The financial statements, also called annual accounts, financial reports or accounting statements, reflect the accounting of a company and show the economic structure of the company.

The financial statements consist of:

  • the balance sheet,
  • Profit & Loss account,
  • notes to the financial statements,
  • cash flow statements and
  • statements of changes in equity.

However, these last two are not required for the presentation of abridged annual accounts. Companies presenting abridged annual accounts may not exceed 8 million euros in net turnover, have assets of no more than 4 million euros or have more than 50 employees.

In accordance with the provisions of the Capital Companies Act, company directors are obliged to prepare the annual accounts within three months of the end of the financial year. These must include the management report, including, where appropriate, the statement of non-financial information and the proposed allocation of profits, as well as, where appropriate, the consolidated accounts and management report.

Once the annual accounts have been prepared, within six months of the closing date, they shall be approved at the general meeting of the company and the directors shall submit, for filing with the Mercantile Register of the registered office, a certificate of the resolutions of the shareholders’ meeting approving the accounts, duly signed, and of the appropriation of the profit or loss. The information in the annual accounts is public, so that anyone can Access to this information (e.g. potential investors, etc.).

Consequences of late filing of annual accounts

Failure to file the annual accounts may lead to the company’s registration being closed, which means that no document relating to the company may be entered in the Commercial Register for as long as the non-compliance persists, except in the case of the removal of the administrator, a revocation of powers, the dissolution of the company and the appointment of liquidators.

Such non-compliance will also give rise to the imposition of sanctions by the Instituto de Contabilidad y Auditoría de Cuentas (ICAC), the regulatory and supervisory body.

The penalty corresponding to the filing of the deposit after the deadline established in the Capital Companies Act will be between 1,200 and 60,000 euros.

When the company or, as the case may be, the group of companies has an annual turnover of more than 6,000,000 euros, the fine limit for each year of delay will be increased to 300,000 euros.

In this regard, we stress the importance of submitting the annual accounts within the legally established deadline and thus avoid the economic damage that the imposition of penalties may represent for the company, as well as the limitations of management before the Commercial Registry.

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Financial Accounting Specialist