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Seventh Council Directive of 13 June 1983
Seventh Council Directive of 13 June 1983 based on the article 54 (3) (g) of the treaty on consolidated accounts (83/349/EEC)
The Council of the European Communities,
having regard to the treaty establishing the European Economic Community, and in particular article 54 (3) (g) thereof,
having regard to the proposal from the Commission (1),
having regard to the opinion of the European Parliament (2),
having regard to the opinion of the Economic and Social Committee (3),
whereas on 25 july 1978 the Council adopted directive 78/660/EEC (4) on the coordination of national legislation governing the annual accounts of certain types of companies; whereas many companies are members of bodies of undertakings; whereas consolidated accounts must be drawn up so that financial information concerning such bodies of undertakings may be conveyed to members and third parties; whereas national legislation governing consolidated accounts must therefore be coordinated in order to achieve the objectives of comparability and equivalence in the information which companies must publish within the community;
whereas on 25 july 1978 the Council adopted directive 78/660/EEC (4) on the coordination of national which the power of control is based on a majority of voting rights but also of those in which it is based on agreements, where these are permitted; whereas, furthermore, Member States in which the possibility occurs must be permitted to cover cases in which in certain circumstances control has been effectively exercised on the basis of a minority holding; whereas the Member States must be permitted to cover the case of bodies of undertakings in which the undertakings exist on an equal footing with each other;
whereas the aim of coordinating the legislation governing consolidated accounts is to protect the interests subsisting in companies with share capital; whereas such protection implies the principle of the preparation of consolidated accounts where such a company is a member of a body of undertakings, and that such accounts must be drawn up at least where such a company is a parent undertaking; whereas, furthermore, the cause of full information also requires that a subsidiary undertaking which is itself a parent undertaking draw up consolidated accounts; whereas, nevertheless, such a parent undertaking may, and, in certain circumstances, must be exempted from the obligation to draw up such consolidated accounts provided that its members and third parties are sufficiently protected;
whereas, for bodies of undertakings not exceeding a certain size, exemption from the obligation to prepare consolidated accounts may be justified; whereas, accordingly, maximum limits must be set for such exemptions; whereas it follows therefrom that the Member States may either provide that it is sufficient to exceed the limit of one only of the three criteria for the exemption not to apply or adopt limits lower than those prescribed in the directive;
whereas consolidated accounts must give a true and fair view of the assets and liabilities, the financial position and the profit and loss of all the undertakings consolidated taken as a whole; whereas, therefore, consolidation should in principle include all of those undertakings; whereas such 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 interests of persons outwith such bodies; whereas, however, the necessary corrections must be made to eliminate the effects of the financial relations between the undertakings consolidated;
whereas a number of principles relating to the preparation of consolidated accounts and valuation in the context of such accounts must be laid down in order to ensure that items are disclosed consistently, and may readily be compared not only as regards the methods used in their valuation but also as regards the periods covered by the accounts;
whereas participating interests in the capital of undertakings over which undertakings included in a consolidation exercise significant influence must be included in consolidated accounts by means of the equity method;
whereas the notes on consolidated accounts must give details of the undertakings to be consolidated;
whereas certain derogations originally provided for on a transitional basis in directive 78/660/EEC may be continued subject to review at a later date,
HAS ADOPTED THIS DIRECTIVE:
SECTION 1: Conditions for the preparation of consolidated accounts
Article 1
1. A Member State shall require any undertaking governed by its national law to draw up consolidated accounts and a consolidated annual report if that undertaking (a parent undertaking):
(a) has a majority of the shareholders' or members' voting rights in another undertaking (a subsidiary undertaking); or
(b) has the right to appoint or remove a majority of the members of the administrative, management or supervisory body of another undertaking (a subsidiary undertaking) and is at the same time a shareholder in or member of that undertaking; or
(c) has the right to exercise a dominant influence over an undertaking (a subsidiary undertaking) of which it is a shareholder or member, pursuant to a contract entered into with that undertaking or to a provision in its memorandum or articles of association, where the law governing that subsidiary undertaking permits its being subject to such contracts or provisions. A Member State need not prescribe that a parent undertaking must be a shareholder in or member of its subsidiary undertaking. Those Member States the laws of which do not provide for such contracts or clauses shall not be required to apply this provision; or
(d) is a shareholder in or member of an undertaking, and:
(aa) a majority of the members of the administrative, management or supervisory bodies of that undertaking (a subsidiary undertaking) who have held office during the financial year, during the preceding financial year and up to the time when the consolidated accounts are drawn up, have been appointed solely as a result of the exercise of its voting rights; or
(bb) controls alone, pursuant to an agreement with other shareholders in or members of that undertaking (a subsidiary undertaking), a majority of shareholders' or members' voting rights in that undertaking. The Member States may introduce more detailed provisions concerning the form and contents of such agreements.
The Member States shall prescribe at least the arrangements referred to in (bb) above.
They may make the application of (aa) above dependent upon the holding's representing 20 % or more of the shareholders' or members' voting rights.
However, (aa) above shall not apply where another undertaking has the rights referred to in subparagraphs (a), (b) or (c) above with regard to that subsidiary undertaking.
2. Apart from the cases mentioned in paragraph 1 above and pending subsequent coordination, the Member States may require any undertaking governed by their national law to draw up consolidated accounts and a consolidated annual report if that undertaking (a parent undertaking) holds a participating interest as defined in article 17 of directive 78/660/EEC in another undertaking (a subsidiary undertaking), and:
(a) it actually exercises a dominant influence over it; or
(b) it and the subsidiary undertaking are managed on a unified basis by the parent undertaking.
Article 2
1. For the purposes of article 1 (1) (a), (b) and (d), 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 must be added to those of the parent undertaking.
2. For the purposes of article 1 (1) (a), (b) and (d), the rights mentioned in paragraph 1 above must 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.
3. For the purposes of article 1 (1) (a) and (d), the total of the shareholders' or members' voting rights in the subsidiary undertaking must 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.
Article 3
1. Without prejudice to articles 13, 14 and 15, 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.
2. For the purposes of paragraph 1 above, any subsidiary undertaking of a subsidiary undertaking shall be considered a subsidiary undertaking of the parent undertaking which is the parent of the undertakings to be consolidated.
Article 4
1. For the purposes of this directive, 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 following types of company:
(a) in Germany:
die Aktiengesellschaft, die Kommanditgesellschaft auf Aktien, die Gesellschaft mit beschränkter Haftung;
(b) in 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 personnenvennootschap met beperkte aansprakelijkheid;
(c) in Denmark:
aktieselskaber, kommanditaktieselskaber, anpartsselskaber;
(d) in France:
la société anonyme, la société en commandite par actions, la société à responsabilité limitée;
(e) in Greece:
;
(f) in Ireland:
public companies limited by shares or by guarantee, private companies limited by shares or by guarantee;
(g) in Italy:
la società per azioni, la società in accomandita per azioni, la società a responsabilità limitata;
(h) in Luxembourg:
la société anonyme, la société en commandite par actions, la société à responsabilité limitée;
(i) in the Netherlands:
de naamloze vennootschap, de besloten vennootschap met beperkte aansprakelijkheid;
(j) in the United Kingdom:
public companies limited by shares or by guarantee, private companies limited by shares or by guarantee.
2. A Member State may, however, grant exemption from the obligation imposed in article 1 (1) where the parent undertaking is not established as one of the types of company listed in paragraph 1 above.
Article 5
1. A Member State may grant exemption from the obligation imposed in article 1 (1) where the parent undertaking is a financial holding company as defined in article 5 (3) of directive 78/660/EEC, and:
(a) it has not intervened during the financial year, directly or indirectly, in the management of a subsidiary undertaking;
(b) it has not exercised the voting rights attaching to its participating interest in respect of the appointment of a member of a subsidiary undertaking's administrative, management or supervisory bodies during the financial year or the five preceding financial years or, where the exercise of voting rights was necessary for the operation of the administrative, management or supervisory bodies of the subsidiary undertaking, no shareholder in or member of the parent undertaking with majority voting rights or member of the administrative, management or supervisory bodies of that undertaking or of a member thereof with majority voting rights is a member of the administrative, management or supervisory bodies of the subsidiary undertaking and the members of those bodies so appointed have fulfilled their functions without any interference or influence on the part of the parent undertaking or of any of its subsidiary undertakings;
(c) it has made loans only to undertakings in which it holds participating interests. Where such loans have been made to other parties, they must have been repaid by the end of the previous financial year; and
(d) the exemption is granted by an administrative authority after fulfilment of the above conditions has been checked.
2.
(a) Where a financial holding company has been exempted, article 43 (2) of directive 78/660/EEC shall not apply to its annual accounts with respect to any majority holdings in subsidiary undertakings as from the date provided for in article 49 (2).
(b) The disclosures in respect of such majority holdings provided for in point 2 of article 43 (1) of directive 78/660/EEC may be omitted when their nature is such that they would be seriously prejudicial to the company, to its shareholders or members or to one of its subsidiaries. A Member State may make such omissions subject to prior administrative or judicial authorization. Any such omission must be disclosed in the notes on the accounts.
Article 6
1. Without prejudice to articles 4 (2) and 5, a Member State may provide for an exemption from the obligation imposed in article 1 (1) if as at the balance sheet date of a parent undertaking the undertakings to be consolidated do not together, on the basis of their latest annual accounts, exceed the limits of two of the three criteria laid down in article 27 of directive 78/660/EEC.
2. A Member State may require or permit that the set-off referred to in article 19 (1) and the elimination referred to in article 26 (1) (a) and (b) be not effected when the aforementioned limits are calculated. In that case, the limits for the balance sheet total and net turnover criteria shall be increased by 20 %.
3. Article 12 of directive 78/660/EEC shall apply to the above criteria.
4. This article shall not apply where one of the undertakings to be consolidated is a company the securities of which have been admitted to official listing on a stock exchange established in a Member State.
5. For 10 years after the date referred to in article 49 (2), the Member States may multiply the criteria expressed in Ecu by up to 2,5 and may increase the average number of persons employed during the financial year to a maximum of 500.
Article 7
1. Notwithstanding articles 4 (2), 5 and 6, a Member State shall exempt from the obligation imposed in article 1 (1) 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) where 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; or
(b) where 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.
In so far as the laws of a Member State prescribe consolidation in this case at the time of the adoption of this directive, that Member State need not apply this provision for 10 years after the date referred to in article 49 (2).
2. Exemption shall be conditional upon compliance with all of the following conditions:
(a) the exempted undertaking and, without prejudice to articles 13, 14 and 15, all of its subsidiary undertakings must be consolidated in the accounts of a larger body of undertakings, the parent undertaking of which is governed by the law of a Member State;
(b)
(aa) the consolidated accounts referred to in (a) above and the consolidated annual report of the larger body of undertakings must be drawn up by the parent undertaking of that body and audited, 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;
(bb) the consolidated accounts referred to in (a) above and the consolidated annual report referred to in (aa) above, the report by the person responsible for auditing those accounts and, where appropriate, the appendix referred to in article 9 must be published for the exempted undertaking in the manner prescribed by the law of the Member State governing that undertaking in accordance with article 38. That Member State may require that those documents be published in its official language and that the translation be certified;
(c) the notes on the annual accounts of the exempted undertaking must disclose:
(aa) the name and registered office of the parent undertaking that draws up the consolidated accounts referred to in (a) above; and
(bb) the exemption from the obligation to draw up consolidated accounts and a consolidated annual report.
3. A Member State need not, however, apply this article to companies the securities of which have been admitted to official listing on a stock exchange established in a Member State.
Article 8
1. In cases not covered by article 7 (1), a Member State may, without prejudice to articles 4 (2), 5 and 6, exempt from the obligation imposed in article 1 (1) 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 article 7 (2) 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 accounts at least six months before the end of the financial year. The 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.
2. A Member State may not make it a condition for this exemption that the parent undertaking which prepared the consolidated accounts described in article 7 (2) (a) must also be governed by its national law.
3. A Member State may not make exemption subject to conditions concerning the preparation and auditing of the consolidated accounts referred to in article 7 (2) (a).
Article 9
1. A Member State may make the exemptions provided for in articles 7 and 8 dependent upon the disclosure of additional information, in accordance with this directive, in the consolidated accounts referred to in article 7 (2) (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 accounts and are in the same circumstances.
2. A Member State may also make exemption dependent upon the disclosure, in the notes on the consolidated accounts referred to in article 7 (2) (a), or in the annual accounts of the exempted undertaking, of all or some of the following information regarding the body of undertakings, the parent undertaking of which it is exempting from the obligation to draw up consolidated accounts:
- the amount of the fixed assets,
- the net turnover,
- the profit or loss for the financial year and the amount of the capital and reserves,
- the average number of persons employed during the financial year.
Article 10
Articles 7 to 9 shall not affect any member state's legislation on the drawing up of consolidated accounts or consolidated annual reports in so far as those documents are required:
- for the information of employees or their representatives, or
- by an administrative or judicial authority for its own purposes.
Article 11
1. Without prejudice to articles 4 (2), 5 and 6, a Member State may exempt from the obligation imposed in article 1 (1) 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 articles 13, 14 and 15, all of its subsidiary undertakings must be consolidated in the accounts of a larger body of undertakings;
(b) the consolidated accounts referred to in (a) above and, where appropriate, the consolidated annual report must be drawn up in accordance with this directive or in a manner equivalent to consolidated accounts and consolidated annual reports drawn up in accordance with this directive;
(c) the consolidated accounts referred to in (a) above must have been audited by one or more persons authorized to audit accounts under the national law governing the undertaking which drew them up.
2. Articles 7 (2) (b) (bb) and (c) and 8 to 10 shall apply.
3. A Member State may provide for exemptions under this article only if it provides for the same exemptions under articles 7 to 10.
Article 12
1. Without prejudice to articles 1 to 10, a Member State may require any undertaking governed by its national law to draw up consolidated accounts and a consolidated annual report if:
(a) that undertaking and one or more other undertakings with which it is not connected, as described in article 1 (1) or (2), 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 with which it is not connected, as described in article 1 (1) or (2), consist for the major part of the same persons in office during the financial year and until the consolidated accounts are drawn up.
2. Where paragraph 1 above is applied, undertakings related as defined in that paragraph together with all of their subsidiary undertakings shall be undertakings to be consolidated, as defined in this directive, where one or more of those undertakings is established as one of the types of company listed in article 4.
3. Articles 3, 4 (2), 5, 6, 13 to 28, 29 (1), (3), (4) and (5), 30 to 38 and 39 (2) shall apply to the consolidated accounts and the consolidated annual report covered by this article, references to parent undertakings being understood to refer to all the undertakings specified in paragraph 1 above. Without prejudice to article 19 (2), however, 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 paragraph 1.
Article 13
1. An undertaking need not be included in consolidated accounts where it is not material for the purposes of article 16 (3).
2. Where two or more undertakings satisfy the requirements of paragraph 1 above, they must nevertheless be included in consolidated accounts if, as a whole, they are material for the purposes of article 16 (3).
3. In addition, an undertaking need not be included in consolidated accounts where:
(a) severe long-term restrictions substantially hinder:
(aa) the parent undertaking in the exercise of its rights over the assets or management of that undertaking; or
(bb) the exercise of unified management of that undertaking where it is in one of the relationships defined in article 12 (1); or
(b) the information necessary for the preparation of consolidated accounts in accordance with this directive cannot be obtained without disproportionate expense or undue delay; or
(c) the shares of that undertaking are held exclusively with a view to their subsequent resale.
Article 14
1. Where the activities of one or more undertakings to be consolidated are so different that their inclusion in the consolidated accounts would be incompatible with the obligation imposed in article 16 (3), such undertakings must, without prejudice to article 33 of this directive, be excluded from the consolidation.
2. Paragraph 1 above shall not be applicable merely by virtue of the fact that the undertakings to be consolidated are partly industrial, partly commercial, and partly provide services, or because such undertakings carry on industrial or commercial activities involving different products or provide different services.
3. Any application of paragraph 1 above and the reasons therefor must be disclosed in the notes on the accounts. Where the annual or consolidated accounts of the undertakings thus excluded from the consolidation are not published in the same Member State in accordance with directive 68/151/EEC (5), they must be attached to the consolidated accounts or made available to the public. In the latter case it must be possible to obtain a copy of such documents upon request. The price of such a copy must not exceed its administrative cost.
Article 15
1. A Member State may, for the purposes of article 16 (3), permit the omission from consolidated accounts of any parent undertaking not carrying on any industrial or commercial activity which holds shares in a subsidiary undertaking on the basis of a joint arrangement with one or more undertakings not included in the consolidated accounts.
2. The annual accounts of the parent undertaking shall be attached to the consolidated accounts.
3. Where use is made of this derogation, either article 59 of directive 78/660/EEC shall apply to the parent undertaking's annual accounts or the information which would have resulted from its application must be given in the notes on those accounts.
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