Brussels, 08/01/2008 (Agence Europe) - European Commission regulation 1569/2007/EC sets out the conditions which will allow third country accounting standards to be found to be equivalent to International Financial Reporting Standards (IFRS), compulsory for European companies listed in the EU. Having been adopted at the end of December and published in Official Journal L 340 of 22 December, the directive also establishes an equivalence mechanism.
If the financial documentation of a listed company using the accounting standards of a third country allows an investor to make investment decisions equivalent to those that would be taken on the basis of financial documentation prepared under IFRS, the accounting standards of the third country can be considered equivalent to IFRS. It will be for the Commission to determine this equivalence, at the request of the competent authority of a member state or that of a third country.
Between 1 January 2009 and 31 December 2011, third country listed companies may be authorised to publish their financial information established in line with third country accounting standards in the following cases: - the competent authority of the third country has undertaken to bring its accounting standards into line with IFRS by the end of 2011 and has set up and is implementing a convergence programme; - the competent authority of the third country has undertaken to adopt IFRS before the end of 2011 and has taken steps to achieve this end. In order to reach a decision, the Commission will consult the Committee of European Securities Regulators (CESR) on the convergence programme or on the progress made by the third country in adopting IFRS.
At the end of 2006, the Commission adopted a regulation authorising third country companies listed in the EU to use the accounting standards of the country where they were established until the end of 2008 (see EUROPE 9322). Almost 600 companies which do not use IFRS were listed in the EU in July 2007. Of these, 233 were American, 84 Japanese and 70 Indian. In November, the US Securities and Exchange Commission (SEC) removed the reconciliation requirement on companies listed in the US, and which use the IFRS (see EUROPE 9545). (M.B.)