Consolidated Financial Statements
The Law of 10 August 1915 on commercial companies, as amended, sets the conditions for the preparation of consolidated accounts.
All public limited-liability companies (sociétés anonymes), corporate partnerships limited by shares (sociétés en commandite par actions) or private limited-liability companies (sociétés a responsabilité limitée) and the companies referred to in Article 77(2) and (3) of the Law of 19 December 2002 on the commercial and companies register and on the accounting records and annual accounts of undertakings, as amended, with the exception of credit institutions, insurance and reinsurance companies and pension savings companies with variable capital (sociétés d’épargne-pension à capital variable - SEPCAVs) must draw up consolidated financial statements and a consolidated management report if they:
- have a majority of the shareholders' or members' voting rights in another undertaking; or
- have the right to appoint or remove a majority of the members of the administrative, management or supervisory body of another undertaking and is at the same time a shareholder in or member of that undertaking; or
- are a shareholder in or member of an undertaking, and controls alone, pursuant to an agreement with other shareholders in or members of that undertaking, a majority of shareholders' or members' voting rights in that undertaking.
A parent company and all of its subsidiary undertakings shall be consolidated regardless of where the registered offices of such subsidiary undertakings are located.
By way of departure from Article 309(1), a parent company shall be exempt from the obligation to draw up consolidated accounts and a consolidated annual report if at the balance sheet date of the parent company, the undertakings who would have to be consolidated do not together, on the basis of their latest annual accounts, exceed the limits of two of the three criteria set out below:
- balance sheet total: 20 million euros
- net turnover: 40 million euros
- average number of full-time staff employed during the financial year: 250.
By way of derogation from Article 309(1), any parent company which is also a subsidiary undertaking shall be exempted from the obligation to draw up consolidated accounts and a consolidated annual report if its own parent undertaking is governed by the law of a Member State of the European Community, in the following two cases:
- where that parent undertaking holds all of the corporate units or shares in the exempted undertaking. The corporate units or shares in that company held by members of its administrative, management or supervisory bodies pursuant to a legal obligation or the articles shall be ignored for this purpose; or
- where that parent undertaking holds 90% or more of the corporate units or shares in the exempted company and the remaining shareholders in or members of that company have approved the exemption.
The exemption shall be conditional upon compliance with all of the following conditions:
a) the exempted company and all of its subsidiary undertakings are consolidated in the accounts of a larger body of undertakings, the parent undertaking of which is governed by the law of a Member State of the European Community;
i. aa) the consolidated accounts referred to in (a) above and the consolidated annual report of the larger body of undertakings must be drawn up by the parent undertaking of that body and audited, according to the law of the Member State by which the parent undertaking of that larger body of undertakings is governed;
ii. bb) the consolidated accounts referred to in (a) above and the consolidated annual report referred to in (aa) above and the report by of the person(s) responsible for auditing those accounts shall be published for the exempted company in the manner prescribed by Article 9 of the Law of 10 August 1915 on commercial companies.
b) the notes to the annual accounts of the exempted company must disclose:
i. aa) the name and registered office of the parent undertaking which draws up the consolidated accounts referred to in (a) above; and
ii. bb) the exemption from the obligation to draw up consolidated accounts and a consolidated annual report.
Consolidated accounts shall comprise the consolidated balance sheet, the consolidated profit and loss account and the notes to the accounts.
Consolidated accounts drawn up in accordance with international accounting standards
The companies whose transferable securities are not admitted to trading on a regulated market of a Member State of the European Community within the meaning of Article 4(1), point 14, of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments may depart from the provisions of Section XVI of this Law and draw up their consolidated accounts in accordance with international accounting standards adopted under the terms of Article 6(2) of Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards.