FLASH NEWS February 2012

Transcription

1 FLASH NEWS February 2012 ACCOUNTING ASPECTS I. Law of 10 December 2010 relating to the introduction of the International Financial Reporting Standards (IFRS) II. Grand-Ducal Regulation of 14 December 2011 relating to the procedure for filing financial information electronically with the Luxembourg Trade and Companies Register I. Law of 10 December 2010 relating to the introduction of the International Financial Reporting Standards (IFRS) The Luxembourg law of 10 December 2010 (the "Accounting Law") relating to the introduction of the International Financial Reporting Standards ( IFRS ) and implementing several EU directives has reformed quite substantially the Luxembourg general accounting regime and has therefore amended some provisions 1 regarding the preparation and control of the annual accounts. The Accounting Law provides in its article 4 that the undertakings may opt out of applying the new provisions to financial years not ending at the date of entering into effect of the Accounting Law (i.e. 20 December 2010 at midnight, the " Effective Date"). For the subsequent financial years starting and ending after the Effective Date 2, the provisions of the Accounting Law have to be taken into consideration. You will find hereafter a brief summary of the main new provisions provided for by the Accounting Law: Optional application of IFRS standards 3 instead of the application of the Luxembourg accounting standards principles ("Lux GAAP") for preparation of the annual / consolidated accounts 4 When this option is chosen, some information/documents required under Lux GAAP is however still applicable (e.g. some references to be indicated in the notes to the accounts 5 / necessity of a management report / control of the accounts). 1 of mainly (i) the law of 19 th December 2002 relating to the Trade and Companies Register and the accounting and annual accounts of undertakings, as amended, and (ii) the law of 10 August 1915 relating to commercial companies, as amended. 2 e.g. financial years starting on 1 January 2011 and ending on 31 December without having to ask for prior authorization. 4 already and still compulsory for the consolidated accounts of the companies, whose shares are listed on some EU stockexchanges. 5 e.g. relating to participations / the fact that the Company is included in the consolidated accounts of another company / remunerations of the members of the management and supervision bodies / fees of the agreed independent auditor. 1

2 Optional application of the fair value in Lux GAAP for valuing specific categories of assets (financial instruments 6 and/or other categories of assets) Some specific references regarding the fair value of the financial instruments must be mentioned in the notes to the accounts 7. Insertion of the Principle "Substance over Form" in Lux GAAP Amendment of the scheme for the annual accounts / balance sheet / profit and loss accounts Additional exemptions regarding the obligation to follow the Standard Chart of Accounts ("plan comptable minimum normalisé") for certain types of companies 8 Increase of the size criteria for the enterprises having in particular an impact on the possibility to prepare abbreviated accounting documentation: Small enterprises, which do not fulfill at least 2 of the 3 following criteria 9 : Balance sheet total: EUR 4.4 million (instead of EUR million) Amount of the net turnover 10 : EUR 8.8 million (instead of EUR 6.25 million) Average number of employees (full time) during the financial year: 50 (remained the same) Medium-sized companies, which do not fulfill at least 2 of the 3 following criteria 11 : Balance sheet total: > EUR 4.4 million EUR 17.5 million (instead of > EUR EUR 12.5 million) Amount of the net turnover 12 : > EUR 8.8 million EUR 35 million (instead of >EUR 6.25 million EUR 25 million) Average number of employees (full time) during the financial year: > people (remained the same) Large companies, which fulfill at least two of the three following criteria 13 : Balance sheet total: > EUR 17.5 million (instead of > EUR 12.5 million) Amount of the net turnover 14 : > EUR 35 million (instead of > EUR 25 million) Average number of employees (full time) during the financial year: > 250 people (remained the same) 6 two frameworks possible for the valuation of the financial instruments. 7 e.g. when the valuation at fair value is not chosen into the accounts, the indication of this fair value has to be indicated into the notes to the accounts, and in the case where the book value is higher than the fair market value, the reasons why the book value has not been adjusted, as the case may be, have to be indicated. 8 e.g. (amongst others) professionals of the financial sector in the meaning of the Luxembourg financial law / specialised investments funds / SICAR. 9 during two consecutive financial years. 10 it is the current practice of accountants in Luxembourg that income from holding activities is not included in the net turnover amounts. This being said, this approach purely derives from practice and there is no formal legal doctrinal position in this respect. 11 during two consecutive financial years. 12 please refer to footnote during two consecutive financial years. 14 please refer to footnote 10. 2

3 In accordance with the Accounting Law, companies whose securities are listed on an EU regulated market 15 are considered as large companies, notwithstanding the non-fulfillment of the above-mentioned size criteria, and these companies cannot therefore benefit from the derogations related to small and medium-sized companies. Consolidated accounts Increase of the thresholds where the fulfillment of two of the three below triggers the requirement to prepare consolidated accounts : Balance sheet's total: EUR 17.5 million (instead of EUR 12.5 million) Amount of the net turnover: EUR 35 million (instead of EUR 25 million) Average number of employees (full time) during the financial year: 250 (remained the same) Few amendments regarding the exclusion / insertion 18 of some subsidiaries into the scope of the consolidation. Possibility to use another scheme for the consolidated accounts (articles 10 and 24 of Directive 78/660). Extended information to be included into the annual management (and consolidated) report 19 including for instance: a description of the principal risks and uncertainties to which the company is confronted, (in addition to the fair presentation of the development and performance of the business of the company, as already provided for in the law); this presentation shall consist of a balanced and exhaustive analysis of the evolution, results and situation of the company, adapted to the size and complexity of its business. It shall mainly comprise both financial and non-financial (where appropriate) key performance indicators relevant to the specific business, regarding the use of financial instruments and when relevant for the valuation of its assets and liabilities, its financial situation or its profits and losses: (a) the objectives and the policy of the company in terms of management of the company's financial risk assessment, (b) the exposure of the company to price risk, credit risk, liquidity risk and cash flow risk, for companies whose shares are listed on an EU regulated market 20 (apart from specific exceptions), a declaration relating to the corporate governance with specific minimum information to be listed. 15 in the meaning of the Directive 2004/39/CE. 16 during two consecutive financial years. 17 consolidated accounts always required, notwithstanding these criteria, for companies whose securities are listed on a EU regulated market in the meaning of the Directive 2004/39/CE. 18 subsidiaries having non-similar activities. 19 the management report is not compulsory in principle for small companies, and it can be simplified on a small number of provisions for medium-sized companies. 20 within the meaning of the Directive 2004/39/CE. 3

4 Some new specific references to be inserted into the notes to the accounts and the consolidated accounts, such as (but not limited to): nature and business purpose of the operations not included in the balance sheet, and their financial impact on the company, subject to the fact that the risks or benefits deriving from these operations may be material and that the mention that the latter is necessary to appreciate the financial situation of the company, specific transactions between associated parties, when material and not entered into under normal market conditions 21, please see above section relating to fair value. Increase of the thresholds relating to the obligation of having annual accounts controlled by an agreed independent auditor (please refer to the criteria regarding small companies above, which are also applicable for this matter) Extended information to be inserted into the reports of the agreed independent auditor regarding the annual accounts and the consolidated accounts Express joint obligation and liability of the management and supervisory organs of the company to check that the establishment and publication of the annual and consolidated accounts and related documents be carried out in accordance with the applicable law/regulation II. Grand-Ducal Regulation of 14 December 2011 relating to the procedure for filing financial information electronically with the Luxembourg Trade and Companies Register This Grand-Ducal Regulation is part of the broader project of the Luxembourg central balance sheet unit ( Centrale des bilans luxembourgeoise ). Electronic filing As from 1 January 2012, the filing of the annual and consolidated accounts and related documents shall be made only by electronic means through the website of the Luxembourg Trade and Companies Register ( RCS ) for all undertakings which are obliged to file their annual accounts. New mandatory pre-validation ecdf procedure Companies concerned The undertakings concerned by this new procedure are in principle those that are subject to the obligation to follow the Standard Chart of Accounts ("plan comptable minimum normalisé"), i.e. mainly all commercial companies, apart from in particular: companies exempted to follow the Standard Chart of Accounts ("plan comptable minimum normalisé") such as for instance 22 credit establishments, insurance and reinsurance companies, professional of the financial sector in the meaning of the Luxembourg financial law, Management Company of Family Assets (SPF, Société de gestion de 21 Some exceptions, such as small enterprises and 100% wholly owned subsidiaries. 22 exhaustive list contained in article 13 of the Luxembourg commercial code. 4

5 Patrimoine Familial ), SICAR, FIS; and companies preparing their accounts pursuant to the IFRS. Documents concerned Prior to filing with the RCS, it is required for the companies concerned by the ecdf procedure to prepare and submit a structured information (through PDF or XML format) regarding certain specific documents relating to the annual accounts (being the balance sheet, the profit and loss accounts, and the trial balance in accordance with the Standard Chart of Accounts) through the new ecdf website (platform for electronic gathering of financial data) for financial years ending on or after 31 December The financial information transmitted in the framework of the ecdf procedure shall be accurate and complete. They will be subject to arithmetical and logical control via the ecdf platform. Filing with the RCS For companies subject to the new ecdf procedure, the filing with the RCS will therefore intervene into a second step and shall include two types of documents: (i) the structured information validated in the framework of the ecdf procedure, and (ii) the other documents to be filled with the RCS but not included in the structured information (such as the notes to the accounts, the management report / agreed independent auditor report, if any). This electronic filling of information with the RCS will facilitate the sharing of information with other administrations. For the avoidance of any doubt, the companies not concerned by the ecdf procedure shall also electronically file their annual accounts and related documents with the RCS. General remark The Luxembourg market is still currently examining how to organize with respect to this new ecdf procedure. Such new ecdf procedure being related to the pre-filing of the accounts, it therefore appears as a new formality to be carried out by accountants. Such new ecdf procedure should not prevent MNKS from proceeding with the filing of annual accounts with the RCS, provided that the ecdf procedure is complied with in advance. We remain at your disposal should you wish for more information on any matter stated in this Flash News, this being said we recommend our clients liaise with their accounting counsels on their specific accounting situation and/or specific accounting points. CONTACTS Marie-Béatrice Noble Katia Scheidecker Catherine Baflast Managing Partner Partner Partner noble@mnks.com scheidecker@mnks.com baflast@mnks.com T: T: T: This flash News has been prepared by MNKS for general guidance only. Although the greatest care has been taken to ensure that the information contained therein is accurate on the date of publication, MNKS does not accept any liability to any person for this information (of the use or reliance upon such information) which is provided in this flash News or incorporated into it by reference. On any special matter please contact us for appropriate advice. 5