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

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) 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. (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. 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. (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. (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. (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. 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. 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. (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. (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. (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. (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. (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. (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. 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. 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. (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. (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. (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. (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

1. References in this Part of the Schedule to the items listed in the formats set out in this Part are references to those items read together with any notes following the formats which apply to any of those items.

2. (a) A number in brackets following any item in, or any heading to, the formats set out in this Part is a reference to the note of that number in the notes following the formats.

(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.

3. (1) Items to which arabic numbers are assigned in the balance sheet format set out in Chapter 2 of this Part (except for items concerning technical provisions and the reinsurers' share of technical provisions), and items to which lower case letters are assigned in the profit and loss account format so set out (except for items I.1, I.4, II.1, II.5 and II.6) may be combined in an undertaking's accounts for any financial year in any case where—

(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.

4. (1) Funds of a group pension fund within the meaning of sub-paragraphs (c) and (d) of paragraph (2) of Article 1 of Council Directive 79/267/EEC of March 1979^c which an insurance undertaking administers in its own name but on behalf of third parties shall be shown in the balance sheet if the undertaking acquires legal title to the assets concerned and the total amount of such assets and liabilities shall be shown separately or in the notes to the accounts, broken down according to the various assets and liabilities items.

^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.

5. The provisions of this Schedule which relate to life assurance shall apply to health insurance written by undertakings which write only health insurance and which is transacted exclusively or principally according to the technical principles of life assurance.

6. (1) Every profit and loss account of an undertaking shall show separately as additional items:

(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)

1. Goodwill (3)

C. Investments

I. Land and buildings (4)

II. Investments in group undertakings and participating interests:

1. Shares in group undertakings

2. Debt securities issued by, and loans to, group undertakings

3. Participating interests

4. Debt securities issued by, and loans to, undertakings in which the undertaking has a participating interest

III. Other financial investments:

1. Shares and other variable-yield securities and units in unit trusts

2. Debt securities and other fixed income securities (5)

3. Participation in investment pools (6)

4. Loans secured by mortgages (7)

5. Other loans (7)

6. Deposits with credit institutions (8)

7. Other (9)

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)

1. Provision for unearned premiums

2. Life assurance provision

3. Claims outstanding

4. Provision for bonuses and rebates (unless shown under (2))

5. Other technical provisions

6. Technical provisions for life-assurance policies where the investment risk is borne by the policyholders

E. Debtors (13)

I. Debtors arising out of direct insurance operations

1. Policyholders

2. Intermediaries

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

1. Plant and machinery

2. Fixtures, fittings, tools and equipment

3. Payments on account (other than deposits paid on land and buildings) and assets (other than buildings) in course of construction.

4. Raw materials and consumables

5. Work in progress

6. Finished goods and goods for resale

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)

1. The capital redemption reserve fund

2. Reserves for own shares

3. Reserves provided for by the articles of association

4. Other reserves

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)

1. Provisions for unearned premiums: (23)

2. Life assurance provision: (23) (25) (29)

3. Claims outstanding: (26)

4. Provision for bonuses and rebates: (27)

5. Equalisation provision (28)

6. Other technical provisions: (24)

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

E. Provisions for other risks and charges

1. Provisions for pensions and similar obligations

2. Provisions for taxation

3. Other provisions

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

Notes on the profit and loss account format

(1) Gross premiums written

(Non-life insurance technical account; item I.1. (a))

(Life assurance technical account; item II.1. (a))

This item shall comprise all amounts due during the financial year in respect of insurance contracts entered into regardless of the fact that such amounts may relate in whole or in part to a later financial year, and shall include inter alia:

(a) premiums yet to be written, where the premium calculation can be done only at the end of the year;

(b) single premiums including annuity premiums and, in life assurance business, single premiums resulting from bonus and rebate provisions in so far as they shall be considered as premiums under the terms of the contract;

(c) additional premiums in the case of half-yearly, quarterly or monthly payments and additional payments from policyholders for expenses borne by the undertaking;

(d) in the case of co-insurance, the undertaking's portion of total premiums;

(e) reinsurance premiums due from ceding and retroceding insurance undertakings, including portfolio entries, after deduction of—

(i) portfolio withdrawals credited to ceding and retroceding insurance undertakings, and

(ii) cancellations.

The amounts to which this note relates shall not include the amounts of taxes or duties levied with premiums.

(2) Outward reinsurance premiums

(Non-life insurance technical account: item I.1. (b))

(Life assurance technical account item 11.1. (b))

This item shall comprise all premiums paid or payable in respect of outward reinsurance contracts entered into by the undertaking. Portfolio entries payable on the conclusion or amendment of outward reinsurance contracts shall be added; portfolio withdrawals receivable shall be deducted.

(3) Change in the provision for unearned premiums, net of reinsurance

(Non-life insurance technical account: items I.1. (c) and 1.1.(d))

(Life assurance technical account: items II.1. (c) and II.6. (a))

In the case of life assurance, the change in unearned premiums may be included either in item II.1 (c) or in item II.6. (a) of the life assurance technical account.

(4) Claims incurred, net of reinsurance

(Non-life insurance technical account: item I.4) (Life assurance technical account: item II.5)

This item shall comprise all payments made in respect of the financial year including the provision for claims but excluding the provision for claims for the preceding financial year.

These amounts shall include annuities, surrenders, entries and withdrawals of loss provisions to and from ceding insurance undertakings and reinsurers, external and internal claims management costs and charges for claims incurred but not reported such as are referred to in paragraphs 27(3) and 29 of Part II (Valuation Rules) of this Schedule.

Sums recoverable on the basis of subrogation and salvage within the meaning of sub-paragraph (7) of the said paragraph 27 shall be deducted.

Where the difference between:

(a) the loss provision made at the beginning of the year for outstanding claims incurred in previous years, and

(b) the payments made during the year on account of claims incurred in previous years and the loss provision shown at the end of the year for such outstanding claims,

is material it shall be shown in the notes to the accounts, broken down by category and amount.

(5) Bonuses and rebates, net of reinsurance

(Non-life insurance technical account: item I.6)

(Life assurance technical account: item II.7)

Bonuses shall comprise all amounts chargeable for the financial year which are paid or payable to policyholders and other insured parties or provided for their benefit, including amounts used to increase technical provisions or applied to the reduction of future premiums, to the extent that such amounts represent an allocation of surplus or profit arising on business as a whole or a section of business, after deduction of amounts provided in previous years which are no longer required.

Rebates shall comprise such amounts to the extent that they represent a partial refund of premiums resulting from the experience of individual contracts.

Where material, the amount charged for bonuses and that charged for rebates shall be disclosed separately in the notes to the accounts.

(6) Acquisition costs

(Non-life insurance technical account: item I.7. (a))

(Life assurance technical account: item II.8. (a))

This item shall comprise the costs arising from the conclusion of insurance contracts. They shall cover both direct costs, such as acquisition commissions or the cost of drawing up the insurance document or including the insurance contract in the portfolio, and indirect costs, such as advertising costs or the administrative expenses connected with the processing of proposals and the issuing of policies.

In the case of life assurance, policy renewal commissions shall be included under item II.8. (c) in the life assurance technical account.

(7) Administrative expenses

(Non-life insurance technical account; item I.7. (c))

(Life assurance technical account: item II.8. (c))

This item shall include the costs arising from premium collection, portfolio administration, handling of bonuses and rebates, and inward and outward reinsurance. They shall, in particular, include staff costs and depreciation provisions in respect of office furniture and equipment in so far as these need not be shown under acquisition costs, claims incurred or investment charges.

Item II.8. (c) shall also include policy renewal commissions in respect of life assurance.

(8) Investment income and charges.

(Non-life insurance technical account: items I.2 and 7a.)

(Life assurance technical account: items II.2 and II.9) (Non-technical account: items III.3 and III.5)

(a) Investment income and charges relating to non-life insurance shall be disclosed in the non-technical account. Investment income and those charges attributable to the non-life technical account shall be allocated to that account by class of business, grouped as in the Revenue Account of the annual returns submitted in accordance with the European Communities (Non-life Insurance Accounts) Regulations, 1977 ( S.I. No. 401 of 1977 ). The proportion of this and the basis on which they have been allocated as between the various classes shall be disclosed in the notes to the accounts.

(b) Investment income and charges relating to life assurance shall be disclosed in the life assurance technical account.

(c) In the case of an undertaking carrying on both life assurance and non-life insurance business, investment income and charges shall, to the extent that they are directly connected with the carrying on of the life-assurance business be disclosed in the life assurance technical account.

(9) Allocated investment return

(Non-life insurance technical account: item I.2)

(Life assurance technical account: item II.2)

(Non-technical account: items III.4 and III.6)

Where part of the investment return is transferred to the non-life insurance technical account, the transfer from the non-technical account shall be deducted from item III.6 and added to item I.2.

Part of the investment return disclosed in the life assurance technical account may (to the extent that it is not attributable in the life assurance fund) be transferred to the non-technical account. The amount transferred shall be deducted from item III.12 and added to item III.4.

In the case of non-life insurance, allocated return may be transferred from one part of the profit and loss account to another in accordance with best accounting practices. The amount and reasons for such transfers and the bases on which they are made shall be disclosed in the notes to the accounts.

(10) Unrealised gains and losses on investments.

(Life assurance technical account: items II.3 and III.10.)

(Non-technical account: items III.3a and III.5a.)

Variations between the valuation of investments at their current value or by means of one of the methods referred to in paragraph 19 of the Schedule to the Act of 1986 and their valuation at purchase price shall be treated as follows:

(a) where they relate to investments shown as assets under D of the balance sheet format they shall be fully disclosed in items II.3 and II.10 in the profit and loss account.

(b) in life assurance business those which do not fall under paragraph (a) of this note may be disclosed in full or in part in items II.3 and II.10 in the profit and loss account.

(c) in non-life insurance business they may be disclosed in full or in part in items III.3a and III.5a in the profit and loss account.

In the case of both paragraphs (b) and (c) of this note, where a partial disclosure is made, that shall be disclosed in the notes to the accounts, together with the full amount of the unrealised gains or losses, as the case may be, and the reasons for which the partial disclosure was made.

PART II

VALUATION RULES

CHAPTER 1

HISTORICAL COST ACCOUNTING RULES

PRELIMINARY

1. Subject to paragraphs 12 to 21 of this Part, the amounts to be included in respect of all items shown in an undertaking's accounts shall be determined in accordance with the rules set out in paragraphs 2 to 11 of this Part of the Schedule.

General rules

2. (1) Subject to any provision for depreciation or diminution in value made in accordance with paragraph 3 the amount to be included in respect of any asset shall be its purchase price or production cost.

(2) Where investments are shown as provided in sub-paragraph (1), their current value shall be disclosed on the balance sheet or in the notes to the accounts.

3. (1) In the case of any asset included under Assets item B, (intangible assets), CI (investments : land and buildings) or FI (tangible assets and stocks) in the balance sheet format (set out in Chapter 2 of Part 1 of this Schedule) which has a limited useful economic life, the amount of—

(a) its purchase price or production cost, or

(b) where it is estimated that any such asset will have a residual value at the end of the period of its useful economic life, its cost less that estimated residual value,

shall be reduced by provisions for depreciation calculated to write off that amount systematically over the period of the asset's useful economic life.

(2) Where an asset falling to be included under Assets item C.II, C.III, C.IV or F.III in the balance sheet format (set out in Chapter 2 of Part 1 of this Schedule) has diminished in value, provisions for diminution in value may be made in respect of it and the amount to be included in respect of it may be reduced accordingly, and any such provisions which are not shown separately in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the accounts.

(3) Provisions for diminution in value shall be made in respect of any asset to which this paragraph applies which has diminished in value if the reduction of its value is expected to be permanent (whether its useful economic life is limited or not), and the amount to be included in respect of it shall be reduced accordingly; and any such provisions which are not shown separately in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the accounts.

(4) Where the reasons for which any provision was made in accordance with sub-paragraph (2) or (3) have ceased to apply to any extent, that provision shall be written back to the extent that it is no longer necessary, and any amounts written back in accordance with this sub-paragraph which are not shown separately in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the accounts.

Goodwill

4. (1) The application of paragraphs 1 to 3 in relation to goodwill (in any case where goodwill is treated as an asset) is subject to the following provisions of this paragraph.

(2) Subject to sub-paragraph (3), the amount of the consideration for any goodwill acquired by an undertaking shall be reduced by provisions for depreciation calculated to write off that amount systematically over a period chosen by the directors of the undertaking.

(3) The period chosen shall not exceed the useful economic life of the goodwill in question.

(4) In any case where any goodwill acquired by an undertaking is included as an asset in the undertaking's balance sheet the period chosen for writing off the consideration for that goodwill and the reasons for choosing that period shall be disclosed in a note to the accounts.

5. (1) This paragraph applies to assets included under Assets items E.I, E.II and E.III (debtors) and F.II (cash at bank and in hand) in the balance sheet.

(2) If the net realisable value of any asset referred to in sub-paragraph (1) is lower than its cost the amount to be included in respect of that asset shall be the net realisable value.

(3) Where the reasons for which any provision for diminution in value was made in accordance with sub-paragraph (2) have ceased to apply to any extent, that provision shall be written back to the extent that it is no longer necessary.

Miscellaneous and supplementary provisions

Excess of money owed over value received as an asset item

6. (1) Where the amount repayable on any debt owed by an undertaking is greater than the value of the consideration received in the transaction giving rise to the debt, the amount of the difference may be treated as an asset.

(2) Where any such amount is treated as an asset, then—

(a) it shall be written off by reasonable amounts each year and shall be completely written off before repayment of the debt, and

(b) if the current amount is not shown as a separate item in the undertaking's balance sheet it shall be disclosed in a note to the accounts.

Determination of cost

7. The cost of an asset that has been acquired by the undertaking shall be determined by adding to the actual price paid any expenses incidental to its acquisition.

8. (1) The cost of an asset constructed by the undertaking shall be determined by adding to the purchase price of the raw materials and consumables used the amount of the costs incurred by the undertaking which are directly attributable to the construction of that asset.

(2) In addition, there may be included in the cost of an asset constructed by the undertaking—

(a) a reasonable proportion of the costs incurred by the undertaking which are only indirectly attributable to the construction of that asset, but only to the extent that they relate to the period of construction; and

(b) interest on capital borrowed to finance the construction of that asset, to the extent that it accrues in respect of the period of construction;

provided that, in a case to which sub-paragraph (b) relates, the inclusion of the interest in determining the cost of that asset and the amount of the interest so included is disclosed in a note to the accounts.

9. (1) Subject to the qualification mentioned in this sub-paragraph, the cost of any assets which are fungible assets as defined in paragraph 15(6) of the Schedule to the Act of 1986 may be determined by the application of any of the methods mentioned in sub-paragraph (2) in relation to any such assets of the same class and the method chosen shall be one which appears to the directors to be appropriate in the circumstances of the undertaking.

(2) The methods to which sub-paragraph (1) relates are the following:

(a) the method known as "first in, first out" (FIFO);

(b) a weighted average price;

(c) any other method similar to either of the other methods mentioned in this sub-paragraph.

(3) Where in the case of any undertaking:

(a) the cost of assets falling to be included under any item shown in the undertaking's balance sheet has been determined by the application of any method permitted by this paragraph, and

(b) the amount shown in respect of that item differs materially from the relevant alternative amount given below in this paragraph,

the amount of that difference shall be disclosed in a note to the accounts.

(4) Subject to sub-paragraph (5), for the purposes of sub-paragraph (3)(b), the relevant alternative amount, in relation to any item shown in an undertaking's balance sheet, is the amount which would have been shown in respect of that item if assets of any class included under that item at an amount determined by any method permitted by this paragraph had instead been included at their replacement cost as at the balance sheet date.

(5) The relevant alternative amount may be determined by reference to the most recent actual purchase price before the balance sheet date of assets of any class included under the item in question instead of by reference to their replacement cost as at that date, but only if the former appears to the directors of the undertaking to constitute the more appropriate standard of comparison in the case of assets of that class.

Substitution of original amount where price or cost unknown

10. Where there is no record of the purchase price of any asset acquired by an undertaking or of any price, expenses or costs relevant for determining its cost in accordance with paragraph 9, or any such record cannot be obtained without unreasonable expenses or delay, its cost shall be taken for the purposes of paragraphs 2 to 7 to be the value ascribed to it in the earliest available record of its value made on or after its acquisition by the undertaking.

11. (1) Subject to sub-paragraph (2), assets which fall to be included under Assets item FI (tangible assets and stocks) in the balance sheet format (set out in Chapter 2 of Part 1 of this Schedule) may be included at a fixed quantity and value.

(2) Sub-paragraph (1) applies to assets of a kind which are constantly being replaced, where—

(a) their overall value is not material to assessing the undertaking's state of affairs; and

(b) their quantity, value and composition are not subject to material variation.

CHAPTER 2

CURRENT VALUE ACCOUNTING RULES

Preliminary

12. (1) The rules set out in paragraphs 2 to 11 are referred to subsequently in this Schedule as "the historical cost accounting rules".

(2) Paragraphs 2, 3, 4 and 5 are referred to in this Chapter as "the depreciation rules" and references subsequently in this Schedule to the historical cost accounting rules do not include the depreciation rules as they apply by virtue of paragraph 19.

13. Subject to paragraphs 19 to 21, the amounts to be included in respect of assets of any description mentioned in paragraph 14 may be determined on any basis so mentioned.

Current value accounting rules

14. (1) Investments falling to be included under Assets item C (investments) may be included at their current value calculated in accordance with paragraphs 17 and 18.

(2) Investments falling to be included under Assets item D (unit-linked investments) shall be shown at their current value.

15. (1) Intangible assets, other than goodwill, and assets falling to be included under Assets item F.II (cash at bank and in hand), F.III (own shares) and F.IV (other) may be included at their current cost.

(2) Assets falling to be included under Assets item F.I (tangible assets and stocks) in the balance sheet format (set out in Chapter 2 of Part I of this Schedule) may be included at a market value determined as at the date of their last valuation or at their current cost.

16. The same valuation method shall be applied to all investments included in any item denoted by an arabic number or shown as assets under Assets item C.I.

Valuation of investments

17. (1) Subject to sub-paragraph (5) in the case of investments other than land and buildings, current value shall mean market value determined in accordance with this paragraph.

(2) Where investments are officially listed on an official stock exchange, market value shall mean the value on the balance sheet date or, when the balance sheet date is not a stock exchange trading day, on the last stock exchange trading day before that date.

(3) Where a market exists for unlisted investments, market value shall mean the average price at which such investments were traded on the balance sheet date or, when the balance sheet date is not a trading day, on the last trading day before that date.

(4) Where on the date on which the accounts are drawn up listed or unlisted investments have been sold or are to be sold within the short term, the market value shall be reduced by the actual or estimated realisation costs.

(5) Except where the equity method is applied all investments other than those referred to in sub-paragraphs (2) and (3) shall be valued on a basis which has prudent regard to the likely realisable value.

(6) In all cases the method of valuation shall be precisely described and the reason for adopting it disclosed in the notes to the accounts.

18. (1) In the case of land and buildings, current value shall mean the market value on the date of valuation, where relevant, reduced as provided in sub-paragraphs (4) and (5).

(2) Market value shall mean the price at which land and buildings could be sold under private contract between a willing seller and an arm's length buyer on the date of valuation, it being assumed that the property is publicly exposed to the market, that market conditions permit orderly disposal and that a normal period, having regard to the nature of the property, is available for the negotiation of the sale.

(3) The market value shall be determined through the separate valuation of each land and buildings item, carried out at least every five years in accordance with generally accepted methods of valuation.

(4) Where the value of any land and buildings item has diminished since the preceding valuation under sub-paragraph (3), an appropriate value adjustment shall be made and the lower value arrived at shall not be increased in subsequent balance sheets unless such increase results from a new determination of market value arrived at in accordance with sub-paragraphs (2) and (3).

(5) Where on the date on which the accounts are drawn up and buildings have been sold or are to be sold within the short term, the value arrived at in accordance with sub-paragraphs (2) and (4) shall be reduced by the actual or estimated realisation costs.

(6) Where it is impossible to determine the market value of a land and buildings item, the value arrived at on the basis of the principle of purchase price or production cost shall be deemed to be its current value.

(7) The method by which the current value of land and buildings has been arrived at and their breakdown by financial year of valuation shall be disclosed in the notes to the accounts.

Application of the depreciation rules

19. (1) Where the value of any asset of an undertaking is determined in accordance with paragraph 14 (in the case of assets falling to be included under assets item C.1) or paragraph 15, that value shall be, or (as the case may require) be the starting point for determining, the amount to be included in respect of that asset in the undertaking's accounts, instead of its cost or any value previously so determined for that asset; and the depreciation rules shall apply accordingly in relation to any such asset with the substitution for any reference to its cost of a reference to the value most recently determined for that asset in accordance with paragraph 14 or 15 (as the case may be).

(2) The amount of any provision for depreciation required in the case of any asset by paragraph 3 as it applies by virtue of sub-paragraph (1) is referred to below in this paragraph as the "adjusted amount", and the amount of any provision which would be required by that paragraph in the case of that asset according to the historical cost accounting rules is referred to as the "historical cost amount".

(3) Where sub-paragraph (1) applies in the case of any asset the amount of any provision for depreciation in respect of that asset included in any item shown in the profit and loss account in respect of amounts written off assets of the description in question may be the historical cost amount instead of the adjusted amount, provided that the amount of any difference between the two is shown separately in the profit and loss account or in a note to the accounts.

Additional Information to be provided

20. (1) This paragraph applies where the amounts to be included in respect of assets covered by any items shown in an undertaking's accounts have been determined in accordance with paragraph 14 or 15.

(2) The items affected and the basis of valuation adopted in determining the amounts of the assets in question in the case of each such item shall be disclosed in a note to the accounts.

(3) The purchase price of investments valued in accordance with paragraph 14 shall be disclosed in the notes to the accounts.

(4) In the case of each balance sheet item valued in accordance with paragraph 15 either—

(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,

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

(5) In sub-paragraph (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.

21. (1) With respect to any determination of the value of an asset of an undertaking in accordance with paragraph 14, the amount of any profit or loss arising from that determination (after allowing, where appropriate, for any provisions for depreciation or diminution in value made otherwise than by reference to the value so determined and any adjustments of any such provisions made in the light of that determination) shall be credited or (as the case may be) debited to a separate reserve (referred to in this paragraph as "the revaluation reserve"), except in so far as it has already been recognised in the life assurance technical account or the non-technical account in accordance with note 10 to the profit and loss account.

(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 Chapter 2 of Part 1 of this Schedule).

(3) An amount may be transferred from the revaluation reserve to the profit and loss account—

(a) if the amount was previously charged to that account or represents realised profit, or

(b) on capitalisation,

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 method used.

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

(5) The treatment for taxation purposes of amounts credited or debited to the revaluation reserve shall be disclosed in a note to the accounts.

(6) In sub-paragraph (3)(b) "capitalisation", in relation to an amount standing to the credit of the revaluation reserve, means applying it in wholly or partly paying up unissued shares in the undertaking to be allotted to members of the undertaking as fully or partly paid shares.

CHAPTER 3

GENERAL RULES

22. (1) This paragraph applies to debt securities and other fixed income securities shown as assets under C.II and C.III of the balance sheet format (set out in Chapter 2 of Part 1 of this Schedule) which have not been valued at market value.

(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 accounts.

(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 accounts.

Technical provisions

23. The amount of technical provisions shall at all times be sufficient to cover any liabilities arising out of insurance contracts as far as can reasonably be foreseen.

Provision for unearned premiums

24. (1) Subject to sub-paragraph (2), the provision for unearned premiums shall be computed separately for each insurance contract.

(2) Notwithstanding sub-paragraph (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 sub-paragraph (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

25. (1) The provision for unexpired risks shall be computed on the basis of claims and administrative expenses likely to arise after the end of the financial year from contracts concluded before that date, in so far as their estimated value exceeds the provision for unearned premiums and any premiums receivable under those contracts.

(2) In this paragraph, "unexpired risks" has the same meaning as it has in note 24 on the balance sheet format which is set out in Chapter 2 of Part 1of this Schedule.

Life assurance

26. (1) Subject to sub-paragraph (2), the life assurance provision shall be computed separately for each life assurance contract.

(2) Notwithstanding sub-paragraph (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 sub-paragraph (1).

(3) A summary of the principal assumptions in making the provision under sub-paragraph (1) or (2) shall be given in the notes to the accounts.

(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 Council Directive 92/96/EEC.

Provisions for claims outstanding

Non-life insurance

27. (1) Subject to sub-paragraph (2), a provision for claims outstanding shall be computed separately for each case on the basis of the costs still expected to arise.

(2) Notwithstanding sub-paragraph (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 accounts) 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 sub-paragraph (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;

28. (1) There shall be no implicit discounting or deductions (including by way of financial reinsurance), whether resulting from the placing of a present value on a provision for an outstanding claim which is expected to be settled later at a higher figure or otherwise effected.

(2) The Minister 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 Minister 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 Minister;

( 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 on its accounts, 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 sub-paragraph (2), and the criteria adopted for estimating the period that will elapse before the claims are settled.

Life assurance business

29. The amount of the provision for claims shall–

( 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 in Liabilities item C(2).

30. Any equalisation provision established under the European Communities (Non-Life Insurance) (Amendment) Regulations, 1991 ( S.I. No. 5 of 1991 ), shall be valued in accordance with the provisions of those Regulations

Accounting on a non-annual basis

31. (1) Where, because of the nature of the class or type of insurance in question, information relating to premiums receivable or claims payable or to both in respect of the underwriting year is, when the annual accounts are drawn up, insufficient for accurate estimates to be made, then either of the methods set out in the Table to this paragraph may be adopted and applied.

(2) The method adopted shall be disclosed in the notes 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 accounts.

(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 27 to 29 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 accounts.

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 accounts 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 accounts.

PART III

NOTES TO THE ACCOUNTS

Preliminary

1. Any information required in the case of an undertaking by the following provisions of this Part of this Schedule shall be given by way of a note to the accounts, unless otherwise provided.

General

Disclosure of accounting policies

2. The accounting policies adopted by the undertaking in determining the amounts to be included in respect of items shown in the balance sheet and in determining the profit or loss of the undertaking shall be stated, including such policies with respect to the depreciation and diminution in value of assets.

3. If there are changes to the accounting policies adopted by the undertaking from one year to the next, these changes shall be stated together with the reasons for the changes and their effect on the accounts of the undertaking.

Sums denominated in foreign currencies

4. Where any sums originally denominated in a currency other than the currency of the State have been brought into accounts under any items shown in the balance sheet format (which is set out in Chapter 2 of Part 1 of this Schedule) or the profit and loss account format (which is so set out), the basis on which those sums have been translated into Irish Pounds, or the currency in which the accounts are drawn, shall be stated.

5. It shall be stated whether the accounts have been prepared in accordance with applicable accounting standards and particulars of any material departure from those standards and the reason for it shall be given.

Information supplementing the balance sheet

Share capital and debentures

6. (1) The following information shall be given with respect to the undertaking's share capital:

( a ) the authorised share capital, and

( b ) where shares of more than one class have been allotted, the number and aggregate nominal value of shares of each class allotted.

(2) In the case of any part of the allotted share capital that consists of redeemable shares, the following information shall be given:

( a ) the earliest and latest dates on which the undertaking has power to redeem those shares,

( b ) whether those shares have to be redeemed in any event or are liable to be redeemed at the option of the undertaking or of the shareholder, and

( c ) whether any premium is payable on redemption and, if so payable, the amount of that premium.

7. If the undertaking has allotted any shares during the financial year, the following information shall be given:

( a ) the reason for making the allotment,

( b ) the classes of shares allotted, and

( c ) as respects each class of shares, the number allotted, their aggregate nominal value and the consideration received by the undertaking for the allotment.

8. (1) With respect to any contingent right to the allotment of shares in the undertaking the following particulars shall be given:

( a ) the number, description and amount of the shares in relation to which the right is exercisable,

( b ) the period during which it is exercisable, and

( c ) the price to be paid for the shares allotted.

(2) In sub-paragraph (1) "contingent right to the allotment of shares" means any option to subscribe for shares and any other right to require the allotment of shares to any person whether arising on the conversion into shares of securities of any other description or otherwise.

9. (1) If the undertaking has issued any debentures during the financial year to which the accounts relate, the following information shall be given:

( 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 undertaking's 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 202 of the Act of 1990, shall be stated.

Assets

10. (1) In respect of any assets of the undertaking included in Assets item B (intangible assets), C.I (land and buildings) and C.II (investments in group undertakings and participating interests) in the undertaking's balance sheet the following information shall be given by reference to each such item:

( a ) the appropriate amounts in respect of those assets included in the item as at the date of the beginning of the financial year and as at the balance sheet date respectively;

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

(i) any determination during that year of the value to be ascribed to any of those assets in accordance with paragraph 15;

(ii) acquisitions during that year of any assets;

(iii) disposal during that year of any assets; and

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

(2) The reference in sub-paragraph (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 the item on either of the following bases, that is to say:

( a ) on the basis of cost, determined in accordance with paragraphs 7, 8 and 9;

or

( b ) on any basis permitted by paragraph 14 or 15; leaving out of account in either case any provision 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 those assets included under the item as at each date mentioned in sub-paragraph (1) (a);

( b ) the amount of any such provision made in respect of the financial year;

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

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

11. Where any assets, other than listed investments, of the undertaking are included under any item shown in the undertaking's balance sheet at an amount determined on any basis mentioned in paragraph 14 or 15 of Part II of this Schedule, the following information shall be given:

( a ) the years, in 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.

12. In relation to any amount which is included under Assets item C.I. (land and buildings) the following shall be stated:

( 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

13. In respect of the amount of each item which is shown in the undertaking's balance sheet under Assets item C (investments) the following shall be stated:

( a ) how much of that amount is ascribable to listed investments; and

( 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.

Reserves and provisions

14. (1) Where any amount is transferred—

( a ) to or from any reserves, or

( b ) to any provisions for liabilities and charges, or

( c ) from any provision for liabilities and charges otherwise than for the purpose for which the provision was established,

and the reserves or provisions are or would be but for paragraph 3 of Part I of this Schedule shown as separate items in the undertaking's balance sheet, the information mentioned in sub-paragraph (2) shall be given in respect of the aggregate of reserves or provisions included in the same item.

(2) The information to which sub-paragraph (1) relates is as follows:

( a ) the amount of the reserves or provisions as at the date of the beginning of the financial year and as at the balance sheet date respectively,

( b ) any amounts transferred to or from the reserves or provisions 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.III (other provisions) in the undertaking's balance sheet in any case where the amount of that provision is material.

Provision for taxation

15. The amount of any provision for deferred taxation shall be stated separately from the amount of any provision for other taxation.

Details of indebtedness

16. (1) 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 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, and

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

and in the case of debts to which sub-paragraph (b) relates the aggregate amount of instalments falling due after the end of that period shall also be disclosed for each such item.

(2) Subject to sub-paragraph (3), in relation to each debt falling to be taken into account under sub-paragraph (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 sub-paragraph (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 by the undertaking; and

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

(5) References in this paragraph 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 sub-paragraph (1), to an item shown under the latter of those categories, and

( b ) in a case within sub-paragraph (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 3(1)(b) of Part I of this Schedule be shown under that heading.

17. If any fixed cumulative dividends on the undertaking's shares are in arrears, there shall be stated —

( 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

18. (1) Particulars shall be given of any charge on the assets of the undertaking to secure the liabilities of any other person, including, where practicable, the amount secured.

(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 or not any valuable security has been provided by the undertaking in connection with that liability and, if such security has been so provided, what that security is.

(3) Where practicable, there shall be stated—

( 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 pension 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 pensions payable to past directors of the undertaking separate particulars shall be given of that commitment so far as it relates to such pensions.

(5) 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 state of affairs.

(6) Commitments, being commitments to which any sub-paragraph of this paragraph relates, which are undertaken on behalf of or for the benefit of —

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

( b ) any subsidiary undertaking of the undertaking,

shall be stated separately from the other commitments within that sub-paragraph, and commitments within clause (a) of this sub-paragraph shall also be stated separately from those within clause (b) of this sub-paragraph.

Dealings with or interests in group undertakings

19. Where an undertaking is a parent undertaking or a subsidiary undertaking and any item required by Part 1 of this Schedule 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 parent 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 sub-paragraphs (a) and (b) respectively, shall be shown as separate items, in the balance sheet.

Miscellaneous matters

20. (1) Particulars shall be given of any case where the cost of any asset is for the first time determined under paragraph 11 of Part I of this Schedule.

(2) Where any outstanding loans made under the authority of section 60 of the Principal Act, other than subsection (13) (a) of that section (which relates to various cases of financial assistance by an undertaking for purchase of its own shares) are included under any item shown in the undertaking's balance sheet, the aggregate amount of those loans shall be disclosed for each item in question.

(3) The aggregate amount which is recommended for distribution by way of dividend shall be stated.

(4) Particulars of any restriction on profits available for distribution by virtue of section 224 (2)(b)(i) of the Act of 1990 shall be stated.

Information supplementing the profit and loss account

Separate statement of certain items of income and expenditure

21. Subject to the following provisions of this paragraph, each of the following amounts shall be stated:

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

(i) bank loans and overdrafts, and loans made to the undertaking (other than bank loans and overdrafts) which -

(I) are repayable otherwise than by instalments and fall due for repayment before the end of the period of five years beginning with the day next following the end of the financial year, or

(II) are repayable by instalments the last of which falls due for payment before the end of that period,

and

(ii) loans of any other kind made to the undertaking:

Provided that this sub-paragraph shall not apply to interest or charges on loans to the undertaking from group undertakings, but shall apply to interest or charges on all loans, whether made on the security of debentures or not;

( b ) the amounts respectively set aside for redemption of share capital and for redemption of loans;

( c ) the amount of income from listed and unlisted investments;

( d ) the amount of the remuneration of the auditors and the expenses of the auditors;

( e ) the aggregate amounts of the emoluments of, and compensation in respect of loss of office to, directors and compensation paid to past directors.

Particulars of tax

22. (1) The basis on which the charge for corporation tax, income tax and other taxation on profits, whether payable in the State or outside the State, is computed shall be stated.

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

These amounts shall be stated separately in respect of each of the amounts which is 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

23. (1) As regards non-life insurance, the notes to the accounts shall disclose-

( 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 sub-paragraph (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 sub-paragraph (4), the amounts required to be disclosed by sub-paragraphs (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 ECU's.

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

24. (1) As regards life assurance, the notes to the accounts shall disclose –

(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 sub-paragraph (2) shall not be required where that amount does not exceed 10 per cent of the gross premiums written in direct insurance.

25. (1) Subject to sub-paragraph (2), there shall be disclosed as regards both non-life insurance and life assurance the total gross direct insurance premiums resulting from contracts concluded by the undertaking—–

(a) in the member state of the European Union where there is situated its head office,

(b) in the other member states of the European Union, and

(c) in other countries.

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

Commissions

26. There shall be disclosed the total amount of commissions of any kind for direct insurance business accounted for in the financial year, including acquisition, renewal, collection and portfolio management commission.

Particulars of staff

27. (1) The following information shall be given with respect to the employees of the undertaking:

(a) the average number of persons employed by the undertaking in the financial year, and

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

(2) The average number required by clause (a) or (b) of sub-paragraph (1) shall be determined by dividing the relevant annual number by the number of weeks in the financial year.

(3) For the purposes of this paragraph, the relevant annual number shall be determined by ascertaining for each week in the financial year–

(a) for the purpose of sub-paragraph (1)(a), the number of persons employed under contracts of service by the undertaking in that week, whether throughout the week or not, and

(b) for the purpose of sub-paragraph (1)(b), the number of persons in the category in question of persons so employed,

and, in either case, adding together all the weekly numbers.

(4) In respect of all persons employed by the undertaking during the financial year who are taken into account in determining the relevant annual number for the purpose of sub-paragraph (1)(a) there shall also be stated the aggregate amounts respectively of—

(a) wages and salaries paid or payable in respect of that year to those persons,

(b) social welfare costs incurred by the undertaking on their behalf, and

(c) other pension costs so incurred,

save in so far as those amounts or any of them are stated in the profit and loss account.

(5) The categories of person employed by the undertaking 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 may select, having regard to the manner in which the undertaking's activities are organised.

Miscellaneous matters

28. (1) Where any amount relating to any preceding financial year is included in any item in the profit and loss account, the effect shall be stated.

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

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

PART IV

FORM AND CONTENT OF GROUP ACCOUNTS

CHAPTER 1

General Rules

1. (1) Accounts shall comply so far as practicable with the provisions of Parts I and III of this Schedule as if the undertakings included in the consolidation (in this Part referred to as "the group") were a single undertaking.

(2) In particular, for the purpose of note 13 to the balance sheet format (which is set out in Chapter 2 of Part I of this Schedule) and paragraphs 18(6) and 19 of Part III of this Schedule as it applies to group accounts—–

(a) any subsidiary undertakings of the parent undertaking not included in the consolidation shall be treated as subsidiary undertakings of the group, and

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

2. (1) Subject to the exceptions authorised or required by this paragraph, all the subsidiary undertakings of the parent undertaking shall be included in the consolidation.

(2) A subsidiary undertaking may be excluded from consolidation if its inclusion is not material for the purpose of giving a true and fair view, but two or more undertakings may be excluded only if they are not material taken together.

(3) In addition, a subsidiary undertaking may be excluded from consolidation where—–

(a) severe long-term restrictions substantially hinder the exercise of the rights of the parent undertaking over the assets or management of that undertaking, or

(b) the information necessary for the preparation of group accounts cannot be obtained without disproportionate expense or undue delay, or

(c) the interest of the parent undertaking is held exclusively with a view to subsequent resale and the undertaking has not previously been included in consolidated group accounts prepared by the parent undertaking.

(4) Subject to sub-paragraph (6), where the activities of one or more subsidiary undertakings are so different from those of other undertakings to be included in the consolidation that their inclusion would be incompatible with the obligation to give a true and fair view, those undertakings shall be excluded from consolidation.

(5) Any application of sub-paragraph (4) and the reasons therefor shall be disclosed in the notes on the group accounts.

(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.

3. (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.

4. (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.

5. (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.

6. 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

7. 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.

8. 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.

9. (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,

or

(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,

(c) in relation to an undertaking without capital, interests—

(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,

(c) the aggregate amount of any debts included under that heading in respect of which any security has been given, and

(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.