I. – INTRODUCTION.
On September 28, 2013 the announced Law 14/2013 to support entrepreneurs and their internationalization, also known as “Entrepreneur Act “, was published in the BOE (the Spanish Official State Gazette). The main purpose of the Act is to promote the entrepreneurial culture as well as both the development and growth of Spanish companies in the international framework. Various incentives and facilities for the newly created entities are being introduced in order to meet this objective.
II. – MAJOR ACCOUNTING MODIFICATIONS.
There are mainly two alterations. On the one hand, the amendment of Article 28.2 of the Code of Commerce, which now allows for transcription of operation totals in the logbooks every three months, will be useful for companies with limited accounting movements.
On the other hand, two articles of the Spanish Companies Act (“Ley de Sociedades de Capital”, hereinafter “LSC”) have been modified. Paragraph 1 of Article 257 now allows for abridged formulation of both the balance sheet and the statement of changes in equity to companies that for two consecutive years meet at least two of the following circumstances:
– The total of assets not exceeding EUR 4 million (before, EUR 2,850,000);
– The net amount of the annual turnover not exceeding EUR 8 million (before. EUR 5,700,000) and;
– The average number of employees during the year not exceeding 50 (there has been no change in this section).
However, with respect to the duty to audit the annual accounts, the new wording of Article 263 of the LSC does not introduce any change to the limits in force before the modification, so that companies that meet two of the following criteria for two consecutive years will not be required to audit their accounts:
– The total of assets not exceeding EUR 2,850,000;
– The net amount of the annual turnover not exceeding EUR 5,700,000;
– The average number of employees during the year not exceeding 50.
III. – CONCLUSION.
Such simplification measures of economic and financial information requirements, mainly concretized in amplifying thresholds for formulating abridged annual accounts, brings Spanish law closer to the EU Directive. Thus, it allows for more companies to choose to formulate abridged annual accounts as well as to be exempt from preparing the cash flow statement. On the other hand, from now on there will be companies which may make abridged financial statements, but will also fall into scope of the audit requirement.
Vilá Abogados
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20th of November 2013
