An ultimate parent whose main activity is holding shares and which takes no management, operational or financial decisions for the group may be exempted, but only if an EU subsidiary is designated to fulfil Articles 6 to 16 and is given the means and legal authority to do so.
The requirement, in our words
An ultimate parent whose main activity is holding shares in operating subsidiaries and which takes no management, operational or financial decisions for the group may be exempted from the due diligence duties, but only if one of its EU subsidiaries is designated to carry out the obligations of Articles 6 to 16 on its behalf, including those concerning the subsidiaries' activities. The designated subsidiary must be given the means and legal authority to do so effectively, in particular to obtain information and documents from group companies.
Why it matters
The exemption is narrow. It is for a pure holding structure, not for a group with a central function that sets strategy or finance. The designation is the price: one EU subsidiary must be able to obtain the information and documents from the group and must have the authority to act. That is a governance change, not a paper filing.
What changed
The old Article 2(3) allowed an exemption for a holding whose subsidiaries were independently managed, without the express designation mechanism. The replacement adds the designation, the means and the legal authority.
What to do
- Document the parent's activity and the absence of group-level management, operational or financial decisions.
- Pass a board resolution designating the EU subsidiary and granting it authority and resources.
- Record how the designated subsidiary will obtain information from each group company.
Evidence to have ready
| Category | Artefact |
|---|---|
| Group governance | Exemption application or notification with the evidence of the parent's pure holding activity |
| Group governance | Board resolution designating the EU subsidiary and granting it authority and resources |
| Group governance | Intra-group information-sharing agreement enabling the designated subsidiary to collect data |
Common failures
- Designated subsidiary lacks authority to require information from sister companies
- Parent continues to take operational decisions while relying on the exemption
Dates
Transposition by 26 July 2028; application from 26 July 2029.
The question to test
Does the designated subsidiary have legal authority to obtain group information, or only a reporting line?
Cross-references
A2-17 Third-country subsidiaries · A4-6 Parent due diligence
Source
Article 4(2)(c), replacing the first subparagraph of Article 2(3) of Directive (EU) 2024/1760; OJ L 2026/470, 26 February 2026; https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32026L0470. Our statement of the duty, read from the Official Journal text and the held control record, not the instrument verbatim.
Not legal advice; does not certify. A reading of the duty and the evidence commonly sampled, not a substitute for the Official Journal text, the national transposing measure or your auditor's judgement.