How to correct annual accounts?
March 2021 – The possibility to rectify annual accounts has in fact only been enshrined in law with the new Code of Companies and Associations (CSA). In mid-2020, the CNC has adapted its old notice (from 2014) to this new legal framework. There are two different ways of correcting or amending approved annual accounts.
Modification of previous annual accounts via the new annual accounts
A first possibility is to modify certain items relating to the previous financial year in the new annual accounts to be filed. What is meant by this?
In principle, you must mention for each of the headings and sub-headings of the balance sheet and income statement the amount of the corresponding item from the previous financial year. This applies not only to companies, but also to ASBL/VZWs, AISBLs and foundations.
If for any reason the figures for the financial year are not comparable with those of the previous financial year, the figures for the previous financial year may be adjusted in order to make them comparable.
This may be the case, for example, when a company established in a State which is not part of the European Union decides to transfer its registered office to Belgium. It is likely that the valuation rules previously applied differ from the Belgian rules. If the position of the item at the beginning of the financial year and its position at the end of the financial year are for this reason difficult to compare, you can restate the position of the item for the previous year. Of course, this must be stated in the notes to the annual accounts. The CNC also adds that even if the figures are not restated, the notes to the annual accounts must include the necessary information to enable comparison.
Amendments to previous annual accounts via the annual accounts themselves
On the other hand, previously approved annual accounts may or must in certain cases be corrected with retroactive effect.
You must make an "optional" correction for material errors, forgeries or duplications. You must also rectify approved annual accounts in the event of errors of law and errors of fact (including errors in the valuation of an item or a breach of accounting law). Material errors include, for example, a clerical error, a calculation error, the entry of a certain asset in the wrong account and other gross errors of fact not based on any legal assessment.
They are errors which are not of such a nature that the annual accounts do not give a true and fair view of the assets, liabilities, financial position and results of the company. Otherwise, rectification would be obligatory.
A rectification is compulsory in the case of infringements of accounting law of such a nature that the annual accounts no longer give a true and fair view of the assets, liabilities, financial position and results of the company.
What must not be rectified
In its opinion, the C.N.C. further specifies the cases in which, in its opinion, no correction should be made:
Management decisions cannot, in principle, be rectified because companies have a certain freedom and margin of appreciation in making their decisions;
The rights acquired in good faith by shareholders of an SA/NV cannot be called into question by a rectification of the annual accounts. The rights acquired in good faith by shareholders of a corporation cannot be called into question by a rectification of the annual accounts. Shareholders in good faith of a corporation cannot be forced to return their dividends. On the other hand, the annual accounts may be corrected in the event of a return of the distribution received where shareholders of a corporation have acquired the rights in bad faith as well as in the event of a return in SRL/BVs and Scomm/CommVs (irrespective of whether the shareholders concerned were in good or bad faith).
Procedure
In principle, any rectification of the annual accounts must be approved by the shareholders meeting or by the general meeting.
If it concerns an error (other than a simple material error) which is in breach of accounting law (and which must therefore be rectified), the administrative body is obliged to convene immediately (i.e. without waiting for the date of the next statutory general meeting) a special general meeting in order to bring the annual accounts back into conformity with the law.
It should be noted, however, that the rectification of approved annual accounts is in principle only necessary as long as these annual accounts have not yet constituted the opening situation for subsequent annual accounts. If new annual accounts have been drawn up in the meantime, it is sufficient to rectify the opening situation of the last annual accounts filed.
The corrected annual accounts must be filed with the BNB.
In the case of simple material errors, the administrative board may make the correction on its own initiative without convening a general meeting. Examples of this are :
a mistake in the address of a director ;
the omission to mention in the notes to the accounts that the company has obtained a derogation relating to the functional currency;
a rounding error;
a mistake in the form when it was filed (when this mistake was not included in the approved annual accounts).
