If you are either running or part of a Limited Liability Company (LLC) in UAE, be aware of Article 26 and 27 of “Federal Law No 2 of 2015 on Commercial Companies” and comply with it in order to avoid the penalties that are mentioned for non-compliance of above articles in the law.
Every LLC company in UAE should maintain books of accounts and keep them for record for a minimum period of 5 years at its head office. Every company shall apply the International Accounting Standards and Practices upon preparing its periodical and annual accounts to give a clear and accurate view of the profits and losses of the company.
Further, every LLC company should appoint an auditor and get their books of accounts audited every year by the appointed auditor along with auditing profit and loss account and balance sheet.
Spectrum Auditing is an auditing company with license issued by Dubai Economic Development and approved by Ministry of Economy to perform audit of any LLC company in UAE.
Spectrum specializes in providing high quality auditing and also helps companies in maintaining books of accounts as per the requirements of the UAE Law applicable to LLC companies. Be a part of your future growth. Spectrum is your door to success!
Following is the extract of the Law for further details:
Article 26 – Accounting Records
1). Every company shall keep accounting records showing its transactions to accurately reveal at any time the financial position of the company and enabling the partners or shareholders to confirm that the accounts of the company are properly kept in accordance with the provisions of this Law.
2). Every company shall keep its accounting books in its head office for a period of at least 5 (five) years from the end of the financial year of the company.
3). The company may keep an electronic copy of the original of the documents and records kept and deposited therein in accordance with the controls issued by a Ministerial Decision.
Article 27 – Accounts of the Company
1). Every Limited Liability Company shall have one or more auditors to audit the accounts of the company every year. The other types of companies may appoint an auditor in accordance with the provisions of this Law.
2). The company shall prepare annual financial accounts including the balance sheet and the profit and loss account.
3). The company shall apply the International Accounting Standards and Practices upon preparing its periodical and annual accounts, to give a clear and accurate view of the profits and losses of the company.
4). Every partner or shareholder in any company may, based on a written request presented, obtain a free copy of the last audited accounts and of the last report of its auditor and a copy of the accounts of the group if it is a holding company. The company shall respond to such request within 10 (ten) days from the date of submittal thereof.
With Emergence of Taxation, other compliance and reporting like VAT / Excise, CbCR, ESR etc, Its also very important for us to note that relevant authorities like FTA / Ministry of Economic also emphasize on keeping up to date accounts and regular audits.
They may also demand periodically, Audited book of accounts.
Penalties for failure to comply with above mentioned articles:
Article 348 – Failure to keep Accounting Records A fine of at least AED 50,000 (fifty thousand), but not more than AED 500,000 (five hundred thousand) shall be imposed on the national or foreign company that fails to keep accounting records for the company to state its deals.
Article 349 – Failure to keep Accounting Records for the Period determined in this Law A fine of at least AED 20,000 (twenty thousand), but not more than AED 100,000 (one hundred thousand) shall be imposed on the national or foreign company that fails to keep accounting records for the period determined in this Law.