Limits applicable in different aspects: formulation of abbreviated or normal CCAA, consideration of small or medium-sized companies, exemption from consolidation, audit obligation, obligation to present the Statement of Non-Financial Information, etc.
For the sole purpose of clarifying the limits applicable to each of these situations, we have prepared this outline, which is presented below:
(1) Audit obligation (TRLSC): If during two consecutive fiscal years they meet, at the closing date of each of them, two of the circumstances indicated.
With the following two qualifications:
- Companies will be exempt from this obligation if they fail to meet, during two consecutive fiscal years, two of the aforementioned circumstances.
- In the first fiscal year after their incorporation, transformation or merger, companies are obliged to be audited if they meet, at the close of said fiscal year, at least two of the three aforementioned circumstances.
(2) Formulation of balance sheet, ECPN, Annual Report and abridged Profit and Loss Account (RD 602/2016 amending the PGC): If during two consecutive fiscal years they meet, at the closing date of each one of them, two of the circumstances indicated.
With the following nuances:
- Companies will lose this power if they cease to meet, during two consecutive fiscal years, two of the aforementioned circumstances.
- In the first fiscal year after their incorporation, transformation or merger, companies may prepare an abbreviated balance sheet, NCPF and Profit and Loss Statement if they meet, at the close of said fiscal year, at least two of the three aforementioned circumstances.
- When the balance sheet can be prepared in an abbreviated form, the ECPN and EFE are not mandatory.
- If the company forms part of a group of companies in the terms described in the 13th annual accounts preparation standard. Group, multi-group and associated companies contained in this third part, for the quantification of the amounts, the sum of the assets, the net turnover and the average number of employees of all the entities comprising the group shall be taken into account, taking into account the eliminations and incorporations regulated in the consolidation rules approved in development of the principles contained in the Code of Commerce. This rule shall not apply when the financial information of the company is included in the consolidated annual accounts of the parent company.
(3) Waiver of the obligation to consolidate (RD 1159/2010)
(4) Limits consideration Small and Medium-sized companies (LAC 22/2015): If during two consecutive fiscal years they meet, at the closing date of each of them, two of the circumstances indicated.
With the following nuances:
- Entities will lose this consideration if they cease to meet, for two consecutive fiscal years, two of the aforementioned circumstances.
- In the first fiscal year after its incorporation, transformation or merger, the entities will be considered as such if they meet, at the close of said fiscal year, at least two of the three aforementioned circumstances.
(5) They shall be considered Public Interest Entities (Art. 8.1. of the RLAC):
- a) Credit institutions, insurance companies, as well as issuers of securities admitted to trading on official secondary securities markets or on the alternative stock market (MAB) belonging to the expanding companies segment.
- b) Investment services companies and collective investment institutions which, during two consecutive fiscal years, as of the closing date of each of them, have at least 5,000 clients, in the first case, or 5,000 unitholders or shareholders, in the second case, and the management companies that manage such institutions.
- c) Pension funds that, during two consecutive fiscal years, at the closing date of each of them, have at least 10,000 participants and the management companies that manage such funds.
- d) Banking foundations, payment institutions and electronic money institutions.
- e) Those entities other than those mentioned in the preceding paragraphs whose net turnover and average number of employees during two consecutive fiscal years, as of the closing date of each of them, exceed 2,000,000,000 euros and 4,000 employees, respectively.
- f) Groups of companies in which the parent company is one of the entities referred to in the preceding paragraphs.
(6) Small-size companies (LIS)
In the immediately preceding tax period.
(7) Obligation to present Non-Financial Information Statement (NFS)
The text of Law 11/2018, of December 28, which amends the Commercial Code, the Consolidated Text of the Capital Companies Act approved by Royal Legislative Decree 1/2010, of July 2, and Law 22/2015, of July 20, on Auditing of Accounts, in matters of non-financial information and diversity, was published in the Official State Gazette. The obligation of disclosure of non-financial and diversity information by certain entities and groups was introduced in Spain by Royal Decree-Law 18/2017, of November 24, which came to transpose to our regulations Directive 2014/95/EU of the European Parliament and of the Council, of October 22, 2014, and which amended the Commercial Code, the Consolidated Text of the Capital Companies Act and Law 22/2015, on Account Auditing. With the new Law 11/2018, its scope is extended to certain entities, even if they do not qualify as public interest entities (EIP), and the content of the information required is expanded, providing greater specificity on the content of the EINF.
Three years after the entry into force of this law, the obligation to file the consolidated [art. 49.5b) of the Commercial Code] and individual [at. 265 b) of the TRLSC] is applicable to all those companies with more than 250 employees that either have the consideration of EIP, except entities that have the qualification of small and medium-sized companies in accordance with Directive 34/2013 (art. 3.9 and 3.10 LAC), or for two consecutive fiscal years meet at the closing date of each of them at least one of the following circumstances:
- Total assets must exceed €20 million.
- The net amount of the annual turnover exceeds €40 million.
DISPENSA
A subsidiary belonging to a group is exempt from this obligation if this company and its subsidiaries, if any, are included in the consolidated management report of another company in which this obligation is complied with. In response to this question, the ICAC issued a consultation on certain issues related to the scope of application of the obligation to publish the Statement of Non-Financial Information. If a company avails itself of this option, it must include in the management report a reference to the identity of the parent company and to the Mercantile Registry or other public office where its accounts must be deposited together with the consolidated management report or, if it is not obliged to deposit its accounts in any public office or has opted for the preparation of a separate report, a reference to where the consolidated information of the parent company is available or can be accessed. Likewise, according to the new wording of Article 262.1, companies that have the qualification of small and medium-sized companies, in accordance with Directive 34/2013 (art. 3.9 and 3.10 LAC), are exempted from the obligation to include information of a non-financial nature.
