The option for SME managers to keep their profit and loss accounts confidential was already being used more and more before the start of the health crisis. With the Covid-19 pandemic and financial difficulties, this practice is becoming increasingly popular and widespread.
Confidentiality of income statements: an option available since 2015
Before 2015, only micro-businesses had the option of not making their annual accounts public. The August 6, 2015 law for growth, activity and equal economic opportunity, followed by the 2019 PACTE law, enabled small SMEs to opt for the confidentiality of their income statements.
To benefit from this confidentiality, they must meet at least 2 of these 3 criteria:
- their balance sheet total must not exceed 6 million euros,
- sales of 12 million euros,
- and the workforce must be less than or equal to 50 employees.
In concrete terms, the procedure is as follows: once companies have closed and validated their accounts, they must send them to the tax authorities and the commercial court clerk's office. When filing with the court, they can choose not to make their income statements public. This means that only the Banque de France and other government bodies can consult them.
A certain discretion regarding financial difficulties
The income statement highlights a number of items:
- the company's potential financial difficulties,
- sales margins,
- fluctuating workforces...
These clues can encourage or discourage potential investors, and provide valuable information for the competition.
By accessing this account, suppliers can also decide to raise their prices, and customers can choose to switch to another company with better results.
In fact, even before the regulations were amended, many SME managers opted for confidentiality even though they did not meet the required criteria, or even did not file their accounts, encouraged by the very rare application of the penalties provided for.
In 2020, 47% of companies opted for account confidentiality. This compares with 41% in 2019 and just 36% in 2018. This trend is likely to increase, as the health crisis plunges many companies into a complex financial situation.