News
Amendments to the Companies Law to incorporate the provisions of the EU Accounting Directive (2013/34/EU) into domestic Law.
Law 97(Ι) of 2016, which was published in the official gazette on 23 September 2016, amends the Companies Law Cap 113 in order to transpose the EU Accounting Directive (2013/34/EU) into domestic law.
The main amendment of the Companies Law, affecting mostly small or medium-sized (groups of) companies, are the abolition of the exemption from conducting audits, amendments of certain accounting and disclosure requirements and the inclusion of a definition of small, medium and large-sized companies based on their total gross assets, their turnover and the number of employees.
In order to fall within a specific category, at least two of the three measures must be below the prescribed threshold.
Categories of Companies and Groups
|
|
CRITERIA | ||
| Total Gross Assets (2) | Net Turnover (1,2) |
Average Νο. of Employees during the year | |
| Small | Less than €4 million | Less than €8 million | Less that 50 |
| Medium | Less than €20 million | Less than €40 million | Less than 250 |
| Large | More than €20 million | More than €40 million | More than 220 |
With regard to the exemption from the consolidation of financial statements, the exemption has been extended to also apply to medium-sized groups of companies, aside from small groups of companies. On the other hand, several provisions that exempted companies from consolidating their financial statements, for example due to disproportionate costs and undue delay, have been repealed. For medium and large-sized companies, additional disclosure requirements have been introduced; they are required to include information in their financial statements on various other matters, such as the employees' costs.
Moreover, Law 97(I)/2016 introduced a section on the compilation of a management report. The management report largely applies to public companies whose shares are listed in a regulated market. The necessary information is intended to determine whether the company is exposed to any risks that may impede the company's performance and growth. Accordingly, a company is required to include information on, for example, its activities and any foreseeable risks, research and development, changes to share capital, and changes in the management board's structure.
The amendments of the Companies Law, in conformity with the EU Accounting Directive, are to simplify the accounting requirements for small companies, and to facilitate the comparison of companies' financial statements throughout the European Union.