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Community programme to support financial services, financial reporting and auditing

Community programme to support financial services, financial reporting and auditing

Outline of the Community (European Union) legislation about Community programme to support financial services, financial reporting and auditing

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Financial services: general framework

Community programme to support financial services, financial reporting and auditing (2010-2013)

Document or Iniciative

Decision No 716/2009/EC of the European Parliament and of the Council of 16 September 2009 establishing a Community programme to support specific activities in the field of financial services, financial reporting and auditing.

Summary

The aim of the Programme is to support the activities or actions of certain bodies in the fields of financial services, financial reporting and auditing. It applies to two types of activity:

  • activities supporting the implementation of Community policies aimed at the convergence of supervisory practices;
  • activities developing or providing input to the development of standards.

Beneficiaries of the Programme

The following bodies may benefit from the Programme:

  • the European Financial Reporting Advisory Group (EFRAG);
  • the International Accounting Standards Board (IASB);
  • the Public Interest Oversight Board (PIOB);
  • CEBS Secretariat Limited, based in London, which supports the Committee of European Banking Supervisors (CEBS);
  • a French not-for-profit organisation, based in Paris, which supports the Committee of European Securities Regulators (CESR);
  • a German not-for-profit organisation, based in Frankfurt, which supports the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS).

Other bodies may also benefit from the Programme provided they meet the following criteria:

  • they must be non-profit-making legal persons which carry out activities connected with public interest and pursue an aim of general European interest;
  • they must not be in the situation described in Articles 93(1), 94 and 96(2)(a) of the Financial Regulation.

Award of grants

The European Commission awards grants to the EFRAG, the IASCF and the PIOB in the form of operating grants, to cover expenses such as the running of secretariats and the remuneration of employees.

The support structures of the European supervisory committees receive funding in the form of action grants covering the following activities:

  • information technology projects;
  • training programmes and staff secondment schemes for staff from national supervisors;
  • hosting conferences, seminars, training sessions and meetings of experts;
  • preparing and issuing publications, preparation and execution of other information activities;
  • carrying out research and preparing studies;
  • other specific supporting activities in the field of accounting, auditing and supervisory convergence or cooperation.

The Commission awards funding in the form of grants to other bodies which have submitted an appropriate work programme and estimated overall budget.

Grant beneficiaries are obliged to indicate, on a website or in the annual report, that they have received funding from the budget of the European Union.

The financial reference amount is EUR 38.7 million for the period 2010-2013.

Monitoring procedures

The Commission shall ensure that a technical and financial report, and an activity and financial report are submitted annually by the beneficiary of the grant. It may exercise supervision and financial control, as may the Court of Auditors.

Context

This Programme is introduced as part of the period of reflection which followed the financial crisis of October 2008. This period has been marked by a range of initiatives such as the adoption of the Communication from the Commission of 29 October 2008 – From financial crisis to recovery: A European framework for action, and the establishment of the De Larosière Group of experts responsible for considering the future supervisory architecture in Europe.

At the same time, the G20 summit held in Washington on 15 November 2008 also highlighted the need to improve international coordination between financial supervisory bodies.

References

Act Entry into force Deadline for transposition in the Member States Official Journal

Decision 716/2009/EC

15.10.2009

1.7.2010

OJ L 253 of 25.9.2009

Related Acts

Communication from the Commission of 29 October 2008 – From financial crisis to recovery: A European framework for action [COM(2008) 706 final – Not published in the Official Journal].

This Communication emphasises the need to redefine the regulatory and supervisory model of the European Union financial sector.

A simplified business environment

A simplified business environment

Outline of the Community (European Union) legislation about A simplified business environment

Topics

These categories group together and put in context the legislative and non-legislative initiatives which deal with the same topic.

Internal market > Businesses in the internal market > Company law

A simplified business environment

Document or Iniciative

Communication from the Commission dated 10 July 2007 on a simplifed business environment for companies in the area of company law, accounting and auditing [COM (2007) 394 final – Official Journal C191 dated 15.8.2007].

Summary

High administrative costs resulting from EU legislation restrict the competitiveness of European companies. Furthermore, legislation relating to company law, accounting and auditing has not developed in line with the business environment. The Commission proposes to re-examine EU directives in this area and their relevance. These proposals are subject to discussion with Member States, European Parliament and stakeholders with the aim of arriving at a consensus and submitting legislative proposals.

Company law

Member States need to be able to provide rapid and flexible responses appropriate to the constantly developing business environment. In this situation, a harmonised European framework promotes a climate of confidence that is required for the smooth running of the single market, but it also represents a restraint on innovation and imposes additional administrative burdens on companies.

An initial option consists in considering the relevance of directives and their complete or partial repeal where they do not regulate cross-border issues. This affects the following:

  • Domestic mergers and divisions (Third and Sixth Directives);
  • Rules on the capital of public limited companies (Second Directive);
  • Rules on single-member private limited liability companies (Twelfth Directive).

A second option consists of considering simplifying legislation if repeal is too far-reaching. This is aimed at giving Member States a wider margin for manoeuvre in mergers and divisions, regarding:

  • The choice between extending directors’ responsibility and the provision of specific financial data to reduce the burdens resulting from information (reports) to be compiled;
  • General meeting approval of the company acquiring another company and cases where this is necessary. In return, the protection of creditors needs to be ensured; Directive 2006/68/EC amending legislation relating to the formation of public limited liability companies and the maintenance and alteration of their capital may be used as a reference basis.

Specific simplification measures are also proposed in order to reduce unnecessary burdens and costs resulting from other legislative obligations for companies and their branches. These measures apply to:

  • Publicity. The duty to publish certain information in the national gazettes in compliance with the First Company Law Directive may be abolished. In fact, this information has already been published in national registers, since 2007 in electronic format, and is accessible to all Member States. For this reason, a simple registration service would be sufficient. Furthermore, publicity obligations for branches in the establishment’s Member State could also be simplified as regards the certified translation of certain documents and the Member State of the branch could have the certified translation prepared in another Member State. In both cases, the European Business Register (EBR) is an appropriate interface to access information taking full advantage of electronic registers;
  • The European Company Statute, particularly the requirements regarding the registered office which should be reviewed in the light of case law at the European Court of Justice. The report scheduled for 2009 on the European Company Statute will provide an opportunity to re-examine legislation.

Accounting and auditing for SMEs

The directives which ensure the quality of financial information and auditing in the EU impose a high administrative burden on companies, especially on small and medium-sized companies (SMEs).

The Commission proposes to introduce the idea of a micro entity, already considered by certain Member States, and to exclude it from the scope of the Fourth Directive on annual accounts. The micro entity could satisfy the following criteria: fewer than 10 employees, balance sheet total less than €500,000 and turnover less than €1,000,000.

As regards SMEs, various additional measures are proposed, namely:

  • To exempt small companies from the obligation to publish their accounts;
  • To extend the exemptions reserved for small entities when managers of the medium-sized entity are also owners of the small entity or when these companies have unlimited liability;
  • To realign periods of transition (from two years to five years when the threshold is exceeded and from two years to one year in the event of any movement in the opposite direction) and to review the procedure for adapting thresholds.

Additional measures may also be considered for SMEs, such as regular updating of thresholds, amendment of requirements in the area of consolidation (especially for small and medium-sized subsidiaries), revision of the need for accounting for deferred taxes and to remove certain disclosure requirements (on start-up costs and on breakdown of turnover).

Background

Reducing administrative burdens for companies boosts the European economy. Initiated by the Commission in 2006, the updated simplification programme, completed with an action programme, following on from the European Council of 8 and 9 March 2007 (FR ) (pdf). Company law, accounting and auditing had been identified there as three priority action areas.

Associated Acts

December 2007 summary on reactions to the Communication from the Commission on a simplified business environment in the area of company law, accounting and auditing (COM (2007) 394) (pdf ).
Following the Communication from the Commission dated 10 July 2007, the Council invited the Commission to examine responses generated by the Communication on a simplified business environment and, if necessary, to submit new proposals. As a result of the summary of these reactions, there is a clear preference for the solution involving simplifying existing legislation (second option proposed by the Commission in its Communication).