EC tightens rules on annual accounts

The European Parliament has agreed changes to the European Union’s (EU)
rule-book on annual and consolidated accounts, toughening companies’
requirements to fight fraud and irregularities, while exempting a large number
of smaller businesses from many demands.

Its vote was welcomed by EU internal market commissioner Charlie McCreevy:
‘We improve disclosure for the most complex listed and unlisted companies, and
at the same time allow member states much more scope for reducing burdens on
small and medium-sized companies.’

The parliament notably widened thresholds for small and medium-sized
companies under a key 1978 (78/660/EEC) directive on annual accounts, allowing
them to file simplified returns.

These have been raised from 3.6m to 4.4m euros (balance sheet total) for
smaller businesses and 14.6m to 17.3m euros for medium-sized businesses. MEPs
also agreed to enshrine in EU law the collective responsibility of limited
company board members for any published financial and other key information
about their companies.

They also accepted that more information should be published on large and
unusual transactions with related parties such as family members and company
managers for all bar smaller unlisted companies. The changes will now receive a
formal vote from the EU Council of Ministers, which may approve them unamended.

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