Miércoles, 22 Febrero 2023

New legal measures to promote the fight against late payment set out in the Create and Grow “Crea y Crece” Law

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In September 2022, the Spanish Government approved Law 18/2022, of 28 September, on the creation and growth of companies, hereinafter referred to as the "Crea y Crece Law", aimed mainly at facilitating the creation of companies, reducing regulatory obstacles, combating late payment and boosting their growth and expansion. In previous articles we have already analyzed some of the measures aimed at facilitating the creation of companies; however, in this article, we would like to focus on the new measures established by the Crea y Crece Law, aimed at promoting and providing more legal weapons in the fight against late payment.

To give context to this article, we should remember that the Crea y Crece Law is a legal tool that forms part of the Spanish Government's Recovery, Transformation and Resilience Plan and that it, in addition to seeking to strengthen and make the Spanish business fabric more agile, regulating issues that pursue objectives such as: streamlining the procedures and conditions for the incorporation of Limited Liability Companies, fostering the growth of companies through regulatory improvement, generalizing the use of electronic invoicing and promoting alternative financing by boosting mechanisms such as crowdfunding, collective investment and venture capital, It also establishes measures to combat late payment in commercial transactions and to encourage compliance with the obligations already established in Law 3/2004, of 29 December, which establishes measures to combat late payment in commercial transactions (hereinafter "Law on Measures against Late Payment"), as a measure to protect Spanish companies, the latter being, as we have already said, the subject of this article.

Late payment in commercial transactions is one of the issues that most affects the ordinary activity of our companies and mainly SMEs, causing extremely adverse effects in terms of their profitability and liquidity, elements that are so essential for the viability of companies that, if they are negatively affected, may even make their continuity unviable. In order to try to alleviate the current situation, in which we can affirm that the maximum payment limits established in the Law on Measures against Late Payment are being exceeded across the board, the Crea y Crece Law establishes the measures described below.

As the first measure related to the fight against late payment in commercial transactions, the Crea y Crece Law includes an extension of the obligation to use electronic invoices in commercial transactions for companies and the self-employed, a necessary measure to provide the transparency in commercial transactions that is essential for efficiently combating late payment.

The measure adopted by the Crea y Crece Lawconsists of establishing the obligation to issue and send electronic invoices in all commercial relations with companies and the self-employed, which will guarantee greater traceability and control of payments. This measure, in addition to reducing transaction costs and representing a step forward in the digitalisation of company operations, will make it possible to obtain reliable, systematic and agile information on effective payment deadlines, an essential requirement for reducing commercial delinquency.

The Crea y Crece Law has also regulated the inclusion of some changes in the Companies Act, establishing the obligation for companies to indicate in their annual reports the average payment period to their suppliers and, depending on their size or their particular characteristics, for example their status as a listed company, other data such as the number of invoices paid in a period shorter than the maximum established in the regulations on late payment. This measure is intended as an incentive to try to enforce compliance with the legally established deadlines by imposing the inclusion of this information in companies corporate documentation.

In this way, all trading companies will have to report the average supplier payment period in their annual accounts; in addition, listed companies, and unlisted companies that do not present abridged annual accounts, must also report in their annual accounts and on their corporate website, if they have one, the volume and number of invoices paid without exceeding the deadlines of the late payment regulations, as well as the percentage that they represent of the total number of transactions carried out.

"Third additional provision. Duty of information.

  1. All trading companies shall expressly include in the notes to their annual accounts their average supplier payment period.
  2. Listed trading companies shall publish on their website their average supplier payment period, the monetary volume and number of invoices paid in a period shorter than the maximum established in the regulations on late payment and the percentage they represent of the total number of invoices and of the total monetary payments to their suppliers. This information shall be included in the notes to its annual accounts.
  3. Trading companies that are not listed and do not present abridged annual accounts shall publish their average supplier payment period, the monetary volume and number of invoices paid in a period shorter than the maximum established in the late payment regulations and the percentage that they represent of the total number of invoices and of the total monetary amount of payments to their suppliers on their website, if they have one. This information will be included in their annual accounts.

Another measure intended to serve as an effective tool in the fight against late payment is the modification of the Public Sector Contracts Act, granting the respective public procurement bodies the power to impose penalties in the event of non-payment by the main contractor to its subcontractors. Thus, in the event of such non-payment within the payment deadlines established in the Law on Measures against Late Payment and this non-payment is accredited by judicial or arbitration ruling and the delay is not due to a breach of contractual obligations, the contracting body may impose a penalty of up to 5% of the contract price, which may be reiterated each month while the non-payment persists until it reaches 50% of said price, for which the definitive guarantee provided by the main contractor will be liable.

In addition, the contracting body is also empowered both in cases related to the so-called S.A.R.A. contracts (Subject to Harmonized Regulation) and in cases related to the S.A.R.A. contracts (Subject to Armed Regulation as established in Article 23 of the Public Sector Contracts Act), which are those public sector contracts that, depending on the contracting entity, their object and amount, are subject to certain requirements of European law, as well as in those public contracts whose estimated value is equal to or greater than two million euros, if the subcontractor or supplier takes legal or arbitration proceedings against the main contractor for payment of the invoices after the deadline for payment has passed, the contracting body may provisionally withhold the definitive guarantee until the contractor proves full satisfaction of the rights declared in the final judicial or arbitration decision that ends the dispute.

Thus, the Crea y Crece Law amends article 216.4 of Law 9/2017, of 8 November, on Public Sector Contracts.

Article 216(4) is amended as follows:

"4. The contractor shall pay the invoices within the deadline set in accordance with the provisions of paragraph 2. In the event of late payment, the subcontractor or supplier shall be entitled to late payment interest and compensation for collection costs under the terms set out in Law 3/2004, of 29 December, which establishes measures to combat late payment in commercial transactions.
Likewise, in contracts subject to harmonised regulation and, in addition, in those whose estimated value is equal to or greater than two million euros, when the subcontractor or supplier takes legal or arbitration action against the main contractor for payment of the invoices
 once the term established in section 2 has been exceeded, the contracting body, without prejudice to the continuation of all its effects, shall provisionally withhold the definitive guarantee, which may not be returned until such time as the contractor accredits full satisfaction of the rights declared in the final judicial or arbitration decision that ends the dispute, and provided that the conditions established in Article 111 of this law are met."

Another additional measure in relation to access to public subsidies is instrumented through the modification of the General Law on Subsidies, establishing as a requirement for access to subsidies exceeding €30,000, the obligation to accredit compliance with the deadlines of the Law on Dilatoriness. Thus, companies that submit abridged annual accounts must accredit this with a responsible declaration to the body granting the subsidy, and companies that do not submit abridged annual accounts must accredit this with certification from the accounts auditor, who will make his calculations based on the effective term of the debtor's payments "regardless of any financing for early collection" from the creditor.

The Crea y Crece Law also incorporates an amendment to the Law on Unfair Competition, whereby repeated non-compliance with the obligations established in the Law on Measures against Dilatoriness will be considered unfair, which will allow the filing of unfair defence actions in the event of the situations described above.

Finally, the Crea y Crece Law also provides for the creation of the "State Observatory on Private Late Payment", which will monitor and analyse data on the payment periods of companies and Spaniards and promote the implementation of good practices in these commercial operations. The activities attributed to this State Observatory on Private Late Payment include the publication of an annual list of defaulting companies (legal entities that fail to pay more than 5% of their invoices on time and whose total amount of unpaid invoices exceeds 600,000 euros).

In conclusion, the new measures established by the Crea y Crece Law to combat late payment are imposed by the legislator with the aim of avoiding the maintenance of situations that are currently widespread in relation to non-compliance or delays in payments relating to commercial transactions above the limits legally established in the Law on Measures against Late Payment.

In relation to the situations described above, Belzuz Abogados, S.L.P., as legal advisors specializing in this area, can advise your company in this type of situation, both in the eventual claiming of possible unpaid debts and in the defense of your interests in any other possible situation.

 

 

Igor Orozco Román  Igor Orozco Román


Departamento Derecho mercantil y societario | Madrid (España)

 

Belzuz Abogados SLP

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