1. Slide 1 Corporate Accountability and Accounting Standards « Fourth Directive » - annual accounts 1978 « Seventh Directive » - consolidated accounts 1983 – Modifications (fair value, modernisation) and special industry rules (banking, insurance) principles, flexibilty, national traditions

2. Slide 2 Proposal to amend Accounting Directives Recommendation Winther Group – Consultation Part of the Action Plan – Consultation Concrete proposal – Consultation Negotiation

3. Slide 3 Proposal to amend Accounting Directives Objectives – enhance confidence in the financial statements and annual reports published by European companies – Shareholders/stakeholders need reliable, complete and easily accessible information Establish collective responsibility of board members Enhance transparency about related parties’ transactions Enhance transparency about off-balance arrangements Corporate governance statement by listed companies Flexibilty, national traditions

4. Slide 4 Proposal to amend Accounting Directives CLARIFICATION OF RESPONSIBILITY AND LIABILITY OF BOARD MEMBERS FOR FINANCIAL STATEMENTS AND KEY NON- FINANCIAL INFORMATION – Corporate scandals have highlighted issue – EU-framework of collective responsibility for board members A minimum – Member States must guarantee that board members are collectively responsible at least towards the company. – Member States can go further

5. Slide 5 Proposal to amend Accounting Directives INCREASED TRANSPARENCY – Related party transactions for non-listed companies Currently only affiliated companies one type Extend by using definitions set out in IAS 24, as endorsed Non-listed should not apply same disclosure as listed - unnecessary burdens to be avoided: – Only disclose if transaction is not carried out under normal commercial conditions and if material – Small companies can be exempted

6. Slide 6 Proposal to amend Accounting Directives Off-balance arrangements – Innovations facilitated allocation of risk but also to alter a company's accounts not to reflect the true financial position Public policy issue – SPEs part of balance sheet if a subsidiary but can be eluded – Impose specific disclosures for material off-balance sheet arrangements - whether listed or not – Any off balance sheet arrangements and financial impact if material for an investors understanding SPEs definition would be too easy to circumvent

7. Slide 7 Proposal to amend Accounting Directives DISCLOSE CORPORATE GOVERNANCE PRACTICES – Crucial importance for European capital markets and European investors All listed EU-companies provide a specific "Corporate Governance Statement" in their annual report. – Corporate Governance Statement proposed as a specific part of annual report risk management operation of the shareholder meeting, shareholders rights operation of the board and its committees

8. Slide 8 Proposal to amend Accounting Directives Including issues from take over bid directive: – Significant direct/indirect shareholdings (incl. holdings through pyramids and cross-holdings); – Holder securities special control rights + description – Restrictions on voting rights, e.g. limitations, deadlines for exercising voting rights, or systems separating financial right from holders of securities (with company's cooperation) – Rules for appointment/replacement of board members and amendment of the articles of association; – Powers of board members, and in particular power to issue or buy back shares;

9. Slide 9 Conclusion No code introduced no intention of it – Comply or explain Measures to improve disclosure – European response – Principle based – flexibility, differences between MS Minimum EU framework for responsibility Questions?