What is a company report and when should it be prepared?

Who is the company’s activity report intended for?

As a general rule, in accordance with Section 49 of the Accounting Act, the submission of reports on the company’s activities applies to:

• capital companies and limited joint-stock partnerships;
• those general partnerships and limited partnerships in which all partners bearing unlimited liability are capital companies, limited joint-stock partnerships or companies from other countries with a legal form similar to those of such companies
• mutual insurance companies, mutual reinsurance companies, cooperatives and state-owned enterprises
• specialised open-ended investment funds, closed-ended investment funds and alternative investment companies

Thus, for example, if a limited partnership has a general partner that is a limited liability company, that general partner should prepare a report on the entity’s operations. However, if one of the general partners of the partnership is a natural person, this obligation does not apply.

Report on the entity’s activities – exemptions

However, in accordance with the further provisions of the aforementioned regulation, a micro-entity which is required to prepare a report on the entity’s activities (i.e. one meeting the conditions set out above) may refrain from preparing such a report, provided that, in the notes to the financial statements, or if it provides supplementary information to the balance sheet, it discloses information regarding the acquisition of own shares.

Similarly, a small entity which is required to prepare a report on the entity’s operations may refrain from preparing such a report, provided that it discloses information regarding the acquisition of own shares.

Micro and small entities are defined in the Accounting Act. These include, amongst others, entities which:

• in the case of micro-entities: in the financial year in which they commenced operations, did not exceed at least two of the following three thresholds:

1. PLN 1,500,000 – in respect of total balance sheet assets at the end of the financial year,
2. PLN 3,000,000 – in the case of net revenue from the sale of goods and products for the financial year,
3. 10 persons – in the case of average annual employment calculated on a full-time basis

• in the case of small entities: in the financial year in which they commenced operations or began keeping accounts in the manner prescribed by law, they did not exceed at least two of the following three thresholds:
  1. PLN 25,500,000 – in the case of total balance sheet assets at the end of the financial year,
  2. PLN 51,000,000 – in the case of net revenue from the sale of goods and products for the financial year,
  3. 50 persons – in the case of average annual employment calculated on a full-time equivalent basis.

If the notes to the financial statements or the supplementary information to the balance sheet indicate that the Company did not acquire its own shares during the financial year in question, the preparation and submission of the report on the Company’s activities may be waived**.** However, if such information is not included in the documents, such a report should be prepared.

Who prepares the report on the Company’s activities

The report on the entity’s (company’s) activities is prepared, together with the annual financial statements for the relevant financial year, by the head of the entity. Depending on the company’s legal form, the head of the entity is:

• a member of the management board or another governing body, and if the body consists of several persons – all members of that body – in the case of companies limited by shares
• the partners managing the company’s affairs – in the case of a general partnership and a civil law partnership
• the partners managing the company’s affairs or the management board – in the case of a professional partnership
• general partners managing the company’s affairs – in the case of a limited partnership and a limited joint-stock partnership

A liquidator, receiver or administrator appointed in restructuring proceedings, as well as a succession administrator, is also considered to be the manager of the entity.

Approval and submission of the management report

The report on the company’s activities should be approved at a meeting or general meeting of the company, at which the financial statements are also approved, discharge is granted to the members of its governing bodies, and the method of profit distribution or loss coverage is determined. If a company referred to in Article 49 of the Accounting Act is not required to prepare this activity report due to the specified exemptions, the approving body may adopt a resolution to waive the preparation of the entity’s activity report. It should be noted that an analysis must be carried out in each financial year to determine whether the report in question needs to be prepared.

The submission of the activity report takes place simultaneously with the submission of the financial statements and the approving resolutions to the Financial Documents Repository. The document format is unrestricted, i.e. it may be prepared in XML, DOC, DOCX, PDF or another format. The activity report should be signed with a qualified electronic signature, a trusted signature or a handwritten signature by the entire Management Board or by the partners bearing unlimited liability for the company’s obligations.

Penalties for failure to submit the company’s activity report

Failure to submit the company’s activity report, where this was mandatory, may result in liability. As provided for in the Accounting Act, anyone who, contrary to the provisions of the Act, fails to file financial statements, consolidated financial statements, or a report on the company’s activities … with the relevant court registry is liable to a fine or a custodial sentence.

If you require legal assistance regarding the company’s activity report or any other matter, HWW Hewelt Wojnowski Lindner i Wspólnicy is at your service.

Author

Zuzanna Bokina-Kielbasa

Radca prawny, Managing Associate

Specializes in corporate services for business entities and personal data protection. Assists the firm's clients in the preparation of all corporate documentation, including the registration of commercial companies and the further registration of changes, and provides ongoing and comprehensive advice on business. Provides advice in carrying out transformation processes of commercial companies, including transformations and mergers. Prepares and gives opinions on contracts, regulations and current documentation…

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