Every commercial company must face the obligation of presentar your annual accounts in the Mercantile Registrywithin the month following the date of approval of these by the General Meeting. If the fiscal year coincides with the calendar year, the deadline for its formulation is March 31, its approval on June 30 and for its presentation in the Mercantile Registry on July 30 of each year.

The accounts show the financial situation of a company referring to the last year that has been closed (compared to the previous year) and, although the period reflected does not have to coincide with the calendar year, this is usually the case because the majority of the companies carry out their accounting closing on December 31st.

In this article we offer you a summary of the key questions you should know about the approval of the annual accounts, what are they, who have the obligation to present them and what are the standardized models for their deposit.

 

What are the annual accounts?

The annual accounts collect all the economic information of the company corresponding to a financial year and are made up of five types of documents, which we review below.

1. Balance sheet

The Balance Sheet reflects the true image of the economic and financial situation of a company at a given time. It is the summary of:

  • All rights and possessions of the company: Assets
  • All debts and obligations presented by the company: Liabilities
  • Own funds, such as share capital or reserves: Net Worth

2. Profit and loss account

The Profit and Loss Account or Profit and Loss Account summarizes all the income and expenses of the company during the accounting year.

The difference between income and expenses constitutes the operating result, and will be the profits or losses presented by the company.

3. Statement of changes in equity

The statement of changes in equity provides information on operations that affect equity.

These changes may be due to the financial result of the year itself, to operations attributed directly to the Equity, to capital increase operations or to dividend distribution.

4. Statement of cash flows

The statement of cash flows reflects all the receipts and payments made by the company in that year. This document provides information on both the origin of the cash and the destination that it has been given.

5. Memory

The General Accounting Plan refers to the Annual Report as the document that expands the information contained in the other documents that make up the annual accounts, both as explanatory text and as data that complement the information contained in the previous documents.

 

Who is obliged to present the annual accounts in the Mercantile Registry?

All mercantile companies are obliged to prepare and present the annual accounts in the Mercantile Registry of each province.

This obligation covers both Limited Companies and Limited Companies, and all those companies that by law must make their annual accounts public.

La Capital Companies Act establishes that The administrators of the company will be the ones who must formulate the annual accounts within a maximum period of 3 months from the closing date of the financial year.

Once the accounts have been formulated, the Ordinary General Shareholders' Meeting must be called where they will be approved, the management of the Administrative Body will be evaluated and the destination of the financial result for the year will be decided. The deadline for convening the Meeting is during the 6 months following the close of each fiscal year.

Within the month following the date of the General Meeting, the administrators of the company will deposit the annual accounts in the Mercantile Registry.

The Law also contemplates a series of management restrictions and economic penalties in the event that the obligation to present them is breached, such as:

  • Companies may not appoint administrators or grant powers of attorney.
  • Information about the financial situation of the company will not be provided to third parties.
  • Penalties are contemplated that can range from € 1.200 to € 60.000 depending on the volume of turnover of the company.

 

Standard models to be used to deposit the annual accounts

Depending on the size of the company, that is, according to the number of workers, the turnover, and the total of its assets, the companies will present one model of annual accounts or another.

The Ministry of Justice makes available to companies, businessmen and other entities current models for the deposit of annual accounts, which are the following.

Normal model

In the normal model, the five documents that make up the company's annual accounts must be included: the Balance Sheet, the Profit and Loss Account, the Statement of Changes in Equity, the Statement of Cash Flows and the Annual Report. and all companies are required to present them, except for those that can present abbreviated annual accounts or those that can benefit from the General Accounting Plan for SMEs.

Abbreviated model

As the name suggests, the main difference with the previous model is its simplicity, there is not so much information. The documents that must be presented in this are only the Balance Sheet, the Profit and Loss Account, the Report and the Statement of Changes in the Abbreviated Net Equity.

And it can be submitted by those companies that during two consecutive years meet, at the closing date of each of them, at least two of the following circumstances:

- That the average number of workers employed during the year is less than or equal to 50

- That the total of the asset items is less than or equal to € 4.000.000

- That the net amount of its annual turnover is less than or equal to € 8.000.000

Regarding the profit and loss account, they may present it in its abbreviated format when, during two consecutive years, they meet, at the closing date of each of them, at least two of the following circumstances:

  • That the average number of workers employed during the year is less than 250.
  • That the total of the asset items is less than or equal to € 11.400.000
  • That the net amount of your annual turnover is less than or equal to € 22.800.000.

SME Model

Entrepreneurs who have opted for the application of the PGC PYMEs, can formulate the annual accounts using this model. The documents that must be submitted are the balance sheet, the profit and loss account, as well as the memory. On the other hand, in this model, there is no obligation to fill in the statement of changes in equity and the statement of cash flows.

The PGC for SMEs can be used by both individual and corporate entrepreneurs who, during two consecutive years, do not exceed a minimum of two of the following three magnitudes:

- Average number of workers employed during the year <or = 50

- Total asset items <or = € 4.000.000

- Net amount of your annual turnover <or = € 8.000.000

 

Upcoming new features in the models

On May 7, 2021, the General Directorate of Legal Security and Public Faith opened the hearing process to introduce a series of modifications on the 2017 orders where the templates for the presentation of the accounts.

The new models for the presentation in the Mercantile Registry of the annual accounts of the subjects basically include four new features:

  1. Using a unique electronic format for the presentation of the annual financial reports as of January 1, 2020, thus adapting to the European Directives.
  2. For companies presenting audit report The date of this report will be included in the presentation of the deposit models of the accounts.
  3. La non-financial information of the company must be presented as a separate item on the agenda for approval at the General Shareholders' Meeting.
  4. The presentation model has been introduced Declaration Sheet COVID 19 to collect the repercussion of the state of alarm in the companies.

Remember that, both for the day-to-day running of your company and for the presentation of the annual accounts in the Registry, it is important to have specialized help. Contact us for the latest news.