Disclosure requirements in respect of branches: 11th Directive
The purpose of this directive is to lay down rules concerning the disclosure requirements imposed in a Member State in respect of branches of companies governed by the law of another State, in order to provide an equivalent level of protection for shareholders and third parties.
ACT
11th Council Directive 89/666/EEC of 21 December 1989 concerning disclosure requirements in respect of branches opened in a Member State by certain types of company governed by the law of another State.
SUMMARY
The Directive applies to branches of public and private companies situated in a Member State other than that in which the company is established. Branches of companies from another Member State must publish documents which include the following information:
- the address of the branch;
- the activities of the branch;
- the company's place of registration and registration number;
- particulars of the company directors.
The branch no longer needs to publish branch accounts but it must publish the annual accounts and annual report of the company as audited and published in accordance with the law of the Member State by which the company is governed.
EC branches of public and private companies established in a non-EC country but having a legal form comparable to that of Community companies must publish documents which include the information required of branches of EC companies, together with the following particulars:
- the law of the State by which the company is governed;
- the company's memorandum and articles of association;
- the legal form of the company.
The branch must publish the annual accounts and annual report of the company. These accounting documents must have been drawn up either under Community legislation, or in such a way as to be at least equivalent to those so drawn up. They must also have been audited in conformity with the law which governs the company. In the event of non-conformity or non-equivalence, Member States may require that accounting documents relating to the branch's activities be drawn up and published.
Member States must provide appropriate penalties for failure to disclose the information required.
The provisions of the Directive dealing with the disclosure of accounting documents are not applicable to branches of banks and other financial institutions and need not be applied to branches of insurance companies.
Background
The creation of a branch is one of the possibilites open to a company seeking to exercise its right of establishment in another Member State. In this respect, the Commission
See also: Company Law and Corporate Governance.
REFERENCES
| Act | Entry into force | Deadline for transposition in the Member States | Official Journal |
|---|---|---|---|
| Directive 1989/666/EEC | 03.01.1990 | 01.01.1992 | OJ L 395 of 30.12.1989 |