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21.1.2010
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EN
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Official Journal of the European Union
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CE 15/64
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Thursday 23 October 2008
Equivalence of accounting standards
P6_TA(2008)0520
European Parliament resolution of 23 October 2008 on the draft Commission regulation of 2 June 2008 amending Commission Regulation (EC) No 809/2004 implementing Directive 2003/71/EC ofthe European Parliament and of the Council as regards elements related to prospectuses and advertisements and on the draft Commission decision of 2 June 2008 on the use by third-country issuers of securities of certain third-country national accounting standards and international financial reporting standards to prepare their consolidated financial statements
2010/C 15 E/13
The European Parliament,
having regard to Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 on the prospectus to be published when securities are offered to the public or admitted to trading (1), in particular Article 7(1) thereof,
having regard to Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market (2), in particular the third subparagraph of Article 23(4) thereof,
having regard to Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards (3),
having regard to Commission Regulation (EC) No 1569/2007 of 21 December 2007 establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council (4),
having regard to the draft Commission regulation of 2 June 2008 amending Commission Regulation (EC) No 809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council as regards elements related to prospectuses and advertisements,
having regard to the draft Commission decision of 2 June 2008 on the use by third-country issuers of securities of certain third-country national accounting standards and international financial reporting standards to prepare their consolidated financial statements,
having regard to Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission (5),
having regard to its resolution of 14 November 2007 on the draft Commission regulation amending Regulation (EC) No 809/2004 as regards the accounting standards in accordance with which historical information contained in prospectuses is drawn up and on the draft Commission decision on the use by third-country issuers of securities of information prepared under internationally accepted accounting standards (6),
having regard to Rule 81 of its Rules of Procedure,
As regards the draft regulation and draft decision
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1.
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Notes the progress achieved by the Commission towards the elimination of reconciliation requirements for EU issuers in third countries; acknowledges that steps have been taken towards the recognition of US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS) as adopted by the EU;
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2.
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Takes the view that third-country Generally Accepted Accounting Principles (third-country GAAP) should be considered equivalent to IFRS as adopted pursuant to Regulation (EC) No 1606/2002 in the event that investors are able to make similar decisions irrespective of whether they are provided with financial statements in accordance with IFRS or on third-country GAAP and in the event that audit assurance and enforcement at entity level are sufficient for investors to rely on;
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3.
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Considers that regulators should maintain an active dialogue with their international counterparts regarding the application and consistent enforcement of IFRS and enhance cooperation and information-sharing;
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4.
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Notes that IFRS that are issued by the International Accounting Standards Board (IASB) provide a solid basis for the regulators to work towards the convergence of accounting standards globally; takes the view that the worldwide application of international accounting standards could improve the transparency and comparability of financial statements, thus bringing substantial benefits to companies and investors;
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5.
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Believes that bringing about the convergence of accounting standards is an important task, but underlines that the ultimate goal must be for each jurisdiction to adopt IFRS whilst respecting its own democratic and legal framework;
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6.
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Welcomes Regulation (EC) No 1569/2007, which provides for the definition of equivalence and establishes a mechanism for determining the equivalence of third-country GAAP; underlines that Regulation (EC) No 1569/2007 requires that the Commission decision permit Community issuers to use IFRS adopted pursuant to Regulation (EC) No 1606/2002 in the third country concerned;
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7.
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Notes that the US recognises only financial statements prepared under IFRS as issued by the IASB; acknowledges, however, that the US allows a short transition period during which financial statements prepared in accordance with IFRS adopted under Regulation (EC) No 1606/2002 are also accepted without reconciliation requirements;
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8.
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Emphasises that certain third countries have not yet clearly and publicly stated when IFRS will be applied to their domestic issuers;
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9.
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Considers that the draft Commission regulation and the draft Commission decision must be consistent with the conditions provided for in Regulation (EC) No 1569/2007 and this resolution;
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10.
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Welcomes the roadmaps recently presented by certain third countries concerning a switch to IFRS; calls on the Commission to monitor the progress made with the implementation of those roadmaps with a view to abolishing recognition of equivalence when predetermined changeover dates are reached;
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11.
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Notes that proposals have been made to develop governance by the IASB;
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12.
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Notes the Commission report of 22 April 2008 on progress towards the elimination of reconciliation requirements and the efforts of accounting standard setters in third countries to converge with IFRS;
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13.
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Proposes to modify the draft Commission regulation as follows:
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TEXT PROPOSED BY THE COMMISSION
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MODIFICATIONS
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Modification 1
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Draft regulation — amending act
Recital 3
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(3)
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In order to assess the equivalence of the Generally Accepted Accounting Principles (GAAP) of a third country with adopted IFRS, Commission Regulation (EC) No 1569/2007 of 21 December 2007 establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council provides for the definition of equivalence and establishes a mechanism for the determination of equivalence of GAAP of a third country.
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(3)
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In order to assess the equivalence of the Generally Accepted Accounting Principles (GAAP) of a third country with adopted IFRS, Commission Regulation (EC) No 1569/2007 of 21 December 2007 establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council provides for the definition of equivalence and establishes a mechanism for the determination of equivalence of GAAP of a third country.
Regulation (EC) No 1569/2007 also requires that the Commission decision permit Community issuers to use IFRS adopted pursuant to Regulation (EC) No 1606/2002 in the third country concerned
.
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Modification 2
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Draft regulation — amending act
Recital 6
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(6)
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In its advice [delivered in March, May 2008 and in
…
respectively], CESR recommended finding US GAAP and Japanese GAAP equivalent to IFRS for use within the Community. Furthermore, CESR recommended the acceptance of financial statements using GAAPs of China, Canada, South Korea within the Community on a temporary basis, until no longer than 31 December 2011.
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(6)
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In its advice [delivered in March, May, and
October 2008
respectively], CESR recommended finding US GAAP and Japanese GAAP equivalent to IFRS for use within the Community. Furthermore, CESR recommended the acceptance of financial statements using GAAPs of China, Canada, South Korea
and India
within the Community on a temporary basis, until no longer than 31 December 2011.
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Modification 3
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Draft regulation — amending act
Recital 7
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(7)
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In 2006 the United States' Financial Accounting Standards Board and the IASB concluded a Memorandum of Understanding which reaffirmed their objective of convergence between US GAAP and IFRS and outlined the work programme for this purpose. As a result of this work programme many major differences between US GAAP and IFRS have been resolved. In addition, following the dialogue between the Commission and the US Securities and Exchange Commission, reconciliation for Community issuers which prepare their financial statements according to IFRS is no longer required. Therefore, it is appropriate to consider US GAAP equivalent to adopted IFRS from 1 January 2009.
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(7)
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In 2006 the United States' Financial Accounting Standards Board and the IASB concluded a Memorandum of Understanding which reaffirmed their objective of convergence between US GAAP and IFRS and outlined the work programme for this purpose. As a result of this work programme many major differences between US GAAP and IFRS have been resolved. In addition, following the dialogue between the Commission and the US Securities and Exchange Commission, reconciliation for Community issuers which prepare their financial statements in accordance with IFRS
as issued by the IASB
is no longer required. Therefore, it is appropriate to consider US GAAP equivalent to adopted IFRS from 1 January 2009.
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Modification 4
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Draft regulation — amending act
Recital 12a (new)
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(12a)
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The Indian Government and the Indian Institute of Chartered Accountants made a public commitment in July 2007 to adopt IFRS by 31 December 2011 and are taking effective measures to secure the timely and complete transition to IFRS by that date.
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Modification 5
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Draft regulation — amending act
Article 1 — point 1
Regulation (EC) No 809/2004
Article 35 — paragraph 5A
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5A. Third country issuers are not subject to a requirement, under Annex I, item 20.1; Annex IV, item 13.1; Annex VII, item 8.2; Annex X, item 20.1 or Annex XI, item 11.1, to restate historical financial information, included in a prospectus and relevant for the financial years prior to financial years starting on or after 1 January 2012, or to a requirement under Annex VII, item 8.2.bis; Annex IX, item 11.1; or Annex X, item 20.1.bis, to provide a narrative description of the differences between International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 and the accounting principles in accordance with which such information is drawn up provided that the historical financial information is prepared in accordance with the Generally Accepted Accounting Principles of the People's Republic of China, Canada
or
the Republic of Korea.
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5A. Third country issuers are not subject to a requirement, under Annex I, item 20.1; Annex IV, item 13.1; Annex VII, item 8.2; Annex X, item 20.1 or Annex XI, item 11.1, to restate historical financial information, included in a prospectus and relevant for the financial years prior to financial years starting on or after 1 January 2012, or to a requirement under Annex VII, item 8.2.bis; Annex IX, item 11.1; or Annex X, item 20.1.bis, to provide a narrative description of the differences between International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 and the accounting principles in accordance with which such information is drawn up provided that the historical financial information is prepared in accordance with the Generally Accepted Accounting Principles of the People's Republic of China, Canada
,
the Republic of Korea
or the Republic of India
.
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Modification 6
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Draft regulation — amending act
Article 1a (new)
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Article 1a
The Commission shall continue to monitor, with the technical assistance of the CESR, the efforts made by third countries towards a changeover to IFRS and pursue an active dialogue with authorities during the convergence process. The Commission shall submit a report on progress made in this regard to the European Parliament and the European Securities Committee (ESC) during 2009.
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Modification 7
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Draft regulation — amending act
Article 1b (new)
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Article 1b
The dates announced publicly by third countries in relation to a changeover to IFRS shall serve as reference dates for the abolition of equivalence recognition for those third countries.
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14.
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Proposes to modify the draft Commission decision as follows:
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TEXT PROPOSED BY THE COMMISSION
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MODIFICATIONS
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Modification 8
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Draft decision
Recital 5
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(5)
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In order to assess the equivalence of the Generally Accepted Accounting Principles (GAAP) of a third country with adopted IFRS, Commission Regulation (EC) No 1569/2007 of 21 December 2007 establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council provides for the definition of equivalence and establishes a mechanism for the determination of equivalence of GAAP of a third country.
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(5)
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In order to assess the equivalence of the Generally Accepted Accounting Principles (GAAP) of a third country with adopted IFRS, Commission Regulation (EC) No 1569/2007 of 21 December 2007 establishing a mechanism for the determination of equivalence of accounting standards applied by third country issuers of securities pursuant to Directives 2003/71/EC and 2004/109/EC of the European Parliament and of the Council provides for the definition of equivalence and establishes a mechanism for the determination of equivalence of GAAP of a third country.
Regulation (EC) No 1569/2007 also requires that the Commission decision permit Community issuers to use IFRS adopted pursuant to Regulation (EC) No 1606/2002 in the third country concerned.
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Modification 9
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Draft decision
Recital 7
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(7)
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In its advice [delivered in March, May 2008 and
…
respectively], CESR recommended finding US GAAP and Japanese GAAP equivalent to IFRS for use within the Community. Furthermore, CESR recommended the acceptance of financial statements using GAAPs of China, Canada
and
South Korea within the Community on a temporary basis, until no longer than 31 December 2011.
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(7)
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In its advice [delivered in March, May
and October
2008 respectively], CESR recommended finding US GAAP and Japanese GAAP equivalent to IFRS for use within the Community. Furthermore, CESR recommended the acceptance of financial statements using GAAPs of China, Canada
,
South Korea
and India
within the Community on a temporary basis, until no longer than 31 December 2011.
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Modification 10
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Draft decision
Recital 8
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(8)
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In 2006 the United States' Financial Accounting Standards Board and the IASB concluded a Memorandum of Understanding which reaffirmed their objective of convergence between US GAAP and IFRS and outlined the work programme for this purpose. As a result of this work programme many major differences between US GAAP and IFRS have been resolved. In addition, following the dialogue between the Commission and the US Securities and Exchange Commission, reconciliation for Community issuers which prepare their financial statements according to IFRS is no longer required. Therefore, it is appropriate to consider US GAAP equivalent to adopted IFRS from 1 January 2009.
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(8)
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In 2006 the United States' Financial Accounting Standards Board and the IASB concluded a Memorandum of Understanding which reaffirmed their objective of convergence between US GAAP and IFRS and outlined the work programme for this purpose. As a result of this work programme many major differences between US GAAP and IFRS have been resolved. In addition, following the dialogue between the Commission and the US Securities and Exchange Commission, reconciliation for Community issuers which prepare their financial statements according to IFRS
as issued by the IASB
is no longer required. Therefore, it is appropriate to consider US GAAP equivalent to adopted IFRS from 1 January 2009.
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Modification 11
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Draft decision
Recital 13a (new)
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(13a)
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The Indian Government and the Indian Institute of Chartered Accountants made a public commitment in July 2007 to adopt IFRS by 31 December 2011 and are taking effective measures to secure the timely and complete transition to IFRS by that date.
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Modification 12
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Draft decision
Article 1 — paragraph 1 — introductory part
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From 1 January 2009, in addition to IFRS adopted pursuant to Regulation (EC) No 1606/2002,
a third country issuer shall be permitted to prepare its
annual consolidated financial statements and half-yearly consolidated financial statements
in accordance with
the following standards:
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From 1 January 2009, in addition to IFRS adopted pursuant to Regulation (EC) No 1606/2002,
with regard to
annual consolidated financial statements and half-yearly consolidated financial statements
,
the following standards
shall be considered as equivalent to IFRS adopted pursuant to Regulation (EC) No 1606/2002
:
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Modification 13
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Draft decision
Article 1 — paragraph 2
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Prior to financial years starting on or after 1 January 2012, a third country issuer shall be permitted to prepare its annual consolidated financial statements and half-yearly consolidated financial statements in accordance with the Generally Accepted Accounting Principles of the People's Republic of China or Canada
or
the Republic of Korea.
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Prior to financial years starting on or after 1 January 2012, a third country issuer shall be permitted to prepare its annual consolidated financial statements and half-yearly consolidated financial statements in accordance with the Generally Accepted Accounting Principles of the People's Republic of China or Canada
,
the Republic of Korea
or the Republic of India.
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Modification 14
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Draft decision
Article 1a (new)
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Article 1a
The Commission shall continue to monitor, with the technical assistance of the CESR, the efforts made by third countries towards a changeover to IFRS and pursue an active dialogue with authorities during the convergence process. The Commission shall submit a report on progress made in this regard to the European Parliament and the European Securities Committee (ESC) during 2009.
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Modification 15
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Draft decision
Article 1b (new)
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Article 1b
The dates announced publicly by third countries in relation to a changeover to IFRS shall serve as reference dates for the abolition of equivalence recognition for those third countries.
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15.
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Instructs its President to forward this resolution to the Council and the Commission.
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(1) OJ L 345, 31.12.2003, p. 64.
(2) OJ L 390, 31.12.2004, p. 38.
(3) OJ L 243, 11.9.2002, p. 1.
(4) OJ L 340, 22.12.2007, p. 66.
(5) OJ L 184, 17.7.1999, p. 23.
(6) Texts Adopted, P6_TA(2007)0527.