S.I. No. 23/1996 - European Communities (Insurance Undertakings: Accounts) Regulations, 1996

S.I. No. 23 of 1996.

EUROPEAN COMMUNITIES (INSURANCE UNDERTAKINGS: ACCOUNTS) REGULATIONS, 1996

Arrangement of Regulations

Regulations	Regulations	Regulations	Regulations	Page
1.	Citation and Construction.	Citation and Construction.	Citation and Construction.	1
2.	Interpretation.	Interpretation.	Interpretation.	1
3.	Application.	Application.	Application.	4
4.	Modifications.	Modifications.	Modifications.	4
5.	Drawing up of accounts.	Drawing up of accounts.	Drawing up of accounts.	5
6.	Format of accounts	Format of accounts	Format of accounts	7
7.	Accounting principles.	Accounting principles.	Accounting principles.	10
8.	Departure from Accounting Principles.	Departure from Accounting Principles.	Departure from Accounting Principles.	11
9.	Publication of accounts in full or abbreviated form.	Publication of accounts in full or abbreviated form.	Publication of accounts in full or abbreviated form.	11
10.	Group Accounts.	Group Accounts.	Group Accounts.	13
11.	Subsidiary undertaking.	Subsidiary undertaking.	Subsidiary undertaking.	15
12.	Wholly-owned subsidiaries.	Wholly-owned subsidiaries.	Wholly-owned subsidiaries.	19
13.	Financial holding undertakings.	Financial holding undertakings.	Financial holding undertakings.	21
14.	Directors' report.	Directors' report.	Directors' report.	21
15.	Non-application of Principal Act.	Non-application of Principal Act.	Non-application of Principal Act.	22
16.	Auditors' Report.	Auditors' Report.	Auditors' Report.	23
17.	Documents to be annexed to annual return of parent undertaking.	Documents to be annexed to annual return of parent undertaking.	Documents to be annexed to annual return of parent undertaking.	23
18.	Publication of accounts in full or abbreviated form.	Publication of accounts in full or abbreviated form.	Publication of accounts in full or abbreviated form.	24
19.	Offences.	Offences.	Offences.	25
20.	Repeals and Amendments.	Repeals and Amendments.	Repeals and Amendments.	27
Schedule	Schedule	Schedule	Schedule	Schedule
				Page
Part I	Part I	The required formats for accounts.	The required formats for accounts.
		Chapter 1	General Rules	28
		Chapter 2	Section A - the balance sheet. Section B - the profit and loss account.	31 43
Part II	Part II	Valuation Rules.	Valuation Rules.
		Chapter 1 Chapter 2 Chapter 3.	Historical Cost Accounting Rules. Current Value Accounting Rules. General Rules.	55 61 68
Part III	Part III	Notes to the Accounts.	Notes to the Accounts.	75
Part IV	Part IV	Form and Content of Group Accounts.	Form and Content of Group Accounts.
		Chapter 1 Chapter 2 Chapter 3	General Rules. Accounting/Valuation. Information required by way of Notes to the Group Accounts.	91 95 106

S.I. No. 23 of 1996.

EUROPEAN COMMUNITIES (INSURANCE UNDERTAKINGS: ACCOUNTS) REGULATIONS 1996

I, Richard Bruton, Minister for Enterprise and Employment, in exercise of the powers conferred on me by section 3 of the European Communities Act, 1972 (No. 27 of 1972), and for the purpose of giving effect to Council Directive No 91/674/EEC of 23 December, 1991^a hereby make the following Regulations:

^aO.J. No. L374, 31/12/1991, p.7.

1 Citation and Construction

1.

1. (1) These Regulations may be cited as the European Communities (Insurance Undertakings: Accounts) Regulations, 1996.

• (2) These Regulations shall be construed as one with the Companies Acts, 1963 to 1990.

2 Interpretation

2.

2. (1) In these Regulations, unless the context otherwise requires—–

"accounts" means the balance sheet, profit and loss account and any notes on the accounts or statements forming part of the accounts, whether or not required by law;

"the Act of 1986" means the Companies (Amendment) Act, 1986 (No. 25 of 1986);

"the Act of 1990" means the Companies Act, 1990 (No. 33 of 1990);

"annual return" means the annual return made to the registrar of undertakings under the Principal Act;

"associated undertaking" has the meaning assigned by paragraph 21 of Chapter 2 of Part IV of the Schedule;

"company" means an undertaking as defined in Regulation 3;

"the Directive" means Council Directive 91/674/EEC of 23 December, 1991;

"group accounts" means the accounts prepared in accordance with Regulations 10 to 18;

"holding company", in relation to one or more undertakings that are subsidiaries of another undertaking means that other undertaking;

"individual accounts" means the accounts prepared in accordance with Regulations 5 to 9;

"the Minister" means the Minister for Enterprise and Employment;

"parent undertaking" means an undertaking that has one or more subsidiary undertakings;

"participating interest" shall be construed in accordance with paragraph 23 of Part IV of the Schedule.

"the Principal Act" means the Companies Act, 1963 ;

"subsidiary" shall be construed in accordance with Regulation 11;

"undertaking" means an undertaking to which these Regulations apply by virtue of Regulation 3.

• (2) In these Regulations, unless the context otherwise requires, a reference to a balance sheet or profit and loss account shall include a reference to any notes or documents annexed to the accounts in question giving information which is required by any provision of the Companies Acts, 1963 to 1990, or these Regulations and required or allowed by any such provision to be given in a note or document annexed to an undertaking's accounts.

• (3) In these Regulations—–

• (a) a reference to directors shall be construed, in the case of an undertaking which does not have a board of directors, as a reference to the corresponding persons appropriate to such undertaking;

• (b) a reference to voting rights in an undertaking means the rights conferred on shareholders in respect of their shares or, in case of an undertaking not having a share capital, on members, to vote at general meetings of the undertaking on all, or substantially all, matters;

• (c) in relation to an undertaking which does not have general meetings at which matters are decided by the exercise of voting rights, the references to holding a majority of the voting rights in an undertaking shall be construed as references to having the right under the constitution of the undertaking to direct the overall policy of the undertaking to alter the terms of its constitution.

• (4) A word or expression that is used in these Regulations and is also used in the Council Directive has, unless the context otherwise requires, the same meaning in these Regulations as it has in the Council Directive.

• (5) In these Regulations, unless the context otherwise requires—–

• (a) a reference to a Regulation or a Schedule is to a Regulation of or a Schedule to these Regulations unless it is indicated that a reference to some other enactment is intended.

• (b) a reference to a paragraph or a sub-paragraph is to a paragraph or sub-paragraph of the provision in which the reference occurs, unless it is indicated that reference to some other provision is intended.

3 Application

3.

3. These Regulations shall, except where otherwise provided for, only apply—–

• (a) to undertakings to which the European Communities (Non-Life Insurance) Regulations, 1976 ( S.I. No. 115 of 1976 ), the European Communities (Non-Life Insurance) Framework Regulations, 1994 ( S.I. No. 359 of 1994 ) or the European Communities (Life Assurance) Regulations, 1984 ( S.I. No. 57 of 1984 ), the European Communities (Life Assurance) Framework Regulations, 1994 ( S.I. No. 360 of 1994 ) apply and shall also apply to undertakings carrying on reinsurance business, and

• (b) in respect of individual and group accounts of undertakings drawn up in respect of every financial year beginning on or after 1 January, 1995.

4 Modifications

4.

4. (1) For the purposes of enabling the Directive to have full effect, the Minister may, with the consent or on the application of any undertaking, issue a direction in writing that specified provisions of these Regulations shall apply to that undertaking with such modifications as may be specified in the direction.

• (2) A direction under paragraph (1) may be subject to such conditions as the Minister considers appropriate to impose.

• (3) A direction under paragraph (1) may be revoked at any time by the Minister and the Minister may at any time vary the direction on the application or with the consent of the undertaking to which it relates.

• (4) A direction under paragraph (1) shall, subject to paragraph (3), apply for such period as shall be stated in the direction.

5 Drawing up of accounts

5.

5. (1) Subject to paragraph (2), every balance sheet and profit and loss account of an undertaking laid before the annual general meeting of the undertaking pursuant to section 148 of the Principal Act, shall comply with the following requirements and section 149 (other than subsection (5) and, in so far as it relates to the said subsection (5), subsection (7)) of that Act shall not apply to any such balance sheet or profit and loss account:

• (a) every such balance sheet and profit and loss account shall comply with the provisions of the Schedule,

• (b) every such balance sheet of an undertaking shall give a true and fair view of the state of affairs of the undertaking as at the end of its financial year and every such profit and loss account of an undertaking shall give a true and fair view of the profit or loss of the undertaking for the financial year,

• (c) where a balance sheet or profit and loss account drawn up in accordance with sub-paragraph (a) would not provide sufficient information to comply with sub-paragraph (b), any necessary additional information shall be provided in such balance sheet or profit and loss account or in a note to the accounts,

• (d) where, owing to special circumstances, the preparation of accounts of an undertaking in compliance with sub-paragraph (a) would prevent those accounts from complying with sub-paragraph (b) (even if additional information were provided under sub-paragraph (c)) the directors of the undertaking shall depart from the requirements of the said Schedule in preparing those accounts in so far as is necessary in order to comply with that sub-paragraph,

• (e) where the directors of an undertaking depart from the requirements of this Regulation, they shall attach a note to the accounts of the undertaking giving details of the particular departures made, the reasons therefor and the effect of those departures on the accounts,

and, accordingly, in the Companies Acts, 1963 to 1990, in relation to an undertaking to which these Regulations apply—–

• (i) references to the said section 149 shall be construed as references to that section as modified by the provisions of these Regulations, and

• (ii) references to the Sixth Schedule of the Principal Act shall be construed as references to the corresponding provisions of the Schedule to these Regulations.

• (2) Paragraph (1) shall not apply to the profit and loss account of an undertakings if–

• (a) the undertaking is a parent undertaking, and

• (b) the undertaking is required to prepare and does prepare group accounts in accordance with these Regulations, and

• (c) the notes to the undertaking's individual balance sheet show the profit and loss for the financial year determined in accordance with these Regulations.

• (3) Where, in the case of an undertaking, advantage is taken of paragraph (2), that fact shall be disclosed in a note to the individual and group accounts of the undertaking.

• (4) The requirements of the Schedule and the Companies Acts, 1963 to 1990, as to the matters to be included in the accounts of an undertaking or in notes to those accounts shall be subject to the requirement specified in sub-paragraph (b) of paragraph (1) and, accordingly, where a balance sheet or profit and loss account of an undertaking drawn up in accordance with the first mentioned requirements would not provide sufficient information to comply with the said sub-paragraph, any necessary additional information shall be provided in such balance sheet or profit and loss account or in a note to the accounts.

6 Format of accounts

6.

6. (1) Subject to the provisions of this Regulation—–

• (a) every balance sheet of an undertaking shall show the items listed in the balance sheet format set out in Chapter 2 of Part I of the Schedule, and

• (b) every profit and loss account of an undertaking shall show the items listed in the profit and loss account format so set out,

in the order and under the headings and sub-headings given in the format concerned.

• (2) Paragraph (1) shall not be construed as requiring the heading or sub-heading for any item in the balance sheet, or profit and loss account, of an undertaking to be distinguished by any letter or number assigned to that item in the formats set out in the Schedule.

• (3) Where the balance sheet or profit and loss account of an undertaking has been prepared by reference to the options set out in the Schedule, the directors of the undertaking shall adopt the same options in preparing the accounts for subsequent financial years unless, in their opinion, there are special reasons for a change.

• (4) Where any change is made in the format adopted in preparing a balance sheet, or profit and loss account, of an undertaking, the reasons for the change, together with full particulars of the change, shall be given in a note to the accounts in which the new format is first adopted.

• (5) Any item required in accordance with the Schedule to be shown in the balance sheet, or profit and loss account, of an undertaking, may be shown in greater detail than that required by the format adopted.

• (6) In respect of every item shown in the balance sheet, or profit and loss account, of an undertaking, the corresponding amount for the financial year immediately preceding that to which the balance sheet or profit and loss account refers shall also be shown and, if that corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the balance sheet or profit and loss account relates, the former amount shall be adjusted, and particulars of the adjustment and the reasons therefor shall be given in a note to the accounts.

• (7) Subject to paragraph (8), a heading or sub-heading corresponding to an item listed in the balance sheet format or the profit and loss account format of an undertaking, shall not be included in the balance sheet or profit and loss account, as the case may be, if there is no amount to be shown for that item in respect of the financial year to which the balance sheet or profit and loss account relates.

• (8) Paragraph (7) shall not apply in any case where an amount can be shown for the item in question in respect of the financial year immediately preceding that to which the balance sheet or profit and loss account relates, and that amount shall be shown under the heading or sub-heading required by paragraph (1).

• (9) Subject to the provisions of these Regulations and the provisions of the Schedule, amounts in respect of items representing assets or income may not be set off in the accounts of an undertaking against amounts in respect of items representing liabilities or expenditure, as the case may be, or vice versa.

• (10) The balance sheet, or profit and loss account, of an undertaking may include an item representing or covering the amount of any asset or liability or income or expenditure not otherwise covered by any of the items listed in the format adopted but the following shall not be treated as assets in the balance sheet of an undertaking:

• (a) preliminary expenses.

• (b) expenses of, and commission on, any issue of shares or debentures, and

• (c) costs of research.

• (11) Every profit and loss account of an undertaking shall show the amount of the profit or loss of the undertaking on ordinary activities before taxation.

7 Accounting Principles

7.

7. Subject to Regulation 8, the amounts to be included in the accounts of an undertaking in respect of the items shown shall be determined in accordance with the following principles:

• (a) the undertaking shall be presumed to be carrying on business as a going concern,

• (b) accounting policies shall be applied consistently from one financial year to the next,

• (c) subject to the provisions of the Schedule, the amount of any item in the accounts shall be determined on a prudent basis and in particular—

• (i) only profits which have arisen by the balance sheet date shall be included in the profit and loss account, and

• (ii) all liabilities and losses which have arisen or are likely to arise in respect of the financial year to which the accounts relate, or a previous financial year, shall be taken into account, including those liabilities and losses which only become apparent between the balance sheet date and the date on which the accounts are signed in pursuance of section 156 of the Principal Act,

• (d) all income and charges relating to the financial year to which the accounts relate shall be taken into account without regard to the date of receipt or payment, and

• (e) in determining the aggregate amount of any item the amount of each individual asset or liability that falls to be taken into account shall be determined separately.

8 Departure from Accounting Principles

8.

8. If it appears to the directors of an undertaking that there are special reasons for departing from any of the principles specified in Regulation 7, they may so depart, but particulars of the departure, the reasons for it and its effect on the balance sheet and profit and loss account of the undertaking shall be stated in a note to the accounts, for the financial year concerned, of the undertaking.

9 Publication of accounts in full or abbreviated form

9.

9. (1) Where an undertaking publishes its full accounts, it shall also publish with those accounts any report in relation to those accounts by the auditors of the undertaking under section 193 of the Act of 1990.

• (2) Where an undertaking publishes abbreviated accounts relating to any financial year, it shall also publish a statement indicating -

• (a) that the accounts are not the accounts copies of which are required to be annexed to the annual return,

• (b) whether the copies of the accounts so required to be so annexed have in fact been so annexed,

• (c) whether the auditors of the undertaking have made a report under section 193 of the Act of 1990, in respect of the accounts of the undertaking which relate to any financial year with which the abbreviated accounts purport to deal,

• (d) whether the report of the auditors under the said section 193 contained any qualifications as to the matters mentioned in that section.

• (3) Where an undertaking publishes abbreviated accounts, it shall not publish with those accounts any such report of the auditors as is mentioned in paragraph (2) (c).

• (4) Where an undertaking publishes its full individual accounts for a financial year it shall indicate if group accounts have been prepared and if so where those group accounts can be obtained.

• (5) Every undertaking to which these Regulations apply shall–

• (a) make available its full or abbreviated accounts in accordance with paragraphs (1) to (5) for public inspection at its head office, and

• (b) make available to the public copies of its accounts on request at a price which does not exceed the cost of making the copy.

• (6) In this Regulation –

"abbreviated accounts", in relation to an undertaking, means any balance sheet or profit and loss account, or summary or abstract of a balance sheet or profit and loss account, relating to a financial year of the undertaking which is published by the undertaking otherwise than as part of the full accounts of the undertaking for that financial year and, in relation to a parent undertaking, includes an account in any form purporting to be a balance sheet or profit and loss account, or a summary or abstract of a balance sheet or profit and loss account, of the group consisting of the parent undertaking and its subsidiaries;

"full accounts" means the individual or group accounts required to be annexed to the annual return;

"publish", in relation to a document, includes issue, circulate or otherwise make it available for public inspection in a manner calculated to invite the public generally, or any class of members of the public, to read the document, and cognate words shall be constructed accordingly.

10 Group accounts

10.

10. (1) This Regulation applies to a parent undertaking whether or not it is itself a subsidiary of another undertaking.

• (2) Undertakings to which this Regulation applies shall not be entitled to take advantage of—

• (a) subsections (2) or (3) of section 151 of the Principal Act in relation to the form of group accounts, or

• (b) section 154 of the Principal Act in relation to the preparation of group accounts.

• (3) Every parent undertaking to which this Regulation applies shall, subject to paragraph (5), prepare group accounts at the end of its financial year dealing with the state of affairs and profit or loss of the undertaking and its subsidiaries (including those in liquidation and those with registered offices outside the State) in accordance with the provisions of Parts I to III of the Schedule, as modified by Part IV of the Schedule, and every such group accounts shall be laid before the next annual general meeting of the undertaking at the same time as the individual accounts of the undertaking are so laid and shall be annexed to the annual return of the undertaking.

• (4) The report of the auditors on the group accounts laid before the annual general meeting shall be annexed to the annual return referred to in paragraph (3).

• (5)
• (a) The group accounts laid before the annual general meeting of an undertaking shall give a true and fair view of the state of affairs and profit or loss of the undertaking and subsidiaries dealt with thereby as a whole, so far as concerns members of the undertaking.

• (b) The group accounts shall comprise the consolidated balance sheet dealing with the state of affairs of the parent and its subsidiaries as a whole, the consolidated profit and loss account dealing with the profit and loss of the parent and its subsidiaries as a whole and the notes on the accounts giving the information required by these Regulations or otherwise provided by the undertaking.

• (c) Where group accounts drawn up in accordance with paragraph (3) would not provide sufficient information to comply with sub-paragraph (a), any necessary additional information shall be given in the group accounts or in a note to the accounts.

• (d) Where, owing to special circumstances, the preparation of group accounts in compliance with paragraph (3) would prevent those accounts from complying with sub-paragraph (a) (even if additional information were given under sub-paragraph (c)), the directors of the parent undertaking shall depart from the requirements of Parts I, II, III and IV (other than paragraph 2 of Part IV) of the Schedule in preparing these accounts in so far as it is necessary in order to comply with paragraph 3.

• (e) Where the directors of a parent undertaking depart from the requirements of these Regulations in compliance with sub-paragraph (d), they shall attach a note to the group accounts of the undertaking giving details of the particular departures made, the reasons therefor and the effect of those departures on the accounts.

• (6) Where any document annexed to the annual return under this Regulation or Regulation 11, 12 or 13 is in a language other than the English language or the Irish language, there shall be annexed to any such document a translation in the English language or Irish language certified in the prescribed manner to be a correct translation.

• (7) The annual and group accounts, if any, of a subsidiary undertaking excluded from group accounts by virtue of the application of paragraph 2 of Part IV of the Schedule shall be attached to the group accounts, or annexed to the annual return, of the parent undertaking.

• (8) Paragraph (7) shall not apply where the subsidiary undertaking has otherwise annexed the relevant accounts referred to in that paragraph to its annual return.

11 Subsidiary undertaking

11.

11. (1) For the purpose of Regulations 10 to 19 and Part IV of the Schedule, an undertaking shall be deemed to be a subsidiary of another, if, but only if—

• (a) that other—

• (i) holds a majority of the shareholders' or members' voting rights in the undertaking, or

• (ii) is a shareholder or member of it and controls the composition of its board of directors, or

• (iii) is a shareholder or member of it and controls alone, pursuant to an agreement with other shareholders or members, a majority of the shareholders' or members' voting rights;

or

• (b) that other has the right to exercise a dominant influence over it -

• (i) by virtue of provisions contained in its memorandum or articles, or

• (ii) by virtue of a control contract;

or

• (c) that other has a participating interest in it and –

• (i) that other actually exercises a dominant influence over it, or

• (ii) that other and the subsidiary undertaking are managed on a unified basis;

or

• (d) the undertaking is a subsidiary of any undertaking which is that other's subsidiary undertaking.

• (2) In determining whether one undertaking controls the composition of the board of directors of another for the purposes of paragraph (1)(a)(ii), subsection (2) of section 155 of the Principal Act shall apply to undertakings subject to these Regulations as it applies to undertakings subject to that section.

• (3) For the purpose of paragraph (1) (a)—

• (a) subject to paragraphs (c) and (d), any shares held or power exercisable -

• (i) by any person as a nominee for that other, or

• (ii) by, or by a nominee for, a subsidiary undertaking of that other, not being the subsidiary undertaking whose shares or board of directors are involved,

shall be treated as held or exercisable by that other,

• (b) any shares held or power exercisable by that other or a subsidiary undertaking of that other, on behalf of a person or undertaking that is neither that other nor a subsidiary undertaking of that other shall be treated as not held or exercisable by that other,

• (c) any shares held or power exercisable by that other, or a nominee for that other or its subsidiary undertaking shall be treated as not held or exercisable by that other if they are held as aforesaid by way of security provided that such power or the rights attaching to such shares are exercised in accordance with instructions received from the person providing the security,

• (d) any shares held or power exercisable by that other or a nominee for that other or its subsidiary undertaking shall be treated as not held or exercisable by that other if the ordinary business of that other or its subsidiary undertaking, as the case may be, includes the lending of money and the shares are held as aforesaid by way of security provided that such power or the rights attaching to such shares are exercised in the interests of the person providing the security.

• (4) For the purposes of clauses (i) and (ii) of paragraph (1)(a), the total of the voting rights of the shareholders or members in the subsidiary undertaking shall be reduced by the following—

• (a) the voting rights attached to shares held by the subsidiary undertaking in itself, and

• (b) the voting rights attached to shares held by the subsidiary undertaking by any of its subsidiary undertakings, and

• (c) the voting rights attached to shares held by a person acting in his own name but on behalf of the subsidiary undertaking or one of its subsidiary undertakings.

• (5) For the purposes of paragraph (1)(b) an undertaking shall not be regarded as having the right to exercise a dominant influence over another undertaking unless it has a right to give directions with respect to the operating and financial policies of that other undertaking which its directors are obliged to comply with.

• (6) In paragraph (1)(b) "control contract" means a contract in writing conferring such a right which —

• (a) is of a kind authorised by the memorandum or articles of the undertaking in relation to which the right is exercisable, and

• (b) is permitted by the law under which that undertaking is established.

• (7) Paragraph (5) shall not be read as affecting the construction of the expression "actually exercises a dominant influence" in paragraph (1)(c).

12 Wholly-owned subsidiaries

12.

12. (1) Paragraph (3) of Regulation 10 shall not apply to a parent undertaking (in this Regulation referred to as "the exempted parent undertaking") which is itself a wholly-owned subsidiary of another undertaking established in a member state of the European Union (in this Regulation referred to as "the parent undertaking") if the requirements set out in paragraph (3) of this Regulation are complied with; provided that the fact that the advantage of this Regulation is being availed of shall be disclosed in a note to the accounts of the insurance parent undertaking annexed to its annual return under the Principal Act.

• (2) In this Regulation, an undertaking shall be deemed to be a wholly-owned subsidiary of another if—

• (a) that other parent undertaking holds all the shares in the exempted parent undertaking, or

• (b) that other holds 90 per cent. or more of the shares in the undertaking and the remaining shareholders in or members of the undertaking have approved the exemption.

• (3) The requirements referred to in paragraph (1) are as follows:

• (a) the undertaking and its subsidiaries shall be dealt with in group accounts prepared by the parent undertaking;

• (b) the group accounts and the group annual report of the parent undertaking shall be prepared and audited in accordance with the Directive or Council Directive No. 83/349/EEC^b of 13 June 1983, as the case may be;

^bO.J. No. L193, 18/7/1994, p. 1.

• (c) there shall be annexed to the annual return of the exempted parent next after the group accounts have been prepared in accordance with sub-paragraph (a) —

• (i) the group accounts referred to in sub-paragraph (b),

• (ii) the group annual report referred to in sub-paragraph (b), and

• (iii) the report of the person responsible for auditing the accountsreferred to in sub-paragraph (b).

• (d) the notes on the annual accounts of the undertaking shall disclose —

• (i) the name and registered office of the parent undertaking that draws up the group accounts referred to in sub-paragraph (b), and

• (ii) the exemption from the obligation to draw up group accounts and a group annual report.

• (4) The exemption in paragraph (1) shall not apply to a parent undertaking any of whose shares, debentures or other debt instruments are listed on a stock exchange in any member state of the European Union.

• (5) The Minister may require that additional information shall be provided in the consolidated accounts of the parent undertaking or the individual accounts of the undertaking referred to in paragraph (1) in accordance with Article 9 of Council Directive No. 83/349/EEC.

• (6) This Regulation shall also apply to a parent undertaking which is not for the purposes of paragraph (2) a wholly-owned subsidiary of another undertaking where—

• (a) the parent undertaking is itself a subsidiary of a parent undertaking established in a member state of the European Union, and

• (b) the shareholders or members holding in total 10 per cent or more of the nominal value of the shares of the parent undertaking concerned have not at any time that is not later than six months before the end of the financial year in question requested the preparation of group accounts by that parent undertaking in respect of that financial year.

13 Financial holding undertakings

13.

13. (1) The obligation to prepare group accounts in accordance with Regulation 10 shall also apply to a parent undertaking, including a parent undertaking to whom Regulation 3 does not apply —

• (a) which does not itself carry on any material business apart from the acquisition, management and disposal of interests in subsidiaries, and

• (b) whose principal subsidiaries are wholly or mainly undertakings to which these Regulations apply.

• (2) In paragraph (1), the management of interests in subsidiaries include the provision of service to such subsidiaries and a parent undertaking's principal subsidiaries are those subsidiaries of the undertaking whose results or financial position would principally affect the figures shown in the group accounts.

14 Directors' report

14.

14. (1) In the case of a parent undertaking preparing group accounts in accordance with these Regulations, the report of the directors of that undertaking under section 158 of the Principal Act, shall contain, in addition to the information specified in that section, the following information:

• (a) a fair review of the development of the business of the parent undertaking and its subsidiary undertakings taken as a group during the financial year ending with the relevant balance sheet date;

• (b) particulars of any important events affecting the parent undertaking or any of its subsidiary undertakings which have occurred since the end of that year;

• (c) an indication of likely future developments in the business of the parent undertaking and its subsidiary undertakings, taken as a group;

• (d) an indication of the activities, if any, of the parent undertaking and its subsidiary undertakings, taken as a group, in the field of research and development, and

• (e) the number and nominal value of shares in the parent undertaking held by the undertaking itself, by its subsidiary undertakings or by a person acting in his or her own name but on behalf of the undertaking or subsidiary.

• (2) The information required by sub-paragraph (1)(e) may be given in the notes to the group accounts.

• (3) This report shall be annexed to the group's annual report.

15 Non-application of Principal Act

15.

15. Subsections (1) and (2) of section 150, sections 151 (1) and 152, subsections (4) and (5) of section 158 and section 191 of the Principal Act shall not apply to an undertaking to which Regulation 10 applies and, for the purpose of this Regulation, the reference to subsection (1) in subsection (4) of section 150 shall be construed as a reference to Regulation 10.

16 Auditors' report

16.

16. It shall be the duty of the auditors of a parent undertaking, in preparing the report on group accounts required by section 193 of the Act of 1990, to consider whether the information given in the report of the directors on the state of affairs of the parent undertaking and its subsidiary undertakings, as a group, relating to the financial year concerned is consistent with the group accounts for that year and the auditors shall state in their report whether, in their opinion, such information is consistent with those accounts.

17 Documents to be annexed to annual return of parent undertaking

17.

17. (1) Subject to the provisions of these Regulations, copies of the following documents shall be documents to be annexed to the annual return of a parent undertaking:

• (a) the group accounts, in respect of the period to which the return relates, drawn up by the parent undertaking in accordance with these Regulations;

• (b) the report of the directors, in respect of the period to which the return relates, required by Regulation 14;

• (c) the auditors report, in respect of the period to which the return relates, referred to in Regulation 16;

and each such copy document shall be certified both by a director and the secretary of the parent undertaking to be a true copy of such accounts or reports, as the case may be.

• (2) Where any document annexed to the annual return under this Regulation is in a language other than the English language or the Irish language, there shall be annexed to each such document a translation in the English language or the Irish language certified in the prescribed manner to be a correct translation.

18 Publication of accounts in full or abbreviated form

18.

18. (1) Where a parent undertaking publishes its full group accounts, the auditors' report under Regulation 16 in respect of those accounts shall also be published by the parent undertaking.

• (2) Where a parent undertaking publishes abbreviated group accounts relating to any financial year, it shall also publish a statement indicating —

• (a) that the group accounts are not the group accounts, copies of which are required by these Regulations to be annexed to the annual return,

• (b) whether the copies of the group accounts so required to be annexed have in fact been so annexed,

• (c) whether the auditors of the parent undertaking have made a report under section 193 of the Act of 1990 in respect of the group accounts of the parent undertaking which relate to any financial year with which the abbreviated group accounts purport to deal,

• (d) whether the report of the auditors under section 193 of the Act of 1990 contained any qualifications.

• (3) Where a parent undertaking publishes abbreviated group accounts, it shall not publish with those accounts the report of the auditors mentioned in sub-paragraph (2)(c) of this Regulation.

• (4) In this Regulation —

"abbreviated group accounts", in relation to a parent undertaking, means any group balance sheet or group profit and loss account, or summary or abstract of a group balance sheet or group profit and loss account, relating to a financial year of the parent undertaking which is published by the parent undertaking otherwise than as part of the full group accounts of the parent undertaking and its subsidiary undertakings for that financial year;

"full group accounts", in relation to a parent undertaking, means group accounts and the report of the directors of the parent undertaking referred to in Regulation 14.

"publish", in relation to a document, includes issue, circulate or otherwise make it available for public inspection in a manner calculated to invite the public generally, or any class of members of the public, to read the document, and cognate words shall be construed accordingly.

19 Offences

19.

19. (1) If an undertaking to which these Regulations apply fails after the making of these Regulations, to comply with a provision of these Regulations, the undertaking and every officer of the undertaking who is in default shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £1,000.

• (2)
• (a) If any person, being a director of an undertaking to which these Regulations apply, fails, after the making of these Regulations, to take all reasonable steps to secure compliance with a requirement of these Regulations, that person shall be guilty of an offence and shall be liable on summary conviction to imprisonment for a term not exceeding 12 months, or, at the discretion of the court, to a fine not exceeding £1,000, or to both.

• (b) In any proceedings against a person for an offence under this paragraph, it shall be a defence for a director to prove that he or she had reasonable grounds to believe and did believe that a competent and reliable person was charged with the duty of ensuring that the provisions of these Regulations were complied with and that the latter person was in a position to discharge that duty, and a person shall not be liable to be sentenced to imprisonment for an offence under the said paragraph (2) unless, in the opinion of the court, the offence was committed wilfully.

• (3) If after the making of these Regulations, any person in any balance sheet, profit and loss account, report, note or other document required by or for the purposes of any provision of these Regulations wilfully makes a statement false in any material particular, knowing it to be false, that person shall be guilty of an offence and shall be liable on summary conviction, to imprisonment for a term not exceeding 12 months or to a fine not exceeding £1,000 or to both.

• (4) In this section "director" and "officer" includes any person in accordance with whose instruction or directions the directors of the undertakings are accustomed to act.

20 Repeals and Amendments

20.

20. (1) Section 7(4) of the Assurance Companies Act, 1909, (c 49) and section 128(4)(b) of the Principal Act are hereby repealed.

• (2) The Act of 1986 is hereby amended—

• (a) in section (2) by the substitution of the following subsection for subsection (3):

• "(3) Sections 3 to 6, 8 to 12, 17, 18 and 24 of this Act do not apply in relation to undertakings to which the European Communities (Insurance Undertakings: Accounts) Regulations 1996 (No. 23 of 1996) apply by virtue of regulation 3 of those Regulations."

• (b) In subsection (1) of section 7 by the insertion of the following sub-paragraph after sub-paragraph (ii) (inserted by the European Communities (Credit Institutions: Accounts) Regulations, 1992 ( S.I. No. 294 of 1992 )) of paragraph (a):

• "(iii) in the case of an undertaking to which subsection (3) of section 2 of this Act applies, a copy of the balance sheet and profit and loss account of the undertaking drawn up in accordance with the European Communities (Insurance Undertakings: Accounts) Regulations, 1996."

SCHEDULE

FORM AND CONTENTS OF ACCOUNTS OF INSURANCE UNDERTAKINGS

PART 1 THE REQUIRED FORMATS FOR ACCOUNTS

CHAPTER 1 GENERAL RULES

• (b) In the notes following the formats the heading of each note gives the required heading or sub-heading for the item to which it applies and a reference to any letters and numbers assigned to that item in the formats set out in this Part.

• (a) the individual amounts of such items are not material to assessing the state of affairs or profit and loss of the undertaking for the financial year concerned, or

• (b) in any case where the combination of such items facilitates that assessment.

• (2) Where items are combined in an undertaking's accounts pursuant to sub-paragraph (1), the individual amounts of any items so combined shall be disclosed in a note to the accounts.

^CO.J. No. L63, 13/3/79 p.1

• (2) Assets acquired in the name of and on behalf of third parties shall not be shown in the balance sheet.

• (a) any amount set aside or proposed to be set aside to, or withdrawn or proposed to be withdrawn from, reserves;

• (b) the aggregate amount of any dividends paid or proposed to be paid.

• (2) In the profit and loss account format set out below in Section B of Chapter 2 of this Part—

• (a) the heading "Technical account-non-life business" is for those classes of direct insurance which are within the scope of the European Communities (Non-Life Insurance) Regulations, 1976 ( S.I. No 115 of 1976 ), the European Communities (Non-Life Insurance) Framework Regulations, 1994 ( S.I. No. 359 of 1994 ) and for the corresponding classes of reinsurance business, and

• (b) the heading "Technical account-life assurance business" is for those classes of direct insurance which are within the scope of the European Communities (Life Assurance) Regulations, 1984 ( S.I. No 57 of 1984 ), the European Communities (Life Assurance) Framework Regulations, 1994 ( S.I. No. 360 of 1994 ) and for the corresponding classes of reinsurance business.

• (3) Undertakings whose activities consist wholly of reinsurance or whose activities consist of direct non-life insurance and reinsurance may use the format "Technical account - non-life business" for all of their business.

CHAPTER 2 THE REQUIRED FORMATS FOR ACCOUNTS

SECTION A

THE BALANCE SHEET

FORMAT

ASSETS

A. Called-up share capital not paid (1)

B. Intangible assets (2)

C. Investments

I. Land and buildings (4)

II. Investments in group undertakings and participating interests:

III. Other financial investments:

IV. Deposits with ceding undertakings (10)

D. Investments for the benefit of life assurance policyholders who bear the investment risk (11)

Da. Reinsurers' share of technical provisions (12)

E. Debtors (13)

I. Debtors arising out of direct insurance operations

II. Debtors arising out of reinsurance operations

III. Other debtors

IV. Called-up share capital not paid (1)

F. Other assets

I. Tangible assets and stocks

II. Cash at bank and in hand

III. Own shares (14)

IV. Other (15)

G. Prepayments and accrued income

I. Accrued interest and rent (16)

II. Deferred acquisition costs (17)

III. Other prepayments and accrued income

LIABILITIES

A. Capital and reserves

I. Called-up share capital or equivalent funds(18)

II. Share premium account

III. Revaluation reserve

IV. Reserves (19)

V. Profit or loss brought forward

VI. Profit or loss for the financial year

B. Subordinated liabilities (20)

Ba. Fund for future appropriations (21)

C. Technical provisions (22)

(a) gross amount	_
(b) reinsurance amount(-)(12)	_
		_

(a) gross amount	_
(b) reinsurance amount(-)(12)	_
		_

(a) gross amount	_
(b) reinsurance amount(-)(12)	_
		_

(a) gross amount	_
(b) reinsurance amount(-)(12)	_
		_

(a) gross amount	_
(b) reinsurance amount(-)(12)	_
		_

D. Technical provisions for life assurance policies where the investment risk is borne by the policyholders (29)

(a) gross amount	_
(b) reinsurance amount(-)(12)	_
		_

E. Provisions for other risks and charges

F. Deposits received from reinsurers (30)

G. Creditors

I. Creditors arising out of direct insurance operations

II. Creditors arising out of reinsurance operations

III. Debenture loans

IV. Amounts owed to credit institutions

V. Other creditors including tax and social welfare

H. Accruals and deferred income

Notes on the balance sheet format

• (1) Called-up share capital not paid

(Assets items A and EIV.)

This item may be shown in either of the positions given in the format.

• (2) Intangible assets

(Assets item B)

Amounts in respect of assets shall only be included in an undertaking's balance sheet under this item if either -

• (a) the assets were acquired for valuable consideration and are not required to be shown under goodwill, or

• (b) the assets in question were created by the undertaking itself.

• (3) Goodwill

(Assets item B.1)

Amounts representing goodwill shall only be included to the extent that the goodwill was acquired for valuable consideration.

• (4) Land and buildings

(Assets item C.I.)

The amount of any land and buildings occupied by the undertaking for its own activities shall be shown separately.

• (5) Debt securities and other fixed income securities

(Assets item C.III.2)

This item shall comprise negotiable debt securities and other fixed income securities issued by credit institutions, other undertakings or public bodies, in so far as they are not covered by Assets item C.II.2 or C.II.4.

Securities bearing interest rates that vary in accordance with specific factors, for example the interest rate on the interbank market or on the Euromarket, shall also be regarded as debt securities and other fixed income securities and so be included under this item.

• (6) Participation in investment pools

(Assets item C.III.3)

This item shall comprise shares held by the undertaking in joint investments constituted by several undertakings or pension funds, the management of which has been entrusted to one of those undertakings or to one of those pension funds.

• (7) Loans secured by mortgages and other loans

(Assets items C.III.4 and C.III.5)

Loans to policy holders for which the policy is the main security shall be included under "Other loans" and their amount shall be disclosed in the notes to the accounts. Loans guaranteed by mortgages shall be shown as such even where they are also secured by insurance policies. Where the amount of "Other loans" not secured by policies is material, an appropriate breakdown shall be given in the notes to the accounts.

• (8) Deposits with credit institutions

(Assets item C.III.6)

This item shall comprise sums the withdrawal of which is subject to a time restriction. Sums deposited with no such restriction shall be shown under Assets item F.II even if they bear interest.

• (9) Other

(Assets item C.III.7)

This item shall comprise those investments which are not covered by Assets items C.III.1 to6. Where the amount of such investments is significant, they shall be disclosed in the notes to the accounts.

• (10) Deposits with ceding undertakings

(Assets item C.IV)

Where the undertaking accepts reinsurance this item shall comprise amounts, owed by the ceding undertakings and corresponding to guarantees, which are deposited with those ceding undertakings or with third parties or which are retained by those undertakings.

These amounts may not be combined with other amounts owed by the ceding insurer to the reinsurer or set off against amounts owed by the reinsurer to the ceding insurer.

Securities deposited with ceding undertakings or third parties which remain the property of the undertaking accepting reinsurance shall be entered in the undertaking's accounts as an investment, under the appropriate item.

• (11) Investments for the benefit of life assurance policyholders who bear the investment risk.

(Assets item D)

In respect of life assurance this item shall comprise, on the one hand, investments the value of which is used to determine the value of or the return on policies relating to an investment fund, and on the other hand, investments serving as cover for liabilities which are determined by reference to an index. This item shall also comprise investments which are held on behalf of the members of a tontine and are intended for distribution among them.

• (12) Reinsurance amounts

(Assets item Da)

(Liabilities items C.1(b), 2(b), 3(b), 4(b) and 6(b) and D(b)) The reinsurance amounts may be shown either under Assets item Da or under Liabilities items C.1(b), 2(b), 3(b), 4(b) and 6(b) and D(b).

The reinsurance amounts shall comprise the actual or estimated amounts which, under contractual reinsurance arrangements, are deducted from the gross amounts of technical provisions. Where reinsurance amounts are shown as assets under item Da, they shall be sub-divided as shown. Notwithstanding paragraph 3 of this Part, these items shall not be combined. The disclosure of reinsurance amounts shall be in the same form from one accounting year to the next. If the directors decide that a change is necessary, the reason for that change should be disclosed in the notes together with a statement of what the position would have been had the original treatment been retained.

As regards the provision for unearned premiums, the reinsurance amounts shall be calculated according to the methods referred to in paragraph 24 of Part II of this Schedule or in accordance with the terms of the reinsurance policy.

• (13) Debtors

(Assets item E)

Amounts owed by group undertaking and undertakings in which the undertaking has a participating interest shall be shown separately as sub-items of Assets items EI, EII and EIII.

• (14) Own Shares

(Assets item F.III)

The nominal value of the shares shall be shown separately under this item.

• (15) Other

(Assets item F.IV)

This item shall comprise those assets which are not covered by Assets items F.I, II and III. Where such assets are material they shall be disclosed in the notes to the accounts.

• (16) Accrued interest and rent

(Assets item G.I)

This item shall comprise those items that represent interest and rent that have been earned up to the balance-sheet date but have not yet become receivable.

• (17) Deferred acquisition costs.

(Assets item G.II)

The costs of acquiring insurance policies which are incurred during the financial year but which relate to a subsequent financial year (referred to as "deferred acquisition costs") shall be treated as follows:

• (a) Costs incurred in respect of non-life business shall be disclosed under this item and shall be calculated on a basis compatible with that used for unearned premiums;

• (b) (i) Costs incurred in respect of life assurance business shall be deferred. Such deferral should be over such a period as is recognised to be prudent.

• (ii) Costs incurred in respect of life assurance may be either disclosed under this item on the balance sheet or may be deducted by a recognised actuarial method from the mathematical reserves; where the latter method is used, the amounts deducted from the provisions shall be disclosed in the notes to the accounts.

• (iii) The method of treatment of deferred acquisition costs in the accounts of a life assurance undertaking should be the same from one financial year to the next. If, in the opinion of the directors of the undertaking, a change is necessary, the reasons for that change should be disclosed in the notes together with a statement of what the position would have been had the original method been retained.

• (18) Called-up capital or equivalent funds

(Liabilities item A.I)

This item shall comprise all amounts which are regarded, in accordance with the Companies Acts 1963 to 1990, as equity capital subscribed and fully paid up or subscribed and partly paid up, to the extent paid up.

• (19) Reserves

(Liabilities item A.IV)

Reserves shall be shown separately, as sub items of liabilities item A(IV) in the balance sheet except for the revaluation reserve, which shall be shown as a liability under A(III).

Should it be considered necessary, the Minister may, in the future, under this item, require other types of reserves for insurance undertakings not covered by Council Directive No. 78/660/EEC.

• (20) Subordinated liabilities

(Liabilities item B)

This item shall comprise all liabilities, whether or not represented by certificates, in respect of which there is a contractual obligation that, in the event of winding up or of bankruptcy, they are to be repaid only after the claims of all other creditors have been met.

• (21) Fund for future appropriations

(Liabilities item Ba)

This item shall comprise all funds the allocation of which either to policyholders or to shareholders has not been determined by the end of the financial year.

Transfers to and from this item shall be shown in item II. 12a (Transfers to or from the fund for future appropriation) in the profit and loss account.

• (22) Technical provisions

(Liabilities item C) Regulation 7(c)(ii) shall apply to the technical provisions, subject to Note (12) and Notes

• (23) to (28).

• (23) Provision for unearned premiums

(Liabilities items C.1 and C.2)

In the case of life assurance the provision for unearned premiums may be included in Liabilities item C.2 rather than in this item.

The provision for unearned premiums shall comprise the amount representing that part of gross premiums written which is estimated to be earned in the following financial year or to subsequent financial years.

Where, in accordance with Note (24) this item also includes the amount of the provision for unexpired risks, the description of the item shall be "Provision for unearned premiums and unexpired risks".

• (24) Other technical provisions

(Liabilities item C.6).

This item shall include the provision for unexpired risks, being the amount set aside in addition to unearned premiums in respect of risks to be borne by the insurance undertaking after the end of the financial year, in order to provide for all claims and expenses in connection with insurance contracts in force in excess of the related unearned premiums and any premiums receivable on those contracts. However, the provision for unexpired risks may be added to the provision for unearned premiums under item C.1. Where the amount of unexpired risks is material, it shall be disclosed separately in the notes to the accounts.

Ageing reserves should be disclosed under this item.

• (25) Life assurance provision.

(Liabilities item C.2)

This item shall comprise the actuarially estimated value of the undertaking's liabilities including bonuses already declared and after deducting the actuarial value of future premiums, excluding amounts covered by Note 29.

• (26) Claims outstanding

(Liabilities item C.3)

This item shall comprise the total estimated ultimate cost to the undertaking of settling all claims arising from events which have occurred up to the end of the financial year, whether reported or not, less amounts already paid in respect of such claims.

• (27) Provision for bonuses and rebates

(Liabilities item C.4)

This item shall comprise amounts intended for policy holders or contract beneficiaries by way of bonuses and rebates as defined in Note (5) on the profit and loss account format to the extent that such amounts have not been credited to policy holders or contract beneficiaries or included in Liabilities item Ba or in Liabilities item C.2.

• (28) Equalisation provision

(Liabilities item C.5)

This item shall comprise any amounts required by law to be set aside by an undertaking to equalise fluctuations in loss ratios in future years or to provide for special risks. An undertaking which otherwise constitutes reserves, falling to be included under liabilities item A.IV to equalise fluctuations in loss ratios in future years or to provide for special risks shall disclose that fact in the notes to the accounts.

• (29) Technical provisions for life assurance policies where the investment risk is borne by the policyholders.

(Liabilities items D and C.2)

This item shall comprise technical provisions constituted to cover liabilities relating to investment in the context of the assurance policies for which the policy holder bears the risk, the value of or the return on which is determined by reference to investments or by reference to an index.

Any additional technical provisions constituted to cover death risks, operating expenses or other risks (such as benefits payable at the maturity date or guaranteed surrender values) shall be included under Liabilities item C.2.

This item shall also comprise technical provisions representing the obligations of a tontine's organiser in relation to its members.

• (30) Deposits received from reinsurers

(Liabilities item F)

Where the undertaking cedes reinsurance this item shall comprise amounts deposited by or withheld from other insurance undertakings under reinsurance contracts. These amounts may not be merged with other amounts owed to or by those other undertakings.

Where the undertaking cedes reinsurance and has received as a deposit securities which have been transferred to its ownership, this item shall comprise the amount owed by the undertaking by virtue of the deposit.

SECTION B

THE PROFIT AND LOSS ACCOUNT

FORMAT