5(a).
7.                      
A Member State may make the exemptions provided
for in paragraphs 4, 5 and 6 subject to the disclosure of additional
information, in accordance with this Directive, in the consolidated financial
statements referred to in paragraph 5(a), or in an appendix thereto, if that
information is required of undertakings governed by the national law of that
Member State which are obliged to prepare consolidated financial statements and
are in the same circumstances.
8.                      
Paragraphs 4 to 7 shall not affect any Member
State's legislation on the drawing up of consolidated financial statements or
consolidated management reports in so far as those documents are required
(i)      for the information of employees of
their representatives; or
(ii)     by an administrative or judicial
authority for its own purposes.
9.                      
Without prejudice to paragraphs 2 and 3 of this
Article and Article 3(6), a Member State may exempt from the obligation to draw
up consolidated financial statements and a consolidated management report any
parent undertaking governed by its national law which is also a subsidiary
undertaking of a parent undertaking not governed by the law of a Member State,
if all of the following conditions are fulfilled:
(a)         
the exempted undertaking and, without prejudice
to paragraph 10, all of its subsidiary undertakings are consolidated in the
financial statements of a larger body of undertakings;
(b)         
the consolidated financial statements referred
to in point (a) and, where appropriate, the consolidated management report are
drawn up in accordance with this Directive or in a manner equivalent to
consolidated financial statements and consolidated management reports drawn up
in accordance with this Directive;
(c)         
the consolidated financial statements referred
to in point (a) have been audited by one or more persons authorized to audit
financial statements under the national law governing the undertaking which
drew them up.
Paragraphs 5(c) and (d), and 6 to 8 shall apply.
Member States may provide for exemptions under
this paragraph only if it provides for the same exemptions under paragraphs 4
to 8.
10.                  
An undertaking need not be included in
consolidated financial statements where at least one of the following conditions
is complied with:
(a)         
severe long-term restrictions substantially
hinder:
(i)      the parent undertaking in the
exercise of its rights over the assets or management of that undertaking; or
(ii)      the exercise of unified management
of that undertaking where it is in one of the relationships defined in Article
23(7);
(b)         
the information necessary for the preparation of
consolidated financial statements in accordance with this Directive cannot be
obtained without disproportionate expense or undue delay; 
(c)         
the shares of that undertaking are held
exclusively with a view to their subsequent resale.
This paragraph shall also apply to public
interest entities.
Article 25
The
preparation of consolidated financial statements
1.                      
Chapters 2 and 3 shall apply in respect of the
consolidated financial statements, taking into account the essential
adjustments resulting from the particular characteristics of consolidated
financial statements as compared with annual financial statements.
2.                      
The assets and liabilities of undertakings
included in a consolidation shall be incorporated in full in the consolidated
balance sheet.
3.                      
The book values of shares in the capital of
undertakings included in a consolidation shall be set off against the
proportion which they represent of the capital and reserves of those
undertakings in accordance with the following:
(a)         
that set-off shall be effected on the basis of
book values as they stand on the date on which such undertakings are included
in a consolidation for the first time. Differences arising from such set-offs
shall as far as possible be entered directly against those items in the
consolidated balance sheet which have values above or below their book values;
(b)         
a Member State may permit or require set-offs on
the basis of the values of identifiable assets and liabilities as at the date
of acquisition of the shares or, in the event of acquisition in two or more
stages, as at the date on which the undertaking became a subsidiary;
(c)         
any difference remaining after the application
of point (a) or resulting from the application of point (b) shall be shown as
goodwill in the consolidated balance sheet. The methods used to calculate the
goodwill and any significant changes in relation to the preceding financial
year shall be explained in the notes to the financial statements. Where the
offsetting of positive and negative goodwill is authorized by a Member State,
an analysis of the goodwill shall also be given in the notes to the financial
statements. Negative goodwill may be transferred to the consolidated profit and
loss account where such a treatment is in accordance with the principles laid
out in Chapter 2.
However, the first sub-paragraph shall not
apply to shares in the capital of the parent undertaking held either by that
undertaking itself or by another undertaking included in the consolidation. In
the consolidated financial statements such shares shall be treated as own
shares in accordance with Chapter 3.
4.                      
The amount attributable to shares in subsidiary
undertakings included in the consolidation held by persons other than the
undertakings included in the consolidation shall be shown in the consolidated
balance sheet as non-controlling interests.
5.                      
The income and expenditure of undertakings
included in a consolidation shall be incorporated in full in the consolidated
profit and loss account.
6.                      
The amount of any profit or loss attributable to
shares in subsidiary undertakings included in the consolidation held by persons
other than the undertakings included in the consolidation shall be shown in the
consolidated profit and loss account as the profit or loss attributable to
non-controlling interests.
7.                      
Consolidated financial statements shall show the
assets, liabilities, financial positions, profits or losses of the undertakings
included in a consolidation as if there were a single undertaking. 
8.                      
Consolidated financial statements shall be drawn
up as at the same date as the annual financial statements of the parent
undertaking.
A Member State may, however, require or permit
consolidated financial statements to be drawn up as at another date in order to
take account of the balance sheet dates of the largest number or the most
important of the undertakings included in the consolidation. Where use is made
of this derogation, that fact shall be disclosed in the notes to the
consolidated financial statements together with the reasons thereof. In
addition, account shall be taken or disclosure made of important events
concerning the assets and liabilities, the financial position or the profit or
loss of an undertaking included in a consolidation which have occurred between
that undertaking's balance sheet date and the consolidated balance sheet date.
Where an undertaking's balance sheet date
precedes the consolidated balance sheet date by more than three months, that
undertaking shall be consolidated on the basis of interim financial statements
drawn up as at the consolidated balance sheet date.
9.                      
If the composition of the undertakings included
in a consolidation has changed significantly in the course of a financial year,
the consolidated financial statements shall include information which makes the
comparison of successive sets of consolidated financial statements meaningful.
Where such a change is significant, this obligation may be fulfilled by the
preparation of an adjusted comparative balance sheet and an adjusted
comparative profit and loss account.
10.                  
Assets and liabilities to be included in
consolidated financial statements shall be measured on a uniform basis and in
accordance with Chapter 2.
11.         An undertaking which draws
up consolidated financial statements shall apply the same measurement bases as
in its annual financial statements. However, Member States may permit or
require that other measurement bases in accordance with Chapter 2 are used in
consolidated financial statements. Where use is made of this derogation that
fact shall be disclosed in the notes to the consolidated financial statements
and the reasons therefore given.
12.         Where assets and
liabilities to be included in consolidated financial statements have been
measured by undertakings included in the consolidation using bases differing
from those used for the consolidation, those assets and liabilities shall be
remeasured in accordance with the bases used for the consolidation. Departures
from this principle shall be permitted in exceptional cases. Any such
departures shall be disclosed in the notes to the consolidated financial
statements and the reasons for them given.
13.         Deferred tax balances shall
be recognised on consolidation provided that it is probable that an actual charge
to tax will arise within the foreseeable future for one of the undertakings
included in the consolidation.
14.         Where assets to be included
in consolidated financial statements have been the subject of value adjustments
solely for tax purposes, they shall be incorporated in the consolidated
financial statements only after those adjustments have been eliminated.
Article 26
Proportional
consolidation
1.                      
Where an undertaking included in a consolidation
manages another undertaking jointly with one or more undertakings not included
in that consolidation, Member States may permit or require the inclusion of
that other undertaking in the consolidated financial statements in proportion
to the rights in its capital held by the undertaking included in the consolidation.
2.                      
Article 24(10) and Article 25 shall apply
mutatis mutandis to the proportional consolidation referred to in paragraph 1
of this Article.
Article 27
Equity
accounting of associated undertakings
1.                      
Where an undertaking included in a consolidation
has an associated undertaking, that associated undertaking shall be shown in
the consolidated balance sheet as a separate item.
2.                      
When this Article is applied for the first time,
the associated undertaking shall be shown in the consolidated balance sheet at
an amount corresponding to the proportion of the associated undertaking's
capital and reserves represented by the participating interest. The difference
between that amount and the book value calculated in accordance Chapters 2 and
3 shall be disclosed separately in the consolidated balance sheet or in the
notes to the consolidated financial statements. That difference shall be
calculated as at the date as at which that method is used for the first time.
In addition, Member States may permit or
require the calculation of the difference as at the date of acquisition of the
shares or, where the shares were acquired in two or more stages, as at the date
on which the undertaking became an associated undertaking.
3.                      
Where an associated undertaking's assets or
liabilities have been valued by methods other than those used for consolidation
in accordance with Article 25(11), they may, for the purpose of calculating the
difference referred to in paragraph 2 of this Article, be remeasured using the
methods used for consolidation. Where such remeasurement has not been carried
out, that fact shall be disclosed in the notes to the consolidated financial
statements. Member States may require such remeasurement.
4.                      
The amount corresponding to the proportion of
the associated undertaking's capital and reserves referred to in paragraph 2
shall be increased or reduced by the amount of any variation which has taken
place during the financial year in the proportion of the associated
undertaking's capital and reserves represented by the participating interest.
That amount shall be reduced by the amount of the dividends received from the
associated undertaking.
5.                      
Where the positive difference referred to in
paragraph 2 of this Article cannot be related to any category of assets or
liabilities, it shall be considered as goodwill in accordance with Article 9,
11(5)(d), 11(10) and 25(3)(c).
6.                      
The proportion of the profit or loss of the
associated undertakings attributable to the participating interests shall be
shown in the consolidated profit and loss account as a separate item under an
appropriate heading.
7.                      
In so far as the facts are known or can be
ascertained, profits and losses resulting from transactions between the
associated undertakings and other undertakings included in the consolidation
shall be eliminated from the consolidated financial statements, where they are
included in the book values of assets.
8.                      
Where an associated undertaking draws up
consolidated financial statements, paragraphs 1 to 7 shall apply to the capital
and reserves shown in such consolidated financial statements.
Article 28
The notes
to the consolidated financial statements
1.                      
The notes to the consolidated financial
statements shall set out the information required by Articles 17, 18 and 19, in
addition to any other information required under other provisions of this
Directive, taking account of the essential adjustments resulting from the
particular characteristics of consolidated financial statements as compared to
annual financial statements, so that the information is of assistance in
assessing the financial position of the undertakings included in the
consolidation taken as a whole.
The following adjustments to the information
required by Articles 17, 18 and 19 shall apply:
(a)         
In disclosing transactions between related
parties, transactions between related parties included in a consolidation that
are eliminated on consolidation shall not be disclosed;
(b)         
In disclosing the average number of employees
employed during the financial year there shall be separate disclosure of the
average number of employees employed by undertakings that are proportionately
consolidated;
(c)         
In disclosing the amounts of emoluments and
advances and credits granted to members of the administrative, managerial and
supervisory bodies, only amounts granted to members of the administrative,
managerial and supervisory bodies of the parent undertaking shall be disclosed;
the disclosure shall cover amounts granted by the parent undertaking and its
subsidiary undertakings.
2.                      
The notes to the consolidated financial
statements shall, in addition to the information required in paragraph 1, set
out the following information:
(a)         
The names and registered offices of the
undertakings included in the consolidation, the proportion of the capital held
in undertakings included in the consolidation, other than the parent
undertaking, by the undertakings included in the consolidation or by persons
acting in their own names but on behalf of those undertakings, and information
as to which of the conditions referred to in Articles 23(1) and 23(7) following
application of Article 23(2), (3) and (4) has formed the basis on which the
consolidation has been carried out. The latter disclosure may, however, be
omitted where consolidation has been carried out on the basis of Article
23(1)(a) and where the proportion of the capital and the proportion of the
voting rights held are the same.
The same information shall be given in respect
of undertakings excluded from a consolidation pursuant to Article 5(1)(j) and
an explanation shall be given for the exclusion of the undertakings referred to
in Article 24(10).
(b)         
The names and registered offices of associated
undertakings included in the consolidation as described in Article 27(1) and
the proportion of their capital held by undertakings included in the
consolidation or by persons acting in their own names but on behalf of those
undertakings;
(c)         
The names and registered offices of undertakings
proportionally consolidated pursuant to Article 26, the factors on which joint
management is based, and the proportion of their capital held by the
undertakings included in the consolidation or by persons acting in their own
names but on behalf of those undertakings.
(d)         
The name and registered office of each of the
undertakings, other than those referred to in points (a), (b) and (c), in which
undertakings included in the consolidation, either themselves or through
persons acting in their own names but on behalf of those undertakings, hold a
participating interest. The proportion of the capital held, the amount of the
capital and reserves, and the profit or loss for the latest financial year of
the undertaking concerned for which financial statements have been adopted
shall also be disclosed. The information concerning capital and reserves and
the profit or loss may also be omitted where the undertaking concerned does not
publish its balance sheet.
(e)         
Member States may allow the information required
by points (a) to (d) to take the form of a statement deposited in accordance
with Article 3(3) of Directive 2009/101/EC. The depositing of such a statement
shall be disclosed in the notes to the financial statements. Member States may
also allow this information to be omitted when its nature is such that it would
be seriously prejudicial to any of the undertakings to which it relates. Member
States may make such omissions subject to prior administrative or judicial
authorization. Any such omission shall be disclosed in the notes to the
financial statements.
Article 29
The
consolidated management report
1.                      
The consolidated management report shall, in
addition to any other information required under other provisions of this
Directive, set out at least the information required by Articles 20 and 21,
taking account of the essential adjustments resulting from the particular
characteristics of a consolidated management report as compared to a management
report so that the information is of assistance in assessing the undertakings
included in the consolidation taken as a whole.
2.                      
The following adjustments to the information
required by Articles 20 and 21 shall apply:
(a)         
in reporting details of own shares acquired, the
consolidated management report shall indicate the number and nominal value or,
in the absence of a nominal value, the accounting par value of all of the
parent undertaking's shares held by that undertaking itself, by subsidiary
undertakings of that undertaking or by a person acting in his own name but on
behalf of those undertakings. A Member State may permit or require the
disclosure of those particulars in the notes to the consolidated financial statements;
(b)         
in reporting on internal control and risk
management systems, the corporate governance statement shall refer to the main
features of the internal controls and risk management systems for the
undertakings included in the consolidation taken as a whole.
3.                      
Where a consolidated management report is
required in addition to the management report, the two reports may be presented
as a single report.
CHAPTER 7
Publication
Article 30
General
publication requirement
1.                      
Member States shall ensure that undertakings
publish the duly approved annual financial statements and the management
report, together with the opinion submitted by the statutory auditor referred
to in Article 34, as laid down by the laws of each Member State in accordance
with Chapter 2 of Directive 2009/101/EC.
Member States may, however, exempt undertakings
from the obligation to publish the management report. In such a case it shall
be possible to obtain a copy of all or part of any such report upon request.
The price of such a copy shall not exceed its administrative cost.
2.                      
The Member State of an undertaking referred to
in Annex II may exempt that undertaking from publishing its financial
statements in accordance with Article 3 of Directive 2009/101/EC, provided that
those financial statements are available to the public at its head office, in
the following cases:
(a)         
all the members having unlimited liability of
the undertaking concerned are undertakings referred to in Annex I governed by
the laws of Member States other than the Member State whose law governs that
undertaking, and none of those undertakings publishes the financial statements
of the undertaking concerned with its own financial statements; 
(b)         
all the members having unlimited liability are
undertakings which are not governed by the laws of a Member State but which
have a legal form comparable to those referred to in Directive 2009/101/EC.
Copies of the financial statements shall be
obtainable upon request. The price of such a copy may not exceed its
administrative cost.
3.                      
Paragraph 1 shall apply with respect to
consolidated financial statements and consolidated management reports.
Where the undertaking drawing up the
consolidated financial statements is not established as one of the types of
undertaking listed in Annex I and is not required by its national law to
publish the documents referred to in paragraph 1 in the same manner as
prescribed in Article 3 of Directive, 2009/101/EC, it shall at least make those
documents available to the public at its head office. It shall be possible to
obtain a copy of such documents upon request. The price of such a copy shall
not exceed its administrative cost.
Article 31
Simplifications
for small and medium-sized undertakings
1.                      
Member States may exempt small undertakings from
the obligation to publish their profit and loss accounts and management
reports.
2.                      
Member States may permit medium-sized
undertakings to publish:
(a)         
abridged balance sheets showing only those items
preceded by letters and roman numerals in Article 9 disclosing separately,
either in the balance sheet or in the notes to the financial statements:
(i)      B (I) (3), B (II) (1), (2), (3) and
(4), B (III) (1), (2), (3), (4) and (7), C (II) (2), (3) and (6) and C (III)
(1) and (2) under ‘Assets’ and C, (1), (2), (6), (7) and (9) under 'Capital,
reserves and liabilities',
(ii)      the information required in brackets
in C (II) under ‘Assets’ and C under ‘Capital, reserves and liabilities"
in total for all the items concerned and separately for C (II) (2) and (3)
under ‘Assets’ and C (1), (2), (6), (7) and (9) under ‘Capital, reserves and
liabilities’,
(b)         
abridged notes to their financial statements
without the information required in Article 18 (1)(g) and (k).
This paragraph shall be without prejudice to
Article 30(1) where it relates to the profit and loss account, the management
report and the opinion of the statutory auditor.
Article 32
Other
publication requirements
1.                      
Where the annual financial statements and the
management report are published in full, they shall be reproduced in the form
and text on the basis of which the statutory auditor has drawn up his opinion.
They shall be accompanied by the full text of the report of the statutory
auditor.
2.                      
If the annual financial statements are not
published in full, it shall be indicated that the version published is abridged
and reference shall be made to the register in which the financial statements
have been filed in accordance with Article 3 of Directive 2009/101/EC . Where
the financial statements have not yet been filed, the fact shall be disclosed.
The report of the statutory auditor shall not accompany
this publication, but it shall be disclosed whether an unqualified, qualified
or adverse audit opinion was expressed, or whether the statutory auditor were
unable to express an audit opinion. It shall also be disclosed whether the
report of the statutory auditor included a reference to any matters to which
the statutory auditor drew attention by way of emphasis without qualifying the
audit opinion.
Article 33
Duty and
liability for drawing up and publishing the financial statements and the
management report
1.                      
Member States shall ensure that the members of
the administrative, management and supervisory bodies of the undertaking
collectively have the duty to ensure that the annual financial statements, the
management report and, when provided separately, the corporate governance
statement are drawn up and published in accordance with the requirements of
this Directive and, where applicable, in accordance with the international
accounting standards adopted in accordance with Regulation (EC) No 1606/2002.
Such bodies shall act within the competences assigned to them by national law.
2.                      
Member States shall ensure that the members of
the administrative, management and supervisory bodies of the undertaking
collectively have the duty to ensure that the consolidated financial
statements, consolidated management reports and, when provided separately, the
consolidated corporate governance statement are drawn up and published in
accordance with the requirements of this Directive and, where applicable, in
accordance with the international accounting standards adopted in accordance
with Regulation (EC) No 1606/2002. Such bodies shall act within the competences
assigned to them by national law. 
3.                      
Member States shall ensure that their laws,
regulations and administrative provisions on liability apply to the members of
the administrative, management and supervisory bodies of the undertakings, at
least towards the undertaking, for breach of the duties referred to in
paragraphs 1 and 2.
CHAPTER 8
Auditing
Article 34
General
requirement
1.                      
Member States shall ensure that the financial
statements of public interest entities, medium-sized and large undertakings are
audited by one or more persons approved by Member States to carry out statutory
audits on the basis of Directive 2006/43/EC of the European Parliament and of
the Council[33].
The statutory auditor shall also express an
opinion concerning the consistency of the management report with the financial
statements for the same financial year.
2.                      
The first sub-paragraph of paragraph 1 shall
apply with respect to consolidated financial statements. The second
sub-paragraph of paragraph 1 shall apply with respect to consolidated financial
statements and consolidated management reports.
Article 35
Content of
the audit report
1.                      
The report of the statutory auditor shall
include:
(a)         
an introduction which shall at least identify
the financial statements that are the subject of the statutory audit, together
with the financial reporting framework that has been applied in their
preparation;
(b)         
a description of the scope of the statutory
audit which shall at least identify the auditing standards in accordance with
which the statutory audit was conducted;
(c)         
an audit opinion which shall state clearly the
opinion of the statutory auditor as to whether the annual financial statements
give a true and fair view in accordance with the relevant financial reporting
framework and, where appropriate, whether the annual financial statements
comply with statutory requirements; the audit opinion shall be either
unqualified, qualified, an adverse opinion or, if the statutory auditor is
unable to express an audit opinion, a disclaimer of opinion;
(d)         
a reference to any matters to which the
statutory auditor draws attention by way of emphasis without qualifying the
audit opinion;
(e)         
an opinion concerning the consistency of the
management report with the annual financial statements for the same financial
year.
2.                      
The report shall be signed and dated by the
statutory auditor.
3.                      
The report of the statutory auditor on the
consolidated financial statements shall comply with the requirements set out in
of paragraphs 1 and 2. In reporting on the consistency of the management report
and the financial statements as required by paragraph 1(e), the statutory
auditor shall consider the consolidated financial statements and the
consolidated management report. Where the annual financial statements of the
parent undertaking are attached to the consolidated financial statements, the
reports of the statutory auditors required by this Article may be combined.
CHAPTER 9
Report on
payments to governments
Article 36
Definitions

For the purpose of this chapter, the
following definitions shall apply:
1.                      
"Undertaking active in the extractive
industry" means an undertaking with any activity involving the
exploration, discovery, development, and extraction of minerals, oil and
natural gas deposits, as referred to in Section B-Divisions 05 to 08 of Annex I
to Regulation (EC) No 1893/2006 of the European Parliament and of the Council[34]. 
2.                      
"Undertaking active in the logging of
primary forests" means an undertaking with activities as referred to in
Section A-Division 2.2 of Annex I to Regulation (EC) No 1893/2006 of the
European Parliament and of the Council[35],
in primary forests. 
3.                      
"Government" means any national,
regional or local authority of a Member State or of a third country. It
includes a department, agency or undertaking controlled by that authority as
laid down in Article 23 (1) to (6) of this Directive.
4.                     
"Project" is equivalent to a specific operational
reporting unit at the lowest level within the undertaking at which regular
internal management reports are prepared to monitor its business.
Article 37
Undertakings
required to report on payments to governments 
1. Member
States shall require large undertakings and all public interest entities active
in the extractive industry or the logging of primary forests to prepare and
make public a report on payments made to governments on an annual basis.
2. This obligation shall not apply to any
undertaking governed by the law of a Member State which is a subsidiary or
parent undertaking, where both of the following conditions are fulfilled:
(a)         
the parent undertaking is subject to the laws of
a Member State; 
(b)         
the payments to governments of such an
undertaking are included in the consolidated report on payment to governments
drawn up by the parent undertaking in accordance with Article 39.
Article 38
Content of
the report
1.                      
The report shall specify the following when
material to the recipient government: 
(a)         
 the total amount of payments, including
payments in kind, made to each government within a financial year;
(b)         
the total amount per type of payment, including
payments in kind, made to each government within a financial year;
(c)         
 where those payments have been attributed to a
specific project the amount per type of payment, including payments in kind,
made for each such project within a financial year, and the total amount of
payments for each such project.
2.                 
The following types of payments shall be
reported:
(a)         
 production entitlements;
(b)         
 taxes on profits;
(c)         
 royalties;
(d)         
 dividends;
(e)         
 signature, discovery and production bonuses;
(f)           
 licence fees, rental fees, entry fees and other
considerations for licences and/or concessions;
(g)         
 other direct benefits to the government
concerned.
3.                      
Where payments in kind are made to a government,
they shall be reported in value or in volume. Where they are reported in terms
of value, supporting notes shall be provided to explain how their value has
been determined. 
4.                      
The Commission shall be empowered to adopt
delegated acts in accordance with Article 42 in order to specify the concept of
materiality of payments. 
5.                      
The report shall exclude any type of payments
made to a government in a country where the public disclosure of this type of
payment is clearly prohibited by the criminal legislation of that
country. In such cases the undertaking shall state that it has not
reported payments in accordance with paragraphs 1 to 3, and shall disclose the
name of the government concerned.
Article 39
Consolidated
report on payments to goverments
1.                      
A Member State shall require any large
undertaking or any public interest entity active in the extractive industry or the
logging of primary forests and governed by its national law to draw up a
consolidated report on payments to governments in accordance with Articles 37
and 38 if that parent undertaking is under the obligation to prepare
consolidated financial statements as laid down in Article
23(1) to 23(6) of this Directive. 
2.                      
The obligation to draw up the consolidated
report referred to in paragraph 1 shall not apply to: 
(a)         
 a parent undertaking of a small group as
defined in Article 3(4) except where any affiliated undertaking is a public
interest entity;
(b)         
 a parent undertaking of a medium-sized group as
defined in Article 3(5) except where any affiliated undertaking is a public
interest entity; 
(c)         
 a parent undertaking governed by the law of a
Member State which is also a subsidiary undertaking, if its own parent
undertaking is governed by the law of a Member State.
3.                      
An undertaking need not be included in a
consolidated report on payments to government where at least one of the
following conditions is fulfilled:
(a)         
severe long-term restrictions substantially
hinder the parent undertaking in the exercise of its rights over the assets or
management of that undertaking; 
(b)         
the information necessary for the preparation of
the consolidated report on payments to government in accordance with this
Directive cannot be obtained without disproportionate expense or undue delay.
Article 40
Publication

The report
referred to in Article 37 and the consolidated report referred to in Article 39
on payments to governments shall be published as laid down by the laws of each
Member State in accordance with Chapter 2 of Directive 2009/101/EC. 
Article 41
Review
The Commission
shall review and report on the implementation and effectiveness of this Chapter,
in particular as regards the scope of the reporting obligations and the modalities
of the reporting on a project basis. The review should also take into account
international developments and consider the effects on competitiveness and
security of energy supply. It should be completed at the latest five years
after the date of entry into force of this Directive. The report shall be submitted
to the European Parliament and the Council, together with a legislative
proposal, if appropriate.
CHAPTER 10
Final provisions
Article 42
Exercise of
delegated powers
1.                      
The power to adopt delegated acts is conferred
on the Commission subject to the conditions laid down in this Article.
2.                      
The delegation of power referred to in Article
1(2), Article 3(10) and Article 38(4) shall be conferred on the Commission for
an indetermined period of time from the date referred to in Article 50.
3.                      
The delegation of power referred to in Article
1(2), Article 3(10) and Article 38(4) may be revoked at any time by the European
Parliament or by the Council. A decision of revocation shall put an end to the
delegation of the power specified in that decision. It shall take effect the
day following the publication of the decision in the Official Journal of
the European Union or at a later date specified therein. It shall not
affect the validity of any delegated acts already in force.
4.                      
As soon as it adopts a delegated act, the
Commission shall notify it simultaneously to the European Parliament and to the
Council.
5.                      
A delegated act adopted pursuant to Article 1(2), Article 3(10) and
Article 38(4) shall enter into force only if no objection has been expressed
either by the European Parliament or the Council within a period of two months
of notification of that act to the European Parliament and the Council or
if, before the expiry of that period, the European Parliament and the Council have both informed the
Commission that they will not object. That period shall be extended by
two months at the initiative of the European Parliament or the Council.
Article 43
Exemption
for subsidiary undertakings
Notwithstanding the provisions of
Directives 2009/101/EC and 77/91/EEC, a Member State shall not be required to
apply the provisions of this Directive concerning the content, auditing and
publication of the annual financial statements and the management report to
undertakings governed by their national laws which are subsidiary undertakings,
where the following conditions are fulfilled:
(1)                   
the parent undertaking is subject to the laws of
a Member State;
(2)                   
all shareholders or members of the subsidiary
undertaking have declared their agreement to the exemption from such
obligation; this declaration shall be made in respect of every financial year;
(3)                   
the parent undertaking has declared that it
guarantees the commitments entered into by the subsidiary undertaking;
(4)                   
the declarations referred to in points (2) and
(3) of this Article are published by the subsidiary undertaking as laid down by
the laws of the Member State in accordance with Chapter 2 of Directive
2009/101/EC;
(5)                   
the subsidiary undertaking is included in the
consolidated financial statements drawn up by the parent undertaking in
accordance with this Directive;
(6)                   
the exemption is disclosed in the notes to the
consolidated financial statements drawn up by the parent undertaking;
(7)                   
the consolidated financial statements referred
to in point (5) of this Article, the consolidated management report, and the
report by the statutory auditor are published for the subsidiary undertaking as
laid down by the laws of the Member State in accordance with Chapter 2 of
Directive 2009/101/EC.
Article 44
Undertakings
which are members having unlimited liability of other undertakings
1.                      
Member States may require undertakings referred
to in Annex I
which are governed by their law and which are members having unlimited
liability of any undertaking referred to in Article 1(1)(b) and (c) ('entity
concerned'), to draw up, have audited and publish, with their own financial
statements, the financial statements of the entity concerned in conformity with
the provisions of this Directive.
In this case, the requirements of this
Directive shall not apply to the entity concerned.
2.                      
Member States shall not be required to apply the
requirements of this Directive to the entity concerned where:
(a)         
the financial statements of the entity concerned
are drawn up, audited and published in conformity with the provisions of this
Directive by an undertaking which is a member having unlimited liability of
that entity and is governed by the law of another Member State;
(b)         
the entity concerned is included in consolidated
financial statements drawn up, audited and published in accordance with this
Directive by a member having unlimited liability or where the entity concerned
is included in the consolidated financial statements of a larger body of
undertakings drawn up, audited and published in conformity with this Directive
by a parent undertaking governed by the law of a Member State. This exemption
shall be disclosed in the notes to the consolidated financial statements.
3.                      
In cases referred to in paragraph 2, the entity
concerned shall reveal the name of the entity publishing the financial
statements upon request.
Article 45
Profit and
loss account exemption for parent undertakings preparing consolidated financial
statements
A Member State shall not be required to
apply the provisions of this Directive concerning the auditing and publication
of the profit and loss account to undertakings governed by their national laws
which are parent undertakings where the following conditions are fulfilled:
(1)                   
the parent undertaking draws up consolidated
financial statements in accordance with this Directive and is included in the
consolidated financial statements;
(2)                   
the exemption is disclosed in the notes to the
annual financial statements of the parent undertaking;
(3)                   
the exemption is disclosed in the notes to the
consolidated financial statements drawn up by the parent undertaking;
(4)                   
the profit or loss of the parent undertaking,
determined in accordance with this Directive, is shown in the balance sheet of
the parent undertaking.
Article 46
Restriction
of exemptions for public interest entities
Unless expressly provided for in this
Directive, the Member States shall not make the simplifications and exemptions
set out in this Directive available to public interest entities.
Article 47
Penalties
Member States shall lay down the rules on
penalties applicable to infringements of the national provisions adopted
pursuant to this Directive and shall take all the measures necessary to ensure
that they are implemented. The penalties provided for shall be effective,
proportionate and dissuasive.
Article 48
Repeal
Directives 78/660/EEC and 83/349/EEC are
repealed.
References to the repealed Directives shall
be construed as references to this Directive and shall be read in accordance
with the correlation table in Annex III.
Article 49
Transposition
1.                      
Member States shall bring into force the laws,
regulations and administrative provisions necessary to comply with this
Directive by 1 July 2014 at the latest. They shall forthwith communicate to the
Commission the text of those provisions and a correlation table between those
provisions and this Directive.
When Member States adopt those provisions, they
shall contain a reference to this Directive or be accompanied by such a
reference on the occasion of their official publication. Member States shall
determine how such reference is to be made.
2.                      
Member States shall communicate to the
Commission the text of the main provisions of national law which they adopt in
the field covered by this Directive.
Article 50
This Directive shall enter into force on
the twentieth day following that of its publication in the Official Journal
of the European Union.
Article 51
This
Directive is addressed to the Member States.
Done at Brussels,
For the European Parliament                       For
the Council
The President                                                 The
President
ANNEX I
Types
of undertaking referred to in the first subparagraph of Article 1(1)
–                        
Belgium:
la société anonyme/de naamloze vennootschap, la société en
commandite par actions / de commanditaire vennootschap op aandelen, la société
de personnes à responsabilité limitée/de personenvennootschap met beperkte
aansprakelijkheid;
–                        
Bulgaria:
акционерно
дружество,
дружество с
ограничена
отговорност,
командитно
дружество с акции;
–                        
the Czech Republic:
společnost s ručením omezeným,
akciová společnost;
–                        
Denmark:
aktieselskaber, kommanditaktieselskaber,
anpartsselskaber; 
–                        
Germany:
die Aktiengesellschaft, die Kommanditgesellschaft
auf Aktien, die Gesellschaft mit beschränkter Haftung;
–                        
Estonia:
aktsiaselts, osaühing;
–                        
Ireland:
public companies limited by shares or by
guarantee, private companies limited by shares or by guarantee;
–                        
Greece:
η
ανώνυμη εταιρία,
η εταιρία
περιωρισμένης
ευθύνης, η
ετερόρρυθμη
κατά μετοχές
εταιρία;
–                        
Spain:
la sociedad anónima, la sociedad comanditaria por acciones, la
sociedad de responsabilidad limitada;
–                        
France:
la société anonyme, la société en commandite par actions, la
société à responsabilité limitée;
–                        
Italy:
la società per azioni, la società in accomandita per azioni, la
società a responsabilità limitata;
–                        
Cyprus:
Δημόσιες
εταιρείες
περιορισμένης
ευθύνης με μετοχές
ή με εγγύηση,
ιδιωτικές
εταιρείες
περιορισμένης
ευθύνης με
μετοχές ή με
εγγύηση;
–                        
Latvia:
akciju sabiedrība, sabiedrība ar
ierobežotu atbildību;
–                        
Lithuania:
akcinės bendrovės, uždarosios
akcinės bendrovės;
–                        
Luxembourg:
la société anonyme, la société en commandite par actions, la
société à responsabilité limitée;
–                        
Hungary:
részvénytársaság, korlátolt
felelősségű társaság;
–                        
Malta:
kumpanija pubblika —public limited liability
company, kumpannija privata —private limited liability company,
soċjeta in akkomandita bil-kapital maqsum
f'azzjonijiet —partnership en commandite with the capital divided into shares;
–                        
the Netherlands:
de naamloze vennootschap, de besloten vennootschap
met beperkte aansprakelijkheid;
–                        
Austria:
die Aktiengesellschaft, die Gesellschaft mit
beschränkter Haftung;
–                        
Poland:
spółka akcyjna, spółka z
ograniczoną odpowiedzialnością, spółka komandytowo-akcyjna;
–                        
Portugal:
a sociedade anónima, de responsabilidade limitada, a sociedade
em comandita por acões, a sociedadepor quotas de responsabilidade limitada;
–                        
Romania:
societate pe acțiuni, societate cu
răspundere limitată, societate în comandită pe acțiuni.
–                        
Slovenia:
delniška družba, družba z omejeno
odgovornostjo, komanditna delniška družba;
–                        
Slovakia:
akciová spoločnosť,
spoločnosť s ručením obmedzeným;
–                        
Finland:
osakeyhtiö/aktiebolag;
–                        
Sweden:
aktiebolag;
–                        
the United Kingdom:
public companies limited by shares or by
guarantee, private companies limited by shares or by guarantee
ANNEX II
Types
of undertaking referred to in the second subparagraph of Article 1(1)
–                        
Belgium
la société en nom collectif/de vennootschap onder firma, la société en
commandité simple/de gewone commanditaire vennootschap;
–                        
Bulgaria:
събирателно
дружество,
командитно
дружество;
–                        
the Czech Republic:
veřejná obchodní společnost, komanditní
společnost, družstvo;
–                        
Denmark:
interessentskaber, kommanditselskaber;
–                        
Germany:
die offene Handelsgesellschaft, die Kommanditgesellschaft;
–                        
Estonia:
täisühing, usaldusühing;
–                        
Ireland:
partnerships, limited partnerships, unlimited
companies;
–                        
Greece:
η
ομόρρυθμος
εταιρία, η
ετερόρρυθμος
εταιρία;
–                        
Spain:
sociedad colectiva, sociedad en comandita simple;
–                        
France:
la société en nom collectif, la société en commandite simple;
–                        
Italy:
la società in nome collettivo, la società in accomandita semplice;
–                        
Cyprus:
Ομόρρυθμες
και
ετερόρρυθμες
εταιρείες
(συνεταιρισμοί);
–                        
Latvia:
pilnsabiedrība, komanditsabiedrība;
–                        
Lithuania:
tikrosios ūkinės bendrijos,
komanditinės ūkinės bendrijos;
–                        
Luxembourg:
la société en nom collectif, la société en commandite simple;
–                        
Hungary:
közkereseti társaság, betéti társaság, közös
vállalat, egyesülés;
–                        
Malta:
Soċjeta f'isem kollettiv jew soċjeta in
akkomandita, bil-kapital li mhux maqsum f'azzjonijiet meta s-soċji kollha
li għandhom responsabbilita' llimitata huma soċjetajiet in akkomandita bil-kapital maqsum f'azzjonijiet —Partnership en nom
collectif or partnership en commandite with capital that is not divided into
shares, when all the partners with unlimited liability are partnership
en commandite with the capital divided into shares ;
–                        
the Netherlands:
de vennootschap onder firma, de commanditaire vennootschap;
–                        
Austria:
die offene Handelsgesellschaft, die Kommanditgesellschaft;
–                        
Poland:
spółka jawna, spółka komandytowa;
–                        
Portugal:
sociedade em nome colectivo, sociedade em
comandita simples;
–                        
Romania:
societate în nume colectiv, societate în
comandită simplă;
–                        
Slovenia:
družba z neomejeno odgovornostjo, komanditna
družba;
–                        
Slovakia:
verejná obchodná spoločnosť, komanditná
spoločnosť;
–                        
Finland:
avoin yhtiö/ öppet bolag, kommandiittiyhtiö/kommanditbolag;
–                        
Sweden:
handelsbolag, kommanditbolag;
–                        
the United Kingdom:
partnerships, limited partnerships, unlimited
companies
 ANNEX III
Correlation Table 
 Directive 78/660/EEC || Directive 83/349/EEC || This Directive 
 Article 1 (1), first subparagraph, introductory wording || - || Article 1(a) 
 Article 1(1), first subparagraph, first to twenty seventh indents || - || Annex I 
 Article 1(1), second subparagraph || - || Article 1(b) 
 Article 1(1), second subparagraph, points (a) to (aa) || - || Annex II 
 Article 1 (1), third subparagraph || - || Article 1(c) 
 Article 1(2) || - || - 
 Article 2(1) || - || Article 4(1) 
 Article 2(2) || - || Article 4(2) 
 Article 2(3) || - || Article 4(3) 
 Article 2(4) || - || Article 4(3) 
 Article 2(5) || - || Article 4(4) 
 Article 2(6) || - || Article 4(5) 
 Article 3 || - || Article 8(1) 
 Article 4(1) || - || Article 8(2) 
 Article 4(2) || - || Article 8(3) 
 Article 4(3) || - || - 
 Article 4(4) || - || Article 8(4) 
 Article 4(5) || - || - 
 Article 4(6) || - || Article 5(1)(h) 
 Article 5 || - || - 
 Article 6 || - || Article 8(5) 
 Article 7 || - || Article 5(g) 
 Article 8 || - || - 
 Article 9(A) || - || Article 9(A) 
 Article 9(B) || - || - 
 Article 9(C) || - || Article 9(B) 
 Article 9(D) || - || Article 9(C) 
 Article 9(E) || - || Article 9(D) 
 Article 9(F) || - || - 
 Liabilities Article 9(A) || - || Capital, reserves and liabilities Article 9(A) 
 Article 9(B) || - || Article 9(B) 
 Article 9(C) || - || Article 9(C) 
 Article 9(D) || - || Article 9(D) 
 Article 9(E) || - || - 
 Article 10 || - || - 
 Article 10a || - || Article 10 
 Article 11, first subparagraph || - || Article 3(1) and Article 16(1) 
 Article 11, second subparagraph   || - || - 
 Article 11, third subparagraph || - || Article 3(7) 
 Article 12(1) || - || Article 3(8) 
 Article 12(2) || - || - 
 Article 12(3) || - || Article 3(9) 
 Article 13(1) || - || Article 11(1) 
 Article 13(2) || - || Article 11(2) 
 Article 14 || - || Article 17(1), point (d) 
 Article 15(1) || - || Article 11(3) 
 Article 15(2) || - || Article 2(4) 
 Article 15(3), point (a) || - || Article 18(1), point (a) 
 Article 15(3), point (b) || - || - 
 Article 15(3), point (c) || - || Article 18(1), point (a)(i) 
 Article 15(4) || - || - 
 Article 16 || - || Article 11(4) 
 Article 17 || - || Article 2(2) 
 Article 18 || - || - 
 Article 19 ||   || Article 2(8) 
 Article 20(1) || - || Article 11(11), first subparagraph 
 Article 20(2) || - || Article 11(11), second subparagraph 
 Article 20(3) || - || - 
 Article 21 || - || - 
 Article 22, first subparagraph || - || Article 12(1) 
 Article 22, second subparagraph || - || Article 12(2) 
 Article 23, items 1 to 15 || - || Article 13, items 1 to 15 
 Article 23, items16 to 19 || - || - 
 Article 23, items 20 and 21 || - || Article 13, items 16 and 17 
 Article 24 || - || - 
 Article 25, items 1 to 13 || - || Article 14, items 1 to 13 
 Article 25, items 14 to 17 || - || - 
 Article 25, items 18 and 19 || - || Article 14, items 14 and 15 
 Article 26 || - || - 
 Article 27, first subparagraph, introductory wording || - || Article 3(2) 
 Article 27, first subparagraph, points (a) and (c) || - || Article 16(2), points (a) and (b) 
 Article 27, first subparagraph, points (b) and (d) || - || - 
 Article 27, second subparagraph || - || Article 3(7) 
 Article 28 || - || Article 2(5) 
 Article 29 || - || - 
 Article 30 || - || - 
 Article 31(1) || - || Article 5(1), introductory wording and points (a) to (f) 
 Article 31(1a) || - || Article 5(2) 
 Article 31(2) || - || Article 5(3) 
 Article 32 || - || Article 5(1), point (i) 
 Article 33(1), introductory wording || - || Article 6(1) 
 Article 33 (1)(a) and (b), and the second and third subparagraphs || - || - 
 Article 33 (1)(c) || - || Article 6(1) 
 Article 33(2)(a), first subparagraph, and Article 33(2)(b), (c) and (d) || - || Article 6(2) 
 Article 33(2)(a), second subparagraph || - || Article 17(1), point (b) 
 Article 33(3) || - || Article 6(3) 
 Article 33(4) || - || Article 17(1), point (b), last sentence 
 Article 33(5) || - || - 
 Article 34 || - || - 
 Article 35(1)(a) || - || Article 5(1), point (i) 
 Article 35(1)(b) and (c) || - || Article 11(5) 
 Article 35(1)(d) ||   || Article 18(1), point (b) 
 Article 35(2) || - || Article 2(6) 
 Article 35(3) || - || Article 2(7) 
 Article 35(4) || - || Article 11(7) and Article 18(1), point (a)(vi) 
 Article 36 || - || - 
 Article 37(1) || - || Article 11(9) 
 Article 37(2) || - || Article 11(10) 
 Article 38 || - || - 
 Article 39(1)(a) || - || Article 5(1), point (i) 
 Article 39(1)(b) || - ||  Article 11(6) 
 Article 39(1)(c) || - || - 
 Article 39(1)(d) || - || Article 11(6) 
 Article 39(1)(e) || - || Article 18(1), point (b) 
 Article 39(2) || - || Article 2(6) 
 Article 40(1) || - || Article 11(8) 
 Article 40(2) || - || - 
 Article 41 || - || - 
 Article 42, first subparagraph || - || Article 11(11), third subparagraph 
 Article 42, second subparagraph || - || - 
 Article 42a(1) || - || Article 7(1), point (a) 
 Article 42a(2) || - || Article 7(2) 
 Article 42a(3) || - || Article 7(3) 
 Article 42a(4) || - || Article 7(4) 
 Article 42a(5) || - || Article 7(5) 
 Article 42a(5a) || - || Article 7(6) 
 Article 42b || - || Article 7(7) 
 Article 42c || - || Article 7(8) 
 Article 42d || - || Article 17(1), point (c) 
 Article 42e || - || Article 7(1), point (b) 
 Article 42f || - || Article 7 (9) 
 Article 43(1), introductory wording || - || Article 17 (1), introductory wording 
 Article 43(1), point (1) || - || Article 17(1), point (a) 
 Article 43(1), point (2), first subparagraph || - || Article 18(1), point (h) first subparagraph 
 Article 43(1), point (2), second subparagraph || - || Article 18(1), point (l) 
 Article 43(1), point (3) || - || Article 18(1), point (h) 
 Article 43(1), point (4) || - || Article 18(1), point (j) 
 Article 43(1), point (5) || - || Article 18(1), point (k) 
 Article 43(1), point (6) || - || Article 17(1), point (g) 
 Article 43(1), point (7) || - || Article 17 (1), point (d) 
 Article 43(1), point (7a) || - || Article 17 (1), point (e) 
 Article 43(1), point (7b) || - || Article 2(3) and Article 17(1), point (h) 
 Article 43(1), point (8) || - || Article 19(1), point (a) 
 Article 43(1), point (9) || - || Article 18(1), point (f) 
 Article 43(1), point (10) || - || - 
 Article 43(1), point (11) || - || Article 18(1), point (g) 
 Article 43(1), point (12) || - || Article 18(1), point (d) first subparagraph 
 Article 43(1), point (13) || - || Article 18(1), point (e) 
 Article 43(1), point (14)(a) || - || Article 18(1), point (c)(i) 
 Article 43(1), point (14)(b) || - || Article 18(1), point (c)(ii) 
 Article 43(1), point (15) || - || Article 19(1), point (b) 
 Article 43(2) || - || - 
 Article 43(3) || - || Article 18(1), point (d) second subparagraph 
 Article 44 || - || - 
 Article 45(1) || - || Article 18(1), point (h) second subparagraph Article 28(2), point (e) 
 Article 45(2) || - || Article 19(2) 
 Article 46 || - || Article 20 
 Article 46a || - || Article 21 
 Article 47(1) and (1a) || - || Article 30(1) and (2) 
 Article 47(2) || - || Article 31(1) 
 Article 47(3) || - || Article 31(2) 
 Article 48 || - || Article 32(1) 
 Article 49 || - || Article 32(2) 
 Article 50 || - || Article 18(1), points (p) and (g) 
 Article 50a || - || - 
 Article 50b || - || Article 33(1) 
 Article 50c || - || Article 33(2) 
 Article 51(1) || - || Article 34(1) 
 Article 51(2) || - || - 
 Article 51(3) || - || - 
 Article 51a || - || Article 35(1) and (2) 
 Article 52 || - || - 
 Article 53(2) || - || Article 3(10) 
 Article 53a || - || Article 46 
 Article 55 || - || - 
 Article 56(1) || - || - 
 Article 56(2) || - || Article 18(1), points (m), (n) and (o) 
 Article 57 || - || Article 43 
 Article 57a || - || Article 44 
 Article 58 || - || Article 45 
 Article 59(1) || - || Article 8(6), point (a) 
 Article 59(2) to (6), point (a) || - || Article 8(6), point (a) and Article 27 
 Article 59(6), points (b) and (c) || - || Article 8(6), points (b) and (c) 
 Article 59(7) and (8) || - || Article 8(6), point (a) and Article 27 
 Article 59(9) || - || - 
 Article 60 || - || - 
 Article 60a || - || Article 47 
 Article 61 || - || Article 18(2) 
 Article 61a || - || - 
 Article 62 || - || Article 51 
 - || Article 1(1), points (a), (b) and (c) || Article 23(1), points (a), (b) and (c) 
 - || Article 1(1), point (d) || Article 23(1), point (f) 
 - || Article 1(2) || Article 23(1), points (d) and (e) 
 - || Article 2(1), (2) and (3) || Article 23(2), (3) and (4) 
 - || Article 3(1) || Article 23(5) 
 - || Article 3(2) || Article 23(6) 
 - || Article 4(1) || Article 22 
 - || Article 4(2) || Article 24(3) 
 - || Article 5 || - 
 - || Article 6(1) || Article 24(2) 
 - || Article 6(2) || Article 3(6) 
 - || Article 6(3) and (4) || - 
 - || Article 7(1) || Article 24(4) 
 - || Article 7(2) || Article 24(5) 
 - || Article 7(3) || Article 46 
 - || Article 8 || Article 24(6) 
 - || Article 9(1) || Article 24(7) 
 - || Article 9(2) || - 
 - || Article 10 || Article 24(8) 
 - || Article 11 || Article 24(9) 
 - || Article 12 || Article 23(7) 
 - || Article 13(1), (2) and (2a) || - 
 - || Article 13(3) || Article 24(10) 
 - || Article 15 || - 
 - || Article 16 || Article 4 
 - || Article 17(1) || Article 25(1) 
 - || Article 17(2) || - 
 - || Article 18 || Article 25(2) 
 - || Article 19 || Article 25(3) 
 - || Article 20 || - 
 - || Article 21 || Article 25(4) 
 - || Article 22 || Article 25(5) 
 - || Article 23 || Article 25(6) 
 - || Article 24 || - 
 - || Article 25(1) || Article 5(1)(b) 
 - || Article 25(2) || Article 5(3) 
 - || Article 26(1), introductory sentence || Article 25(7) 
 - || Article 26(1), points (a), (b) and (c) || - 
 - || Article 26(2) and (3) || - 
 - || Article 27 || Article 25(8) 
 - || Article 28 || Article 25(9) 
 - || Article 29(1) || Article 25(10) 
 - || Article 29(2) || Article 25(11) 
 - || Article 29(3) || Article 25(12) 
 - || Article 29(4) || Article 25(13) 
 - || Article 29(5) || Article 25(14) 
 - || Article 30 || - 
 - || Article 31 || Article 25(3), point (c) last sentence 
 - || Article 32(1) and (2) || Article 26 
   || Article 32(3) || - 
 - || Article 33(1), first sentence || Article 27(1) 
   || Article 33(1), second sentence || Article 2(13) 
 - || Article 33(2) to (8) || Article 27(2) to (8) 
 - || Article 33(9) || - 
 - || Article 34, introductory wording and Article 34(1), first sentence || Article 17(1), point a 
 - || Article 34(1), second sentence || - 
 - || Article 34 (2) || Article 28(2), point (a) 
 - || Article 34(3), point (a) || Article 28(2), point (b) 
 - || Article 34(3), point (b) || - 
 - || Article 34(4) || Article 28(2), point (c) 
 - || Article 34(5) || Article 28(2), point (d) 
 - || Article 34(6) || Article 17(1), point (g) 
 - || Article 34(7) || Article 17(1), point (d) 
 - || Article 34(7a) || Article 17(1), point (e) 
 - || Article 34(7b) || Article 17(1), point (h) 
 - || Article 34(8) || Article 19(1), point (a) 
 - || Article 34(9), point (a) || - 
 - || Article 34(9), point (b) || Article 18(1), point (d) and Article 28(1), point (b) 
 - || Article 34(10) and (11) || - 
 - || Article 34(12) and (13) || Article 28(1), point (c) 
 - || Article 34(14) || Article 17(1), point (c) 
 - || Article 17(1), point (c) || Article 18(1), point (c) 
 - || Article 34(16) || Article 19(1), point (b) 
 - || Article 35(1) || Article 28(2), point (e) 
 - || Article 35(2) || - 
 - || Article 36(1) || Article 20(1) and Article 29(1) 
 - || Article 36(2), points (a), (b) and (c) || Article 20(2), points (a), (b) and (c) 
 - || Article 36(2), point (d) || Article 29(2), point (a) 
 - || Article 36(2), point (e) || Article 20(2), point (f) 
 - || Article 36(2), point (f) || Article 29(2), point (b) 
 - || Article 36(3) || Article 29(3) 
 - || Articles 36a || Article 33(2) 
 - || Articles 36b || Article 33(3) 
 - || Article 37(1) || Article 34(2) 
 - || Article 37(2) || Article 35(1) 
 - || Article 37(3) || Article 35(2) 
 - || Article 37(4) || Article 35(3) 
 - || Article 38(1) || Article 30(1), first subparagraph and 30(3), first subparagraph 
 - || Article 38(2) || Article 30(1), second subparagraph 
 - || Article 38(3) || - 
 - || Article 38(4) || Article 30(3), second subparagraph 
 - || Article 38(5), (6) and (7) || - 
 - || Article 38a || - 
 - || Article 39 || - 
 - || Article 40 || - 
 - || Article 41(1) || Article 2(12) 
 - || Article 41(1a) || Article 2(3) 
 - || Article 41(2) to (5) || - 
 - || Article 42 || - 
 - || Article 43 || - 
 - || Article 44 || - 
 - || Article 45 || - 
 - || Article 46 || - 
 - || Article 47 || - 
 - || Article 48 || Article 47 
 - || Article 49 || - 
 - || Article 50 || - 
 - || Article 50a || - 
 - || Article 51 || - 
[1]               Fourth Council Directive of 25 July 1978 based on
Article 54 (3) (g) of the Treaty on the annual accounts of certain types of
companies (78/660/EEC). Seventh Council Directive of 13 June 1983 based on the
Article 54 (3) (g) of the Treaty on consolidated accounts (83/349/EEC).
[2]               Proposal
for a Directive of the European Parliament and of the Council amending Council
Directive 78/660/EEC on the annual accounts of certain types of companies as
regards micro-entities (Text with EEA relevance) {SEC(2009) 206} {SEC(2009)
207} COM/2009/0083 final - COD 2009/0035, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52009PC0083:EN:NOT
[3]               http://ec.europa.eu/europe2020/index_en.htm
[4]               The review of the Accounting Directives is flagged in
section 2.11of the Communication of April 2011 from the Commission to the
Council, the European Parliament, The European Economic and Social Committee and
the Committee of the Regions: “Single Market Act – Twelve levers to boost
growth and strengthen confidence, 'Working together to create new growth'”,
available at http://ec.europa.eu/internal_market/smact/docs/20110413-communication_en.pdf#page=2
[5]               http://ec.europa.eu/governance/better_regulation/key_docs_en.htm#_simplification
[6]               http://ec.europa.eu/enterprise/policies/better-regulation/administrative-burdens/priority-areas/index_en.htm
[7]               The impact on savings for micro-companies have not
been included within the impacts attaching to this proposal in order to avoid
double counting with the assessment of the impacts of 2009 proposal for a
Directive on micro-entities.
[8]               Proposal for a Directive of the European Parliament
and of the Council amending Directives 89/666/EEC, 2005/56/EC and 2009/101/EC
as regards the interconnection of central, commercial and companies registers, 24.2.2011, COM(2011) 79.
[9]                               http://www.liberation.fr/monde/01012339133-lutter-contre-l-opacite-des-industries-extractives
[10]             http://ec.europa.eu/commission_2010-2014/president/news/speeches-statements/pdf/deauville-g8-declaration_en.pdfhttp://www.g20-g8.com/g8-g20/g8/francais/en-direct/actualites/un-nouvel-elan-pour-la-liberte-et-la-democratie.1313.html
[11]             Such as Resolution INI/2010/2102 
[12]             Whether clear-cutting, selective logging or thinning,
on land classified as containing primary forest areas or other disturbance of
such forest or forest land caused by mining, mineral, water, oil or gas
exploration or extraction or other detrimental activities.
[13]             Defined in Directive 2009/28/EC as "naturally regenerated forest of
native species, where there aisre
no clearly visible indications of human activities and the
ecological processes are not significantly disturbed." 
[14]             http://www.sec.gov/about/laws/wallstreetreform-cpa.pdf
[15]             Taxes, royalties, fees
(including license fees), production entitlements, bonuses, and other material
benefits.
[16]             On 22 July 2011 the Impact Assessment Board gave its
positive opinion on the impact assessment. The comments expressed by the Board
were incorporated in the final version (website address), namely: The report
needed to establish more clearly the scope and core objective of the
initiative. Secondly, it needed to provide a fuller baseline scenario. Thirdly,
options needed to be better presented. Fourthly, the report needed to better
consider the costs and benefits of the policy options and strengthen the
proportionality analysis of the proposed measures. Finally, the report needed
to provide more information on stakeholders' views. 
[17]             For
instance, the Commission promotes definitions of micro, small and medium-sized
enterprises that are defined only for certain matters, such as State aid,
implementation of the Structural Funds or Community programmes, particularly
the Framework Programme on Research and Technological Development. These are
given by the Commission Recommendation 2003/361/EC of 6 May 2003 concerning the
definition of micro, small and medium-sized enterprises [Official Journal L 124
of 20.05.2003]. Under this frame, a medium-sized enterprise is defined as an
enterprise which employs fewer than 250 persons and whose annual turnover does
not exceed EUR 50 million or whose annual balance-sheet total does not exceed
EUR 43 million. A small enterprise is defined as an enterprise which employs
fewer than 50 persons and whose annual turnover and/or annual balance sheet
total does not exceed EUR 10 million. And a microenterprise is defined as an
enterprise which employs fewer than 10 persons and whose annual turnover and/or
annual balance sheet total does not exceed EUR 2 million. See also http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htm
[18]             COM(2010)543
[19]             Communication
from the Commission to the Council, the European Parliament, the European
Economic and Social Committee and the Committee of the Regions - “Think Small
First” - A “Small Business Act” for Europe {SEC(2008) 2101} {SEC(2008) 2102}.
[20]             Communication from the Commission to the European Parliament,
the Council, Economic and Social Committee and the Committee of the Regions -
Review of the “Small Business Act” for Europe, COM(2011) 78 final.
[21]             European Council of 24 and 25 March 2011 - Conclusions,
Nr: EUCO 10/1/11, Brussels, 25/3/2011
[22]             Communication from the Commission to the Council, the
European Parliament, the European Economic and Social Committee and the
Committee of the Regions, Single Market Act - Twelve levers to boost growth and
strengthen confidence - "Working together to create new growth", COM(2011) 206.
[23]             Communication from the Commission - EUROPE 2020 - A
strategy for smart, sustainable and inclusive growth, COM(2010)
2020.
[24]                      Communication from the Commission to the European Parliament, the Council, the European
 Economic and Social Committee
and the Committee of the Regions, Smart Regulation in the European Union,
COM(2010) 543 final. Please also see: http://ec.europa.eu/governance/better_regulation/index_en.htm
[25]             OJ 2010/C 45 E/10.
[26]             OJ L 26, 31.1.1977, p. 1.
[27]             Defined in Directive 2009/28/EC
as "naturally regenerated forest of native
species, where there isare no clearly
visible indication of human activities and the ecological processes are not significantly
disturbed." 
[28]                             http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2005:347:0001:0006:EN:PDF
[29]             Regulation (EU) No 995/2010 of the European Parliament
and of the Council of 20 October 2010. Companies that import wood products under EU voluntary
agreements will be exempt from this requirement.
[30]             EITI(2005), Extractive Industries Transparency
Initiative, Source book, available at: http://eiti.org/document/sourcebook.

[31]             OJ L 157,
9.6.2006, p. 87.
[32]             OJ L 142, 30.4.2004, p. 12.
[33]             OJ L 157, 9.6.2006, p. 87. 
[34]             OJ L 393, 30.12.2006, p. 1. 
[35]             OJ L 393, 30.12.2006, p. 1.