Legalising the books: the April filing almost nobody explains

What legalising means and why it now happens after the close

Legalising a book means filing it at the Registro Mercantil so the registrar records which book it is and what its content was on a given date. Article 27.1 of the Commercial Code describes the original mechanism, designed for paper: entrepreneurs filed the books they are required to keep at the Registro Mercantil of the place of their registered address so that, before the books were used, the first page of each one carried a note of how many pages it had and every page carried the Register's stamp. The stamp came first, the writing second.

That order was reversed. Article 18.1 of Law 14/2013 provides that all the books entrepreneurs are required to keep, including the minute books of general meetings and other collegiate bodies, or the registers of members and of registered shares, «shall be legalised electronically at the Registro Mercantil after being completed in electronic form and before four months have passed from the closing date of the financial year». Today you write the whole book during the year and legalise it once the year is closed.

The Instruction of the Directorate General of Registries and Notaries of 12 February 2015 (BOE-A-2015-1481), which develops that article, closed the old system for financial years opened from 29 September 2013 onwards: its fourth rule bans legalising blank bound books for later use, and its fifth rule rules out legalising books on paper or on any electronic medium not filed electronically. The classic question, when do I take the books to the Register to be stamped, no longer has an answer: today they are uploaded already completed. The full closing calendar, accounts deposit included, is in the guide to annual accounts deadlines.

The four months of article 27.2

The deadline comes from article 27.2 of the Commercial Code in these words: entries and notes made by any suitable procedure on sheets that will later be bound consecutively to form the compulsory books are valid, and those books «shall be legalised before four months have passed from the closing date of the financial year». Article 18.1 of Law 14/2013 repeats the same period for the electronic filing, and the third rule of the 2015 Instruction spells it out: the filing is made electronically, at the Registro Mercantil competent for the registered address, within the four months following the close of the company's financial year.

How those four months are counted is not in the Commercial Code: it is article 5.1 of the Civil Code, the general rule on time limits. Unless something else is laid down, periods fixed in months or years «shall be computed from date to date», and «where the month of expiry has no day equivalent to the first day of the computation, the period shall be understood to expire on the last day of that month». Paragraph 2 adds that non working days are not excluded from the count.

With that rule in hand, a company on a calendar year, closing on 31 December, falls due on 30 April of the following year: not because the law names April, but because there is no 31 April and the exception on the last day of the month kicks in. That is the date everyone repeats, which is why it is usually read backwards, as if the law said «in April». It does not: the period runs from the closing date, whatever that date is. With any other closing date the arithmetic is the same and the answer is different: a financial year closing on 30 June falls due on 30 October, and one closing on 30 September falls due on 30 January, date to date, without inheriting the 31st. Anyone who changes the closing date in the articles of association also moves this filing without noticing, so the date is worth calculating instead of copying the April one.

The competent Register is the one of the registered office, not the one where the director lives or where the bookkeeping is done. And the deadline is the same for every compulsory book of that company: accounting and corporate books share the due date, even though different people prepare them out of different tools. It is worth writing it in the calendar as its own appointment, separate from the general meeting that approves the accounts, because the two dates sit in different months and the April one comes first.

The two accounting books that go in every year

Article 25.1 of the Commercial Code requires every entrepreneur to keep orderly accounts, appropriate to the activity of the business, allowing a chronological record of all its transactions, and adds that they shall keep «necessarily, without prejudice to what is established in special laws or provisions, a book of Inventories and Annual Accounts and a Diario». Those two are the accounting books legalised every year.

Article 28 sets out what each one holds. The book of inventories and annual accounts opens with the detailed opening balance sheet of the business, transcribes trial balances with sums and balances at least quarterly, and also takes in the year-end inventory and the annual accounts. The Diario records day by day every transaction relating to the activity, with one exception that retail uses heavily: a joint entry of the totals of transactions is valid for periods no longer than a quarter, provided the detail appears in other concordant books or records. How those entries are built is covered in the guide on how to keep the books.

A company with barely any movements still closes its year, still has a balance sheet and still has a Diario, even with few entries. Volume changes the size of the file, not the obligation or the deadline. And there is a practical consequence better seen before April than during it: if the bookkeeping lived in a loose spreadsheet, there is no journal with entries to export, and that problem is not solved in the month it falls due. The books, moreover, are kept for six years from the last entry made, under article 30.1 of the Commercial Code, and ceasing to trade does not release anyone from that duty.

The minute book, and the detail book you legalise when it suits you

Article 26.1 of the Commercial Code also requires commercial companies to keep «a book or books of minutes recording, at least, all the resolutions passed by general and special meetings and by the other collegiate bodies of the company», stating the details of the notice and the constitution of the body, a summary of the matters debated, the interventions for which a record was requested, the resolutions adopted and the results of the votes. For this book article 27.2 itself refers to the Commercial Registry Regulation, and article 18.1 of Law 14/2013 places it squarely inside the four month electronic legalisation.

The 2015 Instruction fills in the detail in two rules. The seventh requires all minutes of meetings of collegiate bodies, including the decisions taken by a sole shareholder, to be recorded in electronic form and filed electronically within the four months following the close. The eighth sets the rhythm: in each financial year the minutes of the preceding year are legalised, the book may be a single one for all collegiate bodies or one per body, and each book must state the opening and closing dates of the year.

There is also a voluntary filing almost nobody uses that solves a real problem: article 18.2 of Law 14/2013 allows detail books of minutes, or groups of minutes, to be legalised at intervals shorter than a year «where it is of interest to prove conclusively the fact and the date of the Registrar's intervention», and the ninth rule of the Instruction adds that this can be done at any point in the financial year, without prejudice to those minutes being compulsorily included later in the annual book. It is the way to give a resolution a certain date mid-year. It should not be confused with a different duty: article 26.3 requires the directors to file at the Registro Mercantil, within the eight days following the approval of the minutes, a notarial record of the registrable resolutions.

The register of members: it does not go in every year

This is where the most widespread mistake in the whole filing lives. Article 27.3 of the Commercial Code extends the previous paragraphs to the register of registered shares in public limited companies and partnerships limited by shares, and to the register of members in limited liability companies, which may be kept by computer means. From there people jump to the conclusion that this book is uploaded in full every year, and the 2015 Instruction says otherwise.

Its tenth rule sets the regime precisely: once the company is registered at the Registro Mercantil, a book must be legalised, the first in order, showing the initial ownership of the founders. From then on, «once this initial book has been legalised, the legalisation of a new book shall only be compulsory in the four months following the end of the financial year in which any change in the initial or subsequent ownership of the shares or holdings has occurred, or charges have been created over them». In plain terms: a year in which nobody buys, sells, inherits or pledges holdings does not generate a new register of members.

The same rule fixes the content: these books must show the full identity of the holders and their nationality, where applicable, including their addresses; omitting the nationality or the address does not prevent the book from being legalised, but the legalisation note records that omission. Two further rules avoid deadlocks: the twelfth allows a register of members to be legalised even if it appears from the book itself that the initial one was never legalised, and the fourteenth covers loss, theft, or physical or electronic destruction of these books, in which case a book may be legalised with the content of the unusable ones provided the facts are evidenced by a police report or a notarial record attached to the request.

The sole shareholder's contracts book

When the company has a single owner, one more book appears. Article 16.1 of the Spanish Companies Act requires contracts between the sole shareholder and the company to be in writing, or in the documentary form the law demands given their nature, and «shall be transcribed into a register book of the company that must be legalised in accordance with the provisions for the minute books of companies». The same paragraph adds the other half of the duty: the annual report must make express and individualised reference to those contracts, stating their nature and terms.

By referring to the minute books, article 16.1 puts this book on the same four month clock and the same electronic route as the rest. The tenth rule of the 2015 Instruction closes the circle on content: the identity, nationality and address rules that govern the register of members «shall apply to the books of contracts of the sole shareholder with the company». Which contracts these are, and why the law watches them, is explained in the guide to the single member company: a lease of the owner's premises, a loan from the owner to the company, a sale between the two.

The price of skipping this book is not theoretical and is written in article 16.2: in the insolvency of the sole shareholder or of the company, contracts that have not been transcribed into the register book and are not referenced in the annual report, or were referenced in a report not deposited as the law requires, cannot be raised against the insolvency estate. Both conditions travel together, the book and the report. And article 16.3 adds that, for two years from the date those contracts were entered into, the sole shareholder answers to the company for any advantage obtained directly or indirectly to the company's detriment.

How the filing works: a SHA256 hash per book and the registrar's certification

The sixteenth rule of the 2015 Instruction refers the format and content of the files to its annex I and points to the electronic filing platform of the Colegio de Registradores, on the registradores.org website, as the means of transmission. Annex I sets the types of book that can be filed (Diario, Inventory and Annual Accounts, trial balances, general ledger, invoices issued, invoices received, register of members, minute book and the sole shareholder's contracts register, among others) and the naming of the files, with a maximum of nine consecutive books per type and a list of names in the NOMBRES.TXT file.

The technical piece holding the whole system together is the hash. The seventeenth rule requires the information for each book to carry a protection system guaranteeing it has not been manipulated between the moment the filer creates the medium and the moment it is entered in the legalisation register file, and specifies that this protection is achieved «through the digital fingerprint corresponding to each book by means of the standard SHA256 algorithm (RFC 6234)». The filer generates the hash for each file; under the nineteenth rule the registrar reviews the content of the request and also checks that the SHA256 generated by the files matches the one stated in the list of books filed. If there are defects, the twentieth rule requires the legalisation to be suspended in the manner set out in the Commercial Registry Regulation.

If there are no defects, the twenty first rule describes the outcome: the registrar issues a certification identifying the entrepreneur, stating the books legalised with their class and number, the digital signature generated by each of them and the details of the filing and of the entry made in the legalisation register file. That certification expressly mentions that the entrepreneur must keep an electronic copy of identical content and format for evidentiary purposes, and this is not a formality: the Instruction of 1 July 2015 (BOE-A-2015-7626) provides that the files filed, being temporary, are deleted as soon as the registrar issues the certification, and that for the purposes of article 327 of the Civil Procedure Act it is the entrepreneur who must keep a computer medium of identical content and format. The same Instruction allows the files to be encrypted before sending, with 3DES at 168 bits or AES at 128, 192 or 256 bits, keeping the key safe, and clarifies that the legalisation may be done for all the books in a single act or separately.

If you miss the deadline: what the certification says

The consequence of being late does not have to be imagined, it is written down. The twenty first rule of the 2015 Instruction says the registrar shall, where applicable, state in the certification that the legalisation was requested outside the legal period, in accordance with article 333 of the Commercial Registry Regulation. In other words: a late legalisation is carried out and recorded as late. The Instruction of 1 July 2015 adds that the registrar may issue formal publicity of the legalisation register, which reflects whether the legalisation was carried out, suspended or refused, and where applicable the content of that certification.

What neither rule says is that an unlegalised book automatically loses its evidentiary value. Article 31 of the Commercial Code leaves that judgement where it was: «the evidentiary value of entrepreneurs' books and other accounting documents shall be assessed by the Courts in accordance with the general rules of law». The fifteenth rule of the Instruction repeats it for catch-up books.

And there is good news for anyone carrying pending years. The eleventh rule allows the minute books of a given year to be legalised «even if the immediately preceding one or ones have not been», and the twelfth says the same of the registers of registered shares and of members. There is no need to rebuild the chain backwards before filing the latest one. For the extreme case, the fifteenth rule lets companies that never legalised their minute book, register of members, register of registered shares or sole shareholder's contracts book include, in the first books of those classes filed electronically, all the minutes and events of the company from the date of incorporation to the closing date, and they may add the minutes of the general meeting ratifying the minutes not transcribed at the time. A dormant company is not outside any of this: its obligations while that situation lasts are in the guide to a dormant SL.

Legalisation, deposit and modelo 200: three separate clocks

The three filings are born from the same year-end and are constantly mixed up, so it helps to separate them by their deadline, which is the one thing that cannot be negotiated. Book legalisation falls due four months after the close (article 27.2 of the Commercial Code and article 18.1 of Law 14/2013), goes to the Registro Mercantil of the registered address, and its subject matter is the books.

The deposit of the annual accounts runs on a different clock and depends on the general meeting. Article 164.1 of the Spanish Companies Act requires the ordinary general meeting to be held within the first six months of each financial year to approve, where appropriate, the management of the company and the accounts of the previous year and to resolve on the allocation of the result. Article 279.1 then requires the directors to file for deposit at the Registro Mercantil of the registered office, within the month following the approval of the annual accounts, the certification of the resolutions approving those accounts and allocating the result, together with a copy of each of them. The detail of that filing is in the guide to annual accounts deadlines.

The modelo 200 does not go to the Register but to the tax authority, and its deadline comes from article 124.1 of the Corporate Income Tax Act: the return is filed within the 25 calendar days following the 6 months after the end of the tax period. On a calendar year that puts the three milestones in April, in July and in July again, with different origins: one counts from the close, another from the approval at the meeting and the third from the end of the tax period. Being up to date with one says nothing about the other two, and the expensive mistake is treating them as a single generic year-end date.

How kontora handles it

kontora builds the legalisation package with the books for the year, each one with the official naming and its digital fingerprint, plus a file with the data the Colegio de Registradores application asks for and step by step instructions. What kontora does not generate is the data file that the application builds on its own: annex I to the Instruction of 12 February 2015 describes every file in the package and gives, field by field, the code, the format, the length and the content of that data file, but not how it is physically written (what line prefix, what padding, what line terminator and what character encoding), and that detail is not published by the rule, so kontora does not invent it: a plausible but wrong file ends in a rejection at the Register. The ZIP you download is not the final submission either: it is loaded into Legalia 2, the free application of the Colegio de Registradores, which builds the final file and sends it. kontora leaves the books, the naming, the fingerprints and the instructions ready; filing the package is on you.

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