Written answers

Wednesday, 20 April 2016

Department of Jobs, Enterprise and Innovation

EU Directives

Photo of Mick WallaceMick Wallace (Wexford, Independent)
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141. To ask the Minister for Jobs, Enterprise and Innovation if EU Directives 51 of 2003 and 34 of 2013 must first be transposed into law before they can become binding on banks and auditors; following on from this, if the domestic law of a member state can or cannot alter the content of Regulation 1606 of 2002; and if he will make a statement on the matter. [7388/16]

Photo of Richard BrutonRichard Bruton (Dublin Bay North, Fine Gael)
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Directive 2003/51/EC amending Directives 78/660/EEC, 83/349/EEC, 86/635/EEC and 91/674/EEC on the annual and consolidated accounts of certain types of companies, banks and other financial institutions and insurance undertakings, was originally transposed into Irish law by means of the European Communities (International Financial Reporting Standards and Miscellaneous Amendments) Regulations 2005 (S.I. No. 116 of 2005). The transposed provisions are now reflected in Part 6 of the Companies Act 2014 and, insofar as they relate specifically to credit institutions, in the European Union (Credit Institutions: Financial Statements) Regulations 2015 (S.I. No. 266 of 2015).

Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC, was due to be transposed by 20 July 2015. Heads of Bill to give effect to that Directive were approved by Government in February 2015 and are with the Office of the Parliamentary Counsel for drafting.

The question of whether any particular Directive is binding in the absence of national transposing legislation is a legal one. As a rule, EU Directives are addressed to Member States, who are then obliged to implement them, and not to individuals or companies.

The content of Regulation (EC) 1606 of 2002 was adopted at EU Level, so any proposal to amend that content would be a matter for the EU legislature.

That said, the Regulation does include options for Member States to consider.

Article 4 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 requires companies with securities admitted to trading on a regulated market (as defined) of any Member State to prepare their consolidated accounts (financial statements) in conformity with international accounting standards adopted by the European Commission in accordance with the procedure specified in the Regulation. This requirement has direct legal effect but is supported by section 1376 of the Companies Act 2014.

Article 5 of the Regulation then gives Member States the option to permit or require a wider use of international accounting standards. In Ireland, this wider use is permitted but not required. The use of the option is now reflected in Part 6 of the Companies Act 2014. In the specific context of banks, Regulations 3 to 5 of the European Union (Credit Institutions: Financial Statements) Regulations 2015 (S.I. No. 266 of 2015) are relevant.

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