Deadline for filing annual reports approaching

The Law on Annual Financial Statements and Consolidated Financial Statements requires all companies to file an annual report approved by the shareholders’ meeting and auditor’s statement on the annual report (for companies that meet the criteria listed in law, as well as companies whose articles of association or shareholders’ meeting require the annual report to be reviewed by an auditor) with the State Revenue Service (SRS), no later than one month after approval by observing the deadline that is set based on the criteria applicable to the companies:

  • micro and small companies must file an approved annual report for the year 2025 to the SRS no later than five months after the end of the reporting year. This means that if a company’s reporting year is the same as the calendar year, the deadline is 31 May, while
  • medium and large companies and parent companies of a group that prepare a consolidated annual group report, must file an annual report and consolidated annual report (if prepared) with the SRS within seven months of the end of a company’s reporting year. If a company’s reporting year is the same as the calendar year, the deadline is 31 July.

Under the Commercial Law, before the annual report is approved, the management board must prepare a proposal on the distribution of profit or, if the company has incurred losses, on measures to improve the company’s financial position. If the company has a council, the council must also prepare a report on the annual report and the management board’s proposal. In addition, under the Law on Groups of Companies, a dependent company is required to prepare and file a statement of dependence with the Commercial Register unless a group agreement has been concluded.

The annual meeting of shareholders regarding the approval of the annual report must be held no later than the deadline mentioned above. A notice convening the meeting must be sent to the shareholders of private limited liability companies at least two weeks before the meeting, while for joint-stock companies the notice must be given at least 21 days before the meeting.

Companies must ensure that shareholders have uninterrupted free-of-charge electronic access to the documents (including the option to save and print the documents) to be reviewed at the meeting (including the annual report, a statement of dependence, an auditor’s statement, a report from the council and a board proposal) starting from the date the notice on convening the meeting was sent out and continuing for at least one year after the meeting. If the company is unable to provide electronic access to the documents for technical or other reasons or the shareholder is unable to access the documents for justified reasons, the documents must be sent to the shareholder free of charge or otherwise made available free of charge at least 14 days before the meeting.

The Commercial Law allows the management board to convene a shareholders’ meeting, enabling the shareholders to participate and vote at the meeting by electronic means of communication.

The annual report, along with the details of the approval of the annual report by the shareholders’ meeting, must be filed with the SRS.

The annual report must be signed not only by the management board or an authorised member of the management board but also by the company’s in-house or outsourced accountant (criteria are listed in the Law on Annual Financial Statements and Consolidated Financial Statements, and the co-signing duty of the accountant applies to the financial statements and consolidated financial statements).

In relation to the requirement to draft a statement of dependence under the Law on Groups of Companies, we would like to draw your attention to the fact that noncompliance with this requirement formally exposes the management board members to higher liability risk. This is especially important for companies entering into agreements with related parties and for companies with several shareholders. We have noticed that companies sometimes fail to comply with the requirement to prepare a dependency statement. For risk management reasons, we ask management boards to comply with this requirement and to prepare dependency statements.

What to consider when convening a shareholders’ meeting

When you send invitations to shareholders’ meetings, do not forget to indicate a procedure whereby the shareholder can use his/her statutory rights, as well as deadlines:

  • to vote before the shareholders’ meeting;
  • to participate and vote at the shareholders’ meeting by electronic means of communication.

We advise supplementing the invitation with a voting ballot and instructions for signing and returning it to the company. In this case, it is important to clearly state the requirements for the identification of the shareholders. The shareholder shall send the vote to the company, keeping in mind that the company should receive the voting ballot at least one day before the meeting.

To ensure shareholders’ ability to participate and vote at the meeting by electronic means of communication, the management board must stipulate how it intends to identify the shareholders.

Rights to distribute disproportionate dividends

We would like to draw your attention that the shareholders may distribute the dividends not only in proportion to the nominal value of their shares, but also on a disproportionate basis, provided that such other procedure for the distribution of dividends has been stipulated in the Articles of Association (AoA) of the company.

The AoA of the company may be amended at the same shareholders’ meeting at which the approval of the annual report and the distribution of profit are on the agenda, provided that the matter of amending the AoA has been included in the notice convening the shareholders’ meeting. The matter of amending the AoA must be addressed before the approval of the annual report and the distribution of profit.

Please feel free to contact us in case of any questions.