What to remember when approving your financial statements? We are here to tell you!

Do you close your fiscal year at the end of the calendar year? In that case, you are obliged by law to review and approve your financial statements at the General Meeting by 30 June 2024. This means there is not much time left. In the following article, we will summarise the rules for the two most common forms of business in the Czech Republic, namely a limited liability company and a joint-stock company.

Method of convening the General Meeting 

The constituent documents (the Deed of Foundation and Memorandum of Association in the case of a limited liability company and the Deed of Foundation or Articles of Association in the case of a joint-stock company) may regulate both the deadline for convening the General Meeting and the manner of delivery of the convening notice. The General Meeting of a joint-stock company is convened by the Board of Directors or the Management Board and the General Meeting of a limited liability company by the Managing Director. Today, convening notices are commonly sent by email. The General Meeting convening notice should include the venue, date and time of the General Meeting as well as the draft resolution(s). A joint-stock company is obliged to post the General Meeting convening notice on its website (at least 30 days before the meeting). The General Meeting must be convened at least once a year.

If your company has a sole member or shareholder, the financial statements can only be approved by a decision of that sole member or shareholder acting in the capacity of the General Meeting.

Course of the General Meeting 

The General Meeting is the supreme body of both a limited liability company and a joint-stock company.

Members or shareholders usually attend the General Meeting in person; alternatively, they may appoint a proxy to represent them via power of attorney. Also present are the Board of Directors and Supervisory Board in the case of a joint-stock company (a.s.) and the Managing Director(s) in the case of a limited liability company (s.r.o.). Other invitees, such as experts and advisors, may also attend the General Meeting. If the company’s constituent documents allow it, the General Meeting may also be held in another form – online via videoconference or in writing (per rollam).

The object of the General Meeting is most often the approval of the financial statements. If you close your fiscal year at the end of the calendar year, the financial statements must be reviewed by 30 June of the following year.

It should also be remembered that other items to be discussed at the General Meeting may include, for example, distribution of profits (dividends), amendments to the Memorandum of Association, changes to the amount of the share capital (registered capital), dissolution of the company, remuneration to the governing body, incumbency contracts and other matters.

Consolidated financial statements?

An accounting entity that is a business company and is the controlling party is required to prepare consolidated financial statements. Such financial statements present the overall profit or loss of the group of companies as a whole. This type of financial statement can be important for e.g. banks, creditors or potential investors.

As in the case of ordinary financial statements, the General Meeting is also responsible for approving the consolidated financial statements and, in the cases provided for by law, the interim financial statements, the distribution of profits or other funds of the company and the settlement of losses.

What to do after the financial statements have been approved? 

Once approved, you are obliged to deposit the financial statements in the Collection of Deeds of the Commercial Register. Audited companies must also deposit the annual report and the auditor’s report. The deadline for depositing these documents is 30 days from the General Meeting. You can also ask the tax office to submit the documents to the Collection of Deeds together with your tax return.

Penalties for non-compliance 

If you do not file your financial statements in the Collection of Deeds, the registry court may impose a fine of up to CZK 100,000. In case of long-term non-cooperation with the registry court, your company may be dissolved.

Specific rules for audited companies 

For audited companies, in addition to the financial statements, the annual report and the report on relations also need to be approved. These documents must be certified by an auditor. The General Meeting often also appoints the auditor for the following fiscal year.

Do you need assistance with convening the General Meeting, approving the financial statements and other follow-up steps?

Our Corporate Services team is here for you.