Section 142(1)(b) of the Companies Law(1) provides that:

  • a company with subsidiaries must consolidate its financial accounts with those of its subsidiary companies as prescribed by international accounting standards; and
  • the consolidated financial accounts must be presented to the parent company at a general meeting.

The law further provides that small-sized groups are exempt from the obligation to draw up consolidated financial accounts, and offers clarification as to which companies fall within the definition of 'small-sized groups'.

The basic provisions of the Companies Law on consolidated accounts have recently been amended(2) by the insertion of a new section (142A) in order to harmonise the law with EU Directive 2009/49/EC.

Section 142A provides that any parent undertaking governed by the Companies Law which has subsidiary undertakings that are immaterial - both individually and as a whole - is exempt from the obligation to draw up consolidated financial statements. As further clarified under the new section, a subsidiary undertaking is considered as 'immaterial' for the purposes of this exemption "if it does not affect the true and fair view of the assets, liabilities, financial position and profit or loss included in the consolidated financial statement".

Section 142A(5) further provides that the financial statements of a subsidiary company need not be included in the consolidated financial statements if:

  • strict and continuous restrictions apply that essentially hinder the ability of the parent company to exercise its rights over the assets and management of that subsidiary undertaking;
  • the necessary information for the preparation of consolidated accounts cannot be obtained without disproportionate expense or unjustified delays; or
  • the shares in the subsidiary company are held for the sole purpose of being sold subsequently.

For further information on this topic please contact Stella Kammitsi at Chryssafinis & Polyviou by telephone (+357 22 67 9760), fax (+357 22 67 9750) or email ([email protected]).


(1) Cap 113.

(2) By virtue of Amendment Law 3 (157(I)/2011).