Commerce Ministry Enforces Fines For Delayed Financial Statements Submission

The Ministry of Commerce has begun enforcing a new ministerial decision by Dr. Majid bin Abdullah Al-Qasabi. This decision mandates direct fines for those who do not submit financial statements as required by the Companies Law and its executive regulations.

According to the decision, violators will face fines based on their company's structure and capital. For single-manager companies with less than SAR500,000 in capital, the fine is SAR8,000. Companies with two or more managers and the same capital threshold will be fined SAR4,000.

For single-manager companies with a capital of SAR500,000 or more, the fine increases to SAR12,000. Companies with two or more managers and the same capital threshold will face a fine of SAR6,000.

Unlisted joint-stock companies also face penalties. If their capital is less than SAR5 million, the fine is SAR15,000. For those with a capital of SAR5 million or more, the fine rises to SAR20,000.

If a company repeats the violation within the statutory period for the following fiscal year after a previous fine has become final, the fine will increase by 50%. This aims to ensure compliance with financial reporting standards.

Article 17 of the Companies Law issued in 1443 AH requires that at the end of each fiscal year, companies must prepare financial statements according to generally accepted accounting standards in Saudi Arabia. These statements must be submitted within six months following the end of the fiscal year.

Notification Mechanism

Violators will be notified of their fines according to Article 94 of the executive regulations of the Companies Law. This ensures that all parties are aware of their obligations and penalties for non-compliance.

Article 262 outlines fines for anyone who neglects or fails to perform their duty regarding financial records. Paragraph E specifies fines for failing to keep accounting records and supporting documents or not preparing financial statements according to approved standards.

This ministerial decision underscores the importance of adhering to financial reporting requirements in Saudi Arabia. It aims to enhance transparency and accountability within companies operating in the Kingdom.

With inputs from SPA