Annual Accounts Law

8/11/2019 Annual Accounts Law

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Text consolidated by Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) withamending laws of:

2 !ebruary "##$%& 'oember "##&%"2 !ebruary "##%

"* +e,tember "##%"& -ecember "###%

22 .arch 2**"%2* 'oember 2**%

2& .ay 2**$%"# /ctober 2**&%

22 .ay 2**%"2 .arch 2**#0

1f a whole or ,art of a section has been amended the date of the amending law a,,ears in s3uare bracketsat the end of the section0 1f a whole section ,aragra,h or clause has been deleted the date of the deletiona,,ears in s3uare brackets beside the deleted section ,aragra,h or clause0

The +u,reme Council has

ado,ted the following 4aw:

Annual Accounts Law[19 October 2006]

Terminology used in this law

The managementis the administratie body of a com,any entitled to take decisions in

relation to the o,erations of the com,any0[12 March 2009]

A groupis an aggregate of com,anies which includes a ,arent com,any of the grou, andits subsidiary com,anies0[12 March 2009]

A cash flow statement is a non5excludable ,art of annual accounts which reflects theflow of cash and its e3uialents during the accounting ,eriod and classifies it as cash flowfrom basic o,erations inestment o,erations and financial o,erations0

The statement of changes in equity is a com,onent of the whole financial re,ort which,roides data on the e3uity of a com,any and changes in the amounts of its com,onentsunder the influence of s,ecific economic transactions during the accounting ,eriod as wellas on total net income or loss during this ,eriod including amounts included or written offdirectly from e3uity0

The financial reportis a unified whole which consists of a balance sheet a ,rofit or lossaccount a cash flow statement a statement of changes in e3uity and an annex0Translation ( 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre)


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Fair valueis the amount in res,ect of which it is ,ossible to exchange assets or fulfilobligations in a transaction between well informed interested and financially inde,endent,ersons0

Balance sheet valueis the amount by which assets or obligations are indicated in thebalance sheet0

Trade portfoliois the total financial instrument item held in the name of a com,any andfor the benefit of the com,any (also contracts whose basic assets are goods) which thecom,any holds in trade or ac3uires in order to obtain a ,rofit in the near future from theactual or ex,ected ,urchase and sale ,rice difference or other ,rice or interest ratechanges as well as items which the com,any ac3uires in order to limit the trade ,ortfolioitem risks0

A risk limitation accounting system is the indicating of one or seeral risk limitation

instruments in risk limitation accounting for the ,ur,ose so that the fair alue of suchinstruments change com,letely or ,artially com,ensate against change of the fair alue orcash flow of the risk insured item0

A risk insured itemis assets obligations fixed ,ur,ose or ,redicted future transactionswhich subject the com,any to a fair alue change or future cash flow change risk andwhich for the ,ur,ose of risk limitation accounting is indicated as a risk insured item0

A risk limitation instrument is a deriatie financial instrument indicated in a risklimitation accounting system or other financial asset or financial obligations with whichfair alue or cash flow it is intended to com,ensate against change of the fair alue or cash

flow of the risk insured item0

The terms 6financial instrument7 and 6derivative financial instrument7 used in this4aw conform the terms used in the !inancial 1nstrument .arket 4aw0

Investment propertiesare ,arcels of land buildings structures or a ,art of such objectswhich a com,any holds (as an owner or as a lessee in accordance with a financial lease) inorder to ac3uire a lease (rent) ,ayment or to await a rise in ,rices (increase in alue) butnot in order to utilise for the manufacture of goods ,roision of serices administratie,ur,oses or to sell in the course of normal economic actiity0

Biological assets are animals or ,lants which the com,any holds in order to ac3uireagricultural ,roducts to sell or additional biological assets0 8griculture within the meaningof this 4aw is also forestry fisheries and another such basic actiity which includes theadministration of animal or ,lant biological conersion 9 its growing degeneration,roduction and re,roduction ,rocesses0

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) 2


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Long-term investments held for saleare such long5term inestment objects which thebalance sheet alue shall be recoered in a sales transaction but not in the course offurther utilisation and which conform to both of the following 3ualification criteria:

") these objects in their current state are aailable for immediate sale and aresubject only to the normal conditions for the sale of such objects% and

2) the sale such objects is belieable (based u,on a management decision regardingthe sale of such objects a sales ,rocess has commenced and there is a conictionregarding the com,letion thereof within a ,eriod of one year from the day ofcommencement of such ,rocess)0

Deferred ta assetsare the amounts of enter,rise income tax which are to be recoeredin the next accounting years and relates to accounting tem,orary differences0

Deferred ta o!ligationsare amounts of enter,rise income tax which are to be ,aid inthe next accounting years and relates to those accounting tem,orary differences which aretaxable with this tax0

The terms 6related parties7 6financial assets7 6financial o!ligations7 6investmentsheld until the end of term7 6loans and claims7 and 6financial assets availa!le forsale7 used in this 4aw conform to international accounting standards which hae beenado,ted in accordance with egulation (;C) 'o "&*&


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(A) Commercial com,anies which ,erform re5insurance ,re,are annual accounts takinginto the regulations of the !inance and Ca,ital market Commission which are mandatoryfor insurance commercial com,anies in the form of stock com,anies0($) 8 commercial com,any which in accordance with the !inancial 1nstrument .arket4aw ,re,ares annual accounts in conformity with egulation (;C) 'o "&*&


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($) The accounting year in which a com,any is reorganised or terminates its actiities aswell as an accounting year the beginning of which is changed may be shorter than "2months0[23 February 1995; 6 November 1996; 20 November 2003; 26 May 2005; 19 October2006]

&ection *'(") The annual accounts as a unified whole shall consist of a financial re,ort and there,ort of the com,any management regarding the deelo,ment of the com,any during theaccounting year0(2) The annual accounts shall be ,re,ared in accordance with the 4aw on 8ccounting this4aw and other regulatory enactments0 The Cabinet shall issue regulations regarding the,rocedures regarding recei,t of financial su,,ort (financial assistance) from the +tatelocal goernment the ;uro,ean Community other international organisations andinstitutions and the reflection of donations and gifts of money or kind in the annual

accounts0() The annual accounts shall ,roide a true and fair iew of the assets and liabilitiesfinancial ,osition ,rofit or loss and cash flow of the com,any0(A) 1f the information included in annual accounts ,re,ared in accordance with this 4awdoes not ,roide a sufficiently true and fair iew of the com,any additional informationshall be ,roided in the annex to the annual accounts0($) 1n exce,tional cases if the a,,lication of any of the ,roisions included in Cha,ters A and $ of this 4aw contradicts the re3uirement s,ecified in =aragra,h three of this+ection regarding the submission of a true and fair iew there may be derogation from thereleant ,roisions0 ;ach such derogation shall be ex,lained in the notes to the annualaccounts indicating its essence reason and influence on the assets liabilities financial

,osition and ,rofit or loss of the com,any and the method chosen shall also be ex,lained0[6 November 1996; 16 December 1999; 22 March 2001; 20 November 2003; 26 May2005; 19 October 2006]

&ection +'

(") The balance sheet shall be ,re,ared and the ,rofit or loss shall be calculated inaccordance with the forms ,roided in +ections "*5"A of this 4aw0 The com,any maychoose one of these forms for ,re,aring a ,rofit or loss account0(2) The form of the ,rofit or loss account may not be changed unless one and the sameform has been used for the accounts for at least two years in succession0() ?& 'oember "##&@(A) The re3uirements of =aragra,h two of this +ection need not be a,,lied in exce,tionalcases if the reason for the change of the ,rofit or loss account form is the ac3uisition of asubsidiary com,any of a grou, and the re3uirement by the ,arent com,any of the grou,that the same form be utilised in related com,anies0($) 8 change in the ,rofit or loss account form shall be referred to in the annex and thereason for the change ex,lained0

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) $


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(&) Cash flow statements and statement of changes in e3uity shall be ,re,ared inaccordance with the mandatory a,,licable 4atian accounting standards s,ecified by theCabinet0[6 November 1996; 16 December 1999; 26 May 2005; 19 October 2006]

&ection ,'

(") The items set out in +ections "*5"A of this 4aw shall each be se,arately ,resented inthe ,rescribed se3uence0 The items designated by 8rabic numerals may be subdiided ifthe s,ecial characteristics of the com,any so re3uire0 8dditionally new items designatedby such numerals may be added if their content is not included in any of the existing items0(2) The items designated by 8rabic numerals may be combined if their amounts areinsignificant or if such combining ,roides greater clarity0 Combined items shall be set outin detail in the notes0[19 October 2006]

&ection '

(") The annual accounts shall show the res,ectie figures from the ,reious accountingyear for each item of the balance sheet the ,rofit or loss account the cash flow statementand the statement of changes in e3uity0 1f in the accounting year mistakes from the,reious year are discoered or the accounting ,olicy has changed the relatie ,reiousaccounting year item indicators shall be corrected0 !or each case where the data hae notbeen mutually com,arable or the correction of ,reious accounting year data has been,erformed an ex,lanation shall be ,roided in the annex to the annual accounts0(2) The balance sheet ,rofit or loss account cash flow statement and statement ofchanges in e3uity items which hae no figures (amounts) shall be set out only if there is a

corres,onding item with an amount in the ,receding annual accounts0[16 December 1999; 26 May 2005]

&ection .'

.utual set5off of asset and liability items or income and ex,ense items shall not beallowed0

&ection /'

(") 1f an asset or a liability relates to seeral items of the form its relation to other itemsshall be reflected either below the item in which it is included or in the notes to theaccounts if such reflection is necessary for understanding the annual accounts0(2) The com,anys ac3uired own stocks or shares shall be set out in the balance sheet item6/wn stocks and shares7 but ,artici,ation in the subsidiary com,anies of a grou, or the,arent com,any of a grou, or in other subsidiary com,anies of such a grou, or theca,ital of a subsidiary com,any of such subsidiary com,any of a grou, shall be set outshall be set out in the balance sheet item 6=artici,ation in the ca,ital of relatedundertakings70 The ,artici,ation of the com,any in the ca,ital of other com,anies under

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) &


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B0 /wn stocks and shares0 4oans to stockholder or shareholders and management

"urrent Assets

I' Inventories1"0 aw materials basic materials and consumables20 Eork in ,rogress0 !inished ,roducts and goods for saleA0 Fnfinished orders$0 8dance ,ayments for goods&0 -raft animals and ,roductie animals

II'Long-term investments held for sale

III' De!tors1

"0 =urchasers and commissioning ,arty debts20 elated undertaking debts0 8ssociated undertaking debtsA0 /ther debtors$0 +hares not ,aid into com,any ca,ital&0 +hort5term loans to co5owners of undertakings and managementB0 'ext ,eriod costs0 8ccrued income

I2' &hort-term financial investments1"0 =artici,ation in ca,ital of related undertakings

20 /wn stocks and shares0 /ther securities and ,artici,ation in ca,italA0 -eriatie financial instruments

2' "ash

Lia!ilities

3quity1"0 +tock or share ca,ital (e3uity ca,ital)20 +tock (share) emission ,remium0 4ong5term inestment realuation resereA0 !inancial instrument realuation resere$0 eseres:

a) reseres s,ecified by lawb) reseres for own stocks or sharesc) reseres s,ecified by the com,any articles of associationd) other reseres

&0 etained ,rofits:

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre)


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a) retained ,rofits brought forward from the ,reious yearb) retained ,rofits of the accounting year

%rovisions1"0 =roisions for ,ensions and similar obligations20 =roisions for contingent taxes0 /ther ,roisions

Long-term creditors:"0 4oans against debentures20 4oans conertible to stock0 4oans from credit institutionsA0 /ther loans$0 =re,ayments receied from ,urchasers&0 8ccounts ,ayable to su,,liers and contractorsB0 Gills of exchange ,ayable

0 -ebts to related undertakings#0 -ebts to associated undertakings"*0 Taxes and +tate mandatory social insurance ,ayments""0 /ther creditors"20 'ext ,eriod income"0 ?"# /ctober 2**&@"A0 Fn,aid diidends

&hort-term creditors1"0 4oans against debentures20 4oans conertible to stock

0 4oans from credit institutionsA0 /ther loans$0 =re,ayments receied from ,urchasers&0 8ccounts ,ayable to su,,liers and contractorsB0 Gills of exchange ,ayable0 -ebts to related undertakings#0 -ebts to associated undertakings"*0 Taxes and +tate mandatory social insurance ,ayments""0 /ther creditors"20 'ext ,eriod income"0 ?"# /ctober 2**&@"A0 Fn,aid diidends"$0 8ccrued obligations"&0 -eriatie financial instruments[6 November 1996; 16 December 1999; 22 March 2001; 20 November 2003; 19 October2006]

&ection ##'

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) #


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%rofit or Loss Account Form in 2ertical Format4classified !y method of payment for the period5"0 'et turnoer20 Changes in stocks of finished goods and work in ,rogress0 Costs (ca,italised) referenced to own long5term inestmentsA0 /ther income from economic actiities$0 Cost of materials

a) costs of raw materials and consumablesb) other external costs

&0 4abour costs:a) remuneration for workb) ,ensions from com,any fundsc) +tate mandatory social insurance ,aymentsd) other social insurance costs

B0 Erite5offs and alue adjustments:

a) de,reciation and write off of fixed and intangible assetsb) write5off of the alue of current assets oer and aboe regular write5offs

0 /ther costs of economic actiity#0 1ncome from ,artici,ation in ca,ital of grou, subsidiary and associated com,anies"*0 1ncome from securities and loans forming long5term inestments""0 /ther income from interest and similar income"20 Erite5off of the alue of long5term financial inestments and short5term securities"0 1nterest ,ayments and similar costs"A0 =rofit or loss before extraordinary items and taxes"$0 ;xtraordinary income"&0 ;xtraordinary ex,enses

"B0 =rofit or loss before taxes"0 ;nter,rise income tax for the accounting year"#0 /ther taxes2*0 =rofit or loss for the accounting year[6 November 1996; 16 December 1999; 20 November 2003; 19 October 2006; 12 March2009]

&ection #('

%rofit or Loss Account 6 2ertical Format4according to period costs method5

"0 'et turnoer20 =roduction costs of goods sold0 Dross ,rofit or lossA0 +ales costs$0 8dministratie ex,enses&0 /ther income from economic actiitiesB0 /ther costs of economic actiities

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) "*


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0 1ncome from ,artici,ation in ca,ital of grou, subsidiary and associated com,anies#0 1ncome from securities and loans forming long5term inestment"*0 /ther interest income and similar income""0 Erite5off of the alue of long5term financial inestments and short5term securities"20 1nterest ,ayments and similar ex,enses"0 =rofit or loss before extraordinary items and taxes"A0 ;xtraordinary income"$0 ;xtraordinary ex,enses"&0 =rofit or loss before taxes"B0 ;nter,rise income tax for the accounting year"0 /ther taxes"#0 =rofit or loss for the accounting year[16 December 1999; 19 October 2006]

&ection #)'

%rofit or Loss Account Form in Account Format4classified according to period costs method53penses1"0 -ecrease in the inentory of finished ,roducts and work in ,rogress20 Costs of su,,lies:

a) costs of raw materials and consumablesb) other external costs

0 4abour costs:a) remuneration for workb) ,ensions from com,any funds

c) +tate mandatory social insurance ,aymentsd) other social insurance costs

A0 Erite5off of the alue of assets:a) de,reciation and write5off of fixed assets and intangible assetsb) write5off of the alue of current assets to the extent that they exceed the amount

of normal write5offs$0 /ther costs of economic actiity&0 Erite5off of alue of long5term inestments and short5term securitiesB0 1nterest ,ayments and similar ex,enses0 =rofit before extraordinary items and taxes#0 ;xtraordinary ex,enses"*0 ;nter,rise income tax for the accounting year""0 /ther taxes"20 =rofit for the accounting year

Income1"0 'et turnoer20 1ncrease in the inentory of finished ,roducts and work in ,rogress

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) ""


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0 Costs (ca,italised) referenced to own long5term inestmentsA0 /ther income from economic actiities$0 1ncome from ,artici,ation in ca,ital of grou, subsidiary and associated com,anies&0 1ncome from securities and loans forming long5term inestmentsB0 /ther interest income and similar income0 4oss before extraordinary items and taxes#0 ;xtraordinary income"*0 4oss for the accounting year[6 November 1996; 16 December 1999; 20 November 2003; 19 October 2006]

&ection #*'

%rofit or Loss Account Form in Account Format4classified according to sales costs method5

3penses1

"0 =roduction costs of sold ,roducts20 +elling costs0 8dministratie costsA0 /ther costs of economic actiity$0 Erite5off of the alue of long5term financial inestments and short5term securities&0 1nterest ,ayments and similar ex,ensesB0 =rofit before extraordinary items and taxes0 ;xtraordinary ex,enses#0 ;nter,rise income tax for the accounting year"*0 /ther taxes""0 =rofit for the accounting year

Income1"0 'et turnoer20 /ther income from economic actiities0 1ncome from ,artici,ation in ca,ital of grou, subsidiary and associated com,aniesA0 1ncome from securities and loans which form long5term inestments$0 /ther interest income and similar income&0 4oss before extraordinary items and taxesB0 ;xtraordinary income0 4oss for the accounting year[6 November 1996; 16 December 1999; 19 October 2006]

"hapter )&pecial %rovisions 7egarding Individual Balance &heet Items

&ection #+'

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) "2


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8ssets which are intended for long5term use or are inested in a long5term use,ro,erty are long5term inestments0 /ther assets are current assets0

&ection #,'

;ach item of long5term inestments on the balance sheet or in the annex shallinclude the following information:

") ac3uisition cost or cost of ,roduction in accordance with the balance sheet ofthe ,receding year%

2) increases including im,roements during the accounting year) li3uidation alue at the commencement of the accounting yearA) any transfers from one item to another during the accounting year$) realuation during the accounting year&) total amount of realuation before the balance sheet date including that

mentioned in Clause $

B) de,reciation and write5offs of alue during the accounting year) adjustments for de,reciation and write5offs of alue for ,reious years

including adjustments in de,reciation and write5offs of alue of li3uidated assets and assetswithdrawn from use% and

#) total de,reciation and write5offs of alue before the balance sheet dateincluding as set out in Clauses B and 0[16 December 1999]

&ection #'

(") ;x,enses incurred before the balance sheet date but relating to future years shall be

set out as ,re,aid ex,enses on the asset side0 1ncome receied before the balance sheetdate but relating to the next year or future years shall be set out as deferred income in theliabilities0(2) 8mounts receiable within one year and amounts receiable later than within one yearafter the balance sheet date shall be set out se,arately for each item of obligations ofdebtors in the balance sheet0() 8mounts ,ayable within one year and amounts ,ayable later than within one year afterthe balance sheet date shall be set out se,arately for each item of obligations to creditors0(A) /bligations which are ,ayable within one year after the balance sheet date shall beconsidered to be short5term creditor obligations0 /bligations which are ,ayable later thanwithin one year after the balance sheet date shall be considered to the long5term creditorobligations0 The total amounts of short5term and long5term creditor obligations shall alsobe set out se,arately0

($) The content of the costs and income as set out in =aragra,h one of this +ection shall beex,lained in the annex0[6 November 1996; 16 December 1999]

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) "


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&ection #.'

(") /nly rights ac3uired in exchange for aluable consideration may be set out in theinestments in intangible assets item 6Concessions ,atents licenses trade marks andsimilar rights70(2) esearch costs and founding ex,enditures may not be ca,italised0 -eelo,ment costsmay be included in the balance sheet in the intangible inestment item 6-eelo,mentcosts7 only if all of the following conditions are in effect:

") the com,any intends to finish an asset object in order to utilise it for the ownneeds of the com,any or to sell it%

2) it is ,ossible for the com,any to finish such asset object and it has access to there3uired technical financial and other resources in order that such asset object may befinished and utilised for the own needs of the com,any or to sell it%

) the com,any is able to trans,arently show what kind of economic benefits fromthe utilisation or sale of such asset object will be receied in the future% and

A) the com,any is able to belieably alue the amount of costs of the such asset

object0[6 November 1996; 20 November 2003; 19 October 2006]

&ection #/'

(") eseres are intended to coer s,ecific forms of obligations which relate to theaccounting year or ,reious years and which are foreseeable or known during the,re,aration of the annual accounts ,eriod but for which the siHe or the date of thecreation and coering of the concrete obligation is not clearly known0(2) eseres shall not exceed the amount necessary and they may not be utilised forcorrecting of asset alue0 -etailed information regarding the resere items established shall

be ,roided in the annex setting out the basis for establishing each resere the amount atthe beginning and end of the accounting year and increase and decrease of the resereamounts and ex,laining the reason and the aluation methods used0() 8mounts included in the 6/ther reseres7 item shall be ,resented in the annex diidedaccording to the ty,e of resere and shall ,roide the information set out in =aragra,htwo of this +ection0(A) 1rres,ectie of the date of the recei,t or issue of the inoice ex,enses that are createdin the accounting year shall not be attributed to the reseres if the amount of this ex,enseor the date of ,ayment is ,recisely known during the ,re,aration of the annual accounts,eriod0[16 December 1999; 22 March 2001; 20 November 2003; 26 May 2005]

&ection (0'

Fnder the item 6etained ,rofits for the accounting year7 the amount shall be setout which corres,onds to the amount set out under the ,rofit or loss item 6=rofit or loss

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) "A


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for the accounting year70 The ,rofit distribution or coerage of losses of a com,any shallbe set out in the accounts for the following year corres,ondingly decreasing the amountset out at the beginning of the accounting year under the item 6etained ,rofits for the,reious year70[16 December 1999; 12 March 2009]

&ection (0'#

(") -iffered tax obligation amounts (if there are such) shall be indicated in the com,ositionof long5term creditors adding a new item 6-iffered tax obligations7 but differed tax assetamounts (if there are such) 9 in the com,osition of long5term financial inestments addinga new item 6-iffered tax assets70(2) 1ncome and ex,enditures associated with differed tax obligations and differed taxassets (if there are such) shall be indicated in the ,rofit or loss account adding a newreleantly named item number in order after the item 6;nter,rise income tax for theaccounting year70

[26 May 2005; 19 October 2006]

&ection (0'(

1nestment ,ro,erties biological assets and long5term inestments held for salescom,anies shall indicate se,arately from other asset items including in the balance sheetassets new releantly named items0[26 May 2005; 19 October 2006]

"hapter *&pecial %rovisions 7egarding Individual Items in the %rofit or Loss Account

&ection (#'

'et turnoer is income from the basic actiities of the com,any sale of goods and,roision of serices from which trade discounts and other allocated discounts and alueadded tax and other taxes directly related to sales hae been subtracted0[6 November 1996; 22 March 2001; 19 October 2006]

&ection (('

(") Fnder the item 6=roduction costs of goods sold7 referred to in +ections "2 and "A ofthis 4aw shall be set out the costs of ,roducts goods or serices used to achiee netturnoer as the actual cost of their ,roduction or ac3uisition0(2) There shall be included in the items 6+elling costs7 and 68dministratie costs7 referredto in +ections "2 and "A of this 4aw the related ,ersonnel costs material costs andamounts of de,reciation and write5off of the alue of fixed assets and other related costs0() There shall be included in the items 6/ther income from economic actiities7 and6/ther costs for economic actiities7 the related income from economic actiities or costsfor economic actiities of a com,any which are not set out under other ,rofit or loss

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) "$


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account items and which hae occurred as the result of economic actiity or are connectedwith it or result directly from it0[16 December 1999; 19 October 2006]

&ection ()'

(") 1ncome and ex,enses which occur as a result of eents or transactions which areclearly different from the usual actiities of a com,any and which are not ex,ected to befre3uently or ,eriodically re,eated shall be set out under the items 6;xtraordinaryincome7 and 6;xtraordinary ex,enses70(2) Fsual actiities are any actiities which a com,any ,erforms within its o,erationalactiities and actiities which su,,ort the o,erational actiities of the com,any or haedeelo,ed in relation to such actiities or are a direct result of such0() The amounts and ty,es of extraordinary income and ex,enses shall be ex,lained in theannex exce,t in cases where the amounts are insignificant

[16 December 1999; 19 October 2006]

&ection (*'

(") Com,anies which as of the balance sheet date do not exceed the limits of the twocriteria mentioned in =aragra,h two of this +ection may establish an item 6Dross ,rofit7or 6Dross loss7 in the re3uired format on the ,rofit or loss account form by combining:

in +ection "" 9 items " to $in +ection "2 9 items " to and &in +ection " 9 ex,ense items " and 2 and income items " to Ain +ection "A 9 ex,ense item " and income items " and 20

(2) The criteria mentioned in =aragra,h one shall be as follows:

") balance sheet total 9 "****** 4I42) net turnoer 9 2A***** 4I4) aerage number of em,loyees for the accounting year 9 2$*

() The balance sheet total mentioned in =aragra,h two of this +ection is the total sum ofthe asset items set out in +ection "* of this 4aw0 The aerage number of em,loyees shallbe calculated by adding u, the working em,loyees of the com,any on the last date of eachmonth of the accounting year and diiding the sum by the number of months in theaccounting ,eriod0(A) 8 com,any shall no longer be entitled to the ,riileges mentioned in =aragra,h one ofthis +ection if it exceeds two of the limits mentioned in =aragra,h 2 items "5 of this+ection but only if this occurs for two years in succession0[6 November 1996; 16 December 1999; 22 March 2001; 19 October 2006]

"hapter +

2aluation 7ules

&ection (+'

(") The items of annual accounts shall be ealuated according to the following accounting,rinci,les:

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) "&


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") it shall be assumed that the com,any will continue as a going concern%2) the ealuation methods utilised shall be the same as utilised in the ,reious

accounting year%) the ealuation shall be carried out with a,,ro,riate care in com,liance with the

following conditions:a) only the ,rofit earned before the balance sheet date shall be included in

the accounts%b) all foreseeable amounts at risk and losses that hae occurred during the

accounting year or ,reious years een if they hae become known during thetime ,eriod between the balance sheet date and the date when the annual accountsare signed by the ,erson or administration institution referred to in +ection &"=aragra,h two of this 4aw shall be taken into account%

c) all decrease in alue and de,reciation amounts shall be calculated andtaken into account regardless of whether the accounting year has closed with a,rofit or a loss0A) income and ex,enses related to the accounting year shall be included in the

,rofit or loss account regardless of the ,ayment date or the date of recei,t or issue of theinoice0 ;x,enses shall accord with income for the res,ectie accounting ,eriods0

$) the com,onent ,arts of the asset and liability items shall be ealuated se,arately%&) the o,ening balance sheet of each accounting year shall accord with the closing

balance sheet of the ,reious accounting year%B) all items that hae a significant influence on the ealuation or taking of decisions

by the users of the annual accounts shall be set out0 1nsignificant items which do notsignificantly alter the annual accounts but make it excessiely detailed may be not set out01n such case combined items shall be set out in the balance sheet the ,rofit or lossaccount the cash flow statement and the statement of changes in e3uity and details ofsuch shall be ,roided in the annex% and

) economic actiities of an undertaking shall be recorded in the books andreflected in the annual accounts taking into account their economic content and naturenot just their legal form0(2) 1n exce,tional cases there may be derogation from the accounting ,rinci,lesmentioned in =aragra,h one of this +ection0 ;ach such derogation shall be ex,lained in theannex indicating how it will affect the assets and liabilities financial ,osition and ,rofit orloss of the com,any0[6 November 1996; 16 December 1999; 26 May 2005; 19 October 2006; 12 March2009]

&ection (,'

(") 4ong5term inestments shall be ealuated in accordance with their initial alue that isthe cost of their ac3uisition or actual cost of ,roduction0(2) The ac3uisition cost shall be calculated by adding the ex,enses related to the ac3uiredobject until the time when it is ,ut into o,eration to the ac3uisition ,rice0 The ac3uisition

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) "B


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,rice is the amount of money or its e3uialent ,aid or the fair alue of consideration giento ac3uire the asset at the time when the asset was ac3uired or made0() The actual cost of ,roduction shall be calculated by adding u, the cost of raw materialsand materials and other ex,enditures directly related to the ,roduction of the object0 Theactual cost of ,roduction may also include ,arts of costs which are indirectly related tothe ,roduction of the object if these costs are a,,licable to the same time ,eriod0(A) The interest on loans receied for the formation of fixed assets in res,ect of the ,eriodu, to the time the object is ,ut into o,eration may be included in the actual cost of thenewly created object0 1n such case information regarding the amount of interest includedin the com,osition of fixed assets shall be set out in the annex0[16 November 1999; 22 March 2001; 20 November 2003]

&ection ('

The initial alue of long5term inestments as hae a limited time ,eriod of effectieusefulness shall be gradually written off (de,reciated) oer the ex,ected time ,eriod of

effectie usefulness0 The initial alue of land ,arcels shall not be subject to write5off(de,reciation)0[6 November 1996; 26 May 2005]

&ection (.'

(") 1f the alue of the object of a long5term inestment at the date of the balance sheet islower than the alue calculated according to the conditions of +ections 2& and 2B of this4aw and it is ex,ected that the reduction in alue will be long5term the res,ectie objectshall be alued according to the lower alue0(2) -ecrease in alue may also be a,,lied to long5term financial inestments ealuating

them in accordance with the lower alue as of the balance sheet date0() Ialuation of the object in accordance with the conditions of =aragra,hs one and two ofthis +ection may be sto,,ed if there is no longer a reason for decrease in alue0(A) -ecreases in alue in accordance with the conditions of =aragra,hs one and two ofthis +ection and changes in alue in accordance with the conditions of =aragra,h three ofthis +ection shall be set out in the annex of the annual accounts with sufficient justificationand detail0[16 December 1999; 26 May 2005]

&ection (/'

(") 4ong5term inestment objects the alue of which is significantly higher than the costof their ac3uisition or ,roduction cost ,rice or their aluation on the balance sheet of the,reious year may be re5alued in accordance with their higher alue if it may beassumed that the alue increase will be long5term0 -e,reciation of fixed assets and thedecrease in alue of inestments shall be recalculated eery year in accordance with the



19/36

alue recorded for the res,ectie year and shall be recorded in the same amounts in the,rofit or loss account0(2) The increase in alue resulting from such realuation shall be recorded under the item6ealuation resere for long5term inestments7 in the section 6;3uity70 1f as a result ofthe realuation an increase in alue is created which fully or ,artially com,ensates for thereduction in the alue of the same long5term inestment object which in ,reiousaccounting years had been included in the ,rofit or loss account as costs such an amountof increase in alue which does not exceed the referred to costs shall be included in the,rofit or loss account as income in the accounting year that such was determined0() The realuation resere for long5term inestments shall be reduced if the re5aluedobject has been li3uidated or is no longer utilised or if the increase in alue is no longerjustified0(A) The realuation resere for long5term inestments shall only be decreased in the casesset out in =aragra,h three of this +ection0 The realuation resere for long5terminestments shall not be allocated to diidends used to coer losses transferred to ca,italor other reseres or used in for social ,ur,oses for charity or for other ,ur,oses0

($) ?"& -ecember "###@(&) Ehen =aragra,h one of this +ection is a,,lied there shall be set out in the annex thejustification for the realuation of each re5alued asset item of the balance sheet as well asdifferences in alue where the alue determined in accordance with the ,rocedures,roided for in =aragra,h one of this +ection is com,ared with the alue determined inaccordance with +ections 2& 2B and 2 of this 4aw0[6 November 1996; 16 December 1999; 26 May 2005]

&ection )0'

(") The aluation of current assets shall be based on actual ac3uisition or ,roduction costs0

(2) The actual cost of ac3uisition shall be calculated by adding ex,enses related to,urchase to the ,urchase ,rice0() The actual cost of ,roduction shall be calculated by adding u, the usage of rawmaterials basic materials and consumables in accordance with the costs of ac3uisition andadditional costs directly related to ,roduction of the ,roduct being alued0 There may beadded to ,roduction costs the cost of releant ,arts not directly related with the,roduction of the ,roduct if these costs are a,,licable to the same ,eriod0 +ales costsshall not be included in the actual cost of ,roduction0

&ection )#'

(") The actual cost of ac3uisition or ,roduction of inentory may be determined as theweighted aerage ,rice or by using the 6!irst in 9 first out7 method (!1!/)0(2) 1f the alue established by using the methods set out in =aragra,h one of this +ectiondiffers significantly from the market ,rice on the balance sheet date the difference for eachinentory item shall be ex,lained in the annex0

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) "#


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[16 December 1999]

&ection )('

(") The aluation a,,lied to current assets shall be such as to alue them on the balancesheet date in accordance with the lowest market ,rice or actual cost0(2) 1nentory balances shall be alued in accordance with either the ac3uisition or,roduction cost ,rice or the lowest market ,rice on the balance sheet date de,endingu,on which of these indicators is the lowest0 1n s,ecial cases 9 if the inentory units aredamaged ,artially or fully obsolete or the ,roduction termination or sale costs haesignificantly increased thereof 9 the releant inentory units shall be alued in conformitywith the net sale alue0[16 December 1999; 26 May 2005]

&ection ))' ?2* 'oember 2**@[16 December 1999; 20 November 2003]

&ection )*' ?2* 'oember 2**@

&ection )+'

(") ;x,enses related to the creation of the inestments in intangible assets mentioned initems "5A of the diision 610 1nestments in 1ntangible 8ssets7 of +ection "* of this 4awshall be systematically written off oer the time of useful life0(2) 1f it is not ,ossible to s,ecify the useful utilisation ,eriod of the cost of ac3uiring theinestment indicated in item 61ntangible alue7 in such item shall be alued the ac3uisitioncosts from which are deducted the accumulated losses from the reduction in alue0

[6 November 1996; 26 May 2005; 19 October 2006]

&ection ),'

(") 1f the re,ayable amount of a loan is higher than the amount receied the differenceshall be set out se,arately on the asset side of the balance sheet or in the annex0(2) The amount of this difference shall gradually be written off as ex,enses reasonablyallocated by year0 1t shall be com,letely written off by not later than the debt re,aymentdate0

&ection )'

(") -ebtor and creditor balances shall be set out in the balance sheet in accordance withthe corroborating documents and entries in accounting registers and they shall accord tothe accounting data of the debtors and creditors themseles on the balance sheet date0 1ncase of dis,utes balances shall be set out in the balance sheet in accordance with the

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) 2*


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accounting data0 !or debtor debts re,ayment of which is dubious bad debt reseres shallbe set u, in the amount of the doubtful amounts0 The debtor debt balances shall be set outin the balance sheet at their net alue which shall be calculated by subtracting the balancesof the established bad debt reseres from the accounting alue of the debts according tothe accounting data0 >ustification for the amount of the established bad debt reseres shallbe ,roided in the annex of the annual accounts0 1f a debt is considered unrecoerable(lost without ho,e of recoery) it shall be res,ectiely written off from reseresestablished for bad debts or shall be included in losses0(2) ?"& -ecember "###@() The e3uity of a com,any shall be set out in the balance sheet by com,onents0(A) 4ong5term creditor debt items shall include those amounts of obligations the ,aymentof which is due more than a year after the end of the res,ectie accounting year andwhich are created in order to finance long5term inestments and business assets or in orderto coer obligations and which are not included in short5term creditor items0($) +hort5term creditor items shall include amounts that are ,ayable in nearest "2 monthstime after the end of the accounting year and other obligations which occur in the normal

cycle of actiity of the undertaking0[6 November 1996; 16 December 1999; 20 November 2003; 26 May 2005]

&ection ).'

1f stocks or shares of new emission hae been sold for a larger amount than thenominal alue the difference shall be set out under 6;3uity7 and 6+tock (share) emission,remium7 items on the liability side of the balance sheet0 1f stock or shares of newemission hae been sold for an amount below the nominal alue the difference shall be setout under the same item as a negatie number0[19 October 2006; 12 March 2009]

&ection )/' ?2& .ay 2**$@[6 November 1996; 16 December 1999; 26 May 2005]

"hapter ,

7ules 7egarding the "ontent of the Anne

&ection *0'

The ex,lanations com,arisons details and justification re3uired in +ections $ &B # "& "B "# 2 2$ 2& 2 2# " & and B of this 4aw and the information,rescribed by +ections A" A2 A AA A$ A& AB A A# $* $" $2 $A $$0Aand $$0Bofthis 4aw shall be set out in numbers text and tables in the annex to the annual accounts0[6 November 1996; 16 December 1999; 20 November 2003; 25 May 2005]

&ection *#'

1nformation shall be ,roided in the annex regarding the methods used for thealuation of different items in the annual accounts and the methods for calculation of

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) 2"


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de,reciation decrease in alue and write5off of the alue of long5term inestments0 1f anyamounts in the annual accounts hae been conerted from a foreign currency into units ofcurrency of the e,ublic of 4atia justification for such conersion shall be ,roided0

&ection *('

(") There shall be set out in an annex in regard to the subsidiary com,anies of a grou,and in regard to associated com,anies names and legal addresses the ,artici,atory shareof the com,any in the com,osition of the grou, (in res,ect of which annual accounts haebeen drawn u,)in the share ca,ital of such com,anies as a ,ercentage0 The amount ofe3uity and of ,rofit or loss of subsidiary com,anies of the grou, and associated com,aniesin accordance with the last a,,roed annual accounts of each such com,any shall also beindicated0 This information need not be ,roided if it is insignificant for fulfilling there3uirements set out in +ection A =aragra,h three of this 4aw0(2) 1nformation s,ecified in =aragra,h one of this +ection need not be ,roided if it couldseriously harm the interests of the res,ectie com,any in the annex indicating that such

information is not ,roided for the referred to reason0() The amount of e3uity and ,rofit or loss of a com,any referred to in =aragra,h one ofthis +ection need not be ,resented if the res,ectie com,any does not ,ublish its annualaccounts and if the ,artici,atory share in it is less than $* ,er cent0[16 December 1999; 19 October 2006]

&ection *)'

1f the e3uity ca,ital consists of seeral ty,es of stock or shares the number andnominal alue of each ty,e of stock or shares shall be set out in the accounts0 +tockcom,anies shall always set out the number of stock and their nominal alue0

[19 October 2006]

&ection **'

1f a com,any has taken a loan which may be conerted into stock the amount,ayable for each such loan the exchange rate and time ,eriods ,ursuant to which the loanmay be conerted into ca,ital of the com,any shall be disclosed0 1f a loan has beenobtained against the security of bonds or other debt documents with a right to receieinterest the amount ,ayable on any such loan and the sti,ulated interest rate shall bedisclosed0[19 October 2006]

&ection *+'

(") ;ach debt item in the balance sheet shall ,roide information about the ,art ,ayablemore than fie years after the balance sheet date0(2) 1f the assets of a com,any hae been ,ledged or encumbered by some other loansecurity such shall be set out together with the information regarding the terms of the,ledge and any other conditions by way of guarantee to secure re,ayment of the loan and



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the balance sheet alue of the ,ledged ,ro,erty0 The total creditor debt amounts whichare coered by the security which has been ,roided to related com,anies shall be set outse,arately indicating the ty,e and form of security0() The total amount of old5age ,ensions warranty and guarantee obligations discountedbills of exchange and other financial liabilities not reflected in the balance sheet shall be setout0 1f a com,any has entered into lease or rent agreements which are significant for itso,erations the obligations ,roided for under these agreements shall be s,eciallyindicated0 /bligations to existing and former em,loyees in relation to ,ensions andobligations to related com,anies shall be set out se,arately0(A) 8mounts of adances loans or guarantees issued to the management shall be set out inthe ,art regarding se,arate ,osition grou,s (members of the council and board ofdirectors) mentioning the interest rate the most im,ortant terms and amounts ,ayable0($) ?"# /ctober 2**&@(&) Total remuneration amounts in the accounting year to the sworn auditors of thecom,any or to the sworn auditor of the commercial com,any (hereinafter 9 swornauditor) shall be indicated se,arately regarding:

") examination of the annual accounts%2) the ,erformance of other audit tasks%) consultation regarding tax issues% andA) the ,erformance of other s,ecialist tasks0

[6 November 1996; 16 December 1999; 19 October 2006]

&ection *,'

(") 1f the cadastral alue of immoable ,ro,erty of the com,any has been determined itshall be set out in the annex0(2) 1f the ,ossibility of choice has not been utilised to a,,ly the aluation of fair alue to

financial instruments as ,roided for in +ection $$0"

of this 4aw an ex,lanation shall be,roided in the annex regarding the amount of deriatie financial instruments and theessential diision by the grou,s of these instruments indicating the balance sheet alue andfair alue if such can be s,ecified with one of the methods referred to in +ection $$0 2=aragra,h one of this 4aw0() 1f the ,ossibility of choice has not been utilised to a,,ly the reduction in alue,roided for in +ection 2 =aragra,h two of this 4aw to long5term financial inestmentsreferred to in +ection $$0" =aragra,h four of this 4aw the fair alue of which is less thanthe balance sheet alue information shall be ,roided in the annex regarding the balancesheet and fair alue of indiidual assets or asset grou,s ex,laining why reduction of alueis not being a,,lied and indicating the facts which certify that the reduction in alue isshort5term and hae been caused due to transitional circumstances0[16 December 1999; 20 November 2003; 19 October 2006]

&ection *'

1f ,art of the ,rofit ex,ected for work which has not been com,leted by the end ofthe accounting year is included in the item 6Eork in ,rogress7 it shall be set out togetherwith the ealuation methods utilised0



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&ection *.'

(") The net turnoer set out in the ,rofit or loss accounts shall be ,resented in the annexallocated according to forms of basic actiity and geogra,hical markets if the forms ofbasic actiity (selling of ,roducts and ,roision of serices) and geogra,hical markets ofthe com,any differ significantly0(2) The ,roisions of this +ection are not a,,licable to com,anies which may use the,rofit or loss account form in accordance with the conditions of +ection 2A =aragra,hone of this 4aw0 /ther com,anies need not ,roided the information re3uested in=aragra,h one of this +ection if such may seriously harm the interests of the releantcom,any indicating in the annex that such information shall not be ,roided due to thereferred to reason0[6 November 1996; 16 December 1999; 19 October 2006]

&ection */'

(") 1nformation shall be ,roided in the annex regarding the amounts of taxes and fees,aid in the accounting year allocated according to ty,es of taxes and fees and tax reliefreceied and abatements granted 9 for each tax se,arately indicating the documents whichconfirm the rights to such relief and abatements0(2) The amounts of tax and fee obligations the late charges calculated ,enalty ,aymentsand other amounts ,ayable or oer,aid to the +tate budget or local goernment budgetsincluded in accounts ,ayable or accounts receiable a,,ro,riately reconciling suchamounts with the tax administration shall be set out in detail according to ty,es of taxesand fees0() ?"# /ctober 2**&@

[6 November 1996; 16 December 1999; 19 October 2006]

&ection +0'

(") 1nformation shall be ,roided regarding the aerage number of ,ersons em,loyedduring the accounting year0 =ersonnel costs shall be detailed as re3uired by +ection ""item & and +ection " ex,ense item of this 4aw0

(2) The total remuneration allocated to the management for ,erformance of their functionsshall be set out allocated according to se,arate grou,s of ,ositions (members of thecouncil and board of directors)0 The same shall a,,ly to ,ensions and similar obligationsfor former administratie institution members0[6 November 1996; 20 November 2003; 19 October 2006]

&ection +#'

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) 2A


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(") The following information shall be ,roided regarding the com,anys aggregate ownstock or shares:

") the number of stocks or shares and the total amount of their nominal alue andthe ratio of this total amount in the ca,ital of the undertaking%

2) the number of stocks or shares re,urchased or sold during the accounting yeartheir nominal alue their ,ercentage ratio in the e3uity ca,ital and the total re,urchasingor selling ,rice%

) the reason for ac3uiring own stock or shares of the undertaking in theaccounting year0(2) The information mentioned in Clause " of this +ection shall be set out se,arately forthose stocks or shares which hae been ac3uired as ,ro,erty and those which hae beenac3uired by way of ,ledge0[19 October 2006]

&ection +('

(") 1f in the accounting year the subsidiary com,any has ac3uired or sold ,arent com,anystocks or shares the ,arent com,any shall submit information regarding the nominal alueof such stocks or shares and the ratio thereof in the ca,ital of the ,arent com,any as wellas shall indicate the buying and selling amounts0(2) The information which is referred to in =aragra,h one of this +ection shall beindicated se,arately for such stocks or shares which are ac3uired in ownershi, and thosewhich are ac3uired as ,ledges0[19 October 2006]

&ection +)' ?"& -ecember "###@

&ection +)'#

(") 8 com,any shall ,roide information regarding each agreement not included in thebalance sheet indicating the ty,e ,ur,ose and financial im,act thereof if the risks orbenefits associated with such agreements are significant and if the information regardingsuch risks and benefits is necessary in order to alue the financial status of the com,any0(2) 8 com,any shall ,roide information regarding its transactions with related ,arties ifsuch transactions are significant and do not conform to normal market conditionsindicating the amount of such transactions the ty,e of relationshi, of the related ,artiesand other information regarding such transactions which is necessary in order tounderstand the financial status of the com,any0 1n formation regarding indiidualtransactions with related ,arties may be unified in grou,s on the basis of the ty,e of suchtransactions exce,t in cases where it is necessary to ,roide information se,arately inorder to alue the im,act of related ,arty transactions u,on the financial status of thecom,any0() Com,anies which do not exceed two of the criteria referred to in +ection 2A=aragra,h two of this 4aw shall be ,ermitted to ,roide information only regarding thety,e and ,ur,ose of the agreements referred to in =aragra,h one of this +ection0Com,anies which do not exceed two of the criteria referred to in +ection 2A =aragra,h

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26/36

two of this 4aw if they are not stock com,anies shall be ,ermitted not to ,roide theinformation referred to in =aragra,h two of this +ection0 +tock com,anies shall ,roideinformation regarding transactions which are directly or indirectly ,erformed with thelargest of such com,any stockholders and with the management of such com,any(members of the council or board of directors)0[19 October 2006]

&ection +*'

(") Com,anies which on the balance sheet date do not exceed two of the criteria referredto in =aragra,h two of this +ection are ,ermitted to draw u, a shorted annex0 1n theshortened annex it is ,ermitted not to ,roide the information referred to in +ections AAand $2 and +ection $$0A Clause of this 4aw0(2) The criteria referred to in =aragra,h one of this +ection are as follows:

") balance sheet total 9 2$* *** lats2) net turnoer 9 $** *** lats

) aerage number of em,loyees in the accounting year 9 2$0() ?"& -ecember "###@(A) The balance sheet total in accordance with the re3uirements of =aragra,h two of this+ection shall be formed by the total amount of all asset items mentioned in +ection "* ofthis 4aw0 The aerage number of em,loyees shall be calculated by adding u, the numberof working em,loyees of the com,any on the last date of each month of the accountingyear and diiding the amount by the number of months in the accounting year0($) 1f on the balance sheet date the com,any exceeds or ceases to exceed two of thecriteria mentioned in =aragra,h two of this +ection this shall affect the a,,lication of theconditions of =aragra,h one of this +ection only if it occurs for two accounting years insuccession0

(&) ?2* 'oember 2**@[6 November 1996; 16 December 1999; 22 March 2001; 20 November 2003; 19 October2006]

"hapter 8anagement 7eport

[16 December 1999]

&ection ++' ?"2 .arch 2**#@

[6 November 1996; 16 December 1999; 20 November 2003; 19 October 2006; 12 March2009]

"hapter '#

2aluation of Fair 2alue[20 November 2003]

&ection ++'#

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) 2&


27/36

(") 1n derogating from the aluation ,roisions ,roided for in +ections 2& 2 2# * 2and & of this 4aw financial instruments (also deriatie financial instruments) may bealued in fair alue if the conditions included in =aragra,hs two three and four of this+ection are obsered0(2) Contracts for which the basic assets are goods and in accordance with which both,arties hae the right to settle in cash or with some other financial instrument within themeaning of this 4aw are deriatie financial instruments exce,t in the case where all ofthe following conditions are in effect:

") the contract is entered into in accordance with the ,lanned ,urchase of goodsraw materials basic materials and ancillaries sale or use needs of the com,any and theystill a,,ly%

2) the contract already initially was intended for the needs referred to in Clause "of this =aragra,h% and

) the contract obligations are intended to be com,leted with the su,,ly of thegoods0() Ialuation of the fair alue shall be a,,lied only to those financial obligations which are

an integral ,art of the trade ,ortfolio or which hae been created from deriatie financialinstruments0(A) The following financial assets shall not be subject to aluation of fair alue:

") inestments held to the end of term which are not deriatie financialinstruments%

2) loans and debtor debts which are not held for trade% and) ,artici,ation in the grou, subsidiary com,anies associated com,anies and

managed5in5common com,any ca,ital and com,any emitted ca,ital securities as well asother financial instruments which taking into account international accounting standardswhich hae been ado,ted in accordance with egulation (;C) 'o "&*&


28/36

(") The aluation of the fair alue of financial instruments in the cases referred to in+ection $$0"of this 4aw must be belieable0 8n aluation is belieable if the fair alue ofthe financial instrument is s,ecified utilising one of the following methods:

") financial instruments for which ,ublished ,rices are 3uoted in asset ,ublicsecurities market 9 on the basis of the market ,rice0 1f the financial instrument does nothae the referred to market ,rice but such ,rice is for a se,arate com,onent thereof orsimilar financial instruments such instrument market ,rice may be established taking intoaccount the market ,rice of the com,onent thereof or similar financial instrument% or

2) financial instruments for which it is not ,ossible to s,ecify a market ,rice 9 onthe basis of the alue which is calculated utilising generally known and a,,licablealuation models and methods if the calculated alue a,,ro,riately reflects the ,ossiblemarket ,rice of such instruments0(2) !inancial instruments the fair alue of which cannot be belieably s,ecified with themethods referred to in =aragra,h one of this +ection shall be alued according to the,rocedures s,ecified in +ections 2& 2 * 2 and & of this 4aw0

[20 November 2003]

&ection ++')

(") Changes to the fair alue of a financial instrument which hae occurred in the,erformance of aluation in accordance with the methods s,ecified in +ection $$02=aragra,h one of this 4aw shall be included in the ,rofit or loss account exce,t in thefollowing cases:

") the financial instrument is 3ualified as a risk limitation instrument and inaccordance with the risk limitation accounting system acce,ted by the com,any it isintended that some (or all) of the changes to the alue of such instrument not be reflected

in the ,rofit or loss account% and2) the changes in the alue of the financial instrument is de,endent u,on the

changes in the exchange rate associated with the long5term cash inestment of thecom,any in the e3uity ca,ital of an existing com,any under foreign jurisdiction0 1n both ofthe referred to cases the changes in the fair alue of the financial instruments shall beshown in the balance sheet item 6!inancial instrument realuation resere70(2) Changes in the fair alue of financial assets aailable for sale if such assets are notderiatie financial instruments a com,any shall show in the balance sheet item 6!inancialinstrument realuation resere70() The financial instrument realuation resere which is shown in the balance sheet item6!inancial instrument realuation resere7 shall include a ,rofit or loss account for thesame ,eriod in which the releant financial instrument is sold extinguished or alienated insome other way or also in which the alue of the financial asset is reduced0[20 November 2003; 19 October 2006]

&ection ++'*

1f financial instruments hae been alued at fair alue the annex shall include thefollowing information:



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") most im,ortant assum,tions on the basis of which the utilised aluation modeland method was chosen if such the fair alue of such instruments are s,ecified inaccordance with +ection $$02 =aragra,h one Clause 2 of this 4aw%

2) the fair alue of financial instruments and the changes in alue thereof whichare included in the ,rofit or loss account or the balance sheet item 6!inancial instrumentrealuation resere7 in the subdiision regarding the financial asset categories inconformity with the subdiision which is s,ecified in international accounting standardswhich hae been ado,ted in accordance with egulation (;C) 'o "&*&


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&ection ++',

1nestment ,ro,erties biological assets or long5term inestments held for sale shallnot be subject to de,reciation which the com,any shall alue on the basis of the fairalue0 Changes in the alue of such assets which hae been created in ,erformance ofa realuation of the releant fair alue or the fair alue from which sales costs haebeen deducted or in the ,erformance of a reduction in alue examination shall beincluded in the ,rofit or loss account0

[25 May 2005; 19 October 2006]

&ection ++'

(") 1f the inestment ,ro,erties biological assets or long5term inestments held for salehae been alued in the releant fair alue or the fair alue from which sales costs hae

been deducted at least the following information shall be included se,arately for each ofthe referred to item grou,s in the annex:

") a descri,tion of the asset included in the item grou,%2) the methods which were a,,lied and the im,ortant assum,tions on the basis of

which the alue of such assets was s,ecified%) the balance sheet alue in conformity with the balance sheet of the ,reious

year%A) increases (if there are such) in the accounting year se,arately indicating those

increases which were created from ac3uisitions%$) alienations (if there are such) in the accounting year%&) ,rofit or loss from alue corrections in the accounting year% and

B) any transfers (if there are such) to other item grou,s in the accounting year0(2) The following additional information shall be ,roided regarding long5terminestments held for sale which hae been alued at fair alue from which sales costs haebeen deducted:

") the time of the intended alienation of such inestments and the alienationregulations% and

2) if there is a subdiision into units (ty,e of basic actiity branch or other clearlyse,arable com,onent ,art of an undertaking) 9 the unit to which such information relates0[26 May 2005]

"hapter .Annual Accounts of a $roup ?"& -ecember "###@

"hapter /Form of Drawing 9p and &igning of the Annual Accounts

[19 October 2006]

&ection ,#'

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) *


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(") The annual accounts shall indicate the following information:") the name (merchant firm name) and legal address of the undertaking as well as

its registration number in the commercial register or the ;nter,rise egister%2) ?"2 .arch 2**#@%) ?"# /ctober 2**&@%

A) for ,artnershi,s 9 also its ty,e members with ,ersonal liability and limited,artner name and surname ,ersonal identity number and address but for legal ,ersons 9name registration number and legal address%

$) for ca,ital com,anies 9 also its ty,e the name and surname ,ersonal identitynumber of and offices held by members of the executie institution council members (ifsuch has been established) and auditor0 This information shall also be ,roided regardingthose ,ersons who hae left such offices during the accounting year% and

&) co5o,eratie societies 9 also its ty,e the name and surname ,ersonal identitynumber of and offices held by members of the executie institution council members (ifsuch has been established)0 This information shall also be ,roided regarding those ,ersons

who hae left such offices during the accounting year0(2) The annual accounts shall be signed by:

") ?"2 .arch 2**#@%2) ?"# /ctober 2**&@%) the annual accounts of a ,artnershi, 9 all the members of such ,artnershi, or

such members of the ,artnershi, who are s,ecially authorised to re,resent the ,artnershi,%A) the annual accounts of ca,ital com,anies 9 the board of directors% and$) the annual accounts of co5o,eratie societies 9 the board of directors0

() 1f a member of a ,artnershi, member of the board of directors of a ca,ital com,any orco5o,eratie society considers that the annual accounts cannot be a,,roed or also hassome objections such ,erson may indicate his or her different ,oint of iew in a s,ecial

note0[6 November 1996; 22 March 2001; 20 November 2003; 25 May 2005; 19 October2006; 12 March 2009]

"hapter #0

Auditing and %u!lishing of Accounts and 8anagement 7eports

&ection ,('

(") 1f a ca,ital com,any co5o,eratie society ;uro,ean co5o,eratie society and;uro,ean commercial com,any registered in 4atia indicators exceed two of the criteriareferred to in +ection $A =aragra,h two of this 4aw as well as if transferable securities ofa com,any are admitted to trading on the regulated market of .ember +tates its ,re,aredannual accounts shall be audited by a sworn auditor in accordance with the 4aw /n +worn8uditors0(2) ?"& -ecember "###@() 1f amendments are made in the annual accounts of a ca,ital com,any co5o,eratiesociety ;uro,ean co5o,eratie society and ;uro,ean commercial com,any registered in4atia after the sworn auditor has audited it the sworn auditor shall audit the accounts



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anew in res,ect of the amendments made0 +uch re,eated audit shall be mentioned in theo,inion of the auditor regarding the audit of the annual accounts0[6 November 1996; 12 February 1998; 16 December 1999; 22 March 2001; 20November 2003; 25 May 2005; 19 October 2006; 22 May 2008]

&ection ,)'

(") The audit of the annual accounts shall also include an accounting audit in order todetermine whether the accounts com,ly with the basic rules of accounting0 The audit shallalso determine whether re3uirements of regulatory enactments regulating the ,re,arationof annual accounts and the ,roisions of the articles of association of the com,any haebeen obsered0(2) The lawful re,resentaties of the ca,ital com,any co5o,eratie society ;uro,ean co5o,eratie society and ;uro,ean commercial com,any registered in 4atia shall submit theannual accounts to the sworn auditor immediately after ,re,aration of such0() The sworn auditor may re3uire from the lawful re,resentaties of the ca,ital com,any

co5o,eratie society ;uro,ean co5o,eratie society and ;uro,ean commercial com,anyregistered in 4atia all information and ex,lanations which are necessary for a thoroughaudit0 1f necessary the sworn auditor may re3uire such information before receiing theannual accounts0(A) 'either the sworn auditor nor his or her assistants may disclose commercial secrets ofwhich they become informed during the audit0[16 December 1999; 22 March 2001; 20 November 2003; 26 May 2005; 19 October2006]

&ection ,*'

The sworn auditor shall ,re,are a written auditors re,ort of the results of theaudit ,erformed in accordance with the re3uirements of the 4aw /n +worn 8uditors0[6 November 1996; 16 December 1999; 22 March 2001]

&ection ,+' ?"& -ecember "###@

&ection ,,'

(") 8 com,any not later than a month after a,,roal of the annual account and not laterthan four months after the end of the accounting year but a com,any whose olume ofactiity exceeds two of the criteria referred to in +ection 2A =aragra,h two of this 4awand a com,any which is the ,arent com,any of a grou, of com,anies which ,re,aresconsolidated annual accounts not later than seen months after the end of the accountingyear shall submit a co,y of the annual account and of the sworn auditors re,ort (if suchexists) to the egional /ffice of the +tate eenue +erice (according to the ,lace ofestablishment of the com,any) together with an ex,lanation as to when the annualaccount was a,,roed0 The ex,lanation by the ca,ital com,any as to when the annualaccount was a,,roed shall be re,laced by the extract from the minutes of the



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stockholders or shareholders meeting containing the decision on the a,,roal of theannual account0 The com,any shall submit the documents referred to in this =aragra,h in,a,er or electronic format0(2) The com,anies to which the ,roisions of +ection $A of this 4aw are a,,licable are notre3uired to submit a management re,ort0 1n such cases a duly authenticated co,y of theminutes of the general meeting of the com,anys stockholders or shareholders containingthe decision regarding distribution of ,rofits or loss5absorbency shall be submitted0() 8 com,any in com,lying with the ,roisions of =aragra,h two of this +ection or of+ection $A shall attach an ex,lanatory note signed by the board of directors of thecom,any to the submitted annual accounts stating that the ,roisions of +ection $A=aragra,hs two four and fie of this 4aw hae been com,lied with0(A) 'ot later than within fie working days the +tate eenue +erice shall electronicallysubmit the documents referred to in =aragra,hs one two and three of this +ection (if theyhae been submitted electronically) or the electronic co,ies of these documents (if theyhae been submitted in ,a,er format) to the ;nter,rise egister0 The ;nter,rise egistershall ensure the ,ublic access to the receied documents0 The ,rocedure of authentication

of electronic co,ies of documents and electronic transfer of documents shall be determinedby the intra5de,artmental agreement0($) 'ot later than within fie working days of recei,t of the documents referred to in=aragra,h four of this +ection the ;nter,rise egister shall ,ublish a notice in thenews,a,er atv!"a# $%#t&e#!# on the accessibility of the information referred to in=aragra,hs one two and three of this +ection at the ;nter,rise egister0(&) ?& 'oember "##&@[6 November 1996; 16 December 1999; 22 March 2001; 20 November 2003; 19 October2006; 22 May 2008]

&ection ,' ?22 .ay 2**@

[16 December 1999; 22 March 2001; 20 November 2003; 26 May 2005; 19 October2006; 22 May 2008]

&ection ,.'

1f the management of a com,any fails to submit documents in accordance with there3uirements of +ection && =aragra,hs one two and three of this 4aw an official of the+tate eenue +erice shall im,ose a fine in accordance with the ,rocedures s,ecified inlaw0[6 November 1996; 19 October 2006; 22 May 2008]

Transitional %rovisions

"0 The amendments made by this 4aw are a,,licable to annual accounts commencing withthe "### accounting year exce,t the amendments in +ection "* of this 4aw in relation toshort5term creditors and long5term creditors and amendments in +ection "B =aragra,hthree of this 4aw which are a,,licable commencing with the 2*** accounting year0

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre)


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20 Consolidated annual accounts commencing with the "### accounting year shall be,re,ared in accordance with the 4aw on Consolidated 8nnual 8ccounts0

0 +ection " =aragra,h three of this 4aw in relation to inestment broker com,anies andinestment management com,anies shall be a,,lied commencing with the 2**$ accountingyear0

A0 F, to the day when the releant amendment to the 4aw /n 1nestment Com,aniescomes into force the term 6inestment administration com,any7 shall be understood bythe term 6inestment com,any70

$0 Fntil the day of the coming into force of the new Cabinet regulations but not later thanby " >anuary 2**& Cabinet egulation 'o0 B2 of 2A 8ugust 2**A egulations regarding.andatory 8,,licable 4atian 8ccounting +tandards and =rocedures by which Cash !low+tatements and Changes in ;3uity +tatements shall be =re,ared shall be a,,lied insofar as

they are not in contradiction to this 4aw0

&0 The amendments to +ection " =aragra,h two and +ection $A =aragra,h two of this4aw shall come into force on " >anuary 2**B and shall be a,,lied to the accounting,eriods which commence with this date or later0

B0 1ndiidual undertakings farms and fishing undertakings the turnoer (income) of whichfrom economic actiity transactions in the 2**$ accounting year or the 2**& accountingyear is from A$ *** lats to 2** *** lats or which are registered with the +tate eenue+erice as enter,rise tax tax,ayers may also in the future a,,ly the ,roisions of this 4awuntil change of legal form or until reorganisation but not longer than to * >une 2*""0

0 +ection A$ =aragra,h six and +ection $0 "of this 4aw shall come into force on ">anuary 2**0

#0 8mendments to +ection && =aragra,hs one two four and fie re,eal of +ection &Band the amendment to +ection & of this 4aw shall come into force on " >uly 2** andshall a,,ly to the annual accounts submitted on or after this date0

"*0 8mendments to the =art 6Terminology Fsed in this 4aw7 regarding deletion of thesecond sentence in ex,lanation of terms 6The management7 and 68 grou,7 amendmentsto +ection " regarding deletion of words 6indiidual undertakings farms and fishingundertakings7 as well as deletion of =aragra,h two amendments to +ection &" regardingdeletion of Clause 2 of =aragra,h one and Clause " of =aragra,h two of this 4aw shallcome into force on " >uly 2*""0[16 December 1999; 20 November 2003; 26 May 2005; 19 October 2006; 22 May 2008;12 March 2009]

Translation 2** Tulkoanas un terminoloijas centrs (Translation and Terminology Centre) A


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Informative 7eference to 3uropean 9nion Directives

This 4aw includes legal norms arising from:") the !ourth Council -irectie Bune "# based on the 8rticle $A

() (g) of the Treaty on consolidated accounts%) Council -irectie A


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Chair,erson 80 Dorbunos+u,reme Council of the e,ublic of 4atia

+ecretary 10 -audis+u,reme Council of the e,ublic of 4atia

iga "A /ctober "##2

Transitional %rovisions 7egarding Amendmentsto the Law :n the Annual Accounts of 9ndertakings

Transitional %rovisions(regarding amending 4aw of & 'oember "##&)

"0 8mendments in +ection && of the 4aw on 8nnual accounts of Fndertakings in relationto the submission to kee,ing in and aailability from the ;nter,rise egister of co,ies ofannual accounts management re,orts and auditor o,inions are a,,licable to annualaccounts regarding "##& and subse3uent years0

20 8nnual accounts of undertakings and management re,orts for the ,eriod until "##& shallbe ke,t in the +tate eenue +erice and they shall be ,ublicly aailable so that eeryoneu,on ,ayment of a +tate fee may familiarise himself or herself with such0

0 Eith the coming into force of this 4aw Cabinet egulations 'o0 2#2 issued inaccordance with +ection " of the Constitution 8mendments to the 4aw /n 8nnualaccounts of Fndertakings (atv!"a# 'epub(!)a# Sae!ma# u& M!&!#tru *ab!&eta +!,ot-"#."##& 'o "#) are re,ealed0

Transitional %rovisions(regarding amending 4aw of 2* 'oember 2**)

The amendments made with this 4aw shall be a,,lied to annual accountscommencing with the 2**$ accounting year0

Documents

Annual Accounts Law