Although the deadline for submitting annual financial statements has passed, there are still cases when companies have not yet managed to submit them.
One of the most frequently mentioned reasons is the delay in audit procedures due to the lack of auditors and their availability, but this is not the only reason why companies are late in submitting their annual financial statements.
From our practice we can see that often when managers of foreign capital companies, who are usually not Lithuanian citizens, are not sufficiently familiar with the nuances and obligations of Lithuanian laws.
What are the other reasons for not submitting annual financial statements on time? We would like to single out the most common ones that occur in practice:
- Managers do not take into consideration that regardless of the company’s registration date, even if it was the last day of December of the previous year, the obligation to submit annual financial statements immediately arises. This year, we received a number of new requests regarding the late preparation of financial statements, when managers did not expect that this obligation existed for a company that had been operating for only a few days or weeks;
- If the company’s activities are suspended, there are no employees, no tax returns need to be submitted, but the obligation to submit annual financial statements remains;
- Sometimes the fact that the mandatory audit is required reveals only at the end of the financial year, and at that time it is extremely difficult to find available auditors.
Although companies are not maliciously late in filing their annual reports, the consequences for companies can be serious. For more than a year now, the Registry Center has been inspecting companies, sending reminders and notifications, extending deadlines of submission, but eventually sanctions can be applied.
What risks can companies face for not submitting annual financial statements:
- Liquidation of the company at the initiative of the Registry Center;
- Administrative fine for the company manager (from 600 to 1,450 Euros);
- The company may be excluded from public procurement procedures;
- Insurance companies may refuse to insure;
- A company may lose the opportunity to receive state financial support;
- Reputational damage against partners and employees.
In addition, please note that not only legal entities established in the Republic of Lithuania, but also branches of foreign legal entities operating in Lithuania have the obligation to submit financial statements. In the latter case, the financial statements of the founder of the branch must be submitted to the Registry Center.
We recommend that managers assess possible obstacles and difficulties for submitting the FS on time and prepare better for the coming years. Now is also the most suitable time to search for audit providers for the next year, so that your business stays compliant and an example of a socially responsible organization.