F1SECTION 7aValuation at fair value
Article 42a
1
By way of derogation from Article 32 and subject to the conditions set out in paragraphs 2 to 4 of this Article, Member States shall permit or require in respect of all companies or any classes of companies valuation at fair value of financial instruments, including derivatives.
Such permission or requirement may be restricted to consolidated accounts as defined in Directive 83/349/EEC.
2
For the purpose of this Directive commodity-based contracts that give either contracting party the right to settle in cash or some other financial instrument shall be considered to be derivative financial instruments, except when:
a
they were entered into and continue to meet the company's expected purchase, sale or usage requirements;
b
they were designated for such purpose at their inception; and
c
they are expected to be settled by delivery of the commodity.
3
Paragraph 1 shall apply only to liabilities that are:
a
held as part of a trading portfolio; or
b
derivative financial instruments.
4
Valuation according to paragraph 1 shall not apply to:
a
to non-derivative financial instruments held to maturity;
b
to loans and receivables originated by the company and not held for trading purposes; and
c
to interests in subsidiaries, associated undertakings and joint ventures, equity instruments issued by the company, contracts for contingent consideration in a business combination as well as other financial instruments with such special characteristics that the instruments, according to what is generally accepted, should be accounted for differently from other financial instruments.
5
By way of derogation from Article 32, Member States may in respect of any assets and liabilities which qualify as hedged items under a fair value hedge accounting system, or identified portions of such assets or liabilities, permit valuation at the specific amount required under that system.
F25a
By way of derogation from the provisions of paragraphs 3 and 4, Member States may, in accordance with international accounting standards as adopted by Commission Regulation (EC) No 1725/2003 of 29 September 2003 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council6, as amended until 5 September 2006, permit or require valuation of financial instruments, together with the associated disclosure requirements which are provided for in international accounting standards adopted in accordance with Regulation (EC) No 1606/2002 of the European Parliament and of the Council of 19 July 2002 on the application of international accounting standards7.