Filing the annual report

The deadline for submitting reports will not be extended

We would like to remind you that, unlike last year, the legislator has decided not to extend the deadline for filing annual reports due to the coronavirus pandemic. It is thus obligatory to file an annual report with the Commercial Register within six months of the end of the financial year. For many entrepreneurs, this deadline will be 30th June.

The process must be completed correctly

The process of preparing the annual report is usually the task of the financial unit of the company (or it may be outsourced to a service provider). However, it is still the obligation of the management to ensure that the Commercial Register receives a correctly prepared annual report, duly signed and approved by the general meeting of shareholders, in a timely manner.

Depending on the type of company, submission of the annual report may also be preceded by a mandatory or optional review by auditors and, if the company has a supervisory board, the opinion of the supervisory board regarding the annual report must be submitted to the general meeting of shareholders. 

It is important to take decisions that fully respect the requirements of the law and the statutes of the company. Such decisions prove that members of the management of the company have organised accounting and reporting in a manner that is expected of them – with due diligence.

Fines for those who do not comply

In the opinion of the Ministry of Justice, many companies are not sufficiently diligent in meeting their reporting obligations. According to the media, there are plans to deal with those who fail or have previously failed to submit reports by the required deadlines by imposing fines on such companies. The plan is to issue warnings and impose fines not only on legal persons but also on the members of their management and on liquidators.

Frequently asked questions

• Does the report have to be signed by all members of the board?

No. The annual report must be signed by at least one member of the management board. Several members of the management board need to sign the report only if the members of the management board have a joint right of representation.

• Is it possible for one board member to sign the report digitally, while others sign it on paper (for example, the board members are in different locations and one of them is unable to give a digital signature) even though they have a joint right of representation?

The annual report is generally prepared in and filed via the Company Registration Portal and this is also where the report is usually signed. In the special case above, it would be possible to forward the signed original documents to a notary and file the report with the Commercial Register using the help of the notary.

• What is the required length and detail of the management report?

The management report provides an overview of the company's activities and circumstances that are decisive in assessing the company's financial status and economic activities. A list of mandatory items to be included in the management report is provided by Accounting Act. Broadly speaking, the detail required from a management report corresponds to the scale of its business.

• Does a new board member have to sign the report of the previous financial year?

Yes, they do. This is the case, for example, if a member of the management board was elected after the end of the financial year but before the approval of the annual report. The new member of the board must confirm the accuracy and completeness of the data of the annual report, but they are not liable for any transactions done before they became members of the board.

• What happens if the report shows that the company's equity does not meet the requirements prescribed by law?

Equity must meet the threshold established by Commercial Code at all times, not only on the balance sheet date. If the company’s net assets are below the threshold set by law, the net assets must either be restored to the required level or the company must be dissolved. While this is not described in Commercial Code, a good solution for restoring net assets is to set up a voluntary reserve capital fund.