Among the many obligations that weigh on commercial companies are those relating to the annual financial statements drawn up at the close of each financial year (Article L123-12 of the French Commercial Code).
Nevertheless, in order to reduce the burden on entrepreneurs, simplified procedures for the presentation of financial statements, as well as for the management report, have been set up by the legislator in the event that the company can be described as medium-sized, small or micro-company (Articles L. 123-16, par. 1 and 2 and L. 123-16-1 of the French Commercial Code).
A recent communication from ANSA clarifies the scope of these simplified procedures.
• The simplified procedures
– Medium-sized companies (moyennes entreprises) are companies that do not exceed two of the following three thresholds: a balance sheet total of 20,000,000 euros a net turnover amount of 40,000,000 euros and an average number of employees employed during the financial year of 250.
Such companies may adopt a simplified presentation of their income statement and may request that only a simplified version of their balance sheet and annex be made public.
– Small companies (petites entreprises) are companies that do not exceed two of the following three thresholds: a balance sheet total of 6,000,000 euros a net turnover amount of 12,000,000 euros and an average number of employees employed during the financial year of 50.
These companies may adopt a simplified presentation of their financial statements and request (with some exceptions) that their income statement not be made public.
They are also (with some exceptions) exempted from drawing up a management report.
– Micro-companies (micro-entreprises) are companies that do not exceed two of the following three thresholds: a balance sheet total of 350,000 euros, a net turnover of 700,000 euros and an average number of employees during the financial year of 10.
Micro-companies may draw up a less detailed balance sheet and income statement when they do not have any employees and have been put on stand-by.
They are also (with exceptions) exempt from drawing up an annex and may request (with exceptions) that their financial statements not be made public.
Excluded from these simplified procedures are financial institutions, insurance companies and assimilated, companies whose financial securities are admitted to trading on a regulated market and people calling on the generosity of the public.
• Are these simplified procedures applicable to newly incorporated companies?
The French Commercial Code states that, when a company exceeds or ceases to exceed two of the three thresholds referred to above, this event has an impact on the right to benefit or not from a simplified procedure only if it occurs during two consecutive financial years.
Considering this reference to “two consecutive financial years”, what about the companies that have just been incorporated? Can they benefit from a simplified procedure when they have only closed one financial year?
National Association of Joint Stock Companies (ANSA) has recently specified that the said two-year period is stated only for assessing a possible change of company category but that it does not prevent newly incorporated companies from benefiting from the relief measures provided by the French Commercial Code (Ansa communication, Legal Committee no. 23-009 of 1-2-2023).
A company may therefore, at the end of its first financial year, determine whether or not it exceeds two of the three thresholds and, if it does not, benefit immediately from the simplified procedure. The company will obviously have to change categories if it exceeds two of the three thresholds at successive closure of its second and third financial years.
To assist you in the steps necessary for the annual operations related to the financial statements of your company, do not hesitate to contact our corporate team.