Initial classifcation of newly established companies
The initial classifcation of newly established companies
depends on the company’s characteristics on the first balance
sheet date. However, publicly traded companies are always
deemed to be large companies.
The classifcation of companies by size is signifcant because
the disclosures required by the German Commercial Code vary
according to the size of the company. Large companies must
prepare a balance sheet, an income statement, notes to the
financial statements (comments and supplementary disclosures
about items in the balance sheet and income statement, as well
as additional information about such matters as accounting poli-
cies, affliated companies, and the remuneration of management
and of the supervisory board), and a management report (con-
taining a description of business trends and future prospects for
the company), each in the complete format prescribed by law.
The legal representatives of a publicly traded company which is
not obligated to prepare consolidated financial statements have
to prepare a cash fow statement and a statement of stockhold-
ers’ equity in accordance with the balance sheet, the income
statement, and the notes to the financial statements as well. In
addition, segment information may be provided together with
the financial statements.