17 December 2003

ZKA response to Commission document on Prospectus

The German Zentraler Kreditausschuss (ZKA) is concerned about the conflict between the Level 1 Directives and the IAS Regulation as the Regulation ensures that issuers of shares do not have to prepare their consolidated financial statements in line with IAS before 1 January 2005, and Member States may allow issuers of debt securities to still draw up their group financial statements until fiscal year 2006. However, the working document does not provide any transitional periods thus, de facto, suspending the choice granted in the Regulation.

ZKA also recommends to replace the requirement set out in Annex E as it is not feasible for issuers planning to switch from local GAAP to IAS in the

ZKA stresses the importance of a clear-cut distinction between European Level 1 legislation and the setting of prudential supervision standards at Level 2. The provisions with on the so-called historical financial information go well beyond the scope of the provisions contained in current European Directives. Furthermore, as some datas of the so-called CESR December package are still missing, ZKA urgently requests to take the forthcoming findings into account in the preparation of the final proposal to the Securities Commission.

In view of the ZKA an interim reporting obligation is inappropriate because particularly smaller and medium-sized credit institutions are burdened with an annual interim reporting obligation when the base prospectus or the RD are drawn up during the fourth or the 1st quarter of a fiscal year. Therefore, this provision should be deleted.

ZKA also rejects the requirement that audited financial information must be presented and prepared in a form consistent with that which will be adopted in the issuer’s next annual financial statements.

During the transition to IAS/IFRS, the companies should not be imposed with additional requirements. Otherwise, a clean conversion to the international accounting rules might be jeopardised.

Finally, the ZKA has different views on the question whether a regulation is the suitable means to implement the directive. However, it would have to be explicitly stipulated, with national implementation of the Prospectus Directive in mind, that the regulation can only take effect once the Directive has been implemented.

Full document

© ZKA - Zentraler Kreditausschuss