It's annual accounts time again: Q&A
Spring is in the air and that means for most companies that it becomes time to draft and file the annual accounts for the past year. But who is responsible for what? And what if the company does not fulfill its obligations?
Who drafts the annual accounts?
The law is clear: each year the directors or the managers of a company make an inventory and draft the annual accounts. This is clearly not the job of the accountant or bookkeeper.
Subsequently the annual accounts should be presented to and approved by the general shareholders meeting. When the board of directors does not present the annual accounts to the general shareholders meeting, several possibilities exist. From a subpoena from a shareholder, over the dismissal of the board of directors by the general shareholders meeting to the dissolution of the company by any interested person or by the public attorney in case the company didn't file its annual accounts during three subsequent years.
Who approves the annual accounts?
It is the annual general shareholders meeting which approves the annual accounts. The date of the annual general shareholders meeting is mentioned in the articles of association. The general shareholders meeting decides by ordinary majority and there is no quorum.
The following companies should not have their annuals accounts approved by their general shareholders meeting:
a general partnership (V.O.F.), whether or not with a social goal;
an ordinary limited partnership (Comm.V), whether or not with a social goal;
a cooperative company with unlimited liability (CVOA), whether or not with a social goal;
companies in liquidation, whether or not with a social goal;
foreign companies, foreseen such approval is not required in their home country;
big public institutions which are not established in the form of a commercial company, but which have another statutory goal than one of commercial, financial or industrial nature.
Who has to file the annual accounts?
Filing the approved annual accounts in due form is also the responsibility of the board of directors.
The annual accounts should be presented to the general shareholders meeting within six months after closing of the accounting year. The annual accounts should be filed within thirty days upon approval. The ultimate filing date is thus seven months upon closing of the accounting year.
Late filing of the annual accounts triggers a fine up to 1.200Ä depending on how late the annual accounts are filed and the form of the annual accounts (brief or normal scheme).
There is also a civil sanction. Damage incurred by third parties is deemed to be caused by non-filing of the annual accounts within the legally foreseen period. Consequently, the burden of proof is turned around: the company should prove that the not or late filing of the annual accounts didn't cause the third party's damages.
As already mentioned, a company can even be dissolved in case no annual accounts are filed for three subsequent years.
Should every company file annual accounts?
Most companies should file annual accounts. Exceptions apply for:
private individuals which are traders;
small companies in which the partners have an unlimited liability: general partnership (V.O.F.), ordinary limited partnership (Comm.V), cooperative company with unlimited liability (CVOA);
big companies in which the partners have an unlimited liability, foreseen none of the partners is a legal person;
hospitals to the extent they didn't take the form of a commercial company with limited liability or a big not-for-profit organization;
National Health Services, professional federations, schools and higher education institutions to the extent they didn't take the form of a big not-for-profit organization.
What if the general shareholders meeting does not approve?
Non-approved annual accounts can in principle not be filed. Such non-approved annual accounts will however be accepted in some specific, legally foreseen, cases.
Can approved annual accounts be amended?
No amendments can be made to the approved annual accounts to the extent the decision of the general shareholders meeting generates rights for third parties or for the shareholders. This decision is definitive and cannot be changed by a new decision of the general shareholders meeting. In case no amendments are made to the rights of third parties or shareholders, the balance sheet can still be amended. Material errors can always be corrected. There is a difference between material errors and erroneously made management decisions. The last one cannot be corrected. The difference is not always clear and every situation should be assessed separately.
In case of corrections of material errors a new general shareholders meeting should approved the corrected annual accounts. This does not apply for filed annual accounts which do not correspond to the correct annual accounts due to typing or calculation errors.