General remarks
1. Do I need to draw up and submit financial statement?
As a general principle, all companies entered into the register of entrepreneurs of the National Court Register are obliged to draw up and submit financial statements. The obligation also applies to branch offices of foreign companies.
2. What needs to be done at the end of financial year 2020?
As part of closing of financial year 2020, the following steps shall be taken:
- preparation of electronic version of financial statements and management board’s activity report (if applicable),
- signing of the financial statements and management board’s activity report,
- holding Annual General Meeting and adopting the resolution on approval of the financial statements and of the management board’s activity report,
- filing financial reports of the company and any other documents related to the closing of financial year of the company at the Repository of Financial Documents or, in situations specified by law, through the S24 system.
3. What is the form of financial statement for 2020?
The financial statements for 2020 shall be prepared in electronic form, in XML file, in accordance with the logical structure available on the official website of the Ministry of Finance.
4, How to sign financial statements?
Financial statements shall be signed by „an entity’s manager” within the meaning of Act of 29 September 1994 on Accounting (director/directors in case of corporate entities and partner/partners authorized to run the activity for partnerships), as well as by the person who was entrusted the keeping of accounting books.
The financial statements shall be signed in electronic form by:
- ePUAP trusted profile,
- qualified electronic signature,
- personal signature (the personal signature is the e-ID signature)
The signed financial statements should be a file (in XML format) with the extension XAdES.
5. Are there any exemptions from the obligation to draw up the management board’s activity report?
Micro and small entities are exempted from the obligation to draw up the management board’s activity report if additional information (constituting an integral part of the financial statements) regarding the acquisition of own shares is provided, once they decide not to do so on the basis of special resolution of shareholders.
6. Who shall sign management board’s activity report and in what form?
The management board’s activity report may be prepared as a general principle, in any form (however, the requirement is to comply with the requirements of its content imposed by the Act on Accounting), e.g. in the format of an electronically signed PDF file.
The activity report is signed in the same way as the financial statements, that is by „an entity’s manager” within the meaning of Act of 29 September 1994 on Accounting (director/directors in case of corporate entities and partner/partners authorized to run the activity for partnerships).
7. How to submit financial statement and other documents?
The financial statements together with other financial documents should be submitted electronically, via the eKRS portal.
The portal allows you to use two options:
Filing to the Repository of Financial Documents may be made by a person authorized to represent the company (a partner authorized to represent it, a member of the board or a proxy) provided that their personal identification number (PESEL number) has been disclosed in the register of entrepreneurs of the National Court Register. Otherwise, you can use the assistance of a professional representative (lawyer or legal advisor).
The S24 system can be used by companies in which none of the persons authorized to represent have a PESEL number, which was disclosed in the register of entrepreneurs of the National Court Register. In this situation, there is a duty to pay a f of PLN 140 is charged on the application.
Both system are available only in Polish.
8. Can commercial proxy submit a financial statements to the Repository of Financial Documents?
Yes, a commercial proxy may submit a financial statements on behalf of the company to the Repository of Financial Documents. The condition is to disclose his PESEL number in the register of entrepreneurs of the National Court Register.
9. Is it possible to submit a financial statements to the Repository of Financial Documents by proxy?
Yes, it is possible to submit a financial statements to the Repository of Financial Documents by a proxy. The representative of the company or branch must, however, be entered on the list of lawyers or a list of legal advisors.
10. When should the financial statement be drawn up?
The financial statement should be prepared within 3 months from the end of the financial year (balance sheet date) of the company or branch.
Moreover, due to the SARS-CoV-2 pandemic and to the regulation of the Minister of Finance, the deadlines for preparing the financial statement were extended by additional 3 months. However, this exception only applies to reporting obligations for the financial year ending after September 29th 2020, but not later than on April 30th 2021, whose deadline has not expired before March 31st 2021.
11. What is the deadline for the financial statement to be approved by Annual General Meeting?
Resolutions regarding approval of the financial statement and distribution of profit or coverage of loss should be adopted within 6 months from the end of the company’s financial year.
In addition, due to the SARS-CoV-2 pandemic, as a result of the regulation of the Minister of Finance, the deadline mentioned above was extended by additional 3 months. However, this exception only applies to reporting obligations for the financial year ending after September 29th 2020, but not later than on April 30th 2021, whose deadline has not expired before March 31st 2021.
12. When should the financial statement be submitted?
The financial statements should be submitted within 15 days from adopting the resolution regarding the approval of the financial statements do the register.
13. Does the COVID-19 pandemic affect the deadlines for drawing up and approving financial statement?
Yes, in accordance with the Regulation of the Minister of Finance of March 26st 2021 amending the regulation on determining other deadlines for fulfilling obligations in the field of records and for the preparation, approval, access and forwarding of reports or information to the appropriate register, unit or body, deadlines for preparation and approval the financial statement were extended by additional 3 months. However, this exception only applies to reporting obligations for the financial year ending after September 29th 2020, but not later than on April 30th 2021, whose deadline has not expired before March 31st 2021.
14. What are the consequences of failure to draw up the financial statements or management board’s activity report?
In the event of failure to prepare financial statements or management board’s activity report or their preparation not in accordance with the provisions of the Act on Accounting or inclusion of unreliable data, the head of the entity shall be subject to criminal liability. The offense is punishable by a fine or imprisonment of up to 2 years, or both.
15. What are the consequences of failure to submit financial statement and management board’s activity report?
In the event of failure to prepare the financial statements and the activity report, their preparation in violation of the provisions of the Accounting Act or the inclusion of unreliable data in them, the head of the entity is subject to criminal liability. The said prohibited act is punishable by a fine and/or imprisonment for up to 2 years.
16. What are the consequences of failure to report on time?
Failure to submit the financial statements in the appropriate register constitutes, pursuant to the Act on Accounting, a criminal act punishable by a fine or restriction of liberty.
In addition, in accordance with the Act on the National Court Register, if it is determined that the financial documents whose submission is mandatory have not been submitted despite the expiry of the statutory deadline, the registration court calls the obliged persons to submit them – setting an additional 7-day deadline. This provision makes it possible for the court to impose a fine on those obliged who do not submit the documents by the indicated date.
In addition, the Act on the National Court Register provides that if, despite the application of a fine, a partnership entered in the register does not comply with the obligation, the registry court may, ex officio, decide on the dissolution of the company and appoint a liquidator. The registry court ex officio initiates proceedings for dissolution of an entity entered in the register without conducting liquidation proceedings, in the event that, despite having been summoned by the registry court twice, the said obligations have not been fulfilled.
Our expert Justyna Nykiel is there to help.
Companies
17. Who is responsible for preparation and submission of financial statement?
According to the Act of 29 September 1994 on Accounting, „an entity’s manager” is responsible for the preparation and submission of financial statements.
Within the meaning of the Act of 29 September 1994 on Accounting, as „an entity’s manager” should be considered the following persons:
- registered partnership (spółka jawna). – shareholders conducting the company’s affairs
- professional partnership (spółka partnerska) – shareholders conducting the company’s affairs or the management board
- limited partnership, limited joint-stock partnership (spółka komandytowa, spółka komandytowo-akcyjna) – general partners conducting the company’s affairs;
- limited liability company, joint-stock company (spółka z ograniczoną odpowiedzialnością, spółka akcyjna) – all the members of the management board
18. Who is responsible for the preparation and submission of financial statement of the company in liquidation?
The liquidator is responsible for preparing and submitting the financial statements of a company in liquidation. If several liquidators have been appointed, the financial statements and the management board’s activity report should be signed by each of them.
19. Which companies are obliged to submit management board’s activity report?
According to the Act of 29 September 1994 on Accounting, the obligation to prepare a report on operations applies to sp. z o.o. (limited liability companies ) and S.A. (joint-stock companies). It may be also applicable to S.K.A. (limited joint-stock partnerships), sp. j. (general partnership) and sp. k. (limited partnerships) in some circumstances.
20. Who in the case of a company can submit a notification to the Repository of Financial Documents?
In the case of companies, notification to the Repository of Financial Documents may be made by a person authorized to represent the company (a shareholder authorized to represent, a member of the board or a commercial proxy) provided that their PESEL number has been disclosed in the register of entrepreneurs of the National Court Register.
The notification may also be made by a lawyer or legal advisor acting on the basis of a power of attorney.
21. Apart from the financial statement and the report on the management board’s activity report, what documents should be submitted to the National Court Register?
In addition to the financial statement and the management board’s activity report, companies should submit to the National Court Register:
- resolution regarding approval of the financial statement and board’s activity report,
- resolution regarding distribution of profit or coverage of loss,
- auditor’s opinion/report (if the financial statements were subject to an audit obligation in accordance with applicable regulations).
22. What resolutions should be adopted by Annual General Meeting?
Pursuant to the Code of Commercial Companies, the Annual General Meeting of sp. z o.o. and s.a. should adopt resolutions on:
- Approval of the financial statements of the company and the management board’s activity report,
- Distribution of profit or covering the loss for the last financial year,
- approval of the duties being discharged by members of the company’s bodies,
- extension of the term of office of members of the company’s bodies (if applicable)
- further existence of the company (if applicable).
23. When should the resolution on further existence of the company be approved?
According to the Code of Commercial Companies, in spółka z o.o., if the balance sheet prepared by the management board shows a loss exceeding the sum of supplementary and reserve capitals and half of the share capital, the management board is obliged to immediately convene a meeting of shareholders to adopt a resolution on further existence of the company.
In the case of spółka akcyjna, the Code of Commercial Companies provides that if the balance sheet prepared by the management board shows a loss exceeding the sum of supplementary and reserve capital and one-third of the share capital, the management board shall immediately convene a general meeting to adopt a resolution on further existence of the company.
Therefore, it can be deduced from the above provisions that if the financial statements prepared at the end of the financial year indicates the existence of the above-mentioned conditions, the agenda of the Annual General Meeting should include a point regarding the adoption of a resolution on further existence of the company.
24. In which circumstances should a resolution on extension of the term of office of members of the company’s bodies be approved?
The shareholders’ meeting or general meeting should adopt a resolution regarding the extension of the term of office of members of the company’s bodies in a situation where the time for which they have been appointed has expired.
25. What does granting discharge mean and what are the consequences?
The resolution on granting discharge constitutes a specific approval of the activities of members of the bodies for the previous financial year. As a rule, granting discharge exempts the company from liability towards the company for harmful decisions taken during the discharge period. However, this does not apply to situations specified in the act, such as, for example, a payment to partners made contrary to the law or the provisions of the articles of association, or the acceptance of contributions at an excessively high price.
26.What is the maximum amount of dividend that can be paid?
Pursuant to the Code of Commercial Companies, the shareholders of a partnership may demand the distribution and payment of profit at the end of the financial year. The amount of dividend paid is in this case limited by the amount of profit achieved, as well as the provisions of the articles of association, as well as the content of the resolution on the distribution of profit taken by the partners. However, please remember that if, as a result of the loss suffered by the company, the shareholder’s capital share has been reduced, the profit is allocated first to supplement the shareholder’s share.
In the case of spółka z o.o., the amount to be distributed among the shareholders may not exceed the profit for the last financial year, increased by retained earnings from previous years and by the amounts transferred from the supplementary and reserve capital created from profit, which may be allocated for distribution. This amount should be reduced by uncovered losses, own shares and by amounts which, in accordance with the law or the articles of association, should be transferred from profit for the last financial year to supplementary or reserve capitals.
In relation to s.a., the amount to be divided among shareholders may not exceed the profit for the last financial year, increased by retained earnings from previous years and by the amounts transferred from the supplementary and reserve capital created from profit, which may be allocated for dividend payment. This amount should be reduced by uncovered losses, own shares and by amounts which, in accordance with the Act or the statute, should be allocated from the profit for the last financial year to supplementary or reserve capitals.
27. Can I leave the earned profit in the company?
Yes, the payment of dividends by the company is not obligatory. Pursuant to a relevant resolution, partners may decide to keep the profit earned in a given year in the company and use it, for example, to cover losses from previous years or to allocate it to the supplementary capital. At the same time, we would like to draw your attention to the possibility of deducting from the income of CIT taxpayers – up to the limit specified in the act – the Company’s profit for 2018 and 2019 and left in the company.
Branches
28. Who is responsible in the branch for the preparation and submission of the financial statements?
Pursuant to the Accounting Act of September 29th 1994, the „entity manager” is responsible for the preparation and submission of the financial statements.
The Act does not specify who should be taken as the „ entity manager ” in the case of a branch of a foreign entrepreneur. Two different interpretations can be found in the commercial law doctrine:
- a) the first of them requires that all members of the body authorized to represent the parent company (management board or board of directors) be recognized as the „entity manager ”,
- b) the second of them indicates that the „entity manager ” of the branch of a foreign entrepreneur is a person indicated in the register of entrepreneurs of the National Court Register as a person authorized to represent the foreign entrepreneur in the branch.
29. Are branches of foreign companies required to draw up a report on their activities?
No, the Act does not include any obligation to draw up a report on the activities of the foreign entrepreneur’s branches.
30. What documents, apart from the financial statements, should branches submit to the National Court Register?
In addition to the financial statements, a branch of a foreign entrepreneur should submit a resolution to the National Court Register regarding the approval by the parent company of the branch’s financial statements or a statement that the financial statements of the foreign entrepreneur has been approved and that it contains the financial data of the branch.
31. Who in the case of a branch can submit a notification to the Financial Documents Repository?
In the case of branches, applications to the Financial Documents Repository may be made by a person authorized to represent a foreign entrepreneur in a branch, provided that their PESEL number has been disclosed in the register of entrepreneurs of the National Court Register.
The notification may also be made by a lawyer or legal advisor acting on the basis of a power of attorney.
CO-WRITTEN BY: Łukasz Wojdanowicz, Senior Consultant, Legal Advisory
