Warmblood breeders

[pocomoto]

I need some help before I put pen to paper. Rather than plough my way through loads of EU legislation, I have been told that a breed registry is bound by law to register all offspring of two registered horses. I beleive this is incorrectly interpreted. What happens with horses that fail their grading?
Do they get registered or just get given a Passport? What happens to the offspring if they are bred from?
I have seen some imports at horse sales that are clearly failed gradings, which are obviously purchased cheeply to sell to the UK, have had a sneak at the passports and they are not from breed societies!
Thanks

 

[volatis]

The TBF will issue papers to a foal that is from two Trakehner registered horses that have not graded. Such a foal would be put on our preliminary register and would receive 'white' papers (as opposed to pink or green). To receive pink papers a foal must be by/out of two graded parents