Brussels, 06.07.2007
The European Commission has adopted the first report to the European Securities Committee and to the European Parliament on convergence between International Financial Reporting Standards (IFRS) and non–EU country domestic Generally Accepted Accounting Principles (GAAPs)
Under Regulation 1606/2002 of the European Parliament and of the Council of 19 July 2002 (the "IAS Regulation") companies listed on a regulated market of any Member State and governed by the law of a Member State of the European Union are required to apply IFRS as adopted by the EU ('endorsed IFRS') for their consolidated accounts for financial years starting from January 2005.
The requirement to use endorsed IFRS in the European Union was extended to third country issuers making a public offer of securities in the EU by the Prospectus Regulation2 and to third country issuers with securities traded on an EU regulated market by the Transparency Directive3. Under these Directives the issuers must prepare their financial information in accordance either with IFRS or with a third country's national accounting standards (third country GAAPs) that is 'equivalent' to endorsed IFRS. Those requirements were initially subject to a transitional exemption until 1st January 2007.
Subsequently, in the light of the efforts of the national accounting standard setters of Canada, Japan, the USA and other jurisdictions, and considering the positive efforts for convergence to IFRS already underway, it was agreed to postpone this date for a further two years. Therefore, on 4 December 2006, the Commission adopted the two legal measures mentioned above under which third country issuers could continue using certain third country GAAPs, for the purposes of the Prospectus Regulation, in all prospectuses filed before 1st January 2009 and, for the purposes of the Transparency Directive, for all financial years starting before January 20094.
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