Royal Decree-Law 18/2017 of 24 November amending the Commercial Code, the Consolidated Companies Act, and the Audit Act regarding non-financial information and diversity

OFFICIAL STATE BULLETIN No. 287 Saturday, November 25, 2017 Sec. I. Page 114344

I. GENERAL PROVISIONS HEAD OF STATE 13643 Royal Decree-Law 18/2017, of November 24, amending the Commercial Code, the Consolidated Text of the Capital Companies Act approved by Royal Legislative Decree 1/2010, of July 2, and Law 22/2015, of July 20, on the Audit of Accounts, regarding non-financial information and diversity.

STATEMENT OF REASONS I

Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial information and diversity information by certain large undertakings and certain groups, aims to identify risks to improve sustainability and increase the confidence of investors, consumers, and society in general, and for this purpose increases the disclosure of non-financial information, such as social and environmental factors.

On the other hand, Directive 2014/95/EU expands the content required in the annual corporate governance report that listed public limited companies must publish, in order to improve transparency by facilitating the understanding of the business organization and of the business of the company in question. The new obligation for these companies consists of the disclosure of the "policies on diversity of skills and viewpoints" that they apply to their administrative body regarding issues such as age, sex, disability, or professional training and experience. In the event that the company does not apply a diversity policy, there is no obligation to establish one, although the corporate governance statement must clearly explain the reason why it is not applied.

The disclosure of non-financial information or information related to corporate social responsibility contributes to measuring, monitoring, and managing the performance of companies and their impact on society. In this context, in order to improve the coherence and comparability of the non-financial information disclosed, some companies must prepare a non-financial information statement containing information relating, at least, to environmental and social issues, as well as to personnel, respect for human rights, and the fight against corruption and bribery. In accordance with Directive 2014/95/EU, that statement must include a description of the policies on results and risks linked to those issues and must be incorporated into the management report of the obliged company or, where appropriate, into a separate report corresponding to the same financial year that includes the same content and meets the requirements imposed.

That statement must include, regarding environmental issues, detailed information on the current and foreseeable effects of the company's activities on the environment, and, where appropriate, health and safety, the use of renewable and/or non-renewable energy, greenhouse gas emissions, water consumption, and air pollution.

Regarding social and personnel issues, the information provided in the statement may refer to measures adopted to ensure gender equality, the application of fundamental conventions of the International Labour Organization, working conditions, social dialogue, respect for the right of workers to be informed and consulted, respect for trade union rights, health and safety in the workplace, and dialogue with local communities and measures adopted to ensure the protection and development of those communities.

With regard to human rights, the non-financial information statement could include information on the prevention of human rights violations and, where appropriate, on measures to mitigate, manage, and repair possible abuses committed.

Likewise, regarding the fight against corruption and bribery, the non-financial information statement could include information on existing instruments to combat them.

The non-financial information statement, in accordance with the aforementioned Directive, must include information on the due diligence procedures applied by the company and, where relevant and proportionate, in relation to its supply chains and subcontracting, in order to detect, prevent, and mitigate existing and potential adverse effects. For these purposes, due diligence procedures are understood as actions carried out to identify and assess risks, as well as for their verification and control, including the adoption of measures.

Obliged companies must provide adequate information on the aspects regarding which there is a higher probability that the main risks of serious effects will materialize, together with the aspects regarding which those risks have already materialized. Adverse effect risks may arise from the company's own activities or may be linked to its activities. This must not entail unnecessary additional administrative burdens for small and medium-sized enterprises, as defined in Law 22/2015, of July 20, on the Audit of Accounts.

In providing this information, obliged companies must rely on national frameworks, European Union frameworks, the Environmental Management and Audit System (EMAS) adapted to our legal system through Royal Decree 239/2013, of April 5, or on international frameworks such as the United Nations Global Compact, the Guiding Principles on Business and Human Rights implementing the United Nations framework to "protect, respect and remedy", the OECD Guidelines for Multinational Enterprises, the ISO 26000 standard of the International Organization for Standardization, the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, the Global Reporting Initiative (GRI) Sustainability Reporting Standards, or other recognized international frameworks.

In the case of organizations that have obtained EMAS registration, the information contained in the environmental statement validated by the accredited verifier will be considered valid and sufficient to comply with the section of the report dedicated to environmental information, provided that this certificate not only operates by workplace and covers the entire activity of the company. Nevertheless, EMAS accreditation in no case exempts the entity from reporting on environmental activity in the non-financial report, with the objective that all non-financial information required by the Directive appears in a single document. Companies that have more detailed studies on carbon footprint, policies for adapting to the impacts of climate change, or other environmental areas may provide this information as a complement to the rest of the required environmental information.

II

The scope of application of the requirements on non-financial information disclosure extends to public limited companies, limited liability companies, and commanditee companies by shares that, simultaneously, have the status of public-interest entities whose average number of employees during the financial year exceeds 500 and, additionally, are considered large companies, as defined by Directive 2013/34/EU, that is, whose net turnover, total assets, and average number of employees determine their qualification in this sense.

Public-interest companies that prepare consolidated accounts are also included in the scope of application of this rule provided that the group is classified as large, as defined by Directive 2013/34/EU, and the average number of employees employed during the financial year by the group of companies comprising the group exceeds 500.

However, a dependent company belonging to a group will be exempt from the previous obligation if the company and its dependents are included in the consolidated management report of another company. On the other hand, and in any case, small and medium-sized enterprises are exempt from the obligation to include a non-financial statement, as well as from additional requirements linked to that obligation.

Auditors of accounts and audit firms must only verify that the non-financial information statement has been provided.

In this regard, it is necessary to modify the wording of Article 35 of Law 22/2015, of July 20, on the Audit of Accounts, regarding the audit report of annual accounts of entities considered public-interest entities for the purposes of that law, to include and specify the actions of auditors of accounts, both in relation to non-financial information statements and in relation to diversity information included in the annual corporate governance report of listed companies.

In both cases, in accordance with what is provided in Directive 2014/95/EU, the auditor's action will be limited solely to verifying that the aforementioned information has been provided in the corresponding reports.

With a view to facilitating the disclosure of non-financial information by companies, Article 2 of Directive 2014/95/EU included the mandate to the European Commission to prepare non-binding guidelines on the methodology applicable to the presentation of non-financial information, including some key non-financial performance indicators of a general and sectoral nature, taking into account existing best practices, international evolution, and the results of related initiatives in the European Union. In compliance with that mandate, through the Commission Communication (2017/C 215/01), the Guidelines on non-financial reporting (methodology for the presentation of non-financial reports) were approved in May 2017. In this regard, it should be mentioned that initiatives on fundamental financial and non-financial indicators have been carried out in Spain, such as those proposed in the "Guide for the preparation of the management report of listed entities" by the National Securities Market Commission (CNMV) or in the integrated information model of the Spanish Accounting and Business Administration Association (AECA), included in the "Integrated Indicator Table (CII-FESG) and its XBRL taxonomy", referenced, in turn, by the aforementioned CNMV Guide.

The transposition of Directive 2014/95/EU into the Spanish legal system obliges to modify certain provisions relating to the management report in the Commercial Code, approved by Royal Decree of August 22, 1885, and in the Consolidated Text of the Capital Companies Act, approved by Royal Legislative Decree 1/2010, of July 2; to the annual corporate governance report in the latter; and to the action of auditors of accounts regarding these matters in the Audit of Accounts Act. For the reasons stated, the modifications incorporated are adapted to the principles of necessity, effectiveness, proportionality, legal certainty, transparency, and efficiency that govern the exercise of legislative initiative, as required by Article 129 of Law 39/2015, of October 1, on the Common Administrative Procedure of Public Administrations.

Finally, a repealing provision and four final provisions are incorporated, which respectively collect the competence title, an express declaration on the transposition of the accounting directive, the regulatory authorizations, and the corresponding provision on entry into force.

III

With regard to the recourse to the royal decree-law as a transposition instrument, it should be noted that the Constitutional Court, in its judgment 1/2012, of January 13, validates the concurrence of the enabling budget of the extraordinary and urgent need of Article 86.1 of the Constitution when there is "patent delay in transposition", the existence of "proceedings for non-compliance against the Kingdom of Spain", and the material importance of the situation to be regulated. In this case, reasons concur that fully justify the extraordinary and urgent need to transpose the various directives through the present royal decree-law.

First, the transposition of Directive 2014/95/EU through this royal decree-law is motivated by the expiration of the deadline for its transposition. According to its Article 4, Member States were required to bring into force the legal, regulatory, and administrative provisions necessary to comply with its provisions no later than December 6, 2016.

Secondly, with regard to the specific situation to be regulated, the preparation of the non-financial information statement, individual and consolidated by companies included in its scope of application, must be carried out, by imperative of the norm itself, in the first financial year starting from January 1, 2017. If the ordinary legislative procedure were followed, this obligation could be compromised, and it is advisable, in any case, for companies to know in advance the legal framework of reference for the preparation of the non-financial information statement.

Finally, regarding the existence of "proceedings for non-compliance against the Kingdom of Spain", it must be taken into account that, despite the optional nature provided for in Article 260.3 of the Treaty on the Functioning of the European Union, in its Communication of December 13, 2016, "EU Law: Better results through better application", the Commission announced a change of approach, moving to systematically request the Court of Justice of the European Union to impose a lump sum penalty. The logical consequence of the lump sum approach is that, in cases where a Member State remedies the infringement by transposing the directive during an infringement procedure, the Commission will no longer discontinue its action solely for that reason.

As a transitional provision, the Commission has stated that it will not apply this new practice to procedures whose letter of formal notice is prior to the publication of that communication in the Official Journal of the European Union, which took place on January 19, 2017. In this case, the European Commission initiated a formal infringement procedure through Letter of Formal Notice 2017/0084 of January 24, 2017. Consequently, the procedure is governed by this new approach, based on the principle of non-discontinuance.

Subsequently, through Reasoned Opinion 2017/0084, of June 14, 2017, it gave a period of two months to adopt the legal, regulatory, and administrative provisions necessary to comply with the directive. After the period indicated by the Commission in the Reasoned Opinion has elapsed, it is of extraordinary and urgent need to proceed with the transposition before the lawsuit is filed before the Court of Justice, thereby avoiding the imposition of a lump sum penalty.

Consequently, the circumstances of extraordinary and urgent need required by Article 86 of the Spanish Constitution as the enabling budget to resort to this type of norm concur in the measure that it is adopted, by its nature, purpose, and by the context in which it is issued.

Therefore, in exercise of the authorization contained in Article 86 of the Constitution, on the proposal of the Minister of Economy, Industry and Competitiveness, in accordance with the Council of State and after deliberation of the Council of Ministers in its meeting on November 24, 2017,

I HEREBY ORDER:

Article 1. Modification of the Commercial Code, approved by Royal Decree of August 22, 1885. The Commercial Code, approved by Royal Decree of August 22, 1885, is modified as follows:

One. New wording is given to paragraph 5 of Article 49, which shall read as follows:

"5. Companies that, in accordance with the audit of accounts legislation, have the status of public-interest entities and that, in addition, prepare consolidated accounts, must include in the consolidated management report the consolidated non-financial information statement provided for in this paragraph provided that the following requirements are met: a) That the average number of employees employed by the companies in the group during the financial year exceeds 500. b) That during two consecutive financial years, at the closing date of each of them, they meet at least two of the following circumstances:

1. That the total of the consolidated asset items exceeds 20,000,000 euros.
2. That the net amount of the consolidated annual turnover exceeds 40,000,000 euros.
3. That the average number of employees employed during the financial year exceeds two hundred and fifty. Companies will cease to be obliged to prepare the non-financial information statement if they cease to meet, during two consecutive financial years, two of the requirements of the preceding letter b), or when at the close of the financial year the average number of employees employed does not exceed 500. In the first two financial years from the constitution of a group of companies, the parent company will be obliged to prepare the consolidated non-financial information statement when at the close of the first financial year at least two of the three circumstances mentioned in paragraph b) are met, provided that the requirement provided for in paragraph a) is also met at the close of the financial year."

Two. A new paragraph 6 is added to Article 49, which shall read as follows:

"6. The consolidated non-financial information statement will include the information necessary to understand the evolution, results, and situation of the group, and the impact of its activity regarding, at least, environmental and social issues, as well as personnel, respect for human rights, and the fight against corruption and bribery, and will include: a) A brief description of the group's business model. b) A description of the policies applied by the group regarding these issues, which will include the procedures applied for the identification and assessment of risks and of verification and control, including what measures have been adopted. c) The results of those policies. d) The main risks related to those issues linked to the group's activities, including, where relevant and proportionate, its commercial relationships, products, or services that may have negative effects in those areas, and how the group manages those risks. e) Key non-financial performance indicators that are relevant to the specific business activity. In order to facilitate the comparison of information, both over time and between entities, key non-financial performance indicators that can be generally applied and that comply with the guidelines of the European Commission in this matter may be used especially. In the event that the group of companies does not apply any policy in any of the issues provided for in the preceding letters, the consolidated non-financial information statement will offer a clear and reasoned explanation regarding this. The consolidated non-financial information statement will also include, where appropriate, references and complementary explanations on the amounts detailed in the consolidated annual accounts. For the disclosure of the non-financial information referred to in this paragraph, the company obliged to prepare consolidated accounts must rely on national, European Union, or international regulatory frameworks, specifying which frameworks it has based itself on. In exceptional cases, information relating to imminent events or issues that are the subject of negotiation may be omitted when, in the duly justified opinion of the administrative body, the disclosure of such information could seriously harm the commercial position of the group, provided that such omission does not prevent a faithful and balanced understanding of the evolution, results, and situation of the group, and of the impact of its activity. The obligation to include non-financial information provided for in paragraph 1 of this article will be considered fulfilled if the company incorporates the information described in this paragraph into the management report. When a dependent company of a group is, in turn, the dominant company of a sub-group, it will be exempt from the obligation established in this paragraph if that company and its dependents are included in the consolidated management report of another company in which this obligation is met. If an entity takes advantage of this option, it must include in the management report a reference to the identity of the parent company and to the Commercial Register or other public office where its accounts together with the consolidated management report must be deposited or, in the event of not being obliged to deposit its accounts in any public office, or of having opted for the preparation of a separate report according to the following paragraph, on where the consolidated information of the parent company is available or can be accessed."

Three. New paragraphs 7 and 8 are added to Article 49, which shall read as follows:

"7. It will be understood that a company complies with the obligation to prepare the consolidated non-financial information statement regulated in the previous paragraph if it issues a separate report, corresponding to the same financial year, in which it expressly indicates that such information is part of the management report, includes the information required for such statement, and is subject to the same criteria of approval, deposit, and publication as the management report. 8. The information contained in the consolidated management report in no case justifies its absence in the annual accounts."

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OFFICIAL STATE BULLETIN No. 287 Saturday, November 25, 2017 Sec. I. Page 114345

health and safety in the workplace and dialogue with local communities and measures adopted to ensure the protection and development of those communities.

With regard to human rights, the non-financial information statement could include information on the prevention of human rights violations and, where appropriate, on measures to mitigate, manage, and repair possible abuses committed.

Likewise, regarding the fight against corruption and bribery, the non-financial information statement could include information on existing instruments to combat them.

The non-financial information statement, in accordance with the aforementioned Directive, must include information on the due diligence procedures applied by the company and, where relevant and proportionate, in relation to its supply chains and subcontracting, in order to detect, prevent, and mitigate existing and potential adverse effects. For these purposes, due diligence procedures are understood as actions carried out to identify and assess risks, as well as for their verification and control, including the adoption of measures.

Obliged companies must provide adequate information on the aspects regarding which there is a higher probability that the main risks of serious effects will materialize, together with the aspects regarding which those risks have already materialized. Adverse effect risks may arise from the company's own activities or may be linked to its activities. This must not entail unnecessary additional administrative burdens for small and medium-sized enterprises, as defined in Law 22/2015, of July 20, on the Audit of Accounts.

In providing this information, obliged companies must rely on national frameworks, European Union frameworks, the Environmental Management and Audit System (EMAS) adapted to our legal system through Royal Decree 239/2013, of April 5, or on international frameworks such as the United Nations Global Compact, the Guiding Principles on Business and Human Rights implementing the United Nations framework to "protect, respect and remedy", the OECD Guidelines for Multinational Enterprises, the ISO 26000 standard of the International Organization for Standardization, the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, the Global Reporting Initiative (GRI) Sustainability Reporting Standards, or other recognized international frameworks.

In the case of organizations that have obtained EMAS registration, the information contained in the environmental statement validated by the accredited verifier will be considered valid and sufficient to comply with the section of the report dedicated to environmental information, provided that this certificate not only operates by workplace and covers the entire activity of the company. Nevertheless, EMAS accreditation in no case exempts the entity from reporting on environmental activity in the non-financial report, with the objective that all non-financial information required by the Directive appears in a single document. Companies that have more detailed studies on carbon footprint, policies for adapting to the impacts of climate change, or other environmental areas may provide this information as a complement to the rest of the required environmental information.

II

The scope of application of the requirements on non-financial information disclosure extends to public limited companies, limited liability companies, and commanditee companies by shares that, simultaneously, have the status of public-interest entities whose average number of employees during the financial year exceeds 500 and, additionally, are considered large companies, as defined by Directive 2013/34/EU, that is, whose net turnover, total assets, and average number of employees determine their qualification in this sense.

cve: BOE-A-2017-13643 Verifiable at http://www.boe.es

OFFICIAL STATE BULLETIN No. 287 Saturday, November 25, 2017 Sec. I. Page 114346

Public-interest companies that prepare consolidated accounts are also included in the scope of application of this rule provided that the group is classified as large, as defined by Directive 2013/34/EU, and the average number of employees employed during the financial year by the group of companies comprising the group exceeds 500.

However, a dependent company belonging to a group will be exempt from the previous obligation if the company and its dependents are included in the consolidated management report of another company. On the other hand, and in any case, small and medium-sized enterprises are exempt from the obligation to include a non-financial statement, as well as from additional requirements linked to that obligation.

Auditors of accounts and audit firms must only verify that the non-financial information statement has been provided.

In this regard, it is necessary to modify the wording of Article 35 of Law 22/2015, of July 20, on the Audit of Accounts, regarding the audit report of annual accounts of entities considered public-interest entities for the purposes of that law, to include and specify the actions of auditors of accounts, both in relation to non-financial information statements and in relation to diversity information included in the annual corporate governance report of listed companies.

In both cases, in accordance with what is provided in Directive 2014/95/EU, the auditor's action will be limited solely to verifying that the aforementioned information has been provided in the corresponding reports.

With a view to facilitating the disclosure of non-financial information by companies, Article 2 of Directive 2014/95/EU included the mandate to the European Commission to prepare non-binding guidelines on the methodology applicable to the presentation of non-financial information, including some key non-financial performance indicators of a general and sectoral nature, taking into account existing best practices, international evolution, and the results of related initiatives in the European Union. In compliance with that mandate, through the Commission Communication (2017/C 215/01), the Guidelines on non-financial reporting (methodology for the presentation of non-financial reports) were approved in May 2017. In this regard, it should be mentioned that initiatives on fundamental financial and non-financial indicators have been carried out in Spain, such as those proposed in the "Guide for the preparation of the management report of listed entities" by the National Securities Market Commission (CNMV) or in the integrated information model of the Spanish Accounting and Business Administration Association (AECA), included in the "Integrated Indicator Table (CII-FESG) and its XBRL taxonomy", referenced, in turn, by the aforementioned CNMV Guide.

The transposition of Directive 2014/95/EU into the Spanish legal system obliges to modify certain provisions relating to the management report in the Commercial Code, approved by Royal Decree of August 22, 1885, and in the Consolidated Text of the Capital Companies Act, approved by Royal Legislative Decree 1/2010, of July 2; to the annual corporate governance report in the latter; and to the action of auditors of accounts regarding these matters in the Audit of Accounts Act. For the reasons stated, the modifications incorporated are adapted to the principles of necessity, effectiveness, proportionality, legal certainty, transparency, and efficiency that govern the exercise of legislative initiative, as required by Article 129 of Law 39/2015, of October 1, on the Common Administrative Procedure of Public Administrations.

Finally, a repealing provision and four final provisions are incorporated, which respectively collect the competence title, an express declaration on the transposition of the accounting directive, the regulatory authorizations, and the corresponding provision on entry into force.

III

With regard to the recourse to the royal decree-law as a transposition instrument, it should be noted that the Constitutional Court, in its judgment 1/2012, of January 13, validates

cve: BOE-A-2017-13643 Verifiable at http://www.boe.es

OFFICIAL STATE BULLETIN No. 287 Saturday, November 25, 2017 Sec. I. Page 114347

the concurrence of the enabling budget of the extraordinary and urgent need of Article 86.1 of the Constitution when there is "patent delay in transposition", the existence of "proceedings for non-compliance against the Kingdom of Spain", and the material importance of the situation to be regulated. In this case, reasons concur that fully justify the extraordinary and urgent need to transpose the various directives through the present royal decree-law.

First, the transposition of Directive 2014/95/EU through this royal decree-law is motivated by the expiration of the deadline for its transposition. According to its Article 4, Member States were required to bring into force the legal, regulatory, and administrative provisions necessary to comply with its provisions no later than December 6, 2016.

Secondly, with regard to the specific situation to be regulated, the preparation of the non-financial information statement, individual and consolidated by companies included in its scope of application, must be carried out, by imperative of the norm itself, in the first financial year starting from January 1, 2017. If the ordinary legislative procedure were followed, this obligation could be compromised, and it is advisable, in any case, for companies to know in advance the legal framework of reference for the preparation of the non-financial information statement.

Finally, regarding the existence of "proceedings for non-compliance against the Kingdom of Spain", it must be taken into account that, despite the optional nature provided for in Article 260.3 of the Treaty on the Functioning of the European Union, in its Communication of December 13, 2016, "EU Law: Better results through better application", the Commission announced a change of approach, moving to systematically request the Court of Justice of the European Union to impose a lump sum penalty. The logical consequence of the lump sum approach is that, in cases where a Member State remedies the infringement by transposing the directive during an infringement procedure, the Commission will no longer discontinue its action solely for that reason.

As a transitional provision, the Commission has stated that it will not apply this new practice to procedures whose letter of formal notice is prior to the publication of that communication in the Official Journal of the European Union, which took place on January 19, 2017. In this case, the European Commission initiated a formal infringement procedure through Letter of Formal Notice 2017/0084 of January 24, 2017. Consequently, the procedure is governed by this new approach, based on the principle of non-discontinuance.

Subsequently, through Reasoned Opinion 2017/0084, of June 14, 2017, it gave a period of two months to adopt the legal, regulatory, and administrative provisions necessary to comply with the directive. After the period indicated by the Commission in the Reasoned Opinion has elapsed, it is of extraordinary and urgent need to proceed with the transposition before the lawsuit is filed before the Court of Justice, thereby avoiding the imposition of a lump sum penalty.

Consequently, the circumstances of extraordinary and urgent need required by Article 86 of the Spanish Constitution as the enabling budget to resort to this type of norm concur in the measure that it is adopted, by its nature, purpose, and by the context in which it is issued.

Therefore, in exercise of the authorization contained in Article 86 of the Constitution, on the proposal of the Minister of Economy, Industry and Competitiveness, in accordance with the Council of State and after deliberation of the Council of Ministers in its meeting on November 24, 2017,

cve: BOE-A-2017-13643 Verifiable at http://www.boe.es

OFFICIAL STATE BULLETIN No. 287 Saturday, November 25, 2017 Sec. I. Page 114348

I HEREBY ORDER:

Article 1. Modification of the Commercial Code, approved by Royal Decree of August 22, 1885. The Commercial Code, approved by Royal Decree of August 22, 1885, is modified as follows:

One. New wording is given to paragraph 5 of Article 49, which shall read as follows:

"5. Companies that, in accordance with the audit of accounts legislation, have the status of public-interest entities and that, in addition, prepare consolidated accounts, must include in the consolidated management report the consolidated non-financial information statement provided for in this paragraph provided that the following requirements are met: a) That the average number of employees employed by the companies in the group during the financial year exceeds 500. b) That during two consecutive financial years, at the closing date of each of them, they meet at least two of the following circumstances:

1. That the total of the consolidated asset items exceeds 20,000,000 euros.
2. That the net amount of the consolidated annual turnover exceeds 40,000,000 euros.
3. That the average number of employees employed during the financial year exceeds two hundred and fifty. Companies will cease to be obliged to prepare the non-financial information statement if they cease to meet, during two consecutive financial years, two of the requirements of the preceding letter b), or when at the close of the financial year the average number of employees employed does not exceed 500. In the first two financial years from the constitution of a group of companies, the parent company will be obliged to prepare the consolidated non-financial information statement when at the close of the first financial year at least two of the three circumstances mentioned in paragraph b) are met, provided that the requirement provided for in paragraph a) is also met at the close of the financial year."

Two. A new paragraph 6 is added to Article 49, which shall read as follows:

"6. The consolidated non-financial information statement will include the information necessary to understand the evolution, results, and situation of the group, and the impact of its activity regarding, at least, environmental and social issues, as well as personnel, respect for human rights, and the fight against corruption and bribery, and will include: a) A brief description of the group's business model. b) A description of the policies applied by the group regarding these issues, which will include the procedures applied for the identification and assessment of risks and of verification and control, including what measures have been adopted. c) The results of those policies. d) The main risks related to those issues linked to the group's activities, including, where relevant and proportionate, its

cve: BOE-A-2017-13643 Verifiable at http://www.boe.es

OFFICIAL STATE BULLETIN No. 287 Saturday, November 25, 2017 Sec. I. Page 114349

commercial relationships, products, or services that may have negative effects in those areas, and how the group manages those risks. e) Key non-financial performance indicators that are relevant to the specific business activity. In order to facilitate the comparison of information, both over time and between entities, key non-financial performance indicators that can be generally applied and that comply with the guidelines of the European Commission in this matter may be used especially. In the event that the group of companies does not apply any policy in any of the issues provided for in the preceding letters, the consolidated non-financial information statement will offer a clear and reasoned explanation regarding this. The consolidated non-financial information statement will also include, where appropriate, references and complementary explanations on the amounts detailed in the consolidated annual accounts. For the disclosure of the non-financial information referred to in this paragraph, the company obliged to prepare consolidated accounts must rely on national, European Union, or international regulatory frameworks, specifying which frameworks it has based itself on. In exceptional cases, information relating to imminent events or issues that are the subject of negotiation may be omitted when, in the duly justified opinion of the administrative body, the disclosure of such information could seriously harm the commercial position of the group, provided that such omission does not prevent a faithful and balanced understanding of the evolution, results, and situation of the group, and of the impact of its activity. The obligation to include non-financial information provided for in paragraph 1 of this article will be considered fulfilled if the company incorporates the information described in this paragraph into the management report. When a dependent company of a group is, in turn, the dominant company of a sub-group, it will be exempt from the obligation established in this paragraph if that company and its dependents are included in the consolidated management report of another company in which this obligation is met. If an entity takes advantage of this option, it must include in the management report a reference to the identity of the parent company and to the Commercial Register or other public office where its accounts together with the consolidated management report must be deposited or, in the event of not being obliged to deposit its accounts in any public office, or of having opted for the preparation of a separate report according to the following paragraph, on where the consolidated information of the parent company is available or can be accessed."

Three. New paragraphs 7 and 8 are added to Article 49, which shall read as follows:

"7. It will be understood that a company complies with the obligation to prepare the consolidated non-financial information statement regulated in the previous paragraph if it issues a separate report, corresponding to the same financial year, in which it expressly indicates that such information is part of the management report, includes the information required for such statement, and is subject to the same criteria of approval, deposit, and publication as the management report. 8. The information contained in the consolidated management report in no case justifies its absence in the annual accounts."

cve: BOE-A-2017-13643 Verifiable at http://www.boe.es