Failure to file annual accounts with the Commercial Registry and personal liability for company debts

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Omisión del deber de depositar cuentas en el Registro Mercantil y responsabilidad personal por deudas sociales

Failure to file annual accounts with the Commercial Registry and personal liability for company debts

Why is it mandatory to file annual accounts with the Commercial Registry? What are the consequences of not doing so? Can it lead to liability for social debts? In this article, we will examine the applicable regulations, the process of filing annual accounts, the consequences of non-compliance, and measures to avoid such liability.

The obligation to file annual accounts with the Commercial Registry

The Spanish Capital Companies Act (Arts. 279 et seq.) and the Commercial Code (Arts. 25 et seq.) establish the obligation for commercial companies to file their annual accounts with the Commercial Registry. The objective of this regulation is to ensure corporate transparency and protect the interests of third parties.

Filing annual accounts allows creditors, investors, employees, among others, to obtain relevant financial information about the company’s economic situation. This is a fundamental aspect of transparency for the proper functioning of the market and informed decision-making.

Therefore, companies are required to file their annual accounts with the Commercial Registry within six months of the end of the financial year. Prior to that, they must be approved by the General Meeting of Shareholders, along with the social management and application of results. Additionally, when necessary, the accounts must be audited.

Consequences of failing to file annual accounts

However, failure to file annual accounts may result in administrative sanctions, including fines. The Institute of Accounting and Auditing of Accounts (ICAC) is the body responsible for imposing these sanctions, which can be significant (see Art. 283 of the Spanish Capital Companies Act).

Another consequence of this non-compliance is the registration closure of the company. Thus, the Commercial Registry will refuse to register other acts and documents (see Art. 282 of the Spanish Capital Companies Act), with the serious consequences that this may entail.

Although failure to file annual accounts does not generate personal liability for social debts, nor is it sufficient to understand that the company is in a situation of dissolution due to inactivity or losses, case law has stated that it has the consequence of reversing the burden of proof in the event that a third party alleges it in a judicial proceeding.

In this case, administrators will be required to prove that there is no cause for liquidation alleged by, for example, social debt creditors. Otherwise, they may be held liable for social debts in accordance with the regulations for cases of failure to dissolve the company.

Liability of administrators for company debts:

Therefore, in the case of social debts that reduce net worth of the company below half of the share capital, or in the case of inactivity of the company, administrators will have the obligation to convene the General Meeting of Shareholders from the moment the cause of dissolution occurs, in order to adopt the dissolution agreement or others necessary to avoid dissolution.

It should be noted that Article 367 of the Spanish Capital Companies Act establishes that social administrators will be jointly and severally liable for social obligations that arise after the cause of dissolution.

Given that, as can be understood, when accounts are not filed with the Commercial Registry, it is difficult for third parties to determine whether these causes of dissolution exist, case law indicates that, when the liability of administrators is alleged for debts after the failure to file annual accounts, alleging the possible existence of a cause for dissolution of the company, the burden of proof will be reversed and social administrators will have to prove that there was no duty to take the necessary actions to dissolve the company.

Conclusions: it is better to file annual accounts annually than to have to prove them in the future

In conclusion, the failure to deposit the annual accounts of a company in the Mercantile Registry can have serious implications for the company and its administrators. 

Throughout the article, we have analyzed the consequences of this omission, such as administrative sanctions, the inability to register other acts and documents in the Mercantile Registry, and the potential personal liability of administrators for social debts. But even more, it also affects the commercial credibility of the company that omits this duty to deposit accounts in front of suppliers, creditors, and customers.

For this reason, it is advisable to adopt internal control and supervision measures to ensure compliance with these obligations and to seek advice and support from expert professionals in the field. 

If you are an administrator of a company, make sure to deposit the annual accounts or have another member of the administration body do so, directly or through professionals. Remember that if you do not do so, you incur an unnecessary risk to your personal assets.

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