The National Securities Market Commission (CNMV) has published its supervisory report on annual accounts for 2018. The section on Non-Financial Statements (NFS) reveals that 13 companies submitted qualifications in the verification report, while requests for supplementary information were made to an additional three companies, and a series of recommendations were sent to a further 25 companies for their consideration when preparing the NFS as of next year. Despite these figures, the CNMV admits that “an improvement in quality has been observed” in this reporting, while encouraging companies to “continue in this vein”.


Let us remember that the entry into force of Act 11/2018, of December 28, transposing the Directive on the disclosure of non-financial and diversity information by certain large undertakings and groups, obliges the governing bodies of these commercial entities to prepare an NFS; that is, a document attached to the annual accounts which is submitted for verification by an independent third party.

We must, however, look beyond the regulatory aspects of this issue. After all, in the increasingly important context of sustainability and corporate social responsibility, the NFS is the ideal vector to transmit the business world’s development in this regard onto society as a whole. Without forgetting that this information already represents a fundamental decision-making criterion in the strategy and decisions of investors and other stakeholders.

Be that as it may, for financial years beginning from 1 January 2018, entities or consolidated groups meeting the following two requirements are required to report his information:
1) The average number of personnel over the year is over 500 persons, and
2) It is a public-interest entity, or meets two of the following three requirements over two consecutive years: i) total assets over 20 million euros; ii) net revenue over 40 million euros; or iii) average number of personnel over 500 persons.

It should also be noted that, from financial years beginning from 1 January 2021 (inclusive), the requirement regarding personnel will be reduced to 250 employees.

Broadly speaking, the NFS summarises the entity’s policies on corporate social responsibility. Specifically, the document must at least contain information on environmental, social, and personnel issues, and on matters related to human rights, and the fight against corruption and bribery. It will also include information on the company’s commitment to sustainable development, subcontracting and suppliers, consumers, tax, and any other significant information, providing key indicators for each issue.

As for consolidated groups, dependent Spanish entities will not have to prepare this document as long as the group NFS contains all the information provided for in the Directive. However, the Spanish subsidiary (or subgroup) must publish the NFS in accordance with Spanish regulations.

Since Spanish regulations include more reporting obligations than those provided for in the Directive, in the case of consolidated groups with parent entities located abroad, the Spanish subsidiary (or subgroup) must prepare either
a) a complete individual NFS that complies with Spanish regulations, or
b) a partial individual NFS which includes the additional information required by Spanish regulations as compared to the Directive.

Read the original article here.



Andreu Bové
Andreu Bové

Tax Advisor, Madrid


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