Spain: The public consultation period has begun for the draft bill regulating the corporate reporting framework on environmental, social and governance issues
The Council of Ministers agreed, on 3 May 2023, to initiate this procedure, which will be available until 25 May, to ensure that those interested in the text of the preliminary draft can make their contributions.
The processing of the Draft Bill regulating the framework for corporate reporting on environmental, social and governance issues forges ahead. The Council of Ministers set the public consultation period in motion on May 3 last; it will last 15 business days, ending on May 25.
The draft bill, which transposes Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022, introduces changes in the Commercial Code, the revised Capital Companies Law, and the Accounting Audit Law and its implementing regulations.
This initiative is a continuation of the efforts to step up corporate reporting in these areas which began with Law 11/2018 of December 28, 2018, which also transposed an EU directive. It imposes the mandatory reporting of information relating to environmental, social, human rights and governance issues, as well as information on the extent to which the reporting company's economic activities may be classed as environmentally sustainable.
The text presented for public consultation will be applicable to:
- Large corporations. A large corporation is understood to be a company which, for two consecutive fiscal years, as at the year-end date in both cases, meets at least two of the following requirements: (a) total consolidated assets amounting to more than 20,000,000 euros; (b) consolidated annual net revenues exceeding 40,000,000 euros; and (c) an average number of workers employed during the year above 250.
- Insurance and reinsurance companies falling within the scope of application of Law 20/2015 of July 14, 2015.
- Credit institutions falling within the scope of application of Law 10/2014 of June 26, 2014.
- Small and medium-sized enterprises (SMEs) where they have issued securities admitted to trading on a regulated secondary market in the European Union.
Micro-businesses, on the other hand, are excluded from its scope of application. These are understood to be businesses which, for two consecutive fiscal years, as at the year-end date in both cases, meet at least two of the following requirements: (a) total assets not exceeding 350,000 euros; (b) annual net revenues not exceeding 700,000 euros; and (c) an average number of workers employed during the year not exceeding 10.
The information reported by companies will be required to be verified, either by an accounting auditor (which may be the auditor which audits the company’s accounts or a different one) or by an independent provider of verification services. Public control of such activity through the ICAC (Spanish Accounting and Audit Institute) is envisaged, in terms equivalent to those established for the auditing of accounts.
In order to facilitate the adaptation of companies to the new rules, there is to be a gradual system of entry into force.
Views on the text presented for public consultation may be sent to the ICAC's e-mail address [email protected], the deadline being May 25, 2023.
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