Tag Archives: Share capital

Seventh Directive: consolidated accounts of companies with limited liability

Seventh Directive: consolidated accounts of companies with limited liability

Outline of the Community (European Union) legislation about Seventh Directive: consolidated accounts of companies with limited liability

Topics

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

Internal market > Single market for capital

Seventh Directive: consolidated accounts of companies with limited liability

Document or Iniciative

Seventh Council Directive 83/349/EEC of 13 June 1983 based on Article 54(3)(g) of the Treaty on consolidated accounts [See amending acts].

Summary

The following text concerns a consolidation of existing Directives on consolidated accounts of companies with limited liability.

A parent company and all its subsidiaries are companies to be consolidated where either the parent company or one or more subsidiaries is established as a company with limited liability if the parent company exercises a dominant influence over the subsidiary.

These Directives define the circumstances in which consolidated accounts are to be drawn up. Any company (parent company) which legally controls another company (subsidiary company) is under a duty to prepare consolidated accounts. In most cases, legal control takes the form of the holding of a majority of voting rights. Member States may also require consolidated accounts to be prepared in other cases where a parent company has only a minority shareholding but exercises de facto control. They may provide for exemption from this obligation. The figures given in euro in Directive 78/660/EEC serve as thresholds for defining the groups which can be exempted completely from the consolidated accounts requirement.

The Directive sets out the methods of drawing up consolidated accounts:

  • Consolidated accounts comprise the consolidated balance sheet, the consolidated profit and loss account and the notes to the accounts. Consolidated accounts must give a true and fair view of the assets, liabilities, financial position and profit or loss of the companies included therein taken as a whole.
  • The book values of shares in the capital of companies included in a consolidation must be set off against the proportion which they represent of the capital and reserves of those companies. Such set-off must be effected on the basis of book values as at the date on which the companies are included in the consolidation for the first time.
  • The consolidated accounts must be drawn up on the same date and by the same methods as the annual accounts of the parent company.

The Annex states that certain information must be provided in the notes, on such things as valuation methods, the names and the registered offices of the undertakings included in the consolidation, total of certain types of debts, etc.

The Directives also regulate the contents of the consolidated annual report. This must include at least a fair review of the development of business and the position of the undertakings included in the consolidation taken as a whole, and certain indications for each of those undertakings (number and nominal value of shares, etc.).

The Directives establish a system of auditing under which a company which prepares consolidated accounts must have them audited by one or more persons authorised to audit accounts under the laws of the Member State which govern that company. The person or persons responsible for auditing the consolidated accounts must also verify that the consolidated annual report is consistent with the consolidated accounts for the same financial year.

Context

The Directives lay down rules on disclosure. The consolidated accounts, the consolidated annual report and the auditor’s report must be published in accordance with the provisions of the first Directive.

References

Act Entry into force – Date of expiry Deadline for transposition in the Member States Official Journal
Directive 83/349/EEC [adoption: consultation CNS/1976/1011]

29.6.1983

31.12.1987

OJ L 193, 18.7.1983


Amending act(s)
Entry into force Deadline for transposition in the Member States Official Journal
Directive 89/666/EEC

3.1.1990

1.1.1992

OJ L 395, 30.12.1989

Directive 90/604/EEC

19.11.1990

1.1.1993

OJ L 317, 16.11.1990

Directive 90/605/EEC

20.11.1990

31.12.1992

OJ L 317, 16.11.1990

Directive 2001/65/EC

16.11.2001

31.12.2003

OJ L 283, 27.10.2001

Directive 2003/51/EC

17.7.2003

1.1.2005

OJ L 178, 17.7.2003

Directive 2006/43/EC

29.6.2006

29.6.2008

OJ L 157, 9.6.2006

Directive 2006/46/EC

5.9.2006

5.9.2008

OJ L 224, 16.8.2006

Directive 2006/99/EC

1.1.2007

1.1.2007

OJ L 363, 2012.2006

Directive 2009/49/EC

16.7.2009

1.1.2011

OJ L 164 of 26.6.2009

The successive amendments and corrigenda to Directive 83/349/ECC  been incorporated into the original text. This consolidated versionis of mere documentary value.

Companies: protecting the interests of members and third parties

Companies: protecting the interests of members and third parties

Outline of the Community (European Union) legislation about Companies: protecting the interests of members and third parties

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

Companies: protecting the interests of members and third parties

Document or Iniciative

Directive 2009/101/EC of the European Parliament and of the Council of 16 September 2009 on coordination of safeguards which, for the protection of the interests of members and third parties, are required by Member States of companies within the meaning of the second paragraph of Article 48 of the Treaty, with a view to making such safeguards equivalent (Text with EEA relevance) [See amending act(s)].

Summary

This Directive aims to frame the guarantees required of companies in order to protect the interests of members and third parties.

Types of companies concerned

This Directive applies to:

  • companies incorporated with limited liability.

Disclosure as regards companies

Companies must disclose certain documents and information relating in particular to:

  • the instrument of constitution and the statutes, and their amendments;
  • the appointment, termination of office and particulars of the persons who have the power to represent the company in legal proceedings and who take part in the administration, supervision or control of the company;
  • the amount of the capital subscribed;
  • any change of the registered office;
  • the winding-up of the company;
  • the liquidation of the company.

All of these disclosed items shall be recorded in a file opened in a central register, commercial register or companies register. The file may be available in electronic format or on paper.

Any change must be recorded in the central register and made public within 21 days after the complete transmission of information.

Companies must have a unique identifier for communication between registers. This unique identifier includes the elements which shall enable the following to be identified:

  • the Member State of the register;
  • the domestic register of origin;
  • the company number in that register.

Member States shall be responsible for the publication of the above information in the national gazette or other means. They shall take the necessary measures to avoid any discrepancy between the pieces of information provided and shall ensure that this information is kept up-to-date. This information must also be made available on the European e-Justice portal in all the official languages of the EU, and also in electronic format using the system of interconnection of central registers (available from 2014).

The system of interconnection of registers shall provide access free-of-charge to the following information:

  • the name and legal form of the company;
  • the registered office of the company and the Member State where it is registered;
  • the registration number of the company.

The Commission shall provide a search service on companies registered in the Member States. In addition it shall introduce a central European portal which aims to ensure the inter-operability of the registers.

The processing of personal data is subject to the provisions of the Directive on the protection of personal data.

Validity of obligations entered into by the company

If action has been carried out on behalf of a company being formed before it has acquired legal personality, the persons who acted shall be liable therefor and not the company itself.

Once a company has acquired legal personality, acts performed by the organs of the company shall be binding upon it in respect of third parties, including such acts that go beyond the limitations of the objects of the company, except where these acts exceed the powers conferred upon those organs.

Even if the formalities of disclosure concerning the persons who are authorised to represent the company have been completed, any irregularity in their appointment shall not be relied upon against third parties. The company may only rely on such disclosure if it provides proof that the third parties had knowledge of the irregularities.

Nullity of the company

The Member States shall provide for the nullity of companies by decision of a court of law. The nullity of a company may only be ordered in the following cases:

  • no instrument of constitution has been executed;
  • the objects of the company are of an unlawful nature or contrary to public policy;
  • there is no statement of the name of the company, subscriptions, the total amount of capital subscribed or the objects of the company;
  • failure to comply with the provisions of national law concerning the minimum amount of capital to be paid up;
  • the incapacity of all the founder members;
  • the number of founder members is less than two.

Once nullity has been official recognised, the company is liquidated. However, shareholders must pay up the capital agreed to be subscribed by them but which has not been paid up with respect to creditors.

This Directive repeals Directive 68/151/EC.

References

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

Directive 2009/101/EC

21.10.2009

OJ L 258, 1.10.2009

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal

Directive 2012/17/EU

6.7.2012

7.7.2014

OJ L 156, 16.6.2012

Successive amendments and corrections to Directive 89/666/EC have been incorporated in the basic text. This consolidated version is for reference purpose only.

The formation of public limited liability companies and the maintenance and alteration of their capital

The formation of public limited liability companies and the maintenance and alteration of their capital

Outline of the Community (European Union) legislation about The formation of public limited liability companies and the maintenance and alteration of their capital

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

The formation of public limited liability companies and the maintenance and alteration of their capital

Document or Iniciative

Second Council Directive 77/91/EECof 13 December 1976 on coordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty, in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent [See amending acts].

Summary

This Directive establishes provisions which aim to protect shareholders and creditors of public limited liability companies by coordinating national provisions relating to the formation of companies and the maintenance, increase or reduction of their capital.

The Directive lays down minimum requirements in terms of information. The statutes or instrument of instruction of a public limited liability company should contain the following information:

  • the type and name of the company;
  • the objects of the company;
  • the amount of capital;
  • the rules governing appointing members responsible for the management, administration and supervision of the company.

Further information must be published in the statutes, the instrument of incorporation or in a separate document, including:

  • the registered office;
  • the value, number and form of the subscribed shares;
  • the amount of subscribed capital;
  • the identity of the signatories of the instrument of incorporation or the statutes.

In addition the Directive lays down the rules applicable:

  • to the value of the minimum capital;
  • to the issuing and acquisition of shares;
  • to the distribution of dividends;
  • to the financial aid accorded by companies for the acquisition of their shares;
  • to the increases and reductions in capital;
  • to the dissolution of public limited liability companies.

With regard to these increases and reductions of capital, the Directive aims in particular to ensure that the Member States’ legislation ensures equal treatment to all shareholders who are in the same position, as well as protecting creditors.

This Directive limits the possibility for a public limited liability company to acquire its own shares. In order to prevent circumvention, Directive 92/101/CEE extends this rule to all capital companies covered by Directive 68/151/CEE in which the company indirectly holds a majority of the voting rights or on which it can exercise a dominant influence either directly or indirectly, even if the other company is governed by the law of a third country on the condition that it has a comparable legal forms.

Context

This Directive forms part of the Community’s harmonisation of company law and company governance process, an essential condition in realising the internal market.

References

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

Directive 77/91/EEC

16.12.1976

17.12.1978
17.12.1979
17.12.1980

OJ L 26, 31.1.1977

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal

Directive 92/101/EEC

4.12.1992

1.1.1994

OJ L 347, 28.11.1992

Directive 2006/68/EC

15.10.2006

15.4.2008

OJ L 264, 25.9.2006

Directive 2009/109/EC

2.10.2009

30.6.2011

OJ L 259, 2.10.2009

The successive amendments and corrections to Directive 77/91/EEC have been integrated in to the original text. This consolidated version is of documentary value only.