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

Type Statutory Instrument

Publication 1996-02-05

Last updated 2015-06-23

State Repealed superseded text

Text As published

Source Irish Statute Book

articles 36

This is the act as published. Later amendments are not folded into the text below: each one is a separate act in this repository and an entry in this law's history.

10 amending acts · 2015-06-23, S.I. No. 262/2015 - European Union (Insurance Undertakings: Financial Statements) Regulat…

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(6) Sub-paragraph (4) shall not apply merely because some of the undertakings are industrial, some commercial and some provide services or because they carry on industrial or commercial activities involving different products or provide different services.

(1) The group balance sheet and group profit and loss account shall incorporate in full the information contained in the individual accounts of the parent undertaking and subsidiary undertakings included in the group accounts, subject to the adjustments authorised or required by the following provisions of this Schedule.

(2) Group accounts shall be drawn up as at the same date as the annual accounts of the parent undertaking.

(3) If the financial year of a subsidiary undertaking included in the group accounts differs from that of the parent undertaking, the group accounts shall be made up

(a) from the accounts of the subsidiary undertaking for its financial year last ending before the end of the parent undertaking's financial year, provided that year ended no more than three months before that of the parent undertaking,

(b) where an undertaking's balance sheet date precedes the group balance sheet by more than three months, but not more than six months, that undertaking shall be included in the group accounts on the basis of interim accounts drawn up as at the group balance sheet date.

(1) The methods of consolidation shall be applied consistently from one financial year to the next.

(2) If it appears to the directors of a parent undertaking that there are special reasons for departing from the principle specified in sub-paragraph (1) they may so depart, but particulars of the departure, the reasons for it and its effect on the balance sheet and profit or loss of the parent undertaking and subsidiaries as a whole shall be disclosed in the notes to the accounts.

(a) Group accounts shall show the assets, liabilities, state of affairs as at the end of the financial year and profit or loss of the parent undertaking and its subsidiary undertakings dealt with in the group accounts as if they were a single undertaking and, in particular, shall show—–

(i) debts and claims between the undertakings dealt with in the group accounts shall be eliminated from those accounts,

(ii) income and expenditure relating to transactions between the undertakings dealt with in the group accounts shall be eliminated from those accounts,

(iii) where profits and losses resulting from transactions between the undertakings dealt with in the group accounts are included in the book value of assets, they shall be eliminated from those accounts,

(b) clauses (i) to (iii) of sub-paragraph (a) need not be complied with where the amounts involved are not material for the purpose of giving a true and fair view as required by Regulation 10.

If the composition of the undertakings dealt with in the group accounts has changed significantly in the course of a financial year, the group accounts shall include information which makes the comparison of successive sets of group accounts meaningful.

CHAPTER 2 2

Accounting/Valuation

Acquisition and merger accounting

The following provisions of this Chapter shall apply where an undertaking becomes a subsidiary undertaking of the parent undertaking and that event is referred to in those provisions as an "acquisition", and references to the "undertaking acquired" shall be construed accordingly.

An acquisition shall be accounted for by the acquisition method of accounting unless the conditions for accounting for it as a merger are met and the merger method of accounting is adopted.

(1) The acquisition method of accounting is as set out in this paragraph.

(2) The identifiable assets and liabilities of the undertaking acquired shall be included in the consolidated balance sheet at their fair values as at the date of acquisition.

(3) The income and expenditure of the undertaking acquired shall be brought into the group accounts only as from the date of the acquisition.

(4)
(a) There shall be set off against the acquisition cost of the interest in the shares of the undertaking held by the undertakings dealt with in the group accounts the interest of undertakings dealt with in the group accounts in the adjusted capital and reserves of the undertaking acquired.

(b) In clause (a) of this sub-paragraph "the adjusted capital and reserves of the undertaking acquired" means its capital and reserves at the date of the acquisition after adjusting the identifiable assets and liabilities of the undertaking to fair values as at that date.

(5) The resulting amount if positive shall be treated as goodwill, and if negative as a negative consolidation difference.

(6) Where in applying the acquisition method of accounting—–

(a) there is no record of –

(i) the fair values as at the date of acquisition of the identifiable assets and liabilities of the undertaking acquired, or

(ii) the acquisition cost of the interest in the shares of the acquired undertaking by the undertakings dealt with in the group accounts,

(b) such records cannot be obtained without unreasonable expense or delay,

then the values of the identifiable assets and liabilities and the acquisition cost shall be taken to be the values and cost ascribed to them in the earliest available record made after the acquisition of that subsidiary undertaking.

(7) In this paragraph

"the acquisition cost" means the amount of any cash consideration and the fair value of any other consideration, together with such amount (if any) in respect of fees and other expenses of the acquisition as the parent undertaking may determine;

the "identifiable assets and liabilities" in relation to the undertaking acquired means the assets and liabilities which are capable of being disposed of or discharged separately, without disposing of a business of the undertaking.

10.

(1) The conditions for accounting for an acquisition as a merger are as follows:

(a) that at least 90 per cent of the nominal value of the relevant shares in the undertaking acquired is held by or on behalf of the undertakings dealt with in the group accounts,

(b) that the proportion referred to in clause (a) of this sub-paragraph was attained pursuant to an arrangement providing for the issue of equity shares by the undertakings dealt with in the group accounts, and

(c) that the fair value of any consideration other than the issue of equity shares given pursuant to the arrangement by the undertakings dealt with in the group accounts did not exceed 10 per cent of the nominal value of the equity shares issued.

(2) In sub-paragraph (1)(a) "relevant shares in an undertaking acquired" means those shares carrying unrestricted rights to participate both in distributions and in the assets of the undertaking upon liquidation.

11.

(1) The merger method of accounting is set out in this paragraph.

(2) The assets and liabilities of the undertaking acquired shall be brought into the group accounts at the figures at which they stand in the undertaking's accounts, subject to any adjustment authorised or required by this Part of the Schedule.

(3) The income and expenditure of the undertaking acquired shall be included in the group accounts for the entire financial year, including the period before the acquisition.

(4) The group accounts shall show corresponding amounts relating to the previous financial year as if the undertaking acquired had been included in the consolidation throughout that year.

(5) There shall be set off against the aggregate of—

(a) the appropriate amount in respect of shares issued by the undertakings dealt with in the group accounts in consideration for the acquisition of shares in the undertaking acquired, and

(b) the fair value of any other consideration for the acquisition of shares in the undertaking acquired, determined as at the date when those shares were acquired,

the nominal value of the issued share capital of the undertaking acquired held by the undertakings dealt with in the group accounts.

(6) The resulting amount by virtue of this paragraph shall be shown as an adjustment to the consolidated reserves.

12.

(1) Where a group of undertakings is acquired, paragraphs 8 to 11 apply with the following adaptations.

(2) Reference to shares of the undertaking acquired shall be construed as references to shares of the parent undertaking of the group.

(3) Other references to the undertaking acquired shall be construed as references to the group, and references to the assets and liabilities, income and expenditure and capital and reserves of the undertaking acquired shall be construed as references to the assets and liabilities, income and expenditure and capital and reserves of the group after making the set-offs and other adjustments required by this Part of the Schedule in the case of group accounts.

Valuation

13.

(1) In determining the amounts to be included in the group accounts, Regulations 7 and 8 and the valuation rules contained in Part II of this Schedule shall apply and shall be applied consistently within those accounts.

(2) Sub-paragraph (1) shall not apply to those liabilities items the valuation of which by the insurance undertakings included in group accounts is based on the application of provisions specific to insurance undertakings nor to those assets items changes in the values of which also affect or establish policyholders' rights.

(3) Where sub-paragraph (2) applies, that fact shall be disclosed in the notes to the group accounts.

14.

(1) Subject to sub-paragraph (2) a parent undertaking shall apply the same methods of valuation in drawing up group accounts as it applies in drawing up its annual accounts.

(2) Subject to paragraph 13, sub-paragraph (1) shall not apply where, in the opinion of the directors, a departure from the provisions of that paragraph is necessary for the purpose of Regulation 10 (5) (i).

(3) Any application of sub-paragraph (2) and the reasons therefor shall be disclosed in the notes to the group accounts.

15.

(1) Where assets and liabilities to be included in the group accounts have been valued or otherwise determined by undertakings according to accounting rules differing from those used for the group accounts, the values or amounts shall be adjusted so as to accord with the rules used for the group accounts.

(2) If it appears to the directors of the parent undertaking that there are special reasons for departing from sub-paragraph (1) they may do so, but particulars of any such departure, the reasons for it and its effect shall be given in a note to the accounts.

(3) The adjustments referred to in this paragraph need not be made if they are not material for the purpose of giving a true and fair view.

16.

Any differences of accounting rules as between a parent undertaking's individual accounts for a financial year and its group accounts shall be disclosed in a note to the latter accounts and the reasons for the difference given.

17.

Amounts which in the particular context of any provision of this Part of the Schedule are not material may be disregarded for the purposes of that provision.

Differences in Tax Treatment

18.

Account shall be taken in the group accounts of any difference arising on consolidation between the tax chargeable for the financial year and for preceding financial years and the amount of tax paid or payable in respect of those years, provided that it is probable that an actual charge to tax will arise within the foreseeable future for one of the undertakings dealt with in the group accounts.

Minority interests

19.

(1) The formats set out in Part I of this Schedule shall have effect in relation to group accounts with the modifications set out in this paragraph.

(2) In the Balance Sheet Format (which is set out in Chapter 2 of Part I of this Schedule) a further item headed "Minority interests" shall be added as Liabilities item Aa and under that item shall be shown the amount of capital and reserves attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the parent undertaking and its subsidiary undertakings.

(3) In the profit and loss account format (which is set out in Chapter 2 of Part I of this Schedule) a further item headed "Minority interests" shall be added as item 10(a) in the non-technical account and under the said item 10(a) there shall be shown the amount of any profit or loss on ordinary activities attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the parent undertaking and its subsidiary undertakings.

(4) In the profit and loss account format (which is set out in Chapter 2 of Part I of this Schedule) a farther item headed "Minority interests" shall be added in as item 13(a) in the non-technical account and under the said item 13(a) there shall be shown the amount of any profit or loss on extraordinary activities attributable to shares in subsidiary undertakings included in the consolidation held by or on behalf of persons other than the parent undertaking and its subsidiary undertakings.

(5) For the purposes of paragraph 3 of Part I of this Schedule (power to combine items) the additional items required by the foregoing provisions of this paragraph shall be treated as items to which a letter is assigned

(6) Investment income and charges attributable to life assurance shall be shown in the technical account. Investment income and charges attributable to non-life business may be disclosed in the non-technical account.

Joint ventures

20.

(1) Where a parent undertaking or one of its subsidiaries dealt with in the group accounts manages another undertaking jointly with one or more undertakings not dealt with in the group accounts, that other undertaking (in this paragraph referred to as "the joint venture") may be dealt with in the group accounts by the method of proportional consolidation if it is neither a body corporate nor a subsidiary undertaking of the parent undertaking.

(2) The provisions of this Part relating to the preparation of group accounts shall, with any necessary modifications, apply to proportional consolidation under this paragraph.

Associated Undertakings

21.

(1) In this Part of the Schedule "associated undertaking" means an undertaking in which an undertaking dealt with in the group accounts has a participating interest and over whose operating and financial policy it exercises a significant influence, and which is not—

(a) a subsidiary undertaking of the parent undertaking, or

(b) a joint venture dealt with in accordance with paragraph 20.

(2) Where an undertaking holds 20 per cent. or more of the voting rights in another undertaking, it shall be presumed to exercise such an influence over it unless the contrary is shown.

(3) Paragraphs (3) and (4) of Regulation 11 shall apply for determining whether sub-paragraph (2) applies.

22.

(1) The interest of an undertaking dealt with in the group accounts in an associated undertaking, and the amount of profit or loss attributable to such an interest, shall be shown in the group accounts by way of the equity method of accounting including dealing with any goodwill arising in accordance with paragraphs 2 to 4 of Part II of this Schedule.

(2) Where the associated undertaking is itself a parent undertaking, the net assets and profits or losses to be taken into account are those of the parent and its subsidiary undertakings, after making any consolidation adjustments.

(3) The equity method of accounting need not be applied if the amounts in question are not material for the purpose of giving a true and fair view.

Participating interest

23.

(1) In this paragraph—

"participating interest" means a qualifying capital interest held by one undertaking in another on a long term basis for the purpose of securing a contribution to that undertaking's own activities by the exercise of control or influence arising from or related to that interest;

"qualifying capital interest", means—

(a) in relation to an undertaking with share capital, an interest in shares comprised in the allotted share capital of that undertaking,

(b) in relation to an undertaking with capital but no share capital, an interest conferring rights to share in the capital of the undertaking,

(i) conferring any right to share in the profits or liability to contribute to the losses of the undertaking, or

(ii) giving rise to an obligation to contribute to the debts or expenses of the undertaking in the event of a winding up,

and includes an interest which is convertible into a qualifying capital interest as well as an option to acquire any such qualifying capital interest.

(2) Where an undertaking holds a qualifying capital interest in another undertaking and such an interest represents 20 per cent. or more of all such interests in the other undertaking it shall be presumed to hold that interest on the basis and for the purpose mentioned in sub-paragraph (1) unless the contrary is shown.

(3) The percentage of qualifying capital interests held in an undertaking with share capital shall be the percentage that the nominal value of the shares held represents of the nominal value of the allotted share capital of that undertaking.

(4) For the purpose of this paragraph an interest held on behalf of an undertaking shall be treated as held by it.

(5) For the purpose of this paragraph as it applies in relation to "participating interest" in Regulation 11(1)(c) (subsidiary undertaking)—

(a) there shall be attributed to an undertaking any interests held by any of its subsidiary undertakings, and

(b) the references in sub-paragraph (1) of this paragraph to the purpose and activities of an undertaking include the purpose and activities of any of its subsidiary undertakings and of the group as a whole.

(6) In the balance sheet and profit and loss formats set out in Part I of this Schedule as applied to group accounts by this Part of the Schedule "participating interest" does not include an interest in a group undertaking.

24.

(1) The formats in Part I of this Schedule shall have effect in relation to group accounts with the following modifications.

(2) In the balance sheet format (which is set out in Chapter 2 of Part I of this Schedule) assets item C.II.3 (Participating Interests) shall be replaced by two items headed "Interests in associated undertakings" and "Other participating interests".

(3) In the profit and loss account format (which is set out in Chapter 2 of Part I of this Schedule) the following items, namely:

(a) item I.2(a) of the technical account-non-life insurance;

(b) item II.2(a) of the technical account-life assurance business, and

(c) item III.3(a) of the non-technical account shall be replaced by two items, "income from interests in associated undertakings" and "income from other participating interests".

CHAPTER 3 Information required by way of notes to the group accounts

25.

Without prejudice to Regulation 10, the notes to the group accounts shall also set out the information required by the following provisions of this Chapter.

26.

(1) In relation to the resulting amounts referred to in paragraph 9(5) and 11(6), there shall be stated in the notes to the group accounts the methods used in calculating those amounts and the reasons for any significant difference between such amounts for the financial year to which the group accounts refer and those for the preceding financial year.

(2) In relation to acquisitions taking place in the financial year, there shall be stated in the notes to the group accounts the following:

(a) the name and registered office of the undertaking acquired, or where a group was acquired, the name and registered office of the parent undertaking of that group, and

(b) whether the acquisition has been accounted for by the acquisition or the merger method of accounting.

27.

Where sums originally denominated in currencies, other than the currency in which the group accounts are drawn up, have been brought into account under any items shown in the balance sheet or profit and loss account, the basis on which those sums have, for the purposes of the accounts, been converted into the currency in which the group accounts are drawn up shall be stated.

28.

In respect of the aggregate of the amounts shown in the group balance sheet under the heading "Creditors" there shall be stated the following:

(a) the aggregate amount of any debts included under that heading which are payable or repayable otherwise than by instalments and fall due for payment or repayment after the end of the period of five years beginning with the day next following the end of the financial year,

(b) the aggregate amount of any debts so included which are payable or repayable by instalments any of which fall due for payment after the end of that period,

(d) an indication of the nature of the securities so given.

29.

(1) The following information shall be given with respect to the employees of the undertakings dealt with in the group accounts:

(a) the average number of persons employed in the financial year, by the undertakings dealt with in the group accounts, and

(b) the average number of persons employed within each category of persons employed by those undertakings.

(2) In respect of all persons employed by the undertakings dealt with in the group accounts during the financial year who are taken into account in determining the relevant annual number for the purposes of sub-paragraph (1)(a), there shall also be stated the aggregate amount of staff costs, save in so far as this amount is stated in the group profit and loss account.

(3) The categories of persons employed by the undertakings included in the group accounts by reference to which the number required to be disclosed by sub-paragraph (1)(b) is to be determined shall be such as the directors of the parent undertaking may select, having regard to the manner in which the activities of the undertakings dealt with in the group accounts are organised.

(4) For the purposes of clauses a and (b) of sub-paragraph (1) the average number of persons employed by the undertakings dealt with in the group accounts shall be determined by adding together the averages, for each such undertaking, calculated by the method set out in paragraph 27(3) of Part III of this Schedule.

(5) The average number of persons employed during the financial year by an undertaking proportionally consolidated pursuant to paragraph 21 of this Part, calculated by the manner specified in sub-paragraph (4), shall also be stated.

30.

(1) In the case of group accounts, the pension commitments referred to in paragraph 18(4) of Part III of this Schedule and the emoluments and compensation referred to in paragraph 58 (6) of the Schedule to the 1986 Act shall be to such commitments, emoluments and compensation relating to directors or past directors of the parent undertaking in respect of duties relating to the parent undertaking, to any of its subsidiary undertakings, to any undertakings proportionally consolidated in accordance with paragraph 21 of this Part or to associated undertakings.

(2) Section 191 of the Principal Act shall not apply to group accounts prepared in accordance with these Regulations.

31.

(1) Subject to sub-paragraph (2), sections 41 to 43 of the Act of 1990 shall apply to group accounts prepared under these Regulations.

(2) The particulars of any transaction, arrangement or agreement referred to in those sections, entered into with a director of the parent undertaking by an undertaking proportionally consolidated in accordance with paragraph 21 of this Part of this Schedule, or an associated undertaking, shall be similarly stated.

32.

(1) (a) The information set out in sub-paragraphs (2), (3) and (4) shall be stated in relation to each undertaking dealt with in the group accounts.

(b) For the purpose of clause a, the information required by sub-paragraph (3)(a) does not include such interests in the parent undertaking.

(2) The names and registered offices of the undertakings included in the group accounts shall be set out therein.

(3)
(a) The aggregate of the qualifying capital interests held in that undertaking by the undertakings dealt with in the group accounts as a proportion of the total of such interests shall be stated for the purposes of paragraph 25.

(b) In this sub-paragraph "qualifying capital interest" has the meanings assigned to it in paragraph 23.

(c) For the purpose of this sub-paragraph, paragraph 23(3) shall apply in determining the percentage of qualifying capital interests held in an undertaking with share capital.

(4)
(a) There shall be set out for the purposes of paragraph 25 a note indicating by virtue of which of the provisions of Regulation 11 has the undertaking been dealt with in the group accounts.

(b) The information required by clause c of this sub-paragraph may be omitted where the undertaking has been dealt with in the group accounts by virtue of Regulation 11(1)(a), and where the proportion of capital and the proportion of voting rights held are the same.

33.

The information set out in sub-paragraphs (2), (3) and (4) of paragraph 32 shall also be given in respect of each undertaking which has been excluded from the group accounts by virtue of the application of paragraph 2.

34.

(1) The information set out in sub-paragraphs (2) and (3) of paragraph 32 shall be stated in relation to each associated undertaking.

(2) The information required by sub-paragraph (1) shall also be stated in relation to associated undertakings, the interest in which has been dealt with in accordance with paragraph 22 (3).

35.

(1) The information set out in sub-paragraphs (2) and (3) of paragraph 32 shall be stated in relation to each undertaking that has been proportionally consolidated in accordance with paragraph 20.

(2) The nature of the joint management of each joint venture, to which paragraph 20 applies, proportionally consolidated shall also be stated.

36.

(1) The information set out in sub-paragraphs (2) and (3) of paragraph 32 shall be stated in relation to each undertaking (in this paragraph referred to as an "undertaking of substantial interest"), other than those referred to in paragraphs 32 to 35 in which undertakings dealt with in the group accounts and undertakings not dealt with by virtue of the application of sub-paragraphs (4) to (6) of paragraph 2, or persons acting in their own name but on behalf of such undertakings, between them hold a qualifying capital interest representing 20 per cent. or more of such interests.

(2) There shall also be stated in relation to each undertaking of substantial interest, the amount of its capital and reserves and its profit or loss for its latest financial year for which accounts have been adopted.

(3) The information required by sub-paragraphs (1) and (2) may be omitted, where for the purposes of Regulation 10(5), it is of negligible importance.

(4) The information concerning capital and reserves and the profit or loss required by sub-paragraph (2) may also be omitted where the undertaking concerned is not required to attach its balance sheet to its annual return and where the qualifying capital interest held as described in sub-paragraph (1) is less than 50 per cent.

(5) For the purpose of this paragraph, paragraph 23(3) shall apply in determining the percentage of qualifying capital interest held in an undertaking with share capital.

GIVEN under my Official Seal, this 5th day of February 1996

Richard Bruton

Minister for Enterprise and Employment.

EXPLANATORY NOTE

These Regulations give effect to the Council Directive on the annual accounts and consolidated accounts of insurance undertakings (91/674/EEC, O.J. No. L374/7). This Directive provides for the application of the fourth and seventh company law directives to insurance companies, taking account of specific features of the accounts of insurance companies.

The fourth directive (78/660/EEC, O.J. No. L222/11) provides for co-ordinated national legislation concerning presentation of accounts and uniform valuation of assets and liabilities brought to account by all undertakings within the European Union, aimed at providing comparable sets of accounts within a range of options. It was implemented by the Companies (Amendment) Act, 1986 (No. 25 of 1986). The seventh directive (83/349/EEC, O.J. L1 93/1) provided for co-ordinated national legislation concerning consolidated accounts. It was implemented by the European Communities (Companies: Group Accounts) Regulations, 1992 (No. 201 of 1992).

These Regulations require insurance undertakings to prepare and to publish annually accounts (balance sheet, profit and loss account and notes), in accordance with the provisions of these Regulations. They also require (with provision for exceptions) insurance undertakings which have subsidiary undertakings or non-insurance holding companies, the most important of whose subsidiaries are insurance undertakings, to prepare and to publish group accounts in accordance with the provisions of these Regulations.

The Regulations contain provisions governing the preparation of accounts, including group accounts, the content of those accounts, their format and the valuation of items to be included. They specify information to be included in the notes to the accounts.

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