Birmingham City face the threat of being denied their licence to play in Europe next season if they cannot convince the Premier League and the Football Association that their finances are not a major cause for concern.

The Premier League is set to hold discussions with the Birmingham board this month before deciding in conjunction with the FA whether they should be granted a Uefa licence and allowed to play in the Europa League, for which they qualified after winning the Carling Cup.

It is understood that a final decision on Birmingham's participation is not expected to be made until the middle of next month, when representatives from the governing bodies meet to determine which clubs meet the criteria for a licence. Uefa delegates its licensing scheme to national associations, meaning that Birmingham will need to satisfy the FA and the Premier League that they can meet their financial liabilities for the year ahead.

This time last year Portsmouth, FA Cup finalists, were told that they would not be allowed to compete in the Europa League after the FA and the Premier League decided against endorsing their application for a Uefa licence. Portsmouth, however, had failed to submit their application on time and were in administration with debts of £119m. Birmingham's situation is far different, although there are genuine concerns at the Premier League, who have additional reasons for wishing to ask questions of the St Andrew's board.

Under the disclosure rules brought in after the collapse of Portsmouth last year, clubs must submit "independently audited accounts to the Premier League by 1 March each year with requirements to note any material qualifications or issues raised by auditors". Clubs are also required to submit "future financial information" to the Premier League by 31 March each year that "will act as an improved early warning system should any club take undue financial risks which may have consequences for future financial stability".

As the accounts for Birmingham City football club and their parent company, Birmingham International Holdings, included qualifications in their audit reports about both companies' ability to continue as a "going concern", the Premier League wish to learn more information about Birmingham's financial position, the ownership structure at the club and recent share activity.

A spokesman for the Premier League said: "Under our financial criteria all the clubs have to submit future financial information. There are a number of triggers that would result in us taking a closer look at a club's financial circumstances, such as an 'emphasis of matter' [eg a doubt on the club's ability to continue as a going concern] on the accounts. This could result in measures being placed upon a club to ensure its sustainability going forward."

Under the new rules, which were approved in 2009, the Premier League has a range of sanctions available to it for clubs that fall into financial difficulties, including a transfer embargo, a ban on player contracts being extended or improved, or the enforced sale of players. Carson Yeung, who on Thursday bought 8.6% of the club to increase his stake in Birmingham International Holdings to 24.9%, provided written assurances to the Premier League last year in relation to the club's finances.

Birmingham's fiscal position has come under scrutiny at various points in the past 12 months, including soon after their Carling Cup final victory, when Birmingham International Holdings announced that Yeung was preparing to mortgage his private properties in a cash-raising exercise. The statement to the Hong Kong stock exchange added that without fresh funds the business may suffer "significant curtailment of its operation".

It is understood that the Premier League is also interested in whether Birmingham will be able to raise the £24.65m that was outlined in the club's most recent accounts, which were signed off in October. Although it was announced last month that the placing for shares for £7.15m has been completed, it has since been confirmed that the "best efforts" part of the capital-raising exercise, which it was hoped would raise £17.5m, has been delayed for a further two months.

Peter Pannu, Birmingham's acting chairman, maintains that the club remain on a sound financial footing. "The finances of the club in terms of profit and loss are fine and with the continued support of Carson Yeung we do not envisage any foreseeable problems," he said. "It is routine procedure for the Premier League and Uefa to look at the club's books, especially as we are now eligible for European competition."