Relief for non-EEA issuers and guarantors from the obligation to use IFRS

Many issuers or guarantors of securities which are incorporated in countries outside the European Economic Area (EEA), known in the jargon as ‘third countries’, have been very concerned for some years over the basic requirements of the Prospectus Directive (Directive 2003/71/EC) and the Transparency Directive (Directive 2004/109/EC) for financial statements which they are obliged to include in prospectuses required under the Prospectus Directive and in annual and semi-annual reports which they will soon be obliged to publish under the Transparency Directive to be prepared in accordance with International Financial Reporting Standards (IFRS) or equivalent. On 7 June 2006 the European Commission published two important proposals concerning transitional relief from these obligations, which are likely to be well received by third country issuers and guarantors.