Commercial societies often face the following situation: after submitting a registration form, a deed of change of administrators, a capital increase, a change of denomination or address, and so on in the Commercial Registry (CR), they receive the following notification:
“Defective Qualification The Commercial Registrar has resolved not to apply for the registration requested due to the Closing of the Registration Form because the Annual Accounts have not been deposited.”
As we discussed in a previous article, one of the main obligations of commercial societies is to submit their annual accounts to the CR. Therefore, if after one year from the closing date of the fiscal year they have not been deposited, the MR will proceed to close the registration form. This follows from Article 378 of the Regulations of the Commercial Registry (RCR).
However, the Regulation of the Commercial Registry (RCR) allows – exceptionally – the registration of the following documents, despite the closing of the registration form:
- The titles related to the cessation or resignation of Administrators, Managers, General Directors or Liquidators.
- The revocation or waiver of powers.
- The dissolution of the company and the appointment of liquidators.
- The registration entry records ordered by the judicial or administrative authority.
Another exception to the closing of the registration form is when the company does not deposit the annual accounts because they have not been approved by the General Shareholders Meeting. What happens in these cases? The article 378.5 RCR establishes that the closing of the registration form will not proceed, provided that the company has accredited such circumstance through (i) certification of the administration body with legitimized signatures, stating the reason for the lack of approval, or (ii) presenting an authorized copy of the notarial minutes of the General Shareholders Meeting. Such documents must be submitted to the CR before the one year period from the close of the fiscal year and will be subject to registration and publication in the BORME.
Having explained the above, let us give as an example a company that closes the fiscal year on December 31, 2017 (fiscal year 2017). What happens if you do not deposit the annual accounts for the year 2017 on December 31, 2018? Given this fact, the CR will proceed to the provisional closure of the registration form, leaving a record of this.
The immediate consequence of closing the registration foRC is that no act or document can be registered. Therefore, these acts will not enjoy registration publicity and society will be considered for all purposes, as an “irregular society”, especially in front of all those who contract and relate to it. This circumstance can be consulted at any time, since, as is known, the RC is a Public Registry.
Likewise, the closing may entail a fine by the National Institute of Accounting and Auditing of Accounts (ICAC), for an amount of between 1.200 and 60.000 euros (depending on the volume of the company) even if the turnover is higher than the 6 million euros per year, the fine could amount to 300.000 euros.
On the other hand, as it is the deposit of accounts, one of the basic obligations of the company’s administrator (must formulate them, call the Meeting of Members for approval and proceed to its subsequent deposit in the CR), the breach of this obligation can give rise to the exercise of the action of liability against the administrator, by a creditor of the company or even by a partner, for not having acted with due diligence.
In any case, it is convenient to present the annual accounts, even after the deadline, as soon as possible, to minimize the impact of the aforementioned sanctions / actions.
Finally, in order to proceed with the reopening of the registration form, the company must prepare and deposit the annual accounts for the last three fiscal years. Following the previous example, in order to deposit the annual accounts for the year 2017, once the closing date has been verified, the years 2014, 2015 and 2016 must be deposited.
Once deposited and qualified correctly by the CR, the registration form will be automatically opened.