Financial Statements in General
An accountable entity must prepare financial statements for each financial period, being typically 12 months. The following discusses the provisions applicable to financial statements primarily from the point of view of a limited liability company.
In a limited company, the Board of Directors and the Managing Director are responsible of preparing the financial statements.
The financial statements comprise the balance sheet, profit and loss statement, cash flow statement and the notes to financial statement. The financial statements contain information relating to a company’s operating result, capitalization and financial standing. Financial statements of limited liability companies must be submitted for registration to the trade registration within the statutory time period [Trade Register]. Pursuant to the registration, the financial statements will become public information. For other forms of incorporation, the obligation to submit financial statement for registration depends on the size of the corporation.
According to the Companies Act, a parent company shall always prepare consolidated financial statements if such parent company is
a public limited liability company or
a private limited liability company that distributes profits to its shareholders.
If a private limited liability company that is a parent company does not distribute profits to its shareholders, then there is no obligation to prepare consolidated financial statements in the following circumstances:
a) no more than one of the following thresholds has been exceeded, for the parent company and its subsidiaries in the aggregate, during the closing financial period and the financial period immediately preceding the closing financial period:
consolidated revenue or other corresponding earnings equals 7,300,000 euros,
total balance sheet value equals 3,650,000 euros, and
the number of employees equals, on average, 50 persons (such companies are often referred to as small accountable entities).
All intra-group transactions shall be excluded from the above figures.
b) no less than 90 % of the parent company is owned by a company registered in an EEA Member State, the minority shareholders have consented to the non-preparation of consolidated financial statements, and the financial statements of the parent company and the subsidiaries have been consolidated in the financial statements of such foreign parent company.
Consolidated financial statements are prepared as a combination of the balance sheets and profit and loss statements and notes to financial statements of the group companies. The consolidated financial statements shall have the same date as the date of the parent company's financial statements. The consolidated financial statements shall describe the group's operating result and financial standing as though the group companies were a single entity. The effect of all intra-group transactions shall be eliminated. Such intra-group items include first and foremost intra-group revenue and expenses, intra-group receivables and debt, intra-group distribution of profits, and intra-group margin included in the balance sheets of the group companies.
The financial period 0f a subsidiary that is included in the consolidated financial statements shall correspond to that of the parent company, unless the Accounting Board grants an exemption on special grounds. Should the financial period of such consolidated subsidiary end more than three months prior to, or more than three months following closing of the financial period of the parent company, the consolidated financial statements shall include such subsidiary’s interim financial statements prepared as per the date of the parent company’s financial statements. Otherwise, it will be sufficient if the consolidated financial statements contain sufficient details on events that affect evaluation of the financial standing of such subsidiary and that have occurred between the date of the subsidiary’s financial statements and the consolidated financial statements.