In an 11 March 2021 decision, the General Directorate of Legal Affairs (DGSJyFP) reiterated that the power to appoint an auditor of voluntary consolidated accounts lies with a company's general shareholders' meeting.
This decision settles a company's appeal of a Jaen registrar's refusal to register its decision to appoint the auditor of its voluntary consolidated accounts because such decision had been issued by its board of directors.
The decision revolved around whether the authority to appoint an auditor of voluntary consolidated annual accounts lies exclusively with a company's general shareholders' meeting (as argued by the registrar) or whether a company's board of directors can also appoint such auditor (as argued by the appellant). The crux of the matter was whether a company's board of directors can appoint an auditor if its consolidated accounts are being filed voluntarily after having also been sent for audit voluntarily or whether such appointment must be made by the general shareholders' meeting.
The registrar refused to register the aforementioned company decision, stating that the auditor could be appointed only by the appellant's general shareholders' meeting. The main argument in this respect was that the company was obliged to audit the consolidated accounts in accordance with Article 42 of the Code of Commerce, Article 264 of the Corporate Enterprises Act and Article 372 of the Mercantile Registry Regulations, regardless of the economic criteria and individual annual accounts.
Further, the registrar argued that the voluntary nature of the audit was not specifically stated in the certification submitted for filing, and that the appointment of the auditor for previous tax years had been made by the general shareholders' meeting.
The appeal was based on the fact that the appellant's consolidated accounts were voluntary (not obligatory, as had been suggested by the registrar) because they did not meet the thresholds requiring accounts to be presented set out in Article 6 of Royal Decree 1159/2010 (dated 17 September 2010), which approved the Consolidated Annual Accounting Standards. Instead, the appellant argued that the accounts could be filed in accordance with Article 7 of said royal decree because they did not exceed the limits set in Articles 8 and 258 of the Corporate Enterprises Act. Thus, the company highlighted the voluntary nature of the audit.
As such, the appellant argued that there was no obstacle to the board of directors appointing the auditor, even though the general shareholders' meeting could also have done so in the course of performing its duties in accordance with the law.
The DGSJyFP first confirmed that the company was presenting its consolidated accounts on a voluntary basis, although this fact did not influence the purpose of the appeal. In this sense, the DGSJyFP took the opportunity to remind all mercantile registries that they must bear in mind information already available in their registries when issuing ratings. In this case (specifically, when looking at the company's turnover, shares and employees as stated in previous tax years), it was clear that the auditor had been voluntarily appointed, despite the nature of the appointment not being explicitly stated in the certificate filed with the registry.
Emphasising this point, the DGSJyFP stated that in order to decide which authorising body had the power to appoint the voluntary auditor, it had to be determined whether the audit was of individual annual accounts or consolidated accounts.
There is absolutely no doubt that the DGSJyFP accepts that a board of directors can appoint an auditor of individual annual accounts.
However, with regard to consolidated annual accounts, which were the main point of discussion, the DGSJyFP referred to an announcement which it issued on 25 November 2015 and to Article 42 of the Code of Commerce, by which the general shareholders' meeting is named as the body authorised to appoint an auditor of consolidated annual accounts, regardless of whether the company must present them (as per Section 4 of said article) or whether the company presents them voluntarily (as per Section 6 of said article).
Given the literal and clear description of the rules, the DGSJyFP dismissed the appeal and stated that the general shareholders' meeting has the power to appoint an auditor of consolidated annual accounts, even when these have been presented on a voluntary basis.
For further information on this topic please contact Victoria Vilar at CMS Albiñana & Suarez de Lezo by telephone (+34 93 494 10 22) or email ([email protected]). The CMS Albiñana & Suarez de Lezo website can be accessed at www.cms.law.