Approval of financial statements in a limited liability company

As the deadlines for preparing and approving the financial statements for the past fiscal year approach, we remind you of the most important rules for a limited liability company.

Deadline for holding an annual shareholders' meeting

According to Article 231 of the Companies Act, an annual shareholders' meeting should be held at least once a year within 6 months after the end of each fiscal year. If the fiscal year coincides with the calendar year, the maximum deadline for holding the meeting is June 30.

As a side note, it is worth noting that the holding of a shareholders' meeting after the aforementioned deadline does not affect the validity of the resolutions adopted at the meeting, unless it is shown that the violation of the deadline affected the content of the resolutions - then there is the possibility of challenging such resolutions (see the Supreme Court ruling of December 8, 1998, I CKN 243/98, while the case concerned a joint-stock company).

Subject matter of the ordinary shareholders' meeting

The subject of the meeting should be:

Consideration and approval of the board of directors' report on the company's activities and financial statements for the past fiscal year;

Adoption of a resolution on the distribution of profit or coverage of loss, if, in accordance with Article 191 § 2 of the Companies Act, these matters are not excluded from the competence of the shareholders' meeting;

granting discharge to members of the company's bodies for the performance of their duties.

The method of convening an annual meeting of shareholders

Convening an annual shareholders' meeting is the responsibility of the company's board of directors. Pursuant to Article 238 of the Companies Act, a shareholders' meeting shall be convened by registered letter or courier mail sent at least 2 weeks before the date of the shareholders' meeting. Instead of registered letter or parcel sent by courier service, the notice may be sent to the shareholder at an electronic delivery address or by e-mail, if the shareholder has previously agreed to this in writing, specifying the address to which the notice should be sent. The invitation shall specify the day, time and place of the shareholders' meeting and the detailed agenda. If participation in the shareholders' meeting is by means of electronic communication, the notice should additionally include information on how to participate in the meeting, speak at the meeting, exercise voting rights at the meeting and object to the resolution(s) adopted at that time.

Board's responsibilities

It should be remembered that attendance at the meeting should be provided not only to shareholders, but also to all persons who served as members of the company's board of directors, supervisory board or audit committee during the last fiscal year. Moreover, members of the company's bodies whose terms of office expired before the date of the shareholders' meeting not only have the right to attend the meeting, but also to review the management report and the financial statements, together with a copy of the report of the supervisory board or audit committee and the auditor, and submit written opinions to them, with the request to exercise these rights to be submitted to the board of directors in writing no later than one week before the meeting.

In addition, the board of directors is obliged to release, at the shareholder's request, documents corresponding in content to the management report on the company's activities, the financial statements, the supervisory board's report or the audit report. The aforementioned documents shall be made available immediately, no later than within 2 business days from the date of the request. At the shareholder's request, documents shall be made available in electronic form, including by means of electronic communication.

Deadline for preparation of financial statements and management report on the company's activities

Both the financial statements and the management report on the company's activities are prepared by the board of directors. According to Article 52 of the Accounting Law, the deadline for both reports is three months from the balance sheet date. If the fiscal year coincides with the calendar year, the deadline for preparing the reports is March 31.

Responsibilities of the supervisory board

If a supervisory board has been established in the company (in companies where the share capital exceeds PLN 500,000 and there are more than 25 shareholders, the establishment of a supervisory board or an audit committee is mandatory) the aforementioned reports are subject to evaluation by the supervisory board as to their compliance with the books, documents and facts. In addition, the supervisory board evaluates the management board's proposal for the distribution of profit or coverage of loss and prepares an annual written report on the results of its evaluations of the financial statements, the management board's report on the company's operations and the management board's proposal for the distribution of profit or coverage of loss, as well as a report on the activities of the supervisory board for the past fiscal year (supervisory board report). The supervisory board's report is then submitted to the shareholders' meeting.

In order to perform the aforementioned duties, the supervisory board may examine all documents of the company, review the company's assets, and demand that the board of directors, proxies and persons employed by the company prepare or submit any information, documents, reports or explanations concerning the company, particularly its operations or assets. The subject of the demand may also be information, reports or explanations in the possession of the authority or obligated person regarding subsidiaries and affiliated companies.

If a limited liability company meets the requirements of Article 64 of the Accounting Law, then the financial statements are additionally subject to audit by a certified public accountant.

Deadline for approval of the company's financial statements and management report

According to Article 53 of the Accounting Law, the annual financial statements should be approved no later than six months after the balance sheet date, i.e. by June 30 if the fiscal year coincides with the calendar year. Thus, an annual meeting of shareholders should be held within the above deadline.

Deadline for filing the company's financial statements and management report

Within 15 days from the date of the annual meeting of shareholders at which the above-mentioned resolutions were adopted, the board of directors is required to submit the financial statements, the management report on operations, and the resolutions approving the financial statements and the resolution on the distribution of profit or coverage of loss to the repository of financial documents. Thus, the maximum deadline for the submission of the aforementioned documents is July 15.

In summary, if the fiscal year coincides with the calendar year, the reporting deadlines for 2023 will expire:

• March 31, 2024 - preparation of financial statements
• June 30, 2024 - approval of financial statements
• July 15, 2024 - filing of financial statements with the competent court registry

Sanctions for failure to file financial statements

Failure to file financial statements is punishable by, among other things:

• fine imposed from 10 to 720 daily rates (imposed on board members)
• A penalty of restriction of liberty from one month to two years (imposed on board members)
• coercive action
• dissolution of the company and deletion from the KRS
• The establishment of a curator.