Understanding the Waiver of Review for Micro-Enterprises in Liechtenstein

Josef Bergt
2023

In the realm of corporate governance, the review of annual accounts and consolidated annual accounts is a critical aspect. This article aims to elucidate the conditions under which micro-enterprises in Liechtenstein can waive the review pursuant to Art. 1058a of the Liechtenstein Persons and Companies Act (“PGR”).

The annual accounts (financial statements) and consolidated annual accounts of joint-stock companies, limited liability companies, and certain limited partnerships and partnerships are legally required to be audited by an external auditor or an audit firm. However, micro-enterprises that meet the requirements of Art. 1064(1a) PGR and operate a commercially managed business can waive the review of their accounts. Exempted from a review opt-out are protected cell companies (Art. 243 et seqq. PGR) and joint-stock companies with bearer shares (Art. 323 et seqq. PGR).

Companies that have waived the review do not need to appoint an auditor. The waiver of the review requires a unanimous resolution of the supreme body. The resolution must state from which financial year the waiver of the review should apply. The waiver of the review also applies to subsequent years, so a corresponding decision does not need to be confirmed or repeated annually. The waiver remains in place until at least one member of the supreme body demands a review.

Only so-called micro-enterprises can waive the review. Micro-enterprises are legal entities that do not exceed at least two of the three following size criteria:

• A balance sheet total of CHF 450,000;
• Net sales revenues of CHF 900,000;
• An average of 10 employees during the fiscal year.

Companies that waive the review must submit the following documents to the Office of Justice:

• Application for registration of the waiver of the review;
• A declaration signed by at least one member of the management or executive board stating that:
  • The company operates a business in a commercial manner;
  • It is a micro-enterprise within the meaning of Art. 1064(1a) PGR;
  • The supreme body has unanimously waived a review;
• The minutes or a corresponding excerpt from the minutes of the supreme body that decided on the waiver, with the original signature of the chairman and the secretary; or the corresponding circular resolution; or the individual waiver declarations in the original; and
• Copies of the annual financial statements of the last two fiscal years.

The declaration to waive the review can also be given by the founders when a company is established and can be included in the founding document.

As a result of the waiver of the review, the auditor as a body of the legal entity is usually eliminated, so the statutes usually need to be adjusted. For joint-stock companies, partnership limited by shares, limited liability companies, or European companies (SE), the resolution to amend the statutes must be publicly notarized.

The Office of Justice records the fact that the review has been waived and the date of the declaration in the commercial register. The auditor can be dismissed and must be reported for deletion in the commercial register.

The option to waive the review was first possible and applicable to fiscal years that begin on or after January 1, 2020.

Executive Summary:

• Micro-enterprises that meet the requirements of Art. 1064 Abs. 1a PGR and operate a commercially managed business can waive the review.
• Exceptions to this are segmented associations (Art. 243 ff. PGR) and joint-stock companies with bearer shares (Art. 323 ff. PGR), which cannot waive the review.
• Companies that have waived the review do not need to appoint an audit firm.
• The waiver of the review requires a unanimous resolution of the supreme body.
• The waiver of the review also applies to subsequent years, so a corresponding decision does not need to be confirmed or repeated annually.
• The waiver remains in place until at least one member of the supreme body demands a review.
• Micro-enterprises, defined by not exceeding two of the following: CHF 450,000 balance sheet total, CHF 900,000 net sales revenues, or an average of 10 employees during the fiscal year, can waive the review.
• Companies waiving the review must submit an application for registration of the waiver, a declaration signed by at least one member of the management, and copies of the annual financial statements of the last two fiscal years to the Office of Justice.
• The declaration to waive the review can be included in the founding document when a company is established.
• Waiving the review typically necessitates adjusting the statutes, especially for joint-stock companies, partnership limited by shares, limited liability companies, or European companies (SE).
• The Office of Justice records the waiver of the review and the date of the declaration in the commercial register, and the auditor can be dismissed and reported for deletion in the commercial register.
• The option to waive the review became applicable to fiscal years beginning on or after January 1, 2020.