In this post we are going to refer to the auditors from the point of view of some aspects of their commercial regulation, that is, who appoints them and how said appointment is revoked; These issues are regulated in articles 263 and concordant of the current Capital Companies Law (LSC).
The auditors are professionals to whom Spanish law attributes the verification of the management report and the annual accounts of the capital companies, although not all companies are required to carry out audits, as we explained in the previous post.
But beware, because although a certain company is not legally obliged to be audited, said audit may be mandatory if partners that represent at least 5% of the share capital of the entity in question request it from the mercantile registrar of the registered office.
It is the General Meeting of Partners (SL) or Shareholders (SA), duly called for this purpose. The appointment of auditors in any case must to be made by agreement adopted before the end of the year to be audited and also for an initial period of time that in no case may be less than three years or more than nine years (from the date on which start the first exercise to be audited).
Can the auditors be dismissed at any time and without just cause ?
No, contrary to what happens with the administrators of a mercantile company, which can be terminated at any time and without just cause by agreement of the General Meeting, in the case of the company’s auditors, the LSC provides that the auditor can not be dismissed before the end of the initial period for which he was appointed, unless there is just cause (eg a serious breach of his duties). This is a measure that seeks to safeguard the independence of the auditing tasks carried out by the auditors, against pressure that partners and / or administrators of the companies that hire them may try to exercise.
The purpose of the annual accounts audit of commercial companies is to guarantee that the accounting of the company faithfully reflects its economic situation: rights, obligations, assets, liabilities and results of the operation of the business.
This is to protect the interests of both the partners of the company in question (and especially their right to information), as well as third parties that contract or plan to contract with it (eg suppliers, customers, financial entities o Public administrations).
Having said this, the Capital Companies Law (LSC) perfectly establishes which companies have a legal obligation to submit their annual accounts and the management report of their administrators to an auditor; According to the LSC, all companies are required to be audited, except those in which at least two of the following three requirements are present:
- a) The total assets of the company are less than 2,850,000 euros.
- b) The net amount of its annual turnover is less than 5,700,000 euros.
- c) The average number of workers employed during the fiscal year does not exceed 50.
In order for a company that is not required to be audited , it is necessary according to the LSC that it does not meet at least two of the three requirements during two consecutive financial years. The law also exempts companies from their constitution, merger or transformation from this obligation to audit annual accounts during the first year.
At this point, it must be remembered that although a certain company does not have a legal obligation to submit its annual accounts to an audit, it must also audit its accounts if requested in due time and form by the entity’s partners who represent at least five per percent of the share capital.
Said request must be made either to the Mercantile Registrar or to the Legal Secretary of the registered office; The cost of said audit at the request of the partners must be borne by the company itself. However, in order for partners to demand that a certain financial year be audited, no more than three months may have elapsed since its closure.