In addition to the financial statements, which we wrote about in one of our recent articles, the reporting obligations of commercial companies also include the preparation of a company activity report. Must all companies prepare such a report? What should it contain, and how and where should it be filed? We answer these questions in today’s article.
Which companies must prepare an activity report?
The obligation to prepare and file an activity report applies only to selected commercial companies. Such a report is prepared by:
- Capital companies (i.e., limited liability companies and joint-stock companies);
- Limited partnerships;
- General partnerships and limited partnerships – provided that all partners bearing unlimited liability in these companies are:
- Capital companies;
- Limited partnerships;
- Foreign companies whose legal form corresponds to those mentioned above.
Must each of these companies prepare an activity report annually?
The answer to this question is no. Even if a commercial company operates in one of the legal forms mentioned above, it does not have to prepare an activity report if, at the same time:
- It has the status of a micro-entity – provided that it presents information on the acquisition of its own shares/stocks in the supplementary information to the financial statements;
- It has the status of a small entity – provided that it presents information on the acquisition of its own shares in the supplementary information.
A micro-entity is a company that, in the fiscal year for which it prepares financial statements and in the preceding year, did not exceed at least two of the following amounts:
- PLN 1,500,000 – the sum of assets in the balance sheet at the end of the fiscal year;
- PLN 3,000,000 – net revenue from the sale of goods and products for the fiscal year;
- 10 employees on average throughout the year – provided that the approving body of such a company has decided to prepare simplified financial statements.
A small entity is a company that, in the fiscal year for which it prepares financial statements and in the preceding year, did not exceed two of the following amounts:
- PLN 25,500,000 – the sum of assets in the balance sheet at the end of the fiscal year;
- PLN 51,000,000 – net revenue from the sale of goods and products for the fiscal year;
- 50 employees on average throughout the year – provided that the approving body of such a company has decided to prepare simplified financial statements.
Micro-entities and small entities also include companies that, in the fiscal year for which they prepare financial statements or in the preceding year, exceeded two of the amounts listed above, if they prepared simplified financial statements for the previous fiscal year.
What is an activity report?
If you know whether you must prepare an activity report for your company, you are probably wondering what it is.
An activity report of a company is a document containing essential information on the company’s financial condition and situation. It should include an assessment of the company’s results and indicate risk factors and describe threats to the company. A standard activity report should contain information on:
- Significant events affecting the company’s operations – which occurred in the fiscal year covered by the report and after its end, until the date of approval of the financial statements;
- The company’s projected development;
- The company’s most important achievements in research and development;
- The company’s current and projected financial situation;
- The company’s own shares, if any;
- Branches (plants) held by the company;
- Financial instruments held by the company.
Furthermore, if this is essential for the assessment of the company’s development, results, and situation, the activity report should also include:
- Key financial efficiency indicators related to the company’s operations;
- Key non-financial efficiency indicators related to the company’s operations;
- Information on employment and environmental matters.
When preparing an activity report, it is also necessary to remember its connection with the financial statements. If there is a link between the values indicated in the annual financial statements and the information indicated in the activity report, the latter should contain references to the amounts indicated in the financial statements.
Preparation of the Activity Report
The activity report should cover the same period as the annual financial statements. It is prepared as of the day ending the fiscal year, which usually coincides with the calendar year. For most companies, the date for which the activity report is prepared is therefore December 31.
The activity report must be prepared no later than 3 months from the date for which it is prepared. Companies whose fiscal year ends on December 31 must therefore prepare the activity report by March 31 of the following year.
The head of the entity is responsible for preparing the activity report. We wrote about who is specifically meant by this term in our previous article on the reporting obligations of companies.
Similar to financial statements, the company’s activity report is prepared electronically and signed with a qualified electronic signature, a trusted signature, or a personal signature. The rules for signing it and refusing to sign are analogous to those for financial statements, so we refer to the article in which we discussed this issue in detail. The only difference is that the activity report of the company is not signed by the person entrusted with keeping the company’s accounting books. Only the managers of the entity sign.
Approval of the Activity Report
After preparing the activity report, it must be approved by the appropriate body of the company. The report should be approved no later than 6 months from the date for which it was prepared. The activity report is approved by the resolution of the appropriate body – similarly to the financial statements. Both reports are approved at the same meeting or assembly of partners.
It should also be remembered that some companies are obliged to make the report available to partners or shareholders no later than 15 days before its approval. These include:
- Limited liability companies;
- Joint-stock companies;
- Simple joint-stock companies.
Filing of the Activity Report
The management board or partners managing the company’s affairs file the activity report with the appropriate court registry within 15 days of the approval of the annual financial statements.
The activity report is filed electronically via a telematics system – usually via the Financial Documents Repository.
Consequences of Failure to Prepare and File the Activity Report
For failure to prepare an activity report or for preparing one that does not comply with legal requirements, the management board or partners managing the company’s affairs are subject to a fine, imprisonment for up to 2 years, or both penalties concurrently.
Failure to file the activity report on time may lead the registry court to initiate compulsory proceedings. In such a case, the court will summon the management board or partners managing the company’s affairs to file the report under threat of a fine.
Summary
Just as with annual financial statements, when it comes to activity reports, the management boards or partners managing company affairs must remember many things. Above all, the report must contain all the required information, and the deadlines for its preparation, approval, and filing must be met. Fulfilling all these obligations can be challenging. In such situations, we invite you to contact the experienced lawyers from our Law Firm, who will help you to correctly and effectively complete the entire procedure.
