Title:
ACCOUNTING OF OWN SHARES IN FINANCIAL STATEMENTS IN VIEW OF DIRECTIVE 2013/34/EU IN ITALY: OUTLOOK OF LEGISLATIVE DECREE 139/2015

Authors:
CLAUDIO SOTTORIVA

Abstract:
Directive 2013/34/EU of 26 June 2013 is aimed at amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC. Such Directive will oblige all Member States to bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 20 July 2015.
Directive 2013/34/EU introduces new elements and principles related to the preparation of financial statements, both annual and consolidated, and related reports, and to the compliance with new audit requirements to all those companies that are not obliged to adopt the international accounting standard set.
The Directive focuses on small and medium-sized entities (SMEs) and pursues the objective of finding the right balance between the need of a transparent financial reporting and the related burden of administrative costs compared to the benefits received. The European Union has intensively analyzed the obligations and requirements posed on SMEs related to accounting and financial reporting, acknowledging that they often result burdensome and not appropriate for promoting and enhancing real development, internationalization and competitive advantage; however, it remains of primary importance to ensure that financial information is correctly and transparently presented to all those parties who have an interest in the Company, thus establishing a set of minimum requirements that need to be respected by all entities operating in the European territory.
One of the most innovative aspects of the Directive is based on the concept of materiality that, according to article 6.1.j), allows an exception to the recognition, measurement, presentation, disclosure and consolidation when the effect of complying is immaterial. In the Italian legislation, a similar concept is expressed by article 2423-ter of the Italian Civil Code, under which the grouping of certain values in the presentation of the financial statement is allowed if their amount is immaterial. The provisions of the Directive, which considers not only the presentation but also the recognition, measurement, disclosure and consolidation, appears far more extensive than the Italian discipline and might lead to excessive arbitrariness, thus having a negative impact on the general principle of true and fair preparation of the whole financial statement
Another innovative aspect of the Directive is the acquisition of own shares shall be recorded in the accounting books by reducing the net capital of the corresponding amount and registering a negative amount in the balance sheet. This is the new requirement that modified article 2357-ter of the Italian Civil Code will impose, thus changing the existing discipline that allows the recording of own shares acquired in the fixed asset section of the balance sheet. Consequently, articles 2424 and 2424-bis will also be modified.