Improvements in clarity and openness of annual and consolidated accounts for
European Union (EU) businesses have been approved by the EU Council of
Ministers, the latest of a series of transparency-seeking reforms to European
company law directives.
The change amends the fourth and seventh ‘accounting’ company law directives,
and accounting directives for banks and insurers. It is designed, said a council
statement, to ‘enhance confidence in the financial statements and annual reports
published by EU companies’.
Notably, the reforms establish a collective responsibility for board members
to reliably and honestly draft and publish these documents; they also demand
more information be published on large and unusual transactions with related
parties – such as family members and company managers – for all bar smaller
The changes, however, do not include some proposals that were deemed
over-bureaucratic by the European Parliament, whose amendments have been
accepted by ministers.
For instance, with regard to the compulsory filing of separate statements on
off-balance sheet arrangements, ministers agreed that such concerns are already
covered by International Accounting Standards.
They also accepted parliamentary amendments increasing the number of small
and medium-sized businesses allowed to file simplified returns under the fourth
company law directive. This threshold, regarding smaller companies’ balance
sheet total and net turnover, has been raised by 20%.
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