The Directive amends three existing Directives, on annual accounts (78/660/EEC), consolidated accounts (83/349/EEC) and annual and consolidated accounts of banks and other financial institutions (86/635/EEC). It requires Member States to permit or require in respect of all companies or any classes of companies the application of “fair values” for certain financial instruments, including derivatives.
The Directive is aimed at allowing for the application of International Accounting Standard (IAS) 39 covering the recognition and measurement of financial instruments. Such permission or requirement may be restricted to consolidated accounts.
A high level of consensus and cooperation among Member States and between the European Parliament, the Council and the Commission allowed the Directive to be adopted in May 2001 (see IP/01/770) under an accelerated procedure with one reading by the European Parliament. Despite this consensus and their own rapid agreement to the Directive, the seven Member States concerned have not yet transposed it.
Some have sought to justify this by referring to the difficulties surrounding the endorsement of IAS 39 within the context of the IAS Regulation. However, the Commission cannot see any reason for delaying the transposition of this Directive into national law because this is mainly an enabling exercise, i.e. Member States do not have to require companies to apply IAS 39. On the other hand, the disclosure provisions of the Directive should allow a better insight in the way in which companies treat financial instruments in their financial statements. These provisions concerning disclosure are very important and are independent of the way in which financial instruments have been accounted for.
This matter is entirely different from the question whether IAS 39 should be endorsed by the Commission for mandatory application in the EU by all EU listed companies in their consolidated accounts in 2005. This matter will be decided upon by the Commission later this year. The infringement only relates to the possibility for companies to voluntarily apply IAS 39 as from now.
For the latest information on proceedings concerning all Member States, consult the following site:
http://europa.eu.int/comm/secretariat_general/sgb/droit_com/index_en.htm
