The effective date for accounting purposes in corporate restructuring operations in Spain

The Royal Decree-law 5/2023, of 28 June, which adopts and extends certain measures in response to the economic and social consequences of the War in Ukraine, supports the reconstruction of the island of La Palma and other situations of vulnerability; transposes European Union Directives on structural modifications of commercial companies and the reconciliation of family life and professional life of parents and caregivers; and implements and complies with European Union Law, regulates, among other things, structural modification operations, such as mergers and demergers and the global transfer of assets and liabilities operations.

The accounting 'effective date'

One of the requirements for the effective adoption of these type of agreements is to specify the accounting "effective date" from which the corporate restructuring to be carried out will take effect; that is, from which date the operations of the merged or transferred unit or entity must be reflected in the accounting books of the beneficiary company.

However, the accounting effective date should not be confused with the effective date of the operation or the date from which the shareholders of the beneficiary entity begin to participate in its profits, which may or may not coincide.

The Accounting Registration and Valuation Standards (NRV) contained in Royal Decree 1514/2007, of 16 November, which approves the General Accounting Plan, regulate the determination of the accounting effective date, which will depend on the existence or absence of a corporate group among the companies participating in the restructuring operation.

Therefore, it is crucial to determine whether the companies participating in the restructuring operation belong to the same corporate group.

According to rule 13 of the General Accounting Plan, companies belong to the same corporate group when they are under the same control relationship, distinguishing two ways of establishing a "control relationship" concerning a company:

• Direct or indirect: in the case that a legal entity holds the majority of voting rights and/or has the ability to appoint or has appointed more than half of the members of the company's administrative body.
• Horizontal or coordination: individuals (natural or legal persons) who act jointly or are under single management by agreements or statutory clauses.

Applying the NRV

Once the analysis of the existence of a control relationship has been carried out, the accounting effective date will be the result of applying the corresponding NRV.

In the absence of a control relationship between the companies participating in the restructuring operation, the applicable NRV will be NRV 19. This establishes that the accounting effective date will be the acquisition date of the unit or business being transferred; that is, the date on which the acquiring company takes control of the acquired unit or business.

Unless otherwise provided in the common project of the restructuring operation, this date will be the date on which the general shareholders' meeting of the participating companies approves the restructuring operation. However, the common project may specify that the acquisition date of the unit or business is the date of registration of the corporate agreements in the Commercial Registry instead of the date on which the corporate agreements are approved.

If a control relationship exists between the companies participating in the restructuring operation, the applicable NRV will be NRV 21. This establishes that the accounting effective date will be the first day of the current fiscal year or the date on which the unit or business being transferred was acquired by the corporate group, provided that this date is after the start of the current fiscal year.

As an exception, if the operation is registered after the mandatory period for the preparation of annual accounts (three months after the end of the fiscal year), according to Resolution No. 2, June 2015 of the Institute of Accounting and Auditing (Instituto de Contabilidad y Auditoría de Cuentas), the accounting effective date will be – for operations between companies without a control relationship – the registration date of the restructuring deed and, for those with a control relationship, the first day of the new fiscal year.

Osborne Clarke comment

When establishing the accounting effective date in a restructuring operation, it is first essential to analyse whether the participating companies are under a control relationship and, therefore, whether they are part of the same corporate group.