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Drawing up minutes for a General Meeting

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The minutes of general meetings for approval of the annual accounts of commercial companies

Once a year, the annual accounts for the last financial year, i.e., the balance sheet, the profit and loss statement and the notes, must be approved of the Annual General Meeting. More specifically, in most commercial companies (SA, SAS, SNC, SCS, SA, SARL etc. ), the members of the executive bodies are liable to heavy criminal and civil sanctions for management error, if they breach the obligation to submit annual accounts for approval by the partners or shareholders. For this reason, the members of these executive bodies must demonstrate that they have indeed submitted the company's annual accounts for the preceding financial year for approval by the partners or shareholders, who generally meet in Annual General Meeting, by drawing up minutes of the general meeting. The approval of the annual accounts is therefore strictly regulated. By approving these annual accounts, these partners or shareholders implicitly demonstrate that the documents concerned contain data that has been prepared on a true and sincere basis. They also presume that, as of the closing date of each financial year, these annual accounts reflect a faithful picture of the assets, the financial position and the book profit (or loss) for the companies' business. More generally, the approval of the annual accounts represent the indispensable tool to provide a minimum of information on the main accounting parameters, financial management and operations of commercial companies. They are therefore an essential decision making tool aiding the diverse interests of any interested person (directors; shareholders; investors; government authorities; creditors, such as bankers, suppliers; customers; competitors; commercial courts and potentially other judicial authorities, responsible for preventing and dealing with companies in difficulty) near or far, through access to the company's business data as well as by their financial, accounting and management position. For all these reasons, it is vital that the annual accounts must be approved in strict compliance with the statutory requirements.

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Formation

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Company history

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Legal proceedings

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File : Obligation to file annual accounts

Part 1

What company accounts should be filed, by whom, why and when?

What company accounts should be filed, by whom, why and when?

Filing statements with the registry office is intended to allow any person to consult information therein.

Overview

Filing annual accounts and their associated documents with the registry office of the Commercial court is compulsory for several categories of companies.
In practice, the formality to file statements is to present statements, drafted in a regular and sincere manner, reflecting, as at the date of closure of each financial year, afaithful image of the asset situation, financial position and profit and loss of the company. Comparison of one financial year to the next of information in these documents allows for consultation over time, and, consequently, to estimate the financial solidity of companies concerned, in other words their short, medium or long term solvency.
More widely, in practice, the formality of filing statements represents the essential mechanism for minimum information about companies and therefore an essential decision-making tool for additional persons interested, from close or afar, in operation of activities of the company (directors, members; investors; administrations; creditors such as bankers, suppliers; clients, competitors; Commercial courts and, potentially, other legal authorities responsible for prevention and handling company difficulties).
For all of these reasons, it appears to be fundamental that annual accounts and their associated documents be filed in strict respect of legal and regulatory requirements.

 

Companies under the obligation of filing annual accounts

Companies for whom their annual accounts and associated documents should be filed are as follows:

  • limited companies with multiple members (SARL), namely with at least two members, and limited companies with a sole member (EURL), namely a single member only;
  • joint stock companies (namely those companies with capital divided into shares) : public limited company (SA) ; simplified joint stock company with multiple members (SAS) and single members (SASU) ; limited partnership company (SCA) ;
  • partnerships (SNC) of which the members (jointly and severally liable) are themselves:
    - SARL or joint stock companies;
    - SNC or limited partnership company (SCS) of which all members are SARL or joint stock companies;
    Good to know: foreign companies, members of an SNC, are likened to SARL or joint stock companies where their legal form is comparable to that of an SARL or joint stock companies.
  • liberal companies (SEL) : private practice company with limited liability (SELARL) ; limited company (SELAFA) ; limited liability partnership (SELCA) ; simplified joint stock company (SELAS) ;
  • commercial entities of which the registered office is abroad and who have one or more branches (subsidiaries) in France;
  • cooperative agricultural companies and unions of agricultural cooperatives insofar as they each exceed, at the end of the financial year, two of the following three thresholds: ten employees on permanent contracts; 534,000 euros in pre-tax turnover; 267,000 euros as a total balance sheet (amount resulting from net amounts on asset information);
  • "European Companies" (SE) having their registered office in France.
    Good to know: a European Company having its registered office in France is subject to the same rules for filing annual accounts and associated documents as limited companies. As, in principle (subject to special provisions), the legal form of a European Company is that of a limited company and should be considered in each EU Member State as a limited company incorporated in line with the law in the state where it has its registered office.

 

Annual company documents to be filed

Distinction should be made between two types of documents: annual accounts and all other documents associated to these accounts. All of these documents should be signed and certified as true and accurate by a legal representative.

  • Annual accounts for each financial year (the financial year representing the period, in principle for one year, used to appreciate, using an accounting technique, the result of company activities), established following the end of the year and, in an inseparable manner, the following documents:
    •   the balance sheet : this document separately outlines all resources (company liabilities) and use of these resources (company assets) held by the company as at the end of the financial year;
    •   profit and loss account : this document outlines all income (the total amount of goods and services provided by the company) and costs (the total amount of goods and services used by the company) for the financial year as well as the result of their difference, namely the positive balance (profit) or negative balance (loss), This balance represents the profit or loss for the financial year;
    •   the annex : this document, intended for explanations, completes and comments on data in the balance sheet and profit and loss account.

 

  • The proposed allocation of profit for the financial year subject to the annual ordinary general meeting (or to the sole member of an EURL or SASU where not the director of the company) and the wording for the resolution of the voted allocation (or the decision of the sole member of an EURL or SASW where not the director of the company).
    In practice, this information appears in the resolution concerning allocation of the profit or loss for the financial year appearing in the minutes of the general meeting having ruled on the annual accounts. Consequently, information required may lead to filing the entire minutes or just an abstract thereof.
    Good to know: consequently, in a EURL and SASU, the sole member, a physical person, is alone responsible for management or chairmanship of the company, with these companies being exempt from the obligation of filing the decision constituting approval of annual accounts by said member as, legally, filing with the registry office of the inventory of the annual accounts, duly signed by the legal representative (for the original copy) or signed and certified as true and certified (in the event of a copy) shall constitute approval thereof by the sole member.

 

  • The report by the supervisory board: only public limited companies with a board of directors and supervisory board or limited partnership companies should file this document. This report indicates, in the form of observations, the results (for instance, irregularities in company accounts) of management control as undertaken by the supervisory board. These observations primarily concern the annual management report (a document in which managers or executive bodies of the company report on the body deliberating primarily on their management during the past financial year) and on the annual accounts of the company.

 

  • The general report by the auditor(s) on annual accounts: drafting and filing of this document are compulsory as soon as at least one auditor is employed in the company (and this whatever the compulsory or optional nature of its nomination). In this document, the auditor(s) accounts include performance of the mission. It(they) notably outline observations on the regular nature, sincerity and faithful image of annual accounts. Where it is believed that these characteristics are met, the auditor(s) hereby certify the regularity and sincerity of annual accounts as well as the faithful impression they give of the annual accounts of the company. In such instance as the auditor(s) should issue reserves as to the certification of accounts or refuse to certify these, the reserves or refusal should be duly motivated.
    Good to know: a copy of the annual accounts must be annexed to the general auditor report. Consequently, filing the general auditor report with the registry office is sufficient in ensuring filing of annual accounts.

 

  • Documents for consolidation of accounts:
    These documents are as follows:
    - consolidated annual accounts: these documents include the consolidated balance sheet, consolidated profit and loss account and an annex to these;
    - the annual report on group management;
    - the auditors' report on consolidated accounts.

    Drafting and filing of these documents is a fundamental requirement of all companies as soon as meeting any of the following three criteria:
    - the company controls one or more other companies in an exclusive manner either by direct or indirect holdings of the majority of voting rights therein; or by appointment, for two successive financial years, of the majority of members of administrative, management or supervisory boards; or by having any dominant influence due to a contract therewith;
    - it controls one or more other companies jointly due to sharing control of one or more companies operated in common by a limited number of members or shareholders (this is, for instance, the case of the joint subsidiary);
    - it operates an influence over one or more companies due to direct or indirect holdings of a 20% stake at least in voting rights thereover.

    Filing these documents is also incumbent upon any company which, although not subject to the obligation of drafting consolidated accounting documents, does so voluntarily.
    The previously indicated documents aggregate the accounting formalities of each of the controlled companies, insofar as they are each in one of the three aforementioned situations. They operate consolidated entries so as to act as if they were a single company. This is why the content and purpose of these documents are almost identical to those of a single company (annual accounts, management report, annex).
     
  • Document to be filed solely by "listed" companies:
    In principle, only certain types of companies are subject to filing the documents indicated hereunder. These are joint stock companies (limited companies or limited partnerships) of which the shares are freely negotiable on a regulated market or market organised by a multilateral negotiation system.

    These companies are indicated in this document, for ease of reading, by the term "listed companies". Other companies, referred to as "unlisted" are exempt from filing these documents:  
    - the annual management report. "Unlisted companies" are exempt from filing the annual management report. They should solely make the annual management report available to any person making such a request. 
    However, filing the annual management report of the company is maintained insofar as this includes consolidated accounts and that, in this framework, the annual management report of the group which it must also draft is included in its own annual management report. Indeed, for companies drafting consolidated accounts, filing an annual management report is still compulsory. On the other hand, if the annual management report of the group (for companies concerned) is not included in the annual management report of the company, it is not bound to file the latter.
    More widely, the annual management report allows company directors (for instance, the manager in the case of an SARL) or management boards (for instance the board of directors in the event of a limited company) to report to the deliberating body (generally the general meeting) on the company, management and the situation during the past year. The annual management report accompanied by annual accounts which it can clarify. In this report, indication is also made, notably, of company activities in research and development, major events occurring at the end of the year and the date when the report is established as well as the likely development of the company over the short term;
    Good to know: companies in the form of an EURL and SASU are exempt from the obligation of drafting a management report and therefore providing this document where, on the one hand, their sole member, a physical person, assumes management or chairmanship alone or on the other hand, the company does not surpass two of the following three thresholds at the end of the financial year: balance sheet total: 1,000,000 euros; total pre-tax turnover: 2,000,000 euros; average number of employees during the financial year: twenty 

    - the chairman's report, where applicable, of the board of directors or supervisory board concerning company management, on the terms and conditions for preparation and organisation of works of the board and internal management and risk management controls implemented by the company;
    Good to know: however, amongst "listed" companies, only limited companies or limited liability partnerships whose shares are accepted for negotiations on regulated markets are concerned by the obligation of filing this report. This obligation is not applicable to companies for which shares are "listed" but on Alternext, a market which is organised in line with a multilateral negotiation system. 

    - the report by auditors presenting their observations on the part of the report previously indicated concerning internal controls procedures and risk management procedures and processing account and financial management;
    Good to know: however, amongst "listed" companies, only limited companies or limited liability partnerships whose shares are accepted for negotiations on regulated markets are concerned by the obligation of filing this report. This obligation is not applicable to companies for which shares are "listed" but on Alternext, a market which is organised in line with a multilateral negotiation system. 

    - the table summarising delegations in force granted for capital increases by the general meeting of shareholders where applicable to the board of directors, management board or director; 

    - the profit and loss account for the last five financial years,

 

Frequency and deadline for the obligation to file documents

Filing annual accounts and their related documents should take placeonce per annum and by the latest seven months following the end of the financial year. Indeed, these documents should be filed by the latest within one month following approval (or refusal of approval) of accounts, where applicable, by the meeting of members, shareholders or by the sole member. However, this approval must be issued within six months following the end date of the previous financial year.
However, an extension of 6 months to the deadline to approve accounts may be granted by the presiding judge at the Commercial court upon application by the legal representative of the company, preferably presented prior to expiry of said deadline. It is recommended to outline in the application an estimated additional deadline to be requested as well as the reasons.
Moreover, where the deadline of one month to file accounts following approval (or refusal) is expired, it is still possible to file accounts at any time.
Good to know: consequently, in a EURL and SASU, the sole member, a physical person, is alone responsible for management or chairmanship of the company, with these companies being exempt from the obligation of filing the decision constituting approval of annual accounts by said member as, legally, filing with the registry office of the inventory of the annual accounts, duly signed by the legal representative (for the original copy) or signed and certified as true and certified (in the event of a copy) shall constitute approval thereof by the sole member. In other words, where these companies are in the situation already outlined, the deadline to be respected to file annual accounts is six months following the end of the financial year and not seven months.

If the documents are filed electronically, the deadline will be increased to two months.

For commercial entities having their registered office abroad and having opened in France one or more offices (branches), documents to be filed are those for companies having established, controlled and published in the State where they have their registered office. Consequently, these documents should be filed with the French registry office with jurisdictional competence within the deadline for which provision is made by the legislation in this State.

If the deadline for filing has passed, the registry office should issue a reminder, or several automatic reminders where necessary.

 

Objective of the obligation to file accounts: publication of annual accounts

Immediately following filing of annual accounts and their related documents with the Trade and Companies Register, the clerk shall publish a notice on the BODACC (Official Journal of Civil and Commercial Announcements) indicating completion of this formality.

Filing and publication of annual accounts and related documents shall give a public nature to these accounts and documents as required by the obligation to file annual documents as the responsibility of some companies. Consequently, any interested party may, in principle, freely consult these documents, notably online.

File company accounts
Order a company's annual accounts