The obligation to file financial statements in the collection of documents in the Czech Republic does not lapse with the passage of time. The court may ask a company to add financial statements of as early as 1996 and impose a fine if the company fails to do so.
Financial statements and annual reports are one of the key documents of a company and contain sensitive information on the company’s business and its economic situation. In spite of this or for that reason, the law requires that all companies file their financial statements and/or annual reports in the collection of documents of the Companies Register. Documents from the collection of documents are digitized and publicly available on the Internet as part of access to the Companies Register on the website of the Ministry of Justice at www.justice.cz.
The obligation of companies to file documents in the collection of documents arises from the Business Corporations Act and, in the case of accounting documents, also from the Accounting Act. Companies are obliged to file the financial statements and the annual report within 30 days of the audit thereof (if audited) and approval by the relevant body (approval by the general meeting), however, no later than 12 months after the balance sheet date. For example, the financial statements prepared as of 31 December 2019 must be published in the collection of documents by the end of 2020. The obligation for companies to file accounting documents has been in effect since 1996, and the first financial statements that companies were required to disclose were those for the year 1996.
A number of companies do not file financial statements in the collection of documents or file them in illegible format to protect information on their economic situation. If a company fails to file documents which it is legally obliged to file in the collection of documents, it may be requested by the court to add them, and if it fails to submit them even after that, the court may impose a fine upon the company in the amount of up to CZK 100,000. As this is a disciplinary fine, this fine may be imposed repeatedly.
A more significant penalty is the penalty under the Accounting Act according to which the tax administrator may impose a fine of up to 3% of the company’s assets on the company for its failure to file the financial statements.
The obligation of the company to file documents in the collection of documents does not expire with time. As the High Court in Prague confirmed in October last year, the law does not imply that “the lapse of a certain period with no result results in expiry of the obligation to file the prescribed documents (company financial statements) in the collection of documents of the Companies Register (High Court in Prague, file No. 7 Cmo 59/2019).” Therefore, the register court may still today request the filing of historical financial statements, for example from the 1990s, and impose disciplinary fines for the failure to submit them.
The obligation to file documents in the collection of documents applies even after the expiry of the shredding periods. A Company may not even shred historical financial statements unless it has met its obligation to publish them in the collection of documents (see High Court in Prague, file No. 7 Cmo 455/2016). A change in the shareholder of a company can be an excuse for not filing the documents neither. It is therefore necessary, when acquiring holdings in companies, to check the filing of mandatory documents in the collection of documents or, as applicable, to require the filing or at least submission thereof.
For the sake of completeness, I should add that the two decisions referred to above concerned appeals against the decision of the register court to impose a disciplinary fine for not filing the financial statements in the collection of documents. The decisions did not concern the imposition of a fine under the Accounting Act. Nevertheless, I am of the opinion that the obligation to file financial statements in the collection of documents continues and does not expire even under the Accounting Act and that the tax administrator could similarly also impose a fine.
Act No. 563/1991 Sb. (Collection of Laws), the Accounting Act
Act No. 304/2014 Sb. (Collection of Laws), on Public Registers of Legal Entities and Natural Persons and on the Registry of Trusts
High Court in Prague, file No. 7 Cmo 59/2019
High Court in Prague, file No. 7 Cmo 455/2016