Publication of the 2024 annual financial report of a company in Bulgaria

The publication of an annual financial statement (AIF) is a mandatory process for every commercial company in Bulgaria, which ensures transparency and clarity regarding the financial situation and activities of the enterprise for the past year. The GFO - Godishen Finansov Otchet / "Годишен финансов отчет"(the Bulgarian abbreviature for AIF) is a comprehensive document that summarizes all financial operations of the company, including concluded contracts, realized profits or losses, as well as the overall financial performance of the company for the relevant reporting period. In Bulgaria, legislation sets strict rules for the publication of these reports, with the aim of ensuring access to financial information for both interested parties and the public. According to the latest amendments to the law, all traders within the meaning of the Commercial Law, non-profit legal entities, as well as other enterprises, are obliged to publish their annual financial statements in the Commercial Register at the Registry Agency within the established deadlines.

The publication of the AIF is mandatory by September 30 of the year following the reporting period, and this process enables different stakeholders to gain a holistic view of the financial health and stability of companies. This practice helps to increase transparency and trust in the business environment, and supports effective management decision-making as well as strategic planning.

The upcoming consideration of the concept and essence of AIF will give us a more detailed understanding of its importance and role in modern accounting and business management.

What is an Annual Financial Statement (AIF)?

The annual financial statement (AIF) is a fundamental document that reflects the financial position and results of activities of an enterprise for the past financial year. It presents detailed and accurate information on all accounting operations carried out during the year, including data on concluded contracts, the effectiveness of these transactions and the final financial result - profit or loss.

Here are the main elements that AIF usually includes:

1. Balance sheet:This is a detailed report that shows the assets, liabilities and equity of the enterprise as of a certain date.
2. Statement of Income and Expenses (OPR):This report presents information about the income, expenses and financial result (profit or loss) of the entity during the year.
3. Statement of Equity (EIT):Provides information on changes in the equity of the enterprise during the reporting period.
4. Statement of Cash Flows (CAF):It analyzes the inflow and outflow of cash in the enterprise, showing how money is generated and used.
5. Application:It includes additional information and explanations that complement and specify the data presented in the other parts of the AIF.

Drawing up a AIF in Bulgaria is the task of a qualified accountant - an expert who has a higher education in accounting and economics and has experience as an accountant of at least 2 years. The accountant is responsible for the accuracy and reliability of the information presented, certifying it with his signature. This ensures that the data presented is in accordance with the applicable accounting standards and regulations.

For microenterprisesthere is the option to declare only a condensed balance sheet and an abbreviated ODA. The same applies to small businesses, which may be limited to abridged versions of the balance sheet and the MOU, together with an annex.

Sole proprietors (ET)with net sales revenues exceeding BGN 200,000 for the reporting period, which are subject to a mandatory independent financial audit, must draw up a complete AIF.

Micro- and small enterprises, which are not subject to the mandatory independent financial audit, are not required to prepare an annual activity report.

These provisions make it easier for enterprises with different business sizes to prepare and present their financial statements, thereby reducing the administrative burden and optimizing the reporting process.

It is important to note that AIFs play a critical role in assessing an entity's financial health, both by internal and external stakeholders, such as investors, lenders, government agencies, and the public. It provides a basis for analyzing the company's performance and making informed management and investment decisions.

How to file a GFO (AIF) electronically in the Commercial Register?

The procedure for publishing the Annual Financial Statement (AIF) in the Commercial Register electronically, as regulated in the Commercial Register Act, is a critical step for every Bulgarian trader. This is an obligation that must be fulfilled by certain enterprises by September 30 of each year. It is important to emphasize that the GFO itself must be prepared by June 30 for the previous year, according to the Accounting Act.

The procedure for publishing the GFO includes the following steps:

1. Identification of the applicant:The Commercial Register Act (ZTR) defines the categories of persons who can apply for publication of a GFO. These can be the trader himself, a lawyer with a written power of attorney to represent before the Registry Agency, or the compiler of the financial statements with a notarized power of attorney.
2. Presentation of GFO:According to the Law on Accounting, the compiler of the GFO can be an accountant with the relevant educational background and experience, working in employment or employed under non-employment relations with the company. The accountant may also represent an accounting firm or a specialized accounting firm with which the company has a contract.
3. Submission of documents:Although the GFO and accompanying documents can be submitted by the above persons, they can also be submitted by a proxy with a notarized power of attorney. It is important to note that the signature of the applicant in the application for declaration must also be notarized.

This procedure ensures that the GFO is published on time and in accordance with legal requirements, thereby ensuring transparency and accountability of the company's financial operations. The publication of the GFO in the Commercial Register is not only mandatory, but also provides important information for stakeholders, such as investors, creditors, partners and regulatory authorities.

Necessary documents for publication of the GFO in the Commercial Register

For the successful publication of the Annual Financial Report (AGR) for 2024 in the Commercial Register, preparation and submission of a number of documents are required. The process is important not only to comply with legal requirements, but also to ensure transparency and accountability to shareholders, creditors, potential investors and other stakeholders. Here are the required documents:

1. Application according to model G2:This is a standard form that must be filled out and submitted for the announcement of the GFO.
2. GFO and Annual Activity Report:These documents present the financial position and activities of the company in the relevant year. They must be in the original, a notarized copy or a transcript certified by the applicant.
3. Declaration under Art. 62a, para. 2, item 2 of Ordinance No. 1 of 2007:This is a sample statement that contains information about the GFO and its notarization is not required.
4. Declaration under Art. 62a, para. 2, item 2 of Ordinance No. 1 of 2007 with deleted personal data:This statement is the same as the one mentioned above, but with the personal data deleted in order to comply with the legislation on the protection of personal data.‍
5. Declaration under Art. 13, para. 4 of ZTRRULNC:This declaration is also an important part of the publication process.‍
6. Power of attorney (if necessary):In the event that the documents are submitted by a proxy, the corresponding power of attorney must also be attached.

When documents are submitted electronically, the GFO must be legibly scanned. The full text of the audit report is also subject to publication. It is important to note that no state fee is paid for the publication of the GFO.

This procedure is essential to ensure transparency and compliance with regulatory requirements, thus ensuring that interested parties have access to up-to-date and accurate financial information about the company.

Who prepares annual reports on the activities of the company and are they always necessary?

The annual activity report of the company is a detailed overview of the business, financial results and activities of the enterprise in the past year. According to the law on accounting, all enterprises are obliged to draw up such a report, which will reflect their activities and financial condition.

The preparation of the report applies to all types of enterprises, including micro and small firms. However, micro and small enterprises that are not required to conduct an independent financial audit and do not operate as investment or financial holding companies have the option of not preparing an annual activity report if the information on the acquisition of own shares is available in the annex to the annual financial statements or in a footnote to the balance sheet.

For micro, small and medium-sized enterprises, there is another relief: they can omit the inclusion of non-financial information in the activity report. This applies, for example, to information that is not directly related to the financial results of the company.

For larger enterprises, especially those in the public interest and with more than 500 employees, the requirements are stricter. They must include in their activity report not only basic financial information, but also a non-financial statement that reflects various aspects of the business, such as social and environmental initiatives.

The Law on Accounting also provides for special requirements for certain categories of enterprises. For example, companies whose shares are listed on a regulated market, as well as credit institutions and insurers, must include a corporate governance statement in their activity report.

Thus, depending on the size and type of activity, companies must follow different rules when preparing and submitting their annual activity report, which is important to ensure transparency and accountability in business.

Is there a fine for not publishing the GFO in the Commercial Register 2024?

Legislation in Bulgaria provides for strict penalties for companies that do not fulfill their obligation to publish their Annual Financial Statement (AIF) in the Commercial Register within the established deadline. After the Registry Agency has sent the National Revenue Agency (NRA) a list of enterprises that have not applied for the publication of their financial statements by October 31, the following sanctions are imposed:

1. Zand the responsible officials, such as company managers, the fine varies from 200 to 3000 leva.This constitutes a significant financial penalty aimed at the individuals who are responsible for the management and accounting of the company.
2. Legal entities or sole traders are sanctioned with a fine that is proportional to their net sales revenue for the relevant reporting period. The penalty is in the amount from 0.1 to 0.5 percent of these revenues, but at least 200 leva.That is, the higher the turnover of the company, the greater the fine may be imposed.

In case of repeated violation, the fines are doubled. Such a severe penalty underlines the importance that the legislation attaches to the accurate and timely publication of financial statements, which is key to transparency and good corporate practice. These measures aim to ensure that all enterprises comply with their reporting obligations and provide accurate financial information to both public authorities and the public.