Liability of board members for failure to file financial statements

plpolski (Polish)

The obligation to submit annual financial statements is incumbent on all entrepreneurs, i.e. entities entered in the register of entrepreneurs. This refers not only to limited liability companies, but also to partnerships with full accounting. Therefore, it is not only the responsibility of the members of the board of managing directors for failure to file the financial statements, but it is also extended to partnerships.

The important point is that it is the head of the entity who must file the annual financial statements. For example, in limited liability companies, this is a member of the management board or other governing body. The liability of the head of the entity is not only limited to the company, as he or she may also incur criminal liability. This behaviour is also sanctioned by criminal law and the perpetrator may be sentenced to a fine or a restriction of freedom. From a business perspective, the above sanctions are not very severe for board members. However, a criminal measure in the form of a prohibition to hold a specific position, such as a member of the management board, may be imposed along with the penalty, which will formally exclude the person from the company.

Who is responsible

The manager of an entity under the Act is:

  • in a limited company (sp. z o.o., S.A., P.S.A.) – a member of the management board or other governing body. In the case of a multi-member body – all the members of that body, excluding the proxies appointed by the company;
  • in a general partnership and a civil partnership – the partners managing the company’s affairs;
  • in a partnership company – the partners managing the affairs of the partnership or the management board;
  • in a limited partnership and a limited joint-stock partnership – the general partners managing the company’s affairs;
  • in sole proprietorship – the person conducting the business;
  • additionally:
    • liquidator;
    • a receiver or administrator appointed in restructuring proceedings;
    • a succession administrator.

In the case of a general partnership of natural persons or a partnership company whose net revenues from the sale of goods, products and financial operations for the preceding financial year amounted to less than the equivalent of EUR 2,000,000 and which does not apply the accounting specified by the Act pursuant to Article 2(2), it shall submit to the competent court register, within 6 months of the end of the financial year, a declaration that it is not required to prepare and submit financial statements. The declaration in question must be filed electronically with the financial document repository (RDF) or, only in the event of a negative verification by the RDF, a request must be made to the competent court of registration to file the declaration.

failure to file financial statements

The wording of the provision itself, on the surface, is clear. It literally reads: Whoever, contrary to the provisions of the Act, fails to file the financial statements, the consolidated financial statements, the management report, the group management report, the report on payments to the public administration, the consolidated report on payments to the public administration, the income tax report with the competent court register shall be subject to a fine or the penalty of restriction of liberty.

This is a so-called individual offence, which means that special provisions must impose an obligation on the offender to file a financial report. As mentioned earlier, the head of the entity is obliged to do so. This person will not be the accountant or tax advisor. This is because they are obliged to sign but not file the financial statements, as this obligation continues to rest with the head of the entity.

Problematic in practice is the situation in which one or all members of the management board claim that their mandate has expired or they have resigned from their function as a member of the management board in a limited liability company. The entries in the National Court Register are declaratory in nature, so the fact that a person is not removed from the register does not mean that he or she actually holds a mandate as a board member. The presumption of the truthfulness of an entry in the National Court Register is rebuttable, but the burden of proving that a person who is no longer a member of the management board was no longer a member of the management board at the time when he or she was obliged to submit the financial statements.

There is no doubt that failure to file financial statements will be conduct penalised by the Accounting Act. The mere failure to prepare financial statements is also penalised, however, by section 77(2) of the Accounting Act.

Line of defence

At first glance, it also appears that an entity’s manager could be held liable if, although an application for registration of financial statements with the competent register was submitted, it was rejected because it was prepared in an incorrect form or was signed by an unauthorised person. While it is true that the financial statements were not filed, it will be important whether the perpetrator committed the act intentionally. The offence under Art. 79(4) of the Accountancy Act can only be committed intentionally, so unintentional commission of such an offence does not result in criminal liability.

It is also possible to avoid liability when the head of the entity remained in a justifiable error that he or she was not obliged to file the financial statements. Such situations often arise in companies that in fact:

  • do not carry out business activities;
  • have no employees;
  • do not generate any revenue;
  • do not incur any expenses

i.e. in so-called ‘dead companies’. Excusable ignorance of the unlawfulness of conduct excludes criminal liability. In the case of remaining in an unjustifiable ignorance of the lack of the need to file financial statements, the court may apply extraordinary leniency. However, each situation must take into account the personal characteristics of the offender and the circumstances of the case.


In summary, committing the offence under section 79(4) of the Accounting Act is not relatively difficult. All the more so as it is an offence of ‘omission’. Thus, it can be considered sufficient to be a member of the board of directors and fail to file the financial statements. Despite the criminal sanctions that have been tightened in recent years, the criminal sanctions are not severe, which should be viewed positively. It is, however, a certain question mark whether the courts will rule on criminal measures in 2021-2023. In particular, in the form of a ban on holding a certain position or conducting business. The answer will probably come in the future.


Full article is available in Polish here.

plpolski (Polish)

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