Note on the Legal action against the EUC

Legal action started

This week, CERA has retained the services of a lawyer based in Valladolid who has started the procedure to challenge the legality of the actions of the Costa Esuri EUC’s Council before the Courts. We will keep members advised of any news as it arises.

Below is a detailed summary of some of the issues raised by the actions of the EUC’s Council with regard to the annual accounts.

Our thanks go to Francisco for spending the time to explain the actions of the EUC’s Council in a clear and understandable way.

COMMENTS ON THE MINUTES OF THE MEETING OF
THE EUC COSTA ESURI ON 30 MARCH, 2022

Dear Members of the Costa Esuri Residents Association,
My comments this time are going to refer to the 2nd and 5th points of the Minutes. These points refer to the Annual Accounts of 2021 and the Budget for 2022.


In recent days, the Minutes of the EUC’s Ordinary General Assembly, held on 30 March, 2022, have been published. Two months after it was held, the EUC’s Governing Council has not given any explanation for the delay. In addition, they have been published in the transparency portal of the EUC website and not on the first page where there is still the notice of the call to the  Assembly and without reference to its date of publication. This publication does not exempt the Governing Council from making the notifications of the Minutes to the Members of the Entity as established in the Bylaws.

I consider that the Governing Council has acted in a non-transparent manner and with an improper procedure, as on so many other occasions.

1) Point 2 – Approval, if applicable, of the Accounts for the 2021 Financial Year

At the Assembly, the Accounts that had been previously published on the transparency portal of the Entity’s web page were presented and I made comments on them. I have been pointing out, for some time, the inappropriateness of using the document of Income/Expenditure for the Accounts of the EUC Costa Esuri, as if it were a community of owners, such as those regulated by the Horizontal Property Law.

In several meetings of the Governing Council, they have spoken about the clarity of the Accounts and their presentation, indicating that they wished to improve the presentation of Accounts in view of the complaints expressed in previous Assemblies.

This year, after admitting and announcing that they were formulated following the adaptation of the General Accounting Plan for Non-Profit Entities, in addition to the format for communities of owners, they have published the Accounts in the form of a Balance Sheet, an Income Statement and an Annual Report, with very little rigor and professionalism, omitting a lot of important information needed to be able to understand the economic/financial situation of the Entity.

It is very clear from the Statutes of the EUC Costa Esuri that the Annual Accounts must be formulated on the principles and criteria withinin the framework of the accounting law.

The preparation of the Annual Accounts is the responsibility of the Governing Council, even if it makes use of external elements for this purpose.

The Annual Accounts of a small non-profit entity, comprise the Balance Sheet, the Profit and Loss Account and the Annual Report as a minimum.

The Annual Accounts must be drafted and formulated with clarity so that the information provided is understandable and useful for the members of the Entity and other interested parties. They must show a true and fair view of the assets, the financial situation and the variations in the net worth during the financial year, as well as the activity carried out, in accordance with the legal provisions.

The Annual Report of the Accounts may include a cash flow statement for further information and, in particular, it shall contain a detailed description of the degree of compliance of the Entity’s activity.

The Bylaws state that the Profit and Loss Account shall be related to the accumulated budget as of the reference date and that the Annual Accounts shall be audited by the Governing Council.

The Ordinary General Assembly will approve, totally or partially, the aforementioned financial statements, as well as the management derived from the administration of the Entity’s funds.

The Minutes state that, according to the result of the vote carried out, the Annual Accounts for the 2021 financial year have NOT been approved, either partially or totally.

Does the non-approval of the Annual Accounts in the General Assembly imply a vote of censure and disapproval of the management carried out by the Governing Council and the administration of the Entity? I believe that it does.

What happens now? Well, logically, I understand that the Governing Council and the Administration should prepare and formulate new Annual Accounts, complying with the principles, criteria and rules of preparation included in the Accounting Plan for small non-profit entities and submit them again for approval or not in an Extraordinary General Assembly.

Was there any vote to approve or disapprove of the management carried out by the Governing Counci of the EUC? I was at the Assembly and the vote was not held because the Governing Council has, since 2016, omitted to make a report of the management carried out and has failed to include in the Agenda an item submitting the management carried out by the Governing Counci to a vote.

Apart from the Annual Accounts, although the Statutes do not mention it, the Accounting Plan for Non-Profit Entities regulates the ACTION PLAN as a document of vital importance, since it projects the Annual Accounts into the future, identifying the activities to be carried out and reflecting the strategy of the EUC in the medium and long term, ensuring its viability as long as necessary.

Some comments made in the Minutes to the explanations requested by some of those attending the Assembly are worthy of the Marx Brothers and I will not comment.

2) Point 5-Approval, if applicable, of the Budget for the year 2022

The Bylaws of the Entity state in Article 39 Budget that, “In the last quarter of each fiscal year, the Governing Council shall formulate the provisional budgets for the following fiscal year.”

According to Article 21, the General Assembly is responsible for analyzing, debating and approving the budget for each fiscal year.

When did we, the members of the EUC, find out about the Budget for the year 2022, after the publication of the call for the General Assembly? Since its appointment, the Governing Council has met on three occasions, on none of which was the Budget was discussed or approved.

The Budget, unlike the Annual Accounts, does not have a standard format or structure and its contents should normally consider only the current income and expense items for the year, unless investments are made. If that is the case, then their influence on current expenses or income should be included.

With respect to expenses, it is important that all those budgeted be for the purpose of fulfilling the object and purpose indicated in the bylaws, since expenses exceeding this purpose may be considered improper and harmful by the members of the Entity and may be subject to challenge before the Municipality and the Courts.

A provisional budget has been presented to the Assembly, but when the Assembly was held, the sports field had already been repaired, which is mentioned in the budget under point 4, “Repair and replacement of infrastructures and equipment.” It was said in the Assembly that the sports court is an irregular installation, located in a plot of land owned by the Town Hall that is not for sports use, so the EUC is not responsible for its maintenance and conservation.

The provisional budget includes items for actions outside the object and purpose of the EUC, as set out in the Bylaws, so they should not be approved.

I consider that the actions of the Governing Council are disloyal to the members of the Entity and to the General Assembly by not offering alternatives for maintenance and conservation works as necessary or more necessary than those proposed. It has started to execute them before knowing whether the budget was approved or not and is not disclosing the cost of the various works. It did not provide the Assembly with projects, reports or budgets for the execution of any work.

On 16 May 2022, I requested detailed information in writing from the Governing Council on the works carried out on the sports field, on the works to be carried out in the playgrounds and other areas. I am still waiting for its response.

I do not think it is correct the way the budget is balanced, with an estimate of the amount of the dues that will not be paid during the fiscal year (they call them doubtful) and the assignment of estimated amounts to the income and expense items without taking into account the budget execution of previous years.

The Budget, according to the vote recorded in the Minutes, was approved by a ratio of votes in favour of 13.097% and against of 8.045%.

I consider that the Annual Accounts presented do not comply with the requirements indicated in the Statutes; the Budget does not adjust to its purpose by including works and actions that exceed the object and purpose of the EUC. This has previously happened with the contract that was made to promote Costa Esuri and to have a better communication with the Governing Council through “Ayamonte Existe”. What happened? Without explanation, the contract was revoked, causing damage to the assets of the Entity.

I consider that there are sufficient grounds to challenge the General Assembly from the moment it was called and I have done so.

With the publication of the Minutes, the motives for challenging the General Assembly are reinforced, especially due to the lack of transparency of the voting process and the counting of votes and percentages. What verification is there that the percentages assigned to each owner who participated in the Assembly are correct?

Without a CENSUS of owners entitled to vote (or those who cannot vote), public voting and a voting table or voting officers, the votes are not transparent and are worthless.

There are people who attended and voted, but do not appear in the Minutes. There are percentages of votes that cause many doubts as to their accuracy. The Statutes are not being complied with.

Francisco Tapia Catalán

June 2022

1 thought on “Note on the Legal action against the EUC”

  1. A quick question please.

    Will the lawyer also investigate the Martin-Fadesa funds that were meant to be ONLY used for CE under a legal framework, please?

    Please can you confirm what the initial deposit was .. I’ve heard various numbers.

    Thanks for all the work CERA does, voluntarily, for the residents.

    Jon

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