Non-EU issuers may use national GAAP two more years

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07 Dec 2006

After receiving positive votes of agreement from the European Securities Committee and the European Parliament, the European Commission has adopted measures extending by two years the transitional exemption granted to foreign companies presenting financial statements prepared in accordance with national accounting standards for the issuing of securities on EU stock markets.

Under these measures, 'third-country' (non-EU) issuers are not subject to restatement obligations until 31 December 2008 if:
  • the financial information contains an explicit and unreserved statement that it complies with IFRSs; or
  • the financial information is prepared in accordance with Canadian GAAP, Japanese GAAP, or US GAAP; or
  • the financial information is prepared using a third-country GAAP in relation to which the following conditions are met:
    • the third-country authority responsible for that GAAP has made a public commitment to converge it with IFRS; and
    • that authority has established a work programme that demonstrates progress towards convergence before 31 December 2008; and
    • the issuer provides satisfactory evidence to the relevant competent authority demonstrating that the conditions in the above two points have been met.
A decision on the equivalence of third-country GAAPs with IFRS is expected to take place before the end of 2009. The measures also require the Commission Services to adopt a definition of equivalence and an equivalence mechanism before 1 January 2008. Click for:

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