Consolidatie Flashcards
Decision tree on consolidation method (BEGAAP)
KB Artikel 3:98
Een dochteronderneming waarover de consoliderende vennootschap een controle in feite bezit wordt buiten de consolidatie gelaten indien de opneming ervan in de consolidatie zou indruisen tegen het in artikel 3:105 verwoorde beginsel.
De toepassing van deze bepaling wordt vermeld en gemotiveerd in de toelichting.
KB Artikel 3:99
De dochterondernemingen in vereffening alsmede de dochterondernemingen die hebben besloten hun bedrijf stop te zetten of waarvoor er niet meer kan van worden uitgegaan dat zij hun bedrijf zullen voortzetten, worden buiten de consolidatie gelaten.
KB Artikel 3:105
De geconsolideerde jaarrekening moet een getrouw beeld geven van het vermogen, de financiële positie en het resultaat van het geconsolideerde geheel.
Wanneer de toepassing van de bepalingen van deze titel niet volstaat om te voldoen aan dit voorschrift, moeten aanvullende inlichtingen worden verstrekt in de toelichting.
Decision Tree Consolidation
Use of IFRS framework in Belgium
Audit of consolidated accounts — Article 3:77 (BCAC)
- Control authority
– The statutory auditor of the consolidating company
– Another auditor appointed by the general shareholder meeting - Consortium
– The statutory auditor of one of the companies of the consortium
– Another auditor appointed thereto in common consent - It is possible to appoint another auditor as the auditor of the consolidating company.
– The auditor who is responsible for the audit of the consolidated annual accounts but who is not the statutory auditor of the consolidating company is possible when:
o Art. 3:62 – 3:67 applicable
o Art. 3:62: Independency of the statutory auditor
o Art. 3:64 §1 & §3: remuneration of the auditor
o Art. 3:66 & 3:67: Duration of the mandate (3 yrs) - Art. 3:79 (BCAC) - the consolidated audit report does not include:
– Breaches of the Belgian Companies Code
– Comments on the result appropriation
The general law governing consolidation does not apply to (art 3:21 BCAC):
– Financial institutions: Companies subject to the law of 25 April 2014 relating to the status and the control of lending institutions, the Belgium National Bank, the Institute of rediscount and guarantee and the administrative department of the government in charge of investing and lending public money (“Caisse des dépôts et consignations”/”Deposito- en Consignatiekas”);
– investment firms as referred to by the law of 25 October 2016;
– holding companies (portefeuillemaatschappijen)
– economic interest groupings (economische samenwerkingsverbanden / groupement d’intérêt économique)
– Agricultural companies
Who needs to consolidate?
- Every parent company must prepare consolidated annual accounts and an annual report thereon if it, alone or jointly, controls one or more subsidiary undertakings (art. 1:14 – 1:18 BCAC).
- In case of a consortium, consolidated annual accounts must be prepared in which all companies forming the consortium are included together with their subsidiary undertakings (art. 1:19 BCAC).
Definition of consortium
- A consortium shall exist when one company and one or more companies governed by Belgian or foreign law are centrally directed without being subsidiaries of one another or of another company (art. 1:19 BCAC)
- These companies shall be irrefutably presumed to be centrally directed:
– when this arises out of agreements entered into by these companies or out of the articles of association, or
– when their management bodies consist for the most part of the same persons. - Unless proven to the contrary, companies shall be presumed to be centrally directed when the majority of their shares are held by the same persons or companies.
Mandatory exclusions (art 3:98 and 3:99 RD 29.4.2019)
- A subsidiary into liquidation or no going concern
- When full consolidation of the subsidiary would result in the consolidated accounts no longer giving a true and fair view (art 3:105 RD 29.4.2019)
- Different activities: no true and fair view
→ Subsidiaries are consolidated through equity pick-up
Optional exclusions
- A subsidiary into liquidation or no going concern
Art. 3:97 BCAC: - Subsidiary is of negligible importance to the consolidated accounts as a whole (in case of several subsidiaries - materiality should be assessed in total) (CBN/CNC Advice 2012/10 dd 4 July 2012)
- There are important and permanent restrictions on the parent company exercising control or using subsidiaries’ equity (eg. political instability)
- The cost to consolidate would be excessive, or the time necessary to obtain info would be extremely long
- Investments exclusively held with a view towards their subsequent disposal (CBN/CNC Advice 2011/5 dd 25 February 2011)
Decision is to be motivated in the notes
→ Accounting at acquisition cost (less potential impairments)
Exemption criteria
- A company shall be exempted from the obligation to prepare consolidated annual accounts and an annual report thereon if it is a member of a small group (art. 1:26 BCAC)
- On the other hand and as a reminder (no change), an exemption also exists in case of sub-consolidation (article 3:26 BCAC) or a situation with all subsidiaries being immaterial. It excludes however groups with a listed entity in scope. (art. 3:27).
- The changes of above categories (for companies and groups) apply as from the third year (change), when at least two thresholds are met (or not) during the two previous subsequent financial years. There were also other related changes to the criteria applied for small companies and groups.
- New criteria since 2016 (revised on 6 May 2024):
– Turnover (incl. VAT) > 42,5 mio EUR
– Balance sheet total > 21,25 mio EUR
– Annual average number of personnel > 250
Exemption subconso
- A company shall be exempted from the obligation to prepare consolidated annual accounts and an annual report thereon if it is the subsidiary of a parent company drafting and publishing audited consolidated annual accounts and an annual report thereon (art. 3:26 BCAC).
- The general meeting of the concerned company shall resolve (90 % of shareholders NV/CNV & 80% others) to use the exemption for a maximum period of two financial years (but this can be renewed).
→ some conditions need to be fulfilled: - The entity (and her subsidiaries) are included in full within the consolidated
accounts of the ultimate mother and are established and controlled in accordance
with:
○ Either the requirements of a state member of the European Union;
○ Either equivalent requirements. - Information should be provided to allow an easy access to the consolidated
financial statements of the parent company which are deposited (Dutch / Fr /G). - Disclosure in the notes of the company’s financial statements (C 6.18.1)
is required. - This dispensation has to be approved by the workers’ council (annually).
Definition of Control
Control shall be “de jure” and shall be irrefutably presumed to exist (art 1:14 – 1:18 BCAC):
1. if it results from the holding of the majority of the voting rights attached to all shares of the concerned company;
2. if a shareholder is entitled to appoint or dismiss the majority of the directors or managers;
3. if a shareholder has the power of control pursuant to the articles of association of the company or pursuant to agreements entered into with the company;
4. if, on the basis of an agreement entered into with other shareholders, a shareholder holds the majority of the voting rights attached to all shares of the company;
5. in case of joint control.
Control shall be ‘de facto’ when it arises from other circumstances than the ones set out above (art 1:14 – 1:18 BCAC).
* Unless proven to the contrary, a shareholder shall be presumed to dispose of de facto control over a company if at the last two general meetings of the company he has exercised voting rights representing the majority of the voting rights attached to the shares represented at these last two general meetings.
Consolidated Annual report
- Who makes the report?
– Board of Directors of the company that consolidates - Minimum content
– Comment on the consolidated accounts
– Comment on subsequent events
– To the extent not seriously prejudicial to the company, information on circumstances which could significantly affect its development
– Information on R&D within the company - First consolidation (BEGAAP): comparative numbers are optional
- Option to combine with stand alone BoD report?
– Yes, but both should be distinguishable
Consolidated accounts - publication
- Deadline: Similar to stand alone statutory accounts
- Provide to the shareholders: 15 days before the general shareholder meeting which will take place within 6 months after balance sheet date
- Filing annual accounts: within 30 days after the date of the shareholder meeting
- Exception: in case the consolidated accounts’ year end date is a different date then the stand alone financial statements → within 7 months after the closing date of the consolidated account
- Approval by the general shareholder meeting
- Only the stand alone financial statements are submitted for approval to the general shareholder meeting
- The consolidated financial statements are submitted to the general shareholder meeting for information purposes only
– These are not be approved by the general meeting - Documents filing for deposit
– Consolidated accounts
– Consolidated annual report
– Consolidated audit report
Information to the Workers Council
- The Workers Council of the consolidated company
– A copy of the consolidated financial statements should be provided to the WC
– In case of the use of an exemption, the WC may still request a consolidated financial statement with limited notes
Hyperinflation
Accounting procedures:
✔ Non-monetary items are restated (indexed) from the acquisition date until the reporting date in local currency before being
translated into the presentation currency (EUR).
✔ The impact of the indexation is recognised in the P&L (monetary gain/loss).
✔ Translation to EUR is following IAS 21 requirements (OCI).
