Abstract 43 applies to intermediate parent undertakings whose parents are not established under the law of an EEA state. The Companies Act was recently changed to make available to such companies an exemption from preparing consolidated accounts. The exemption is conditional on compliance with various conditions, including that the intermediate parent and all of its subsidiaries are included in consolidated accounts for a larger group drawn up in accordance with the provisions of the Seventh Directive or in an equivalent manner.

Questions have been raised as to whether financial statements drawn up in accordance with IFRS, US GAAP and other GAAPs meet the requirement for equivalence with the Seventh Directive. The guidance in Abstract 43 focuses on the consideration of whether consolidated accounts of a higher parent meet the basic requirements of the Directives and in particular the requirement to give a true and fair view. This means that those accounts do not need to conform with the detailed requirements of the Directives in order for the UK intermediate parent to meet the relevant condition for the exemption.