S.I. No. 262/2015 - European Union (Insurance Undertakings: Financial Statements) Regulations 2015

• (b) the differences between those amounts and the corresponding amounts actually shown in the balance sheet in respect of that item,

shall be shown separately in the balance sheet or in a note to the financial statements.

• (5) In subparagraph (4), references in relation to any item to the comparable amounts determined as there mentioned are references to—

• (a) the aggregate amount which would be required to be shown in respect of that item if the amounts to be included in respect of all the assets covered by that item were determined according to the historical cost accounting rules; and

• (b) the aggregate amount of the cumulative provisions for depreciation or diminution in value which would be permitted or required in determining those amounts according to those rules.

Revaluation Reserve

• (2) The amount of the revaluation reserve shall be shown in the undertaking’s balance sheet under Liabilities item A.III in the balance sheet format (set out in Section B of Part II of this Schedule).

• (3) An amount may be transferred—

• (a) from the revaluation reserve—

• (i) to the profit and loss account, if the amount was previously charged to that account, or it represents realised profit; or

• (ii) on capitalisation;

• (b) to or from the revaluation reserve in respect of the taxation relating to any profit or loss credited or debited to the reserve;

and the revaluation reserve shall be reduced to the extent that the amounts transferred to it are no longer necessary for the purpose of the valuation methods used.

• (4) In subparagraph (3)(a)(ii) “capitalisation”, in relation to an amount standing to the credit of the revaluation reserve, means applying it in wholly or partly paid up unissued shares in the undertaking to be allotted to members of the undertaking as fully or partly paid shares.

• (5) The revaluation reserve shall not be reduced except as mentioned in this paragraph.

• (6) The treatment for taxation purposes of amounts credited or debited to the revaluation reserve shall be disclosed in a note to the financial statements.

SECTION D

FAIR VALUE ACCOUNTING RULES

Inclusion of financial instruments at fair value

• (2) Subject to paragraph 49, subparagraph (1) does not apply to financial instruments which constitute liabilities unless—

• (a) they are held as part of a trading portfolio; or

• (b) they are derivative financial instruments.

(3)Subparagraph (1) does not apply to—

• (a) financial instruments (other than derivative financial instruments) held to maturity;

• (b) loans and receivables originated by the undertaking and not held for trading purposes;

• (c) interests in subsidiary undertakings, associated undertakings and joint ventures;

• (d) equity instruments issued by the undertaking;

• (e) contracts for contingent consideration in a business combination; and

• (f) other financial instruments with such special characteristics that the instruments, according to generally accepted accounting principles or practice, should be accounted for differently from other financial instruments.

• (4) If the fair value of a financial instrument cannot be determined reliably by any of the methods described in paragraph 48, subparagraph (1) does not apply to that financial instrument and it shall be measured using the accounting rules set out in Section B or C.

• (5) In this paragraph—

“associated undertaking” has the meaning given to it by paragraph 24 of

Schedule 2;

“joint venture” has the meaning given to it by paragraph 23 of Schedule 2.

• (a) they are accounted for in accordance with international accounting standards as adopted by the Commission Regulation on or before 5 September 2006; and

• (b) the associated disclosure requirements, provided for in international financial reporting standards, are made.

• (2) Financial instruments referred to in paragraph 46(3) may be accounted for by an undertaking at fair value if—

• (a) they are accounted for in accordance with international accounting standards as adopted by the Commission Regulation, on or before 5 September 2006; and

• (b) the associated disclosure requirements, provided for in international financial reporting standards, are made.

• (3) In this paragraph “Commission Regulation” means Commission Regulation (EC) No. 1126/2008 of 3 November 2008² .

Methods for determining fair value

• (2) If a reliable market can readily be identified for the financial instrument, its fair value is to be determined by reference to its market value.

• (3) If a reliable market cannot readily be identified for the financial instrument but can be identified for its components or for a similar instrument, its fair value is to be determined by reference to the market value of its components or of the similar instrument.

• (4) If neither subparagraph (2) nor (3) applies, the fair value of the financial instrument is to be a value resulting from generally accepted valuation models and techniques.

• (5) Any valuation models and techniques used for the purposes of subparagraph (4) shall ensure a reasonable approximation of the market value.

Inclusion of hedged items at fair value

Other assets that may be included at fair value

• (a) investment property; and

• (b) living animals and plants;

that, under relevant international financial reporting standards, may be included in financial statements at fair value.

• (2) Such investment property and such living animals and plants may be included at fair value, provided that all such investment property or, as the case may be, all such living animals and plants are so included where their fair value can reliably be determined.

• (3) In this paragraph, “fair value” means fair value determined in accordance with relevant international financial reporting standards.

Accounting for changes in fair value of financial instruments

• (2) Notwithstanding paragraph 17, but subject to subparagraphs (3) and (4), a change in the fair value of the financial instrument or of the investment property or living animal or plant shall be included in the profit and loss account.

• (3) Where—

• (a) the financial instrument accounted for is a hedging instrument under a system of hedge accounting that allows some or all of the change in value not to be shown in the profit and loss account; or

• (b) the change in value relates to an exchange difference arising on a monetary item that forms part of an undertaking’s net investment in a foreign entity;

the amount of the change in value shall be credited or (as the case may be) debited to a separate reserve to be known as the “fair value reserve”.

• (4) Where the instrument accounted for—

• (a) is an available for sale financial asset; and

• (b) is not a derivative;

the change in value may be credited or (as the case may be) debited to the fair value reserve.

The fair value reserve

• (a) from the fair value reserve to the profit and loss account if the related asset is impaired, transferred or disposed of; or

• (b) from the fair value reserve in respect of tax relating to any amount transferred under clause (a).

• (2) The fair value reserve shall be adjusted when amounts therein are no longer necessary for the purposes of paragraph 51(3) or (4).

• (3) The fair value reserve shall not be reduced except as provided for in this paragraph.

• (4) The treatment for taxation purposes of amounts credited or debited to the fair value reserve shall be disclosed in a note to the financial statements.

PART IV General Rules

• (2) The amount included in the balance sheet in respect of these assets shall be their purchase price.

• (3) Where the purchase price of these assets exceeds the amount repayable at maturity, the amount of the difference shall be charged to the profit and loss account or reduced each financial year on a systematic basis, in accordance with best accounting practice, so that it is completely written off when the securities are repaid. That difference shall be shown separately in the balance sheet or in the notes to the financial statements.

• (4) Where the purchase price of these assets is less than the amount repayable at maturity, the amount of the difference may be released to income in instalments over the period remaining until repayment. That difference shall be shown separately in the balance sheet or in the notes to the financial statements.

Technical provisions

Provision for unearned premiums

• (2) Notwithstanding subparagraph (1) statistical methods, in particular proportional and flat rate methods, may be used where they may be expected to give approximately the same results as would be obtained if individual calculations were made under subparagraph (1).

• (3) In classes of insurance where the pattern of risk varies over the life of a contract, this shall be taken into account in the calculation methods.

Provision for unexpired risks

• (2) In this paragraph, "unexpired risks" has the same meaning as it has in note (23) to the balance sheet format which is set out in Section B of Part II of this Schedule.

Life assurance

• (2) Notwithstanding subparagraph (1), statistical or mathematical methods may be used where they may be expected to give approximately the same results as would be obtained if individual calculations were made under subparagraph (1).

• (3) A summary of the principal assumptions in making the provision under subparagraph (1) or (2) shall be given in the notes to the financial statements.

• (4) The computation shall be made on the basis of recognised actuarial methods annually by a Fellow Member of the Society of Actuaries in Ireland, with due regard to the actuarial principles laid down in the Insurance and Reinsurance Directive.

PROVISIONS FOR CLAIMS OUTSTANDING

Non-life insurance

• (2) Notwithstanding subparagraph (1), statistical methods may be used if they result in an adequate provision for claims outstanding having regard to the nature of the risks.

• (3) A provision for claims outstanding shall also allow for claims incurred but not reported by the balance sheet date, the amount of the allowance being determined having regard to past experience as to the number and magnitude of claims reported after previous balance sheet dates.

• (4) All claims settlement costs shall be included in the calculation of the provision for claims outstanding, irrespective of their origin.

• (5) Recoverable amounts arising out of subrogation or salvage shall be estimated on a prudent basis and either deducted from the provision for claims outstanding (in which case if the amounts are material they shall be shown in the notes to the financial statements) or shown as assets.

• (6) Where benefits resulting from a claim are required to be paid in the form of annuity, the amounts to be set aside for that purpose shall be calculated by recognised actuarial methods.

• (7) In subparagraph (5)—

"salvage" means the acquisition of the legal ownership of insured property:

"subrogation" means the acquisition of the rights of policy holders with respect to third parties.

• (2) The Bank may, on application by the undertaking concerned, permit explicit discounting or deductions (including by way of financial reinsurance) to take account of investment income subject to compliance with the following conditions and any other conditions which the Bank may from time to time consider necessary:

• (a) the expected date for the settlement of claims shall be on average at least four years after the accounting date;

• (b) the discounting or deduction shall be effected on a recognised prudential basis: any change in that basis shall be notified, in advance, to the Bank;

• (c) when calculating the total cost of settling claims, an undertaking shall take account of all factors that could cause increases in that cost;

• (d) an undertaking shall have adequate data at its disposal to construct a reliable model of the rate of claims settlements;

• (e) the rate of interest used for the calculation of present value shall not exceed a prudent estimate of the investment income from assets invested as a provision for claims during the period necessary for the payment of such claims and that rate shall not exceed either of the following:

• (i) a rate derived from the investment income from such assets over the preceding five years:

• (ii) a rate derived from the investment income from such assets during the year preceding the balance sheet date.

• (3) When discounting or effecting deductions, an undertaking shall, in the notes to its financial statements, disclose the total amount of provisions before discounting or deduction, the categories of claims which are discounted or from which deductions have been made and, for each category of claims, the methods used, in particular the rates used for the estimates referred to in the clauses (c) and (e) of subparagraph (2), and the criteria adopted for estimating the period that will elapse before the claims are settled.

Life assurance business

• (a) be equal to the sums due to beneficiaries, plus the costs of settling claims,

• (b) include the provision for claims incurred but not reported, and

• (c) be disclosed under Liabilities item C.2.

Non-life insurance business

Accounting on a non-annual basis

• (2) The method adopted shall be disclosed in the notes to the financial statements together with the reasons for adopting it.

• (3) The method adopted shall be applied systematically in successive years unless circumstances justify a change and where there is a change in the method applied, the effect on the assets, liabilities, financial position and profit or loss shall be disclosed in the notes to the financial statements.

• (4) In this paragraph and the Table hereto "underwriting year" means the financial year in which the insurance contracts in the class or type of insurance in question commenced.

Table

Method 1

• (a) The excess of the premiums written over the claims and expenses paid in respect of contracts commencing in the underwriting year shall form a technical provision included in the technical provision for claims outstanding shown in the balance sheet under Liabilities item C.3.

• (b) The provision may also be computed on the basis of a given percentage of the premiums written where such a method is appropriate for the type of risk insured.

• (c) If necessary, the amount of this technical provision shall be increased to make it sufficient to meet present and future obligations.

• (d) The technical provision constituted under this method shall be replaced by a provision for claims outstanding estimated in accordance with paragraphs 58 to 60 as soon as sufficient information has been gathered and not later than the end of the third year following the underwriting year.

• (e) The length of time that elapses before a provision for claims outstanding is constituted in accordance with paragraph (d) of this method shall be disclosed in the notes to the financial statements.

Method 2

• (a) The figures shown in the technical account or in certain items within it shall relate to a year which wholly or partly precedes the financial year but by no more than 12 months.

• (b) The amounts of the technical provisions shown in the financial statements shall, if necessary, be increased to make them sufficient to meet present and future obligations.

• (c) The length of time by which the earlier year to which the figures relate precedes the financial year and the magnitude of the transactions concerned shall be disclosed in the notes to the financial statements.

PART V INFORMATION REQUIRED BY WAY OF NOTES TO FINANCIAL STATEMENTS

Preliminary

Information supplementing the balance sheet

Debentures

• (a) the reason for making the issue,

• (b) the classes of debentures issued, and

• (c) as respects each class of debentures, the amount issued and the consideration received by the undertaking for the issue.

• (2) Particulars of any redeemed debentures which the undertaking has power to reissue shall also be given.

• (3) Where any of the undertakings debentures are held by a nominee of or trustee for the undertaking, the nominal amount of the debentures and the amount at which they are stated in the accounting records kept by the undertaking in accordance with section 281 of the Principal Act shall be stated.

Assets

• (a) the appropriate amounts in respect of that item as at the date of the beginning of the financial year and as at the financial year end date respectively;

• (b) the effect on any amount included in Assets item B in respect of that item of—

• (i) any revision of the amount in respect of any assets included under that item made during that year on any basis mentioned in paragraph 39;

• (ii) acquisitions during that year of any assets;

• (iii) disposals during that year of any assets; and

• (iv) any transfers of assets of the undertaking to and from that item during that year.

• (2) The reference in subparagraph (1)(a) to the appropriate amounts in respect of any assets (included in an assets item) as at any date there mentioned is a reference to amounts representing the aggregate amounts determined, as at that date, in respect of assets falling to be included under that item either—

• (a) on the basis of cost (determined in accordance with paragraphs 32 and 33); or

• (b) on any basis mentioned in paragraph 38 or 39;

(leaving out of account in either case any provisions for depreciation or diminution in value).

• (3) In addition, in respect of any assets of the undertaking included in any assets item in the undertaking’s balance sheet, there shall be stated (by reference to each such item)—

• (a) the cumulative amount of provisions for depreciation or diminution in value of assets included under that item as at each date mentioned in subparagraph (1)(a);

• (b) the amount of any such provisions made in respect of the financial year concerned;

• (c) the amount of any adjustments made in respect of any such provisions during that year in consequence of the disposal of any assets; and

• (d) the amount of any other adjustments made in respect of any such provisions during that year.

• (a) the years (so far as they are known to the directors) in which the assets were severally valued and the several values; and

• (b) in the case of assets that have been valued during the financial year, the names of the persons who valued them or particulars of their qualifications for doing so and (in either case) the bases of valuation used by them.

• (a) how much of that amount is ascribable to land of freehold tenure and how much to land of leasehold tenure; and

• (b) how much of the amount ascribable to land of leasehold tenure is ascribable to land held on long lease and how much to land held on short lease.

Investments

• (2) Where the amount of any listed investments is stated for any item in accordance with subparagraph (1), the following amounts shall also be stated—

• (a) the aggregate market value of those investments where it differs from the amount so stated;

• (b) how much of any amount so ascribable is ascribable to investments in respect of which there has been granted a listing on a recognised stock exchange and how much to other listed investments; and

• (c) both the market value and stock exchange value of any investments of which the former value is, for the purposes of the financial statements, taken as being higher than the latter.

Information about fair valuation of assets and liabilities

• (2) There shall be stated—

• (a) the significant assumptions underlying the valuation models and techniques where fair values have been determined in accordance with paragraph 48(5);

• (b) for each category of financial instrument the fair value of the financial instruments in that category and the amounts—

• (i) included in the profit and loss account; and

• (ii) credited or debited to the fair value reserve;

in respect of instruments in that category;

• (c) for each class of derivative financial instrument, the extent and nature of the instruments including significant terms and conditions that may affect the amount, timing and certainty of future cash flows; and

• (d) a table showing movements in the fair value reserve during the financial year.

• (a) the fair value of the derivatives in that class, if such a value can be determined in accordance with paragraph 48; and

• (b) the extent and nature of the derivatives.

• (a) an undertaking has financial assets which could be included at fair value by virtue of paragraph 46;

• (b) those assets are included in the undertaking’s financial statements at an amount in excess of their fair value; and

• (c) the undertaking has not made provision for the diminution in value of those assets in accordance with paragraph 25(1);

there shall be stated—

• (i) the amount at which either the individual assets or appropriate groupings of those assets is stated in the undertaking’s financial statements;

• (ii) the fair value of those assets or groupings; and

• (iii) the reasons for not making a provision for diminution in value of those assets, including the nature of the evidence that provides the basis for the belief that the amount at which they are stated in the financial statements will be recovered.

Information where investment property and living animals and plants included at fair value

• (2) The balance sheet items affected and the basis of valuation adopted in determining the amounts of the assets concerned in the case of each such item shall be disclosed in a note to the financial statements.

• (3) In the case of investment property, for each balance sheet item affected there shall be shown, either separately in the balance sheet or in a note to the financial statements—

• (a) the comparable amounts determined according to the historical cost accounting rules; or

• (b) the differences between those amounts and the corresponding amounts actually shown in the balance sheet in respect of that item.

• (4) In subparagraph (3), references in relation to any item to the comparable amounts determined in accordance with that subparagraph are references to—

• (a) the aggregate amount which would be required to be shown in respect of that item if the amounts to be included in respect of all the assets covered by that item were determined according to the historical cost accounting rules; and

• (b) the aggregate amount of the cumulative provisions for depreciation or diminution in value which would be permitted or required in determining those amounts according to those rules.

Dividends, reserves and provisions for liabilities

• (a) the aggregate amount of dividends paid in the financial year (other than dividends for which a liability existed at the immediately preceding financial year end date);

• (b) the aggregate amount of dividends the undertaking is liable to pay at the financial year end date (other than dividends for which a liability existed at the immediately preceding financial year end date);

• (c) separately, any transfer between the profit and loss account reserve and other reserves;

• (d) any other increase or reduction in the balance on the profit and loss account reserve since the immediately preceding financial year end date;

• (e) the profit or loss brought forward at the beginning of the financial year; and

• (f) the profit or loss carried forward at the end of the financial year.

• (2) The aggregate amount of dividends proposed by the directors for approval of the members at the next general meeting shall be stated in a note to the financial statements.

• (a) to or from any reserves; or

• (b) to any provision for liabilities; or

• (c) from any provision for liabilities other than for the purpose for which the provision was established;

and the reserves or provisions for liabilities are or would, but for paragraph 4(3)(b), be shown as separate items in the undertaking’s balance sheet, the information mentioned in subparagraph (2) shall be given in respect of each such reserve or provisions for liabilities.

• (2) That information is—

• (a) the amount of the reserves or provisions for liabilities as at the date of the beginning of the financial year and as at the financial year end date respectively;

• (b) any amount transferred to or from the reserves or provisions for liabilities during that year; and

• (c) the source and application respectively of any amounts so transferred.

• (3) Particulars shall be given of each provision included in Liabilities item E.3 (other provisions for liabilities) in the undertaking’s balance sheet in any case where the amount of that provision is material.

Provision for taxation

Details of indebtedness

• (a) the aggregate amount of any debts included under that item which are payable or repayable otherwise than by instalments and fall due for payment or repayment after the end of the period of 5 years beginning with the day next following the end of the financial year; and

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

• (2) Subject to subparagraph (3), in relation to each debt falling to be taken into account under subparagraph (1), the terms of payment or repayment and the rate of any interest payable on the debt shall be stated.

• (3) If the number of debts is such that, in the opinion of the directors, compliance with subparagraph (2) would result in a statement of excessive length, it shall be sufficient to give a general indication of the terms of payment or repayment and the rates of any interest payable on the debts.

• (4) In respect of each item shown under “creditors” in the undertaking’s balance sheet there shall be stated—

• (a) the aggregate amount of any debts included under that item in respect of which any security has been given; and

• (b) an indication of the nature of the securities so given.

• (5) References in subparagraph (1) to an item shown under “creditors” in the undertaking’s balance sheet include references, where amounts falling due to creditors within one year and after more than one year are distinguished in the balance sheet—

• (a) in a case within subparagraph (1), to an item shown under the latter of those categories; and

• (b) in a case within subparagraph (4), to an item shown under either of those categories;

and references to items shown under “creditors” include references to items which would, but for paragraph 4(3)(b), be shown under that heading.

• (a) the amount of the arrears; and

• (b) the period for which the dividends or, if there is more than one class, each class of them are in arrears.

Guarantees and other financial commitments

• (2) The following information shall be given with respect to any other contingent liability not provided for (other than a contingent liability arising out of an insurance contract):

• (a) the amount or estimated amount of that liability;

• (b) its legal nature; and

• (c) whether any valuable security has been provided by the undertaking in connection with that liability and, if so, what.

• (3) There shall be stated, where practicable—

• (a) the aggregate amount or estimated amount of contracts for capital expenditure, so far as not provided for; and

• (b) the aggregate amount or estimated amount of capital expenditure authorised by the directors which has not been contracted for.

• (4) Particulars shall be given of:

• (a) any unfunded retirement benefit commitments included under any provision shown in the undertaking’s balance sheet; and

• (b) any such commitments for which no provision has been made;

and, where any such commitment relates wholly or partly to retirement benefits payable to past directors of the undertaking, separate particulars shall be given of that commitment so far as it relates to such retirement benefits.

• (5) The following information shall also be given:

• (a) the nature of every retirement benefit scheme operated by, or on behalf of, the undertaking including information as to whether or not each scheme is a defined benefit scheme or a defined contribution scheme;

• (b) whether each such scheme is externally funded or internally financed;

• (c) whether any retirement benefit costs and liabilities are assessed in accordance with the advice of a professionally qualified actuary and, if so, the date of the most recent relevant actuarial valuation;

• (d) whether and, if so, where any such actuarial valuation is available for public inspection.

• (6) Particulars shall also be given of any other financial commitments, other than commitments arising out of insurance contracts, which—

• (a) have not been provided for; and

• (b) are relevant to assessing the undertaking’s financial position.

Miscellaneous matters

Information supplementing the profit and loss account

Separate statement of certain items of income and expenditure

• (a) the amount of interest on or any similar charges in respect of—

• (i) bank loans and overdrafts made to the undertaking;

• (ii) loans to the undertaking from group undertakings;

• (iii) loans of any other kind made to the undertaking;

and

• (b) the amount of income from listed and unlisted investments.

Particulars of tax

• (2) Particulars shall be given of any special circumstances which affect the liability in respect of taxation on profits, income or capital gains for the financial year concerned or the liability in respect of taxation of profits, income or capital gains for succeeding financial years.

• (3) The following amounts shall be stated:

• (a) the amount of the charge for corporation tax;

• (b) if the amount of the charge to corporation tax would have been greater but for relief from double taxation, the amount which it would have been but for such relief:

• (c) the amount of the charge for income tax; and

• (d) the amount of the charge for taxation payable outside the State of profits, income and (so far as charged to revenue) capital gains.

• (4) The amounts referred to in subparagraph (3) shall be stated separately in respect of each of the amounts which is or would, but for paragraph 4(3)(b), be shown under the following items in the profit and loss account, that is to say item III.9 (tax on profit or loss on ordinary activities) and item III.14 (tax on extraordinary profit or loss).

Particulars of business

• (a) gross premiums written,

• (b) gross premiums earned,

• (c) gross claims incurred,

• (d) gross operating expenses, and

• (e) the reinsurance balance.

• (2) The amounts required to be disclosed by subparagraph (1) shall be broken down between direct insurance and reinsurance acceptances, if reinsurance acceptances amount to 10 per cent or more of gross premiums written.

• (3) Subject to subparagraph (4), the amounts required to be disclosed by subparagraphs (1) and (2) with respect to direct insurance shall be further broken down into the following groups of classes—

• (a) accident and health,

• (b) motor, third party liability,

• (c) motor, other classes,

• (d) marine, aviation and transport,

• (e) fire and other damage to property,

• (f) third-party liability,

• (g) credit and suretyship,

• (h) legal expenses,

• (i) assistance, and

• (j) miscellaneous,

where the amount of the gross premiums written in direct insurance for each such group exceeds ten million euro.

• (4) The amounts relating to the three largest groups of classes in an undertaking’s business shall in any event be disclosed.

• (a) gross premiums written, and

• (b) the reinsurance balance.

• (2) The notes relating to gross premiums written shall be broken down between direct insurance and reinsurance acceptances, where reinsurance acceptances amount to 10 per cent or more of gross premiums written, and within direct insurance shall be broken down to indicate—

(a)(i) individual premiums,

• (ii) premiums under group contracts,

(b)(i) periodic premiums,

• (ii) single premiums,

(c)(i) premiums from non-participating contracts,

• (ii) premiums from participating contracts,

• (iii) premiums from contracts where the investment risk is borne by policy holders.

• (3) Disclosures of any amount required by clause (a), (b) or (c) of subparagraph (2) shall not be required where that amount does not exceed 10 per cent of the gross premiums written in direct insurance.

• (a) in the EEA state where there is situated its head office,

• (b) in the other EEA states, and

• (c) in other countries.

• (2) Disclosure of any figure referred to in subparagraph (1) above shall not be required if it does not exceed 5 per cent of total gross premiums.

Commissions

Miscellaneous matters

• (2) Particulars shall be given of any extraordinary income or changes arising in the financial year.

• (3) The effect shall be stated on any transactions that are exceptional by virtue of size or incidence though they fall within the ordinary activities of the undertaking.

• (4) Any amount expended on research and development in the financial year, and any amount committed in respect of research and development in subsequent years, shall be stated.

• (5) Where, in the opinion of the directors, the disclosure of any information required by subparagraph (4) would be prejudicial to the interests of the undertaking, that information need not be disclosed, but the fact that any such information has not been disclosed shall be stated.

Related party transactions

• (2) The provision of particulars and other information about individual transactions may be aggregated according to their nature, except where separate information is necessary for an understanding of the effects of related party transactions on the financial position of the undertaking.

(3)Subparagraph (1) shall not apply to transactions which are entered into between 2 or more members of a group if any subsidiary undertaking which is party to the transaction is wholly owned by such a member.

• (4) A word or expression that is used in this paragraph and is also used in Directive 2006/46/EC of the European Parliament and the Council of 14 June 2006³ has the same meaning in this paragraph that it has in that Directive.

General

PART VI SPECIAL PROVISIONS WHERE AN UNDERTAKING IS A HOLDING UNDERTAKING OR SUBSIDIARY UNDERTAKING

Entity financial statements

• (2) Where an undertaking is a holding undertaking shall have or a subsidiary undertaking and any item required by Part II to be shown in the undertaking’s balance sheet, in relation to group undertakings, includes—

• (a) amounts attributable to dealings with or interests in any holding undertaking or fellow subsidiary undertaking; or

• (b) amounts attributable to dealings with or interests in any subsidiary undertaking of the undertaking;

the aggregate amounts within clauses (a) and (b), respectively, shall be shown as separate items, either by way of subdivision of the relevant item in the balance sheet or in a note to the undertaking’s financial statements.

Guarantees and other financial commitments in favour of group undertakings

• (a) any holding undertaking or fellow subsidiary undertaking; or

• (b) any subsidiary undertaking of the undertaking;

shall be stated separately from the other commitments within that subparagraph, and commitments within clause (a) shall also be stated separately from those within clause (b).

(2)Subparagraph (1) does not apply in relation to any debentures—

• (a) in the case of which the subsidiary undertaking is concerned as personal representative; or

• (b) in the case of which it is concerned as trustee;

provided that in the latter case neither the undertaking nor a subsidiary undertaking of the undertaking is beneficially interested under the trust, otherwise than by way of security only for the purposes of a transaction entered into by it in the ordinary course of a business which includes the lending of money.

• (a) the largest group of undertakings for which group financial statements are drawn up and of which the undertaking is a member; and

• (b) the smallest such group of undertakings.

• (2) The name of the holding undertaking shall be stated.

• (3) There shall be stated—

• (a) if the holding undertaking is incorporated, the country in which it is incorporated; or

• (b) if it is unincorporated, the address of its principal place of business.

• (4) If copies of the group financial statements referred to in subparagraph (1) are available to the public, there shall be stated the addresses from which copies of the financial statements can be obtained.

Provisions of general application

• (a) does not prepare group financial statements; or

• (b) prepares group financial statements which do not deal with one or more of its subsidiary undertakings;

and references in this paragraph to subsidiary undertakings shall be read, in a case within clause (b), as references to such of the subsidiary undertakings of the undertaking concerned as are excluded from the group financial statements.

• (2) Subject to the following provisions of this paragraph, there shall be given in the notes to the undertaking’s entity financial statements—

• (a) the reasons why subsidiary undertakings are not dealt with in group financial statements; and

• (b) a statement—

• (i) showing any qualifications contained in the reports of the statutory auditors of the subsidiary undertakings on their financial statements for their respective financial years ending with or during the financial year of the undertaking; and

• (ii) of any note or saving contained in those financial statements to call attention to a matter which, apart from the note or saving, would properly have been referred to in such a qualification;

in so far as the matter which is the subject of the qualification or note is not covered by the undertaking’s entity financial statements and is material from the point of view of its members.

• (3) Subject to the following provisions of this paragraph, the aggregate amount of the total investment of the holding undertaking in the shares of the subsidiary undertakings shall be stated in a note to the undertaking’s entity financial statements by way of the equity method of accounting.

• (4) In so far as information required by any of the preceding provisions of this paragraph to be stated in a note to the undertaking’s entity financial statements is not obtainable, a statement to that effect shall be given instead in a note to those entity financial statements.

• (5) Where, in any case within subparagraph (1)(b), the undertaking prepares group financial statements, references in the preceding subparagraphs to the undertaking’s entity financial statements shall be read as references to the group financial statements.

• (a) the reasons why the undertaking’s directors consider that the subsidiary undertakings’ financial years should not end with that of the undertaking; and

• (b) the dates on which the subsidiary undertakings’ financial years ending last before that of the undertaking respectively ending or the earliest and latest of those dates.

PART VII INTERPRETATION OF CERTAIN EXPRESSIONS IN THIS SCHEDULE

General

"fellow subsidiary undertaking" shall have the same meaning as in section 275 of the Principal Act;

"group" means a holding undertaking and its subsidiary undertakings;

"group undertaking" has the meaning assigned to it by section 275 of the Principal Act;

“Insurance and Reinsurance Directive” means Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009⁴ ;

"lease" includes an agreement for a lease;

"long lease" means a lease in the case of which the portion of the term for which it was granted remaining unexpired at the end of the financial year is not less than 50 years;

"short lease" means a lease which is not a long lease.

Assets: fixed or current

Capitalisation

Investment property

Listed investments

• (a) any regulated market or other stock exchange in the State;

• (b) any regulated market or other stock exchange of repute in any other EEA state; or

• (c) any stock exchange of repute in a state that is not an EEA state.

Loans

Materiality

Provisions

• (2) Any reference in the profit and loss account formats set out in Part II to the depreciation of, or amounts written off, assets of any description is a reference to the movement in any provision for depreciation or diminution in value of assets of that description.

Purchase price

SCHEDULE 2 ACCOUNTING PRINCIPLES, FORM AND CONTENT OF GROUP FINANCIAL STATEMENTS

PART I CONSTRUCTION OF REFERENCES TO PROVISIONS OF THIS SCHEDULE

• (a) a reference in this Schedule to a paragraph or Part is a reference to a paragraph or Part of this Schedule, unless it is indicated that a reference to some other enactment is intended; and

• (b) a reference in this Schedule to a subparagraph or clause is a reference to the subparagraph or clause of the provision in which the reference occurs, unless it is indicated that a reference to some other enactment is intended.

PART II

GENERAL RULES AND FORMATS

GENERAL RULES

• (2) In particular, for the purposes of note (12) of the balance sheet format, set out in Part II of Schedule 1, and paragraphs 91 and 92 of Schedule 1 (dealings with or interests in group undertakings) as it applies to group financial statements—

• (a) any subsidiary undertakings of the holding undertaking not dealt with in the group financial statements shall be treated as a subsidiary undertaking of the group; and

• (b) if the holding undertaking is itself a subsidiary undertaking, the group shall be treated as a subsidiary undertaking of any holding undertaking of that undertaking, and the reference to fellow subsidiary undertakings shall be read accordingly.

• (2) If the financial year of a subsidiary undertaking dealt with in the group financial statements differs from that of the holding undertaking, the group financial statements shall be drawn up—

• (a) from the entity financial statements of the subsidiary undertaking for its financial year last ending before the end of the holding undertaking’s financial year provided that the financial year ended no more than 3 months before that of the holding undertaking; or

• (b) where an undertaking’s balance sheet date precedes the group balance sheet by more than three months, but not more than six months, from interim financial statements drawn up by the subsidiary undertaking as at the end of the holding undertaking’s financial year.

AMENDMENTS TO FORMATS IN SCHEDULE 1

Minority interest

• (2) The amount to be shown under the heading “Minority Interest” referred to in subparagraph (1) shall be the amount of share capital and reserves attributable to shares in subsidiary undertakings consolidated in the group financial statements held by or on behalf of persons other than the holding undertaking and its subsidiary undertakings.

• (2) The amount to be shown under the heading “Minority Interest” in accordance with subparagraph (1) shall be the amount of any profit or loss for the year attributable to shares in subsidiary undertakings consolidated in the group financial statements held by or on behalf of persons other than the holding undertaking and its subsidiary undertakings.

• (3) In the Profit and Loss Account Format a further item headed "Minority interests" shall be added in the non-technical account as item 13a and under that item 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 holding undertaking and its subsidiary undertakings.

Other changes

• (2) In the Balance Sheet Format 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 Formats, the following items, that is—

(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 2 items, “Income from interests in associated undertakings” and “Income from other participating interests”.

PART III ACCOUNTING PRINCIPLES AND VALUATION RULES

ACCOUNTING PRINCIPLES

General

(2)Subparagraph (1) shall not apply to those liabilities items the valuation of which, by the insurance undertakings included in group financial statements, 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 subparagraph (2) applies, that fact shall be disclosed in the notes to the group financial statements.

(2)Subparagraph (1) shall not apply where, in the opinion of the directors, a departure from that paragraph is necessary for the purpose of giving a true and fair view.

• (3) Where there is any application of subparagraph (2), the particulars of the departure and the reasons therefor shall be disclosed in the notes to the group financial statements.

• (2) 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.

• (3) If, in the opinion of the directors of the holding undertaking, there are special reasons for departing from subparagraph (1) they may do so but particulars of any such departure, the reasons therefor and its effect shall be stated in the notes to the group financial statements.

Preparing the consolidation

• (2) In particular—

• (a) debts and claims between the undertakings included in the consolidation shall be eliminated in preparing the group financial statements;

• (b) income and expenditure relating to transactions between the undertakings included in the consolidation shall be eliminated in preparing the group financial statements;

• (c) where profits and losses resulting from transactions between the undertakings included in the consolidation are included in the book values of assets, they shall be eliminated in preparing the group financial statements;

but clauses (a) to (c) need not be complied with where the amounts involved are

not material for the purpose of giving a true and fair view.

• (2) If, in the opinion of the directors of the holding undertaking, there are special reasons for departing from subparagraph (1) they may do so but particulars of any such departure, the reasons therefor and its effect shall be stated in the notes to the group financial statements.

Accounting for an acquisition

• (2) That event is referred to in those provisions as an “acquisition” and references to the undertaking acquired shall be read accordingly.

• (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) In subparagraph (2) “identifiable assets or liabilities” means the assets or liabilities which are capable of being disposed of or discharged separately, without disposing of a business of the undertaking.

• (4) The income and expenditure of the undertaking acquired shall be brought into the group financial statements only as from the date of acquisition.

• (5) There shall be calculated the difference between the acquisition cost of the interest in the shares of the acquired undertaking incurred by the undertakings included in the group financial statements, and the interest of the undertakings included in the group financial statements in the adjusted capital and reserves of the undertaking acquired.

• (6) For the foregoing purpose—

“acquisition cost” means the amount of any cash consideration and the fair value of any other consideration, together with such amounts (if any) in respect of fees and other expenses of the acquisition as the holding undertaking may determine to have been incurred in relation to the acquisition;

“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.

• (7) The resulting amount, if positive, shall be treated as goodwill and the provisions of Schedule 1 in relation to goodwill shall apply.

• (8) The resulting amount, if negative, shall be treated as a negative consolidation difference.

• (a) that at least 90 per cent of the nominal value of the equity shares in the undertaking acquired is held by or on behalf of the undertakings consolidated in the group financial statements,

• (b) that the proportion referred to in clause (a) was attained pursuant to the arrangement providing for the issue of equity shares by the undertakings consolidated in the group financial statements,

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

• (2) The assets and liabilities of the undertaking acquired shall be brought into the group financial statements at the amount at which they stand in the acquired undertaking’s financial statements, subject to any adjustment authorised or required by this Part.

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

• (4) The group financial statements shall show corresponding amounts relating to the previous financial year as if the undertaking 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 consolidated in the group financial statements as part of the arrangement referred to in paragraph 18(b) in consideration for the acquisition of shares in the acquired undertaking; and

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

the nominal value of the issued share capital of the acquired undertaking held by the undertakings consolidated in the group financial statements.

• (6) The resulting amount shall be shown as an adjustment to the consolidated reserves.

• (2) References to shares of the acquired undertaking shall be read as references to shares of the holding undertaking of the group acquired.

• (3) Other references to the acquired undertaking shall be read as references to the group acquired; and references to the assets and liabilities, income and expenditure and capital and reserves of the acquired undertaking shall be read 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 in the case of group financial statements.

Changes in the composition of the group

Differences in tax treatment

ACCOUNTING FOR JOINT VENTURES AND ASSOCIATES IN GROUP FINANCIAL STATEMENTS

Joint ventures

• (a) a body corporate; or

• (b) a subsidiary undertaking of the holding undertaking;

be proportionally consolidated in the group financial statements in proportion to the rights in its capital held by the holding undertaking or the subsidiary undertakings consolidated in the group financial statements, as the case may be.

• (2) The provisions of this Schedule relating to the preparation of consolidated financial statements shall apply, with any necessary modifications, to the inclusion of joint ventures in the consolidated financial statements by proportional consolidation in accordance with subparagraph (1).

Associated undertakings

• (a) a subsidiary undertaking of the holding undertaking; or

• (b) a joint venture proportionally consolidated in accordance with paragraph 23.