The text provides rules permitting Member States to exempt small groups, and optionally medium-sized groups, from preparing consolidated financial statements and a consolidated management report, except where an affiliated undertaking is a public‑interest entity. A parent undertaking that is itself a subsidiary may be exempt where its own parent holds all shares, or holds at least 90% and remaining shareholders approve. Exemptions require that the exempted undertaking and its subsidiaries be consolidated in the accounts of a larger parent governed by a Member State and that those consolidated financial statements and the consolidated management report be prepared in accordance with this Directive (excluding Article 29a) or international accounting standards adopted under Regulation (EC) No 1606/2002.

Member States may require publication of the consolidating parent’s consolidated financial statements, consolidated management report, audit report and, where appropriate, an appendix, and disclosure in the exempted undertaking’s notes identifying the consolidating parent and the exemption. Further conditions include shareholder thresholds to prevent exemption (maximum 10% for public limited companies and limited partnerships with share capital; 20% for other undertakings), possible additional disclosures, applicability where the consolidating parent is outside the EU subject to equivalence and audit by authorised auditors, and permitted non‑inclusion where information cannot be obtained without disproportionate expense or delay, where shares are held exclusively for resale, where severe long‑term restrictions hinder control, or where subsidiaries are immaterial or otherwise excluded.