In today's article from our Compliance series, we would like to combine the issue of liability related to company law with the responsibility for proper bookkeeping and present you with the current reporting obligations of companies.
First of all, we would like to remind you that both partnerships and companies are subject to annual reporting obligations, which require the preparation, signing, approval and submission of financial statements.
What is a Financial Statement?
A financial statement is financial information about an enterprise's operations, prepared for the period covering the last financial year. The financial year is defined by the company's articles of association or articles of association and means the calendar year or other period lasting 12 consecutive full calendar months. It is worth noting that if an entity commenced operations in the second half of the adopted financial year, then – in accordance with Art. 3 section 1 item 9 of the Accounting Act of September 29, 1994 (consolidated text: Journal of Laws of 2021, item 217, as amended, hereinafter referred to as the " Accounting Act ") – it is possible to extend the financial year. Therefore, it is possible to combine the accounting records and financial statements with the accounting records and financial statements for the following year. Financial statements are prepared as of the balance sheet date – if the financial year coincides with the calendar year, the balance sheet date will be December 31 of the given year.
The activity preceding the preparation of financial statements and ensuring their correct preparation is the timely closing of the accounting records. Previously, the standard deadline for fulfilling this obligation, as well as for preparing and signing the financial statements for private sector companies, was March 31st. This year (as in the previous two years), pursuant to the Regulation of the Minister of Finance of March 7, 2022 (item 561), the deadlines for fulfilling certain reporting obligations have been extended. In connection with this Regulation, a private company may fulfill the obligation to close its accounts, prepare, and sign the financial statements for 2021 by June 30, 2022. This extension also applies to other reporting obligations, including:
1) approval of the financial statement (from the previous deadline to June 30 this year) – by September 30, 2022 ;
2) submission of the financial statement to the register of entrepreneurs of the National Court Register (from the previous deadline to July 15 this year) – by October 15, 2022 .
For public finance sector entities, the deadlines for fulfilling the above-mentioned reporting obligations have been extended by 1 month .
The extension of reporting deadlines does not oblige companies to extend the deadlines for completing the planned reporting activities accordingly. The cited regulation of the Minister of Finance is intended to facilitate the functioning of companies, justified by the ongoing state of epidemic threat, as well as companies' involvement in the process of implementing the principles of the new tax system. If you are able to comply with the obligation to prepare and sign financial statements, we advise you not to delay its completion until the end of the statutory deadline and to prepare and approve the financial statements as soon as possible. This also applies to other reporting obligations, including, among others, the approval and submission of financial statements. The closer the statutory deadlines for fulfilling individual reporting obligations, the more frequently our Compliance series will feature dedicated articles detailing the responsibilities of authorities related to approving and submitting financial statements. However, if you have any questions today regarding, for example, the procedure for convening and conducting a General Meeting or submitting financial documents to the Financial Document Repository, please contact our Law Firm directly.
Consequences of failure to comply with reporting obligations
The law imposes severe consequences for failure to comply with financial reporting obligations, resulting from both late preparation and failure to submit them to the appropriate authority. Pursuant to Article 77, Section 2 of the Accounting Act, failure by an obligated entity to prepare financial statements or a management report, or failure to prepare them in accordance with the Accounting Act, or inclusion of inaccurate data in such reports, is punishable by a fine or imprisonment for up to two years, or both. Furthermore, Article 79 of the Accounting Act stipulates that anyone who, contrary to statutory provisions, fails to perform reporting obligations, including having the financial statements audited by a certified auditor, providing access to the financial statements and other documents, or filing the financial statements in the appropriate register, is subject to a fine or a penalty of restriction. Sanctions for failure to comply with reporting obligations also result from the Act of 15 September 2000 - the Commercial Companies Code (consolidated text: Journal of Laws of 2020, item 1526, as amended, hereinafter referred to as the " Commercial Companies Code "). Pursuant to the provision of Art. 594 § 1 item 3 of the Commercial Companies Code, whoever, being a member of the management board of a commercial company, contrary to his or her obligation allows the management board to fail to convene a shareholders' meeting or a general meeting shall be subject to a fine of up to PLN 20,000.00.
Furthermore, if a company fails to timely submit mandatory documents – including financial documents – the registry court may initiate proceedings to compel compliance under penalty of a fine (it should be noted, however, that due to the above omission, the registry court may impose a fine of no more than PLN 15,000.00 ). The total amount of fines in the same case cannot exceed PLN 1 million. Furthermore, failure to submit financial statements for two financial years by a company, despite the registry court's requests, results in the ex officio initiation of liquidation proceedings.
Severe penalties are also imposed by Article 80b of the Act of 10 September 1999 - the Fiscal Penal Code (consolidated text: Journal of Laws of 2021, item 408, as amended, hereinafter referred to as the " Fiscal Penal Code "), which states that anyone who, despite the obligation, fails to submit a financial statement or audit report to the competent tax authority on time shall be subject to a fine for a fiscal offense.
It is erroneously assumed that penalties for failure to comply with reporting obligations apply only to management board members. It is worth clearly emphasizing that reporting obligations also apply to members of supervisory boards or other supervisory bodies of a given entity – for example, they are obligated to ensure that the financial statements, consolidated financial statements, management report, and group activity report meet the requirements of the Accounting Act . In the event of damage caused by an act or omission to comply with this obligation, supervisory board members and management board members are jointly and severally liable to the company (Article 4a of the Accounting Act).
We hope that our series will help you structure the responsibilities of corporate bodies and better understand their essence, thus streamlining the operations of your companies. Our goal is to provide you with the broadest possible understanding of the obligations related to corporate operations, which, in our view, will reduce or eliminate the risks to corporate bodies related to the consequences of failing to fulfill their duties. Should you have any questions regarding the above or any other matters concerning corporate responsibilities, please contact our law firm directly – we will be happy to answer all your questions.
This article is for informational purposes only and does not constitute legal advice.
Legal status as of March 30, 2022
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