Regulation 2007/1569 - Mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council - Main contents

EN

Official Journal of the European Union

L 340/66

Article 23(4) of Directive 2004/109/EC requires the Commission to set up a mechanism for the determination of the equivalence of the information required under this Directive, including financial statements and the corresponding requirements under the law, regulations or administrative provisions of third countries. This Article also requires the Commission to take decisions in relation to the equivalence of accounting standards used by third country issuers, and enables the Commission to allow the use of third country accounting standards during an appropriate transitional period. Given the close interconnection of the information required under Directive 2004/109/EC with the information required under Directive 2003/71/EC, it is appropriate that the same criteria for determination of equivalence apply in the framework of both Directives.

Given the objectives of Directive 2003/71/EC to ensure that investors are able to make an informed assessment of the assets and liabilities, financial position, profit and losses and prospects of an issuer, and the objectives of Directive 2004/109/EC to enable investors to make an informed assessment of the financial situation of issuers with securities admitted to trading on a regulated market, it is appropriate that equivalence should be defined by reference to the ability of investors to make a similar assessment of the issuer’s financial position and prospects, irrespective of whether financial statements are drawn up in accordance with the accounting standards of a third country or with International Financial Reporting Standards (hereinafter IFRS).

In order to ensure that a determination of the equivalence of third country accounting standards is made in all cases that are relevant to Community markets, the Commission should assess the equivalence of third country accounting standards either upon a request from the competent authority of a Member State or an authority responsible for accounting standards or market supervision of a third country, or on its own initiative. The Commission will first consult the Committee of the European Securities Regulators (CESR) with regard to the assessment of equivalence of the accounting standards in question. In addition, the Commission will actively monitor ongoing progress in the work by the relevant third country authorities to eliminate any requirement for Community issuers accessing the financial markets of a third country to reconcile financial statements prepared using IFRS adopted pursuant to Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (3). The decision of the Commission will have to be such that Community issuers are permitted to use IFRS...