New Penalties For UAE LLCs and Onshore Companies

February 23, 2023

Recently, the UAE Cabinet issued a resolution that stipulates penalties for violating the UAE Companies Law.

Who is impacted?

LLCs, UAE onshore or mainland companies. You may find it useful to read our article on navigating the UAE market.

Impact on LLCs

As a shareholder or manager of an LLC, it is crucial to be aware of the penalties that have been introduced under the Penalties Law as stated below:

  • Ownership: if the LLC carries out activities with strategic significance may face a fine of AED 100,000 for non-compliance with the required UAE national ownership percentage or minimum number of Emirati board members.
  • Accounting Registers: Expect a fine of AED 15,000 for failing to maintain accounting registers.
  • Trade Name Change: A monthly fine of AED 500 will apply for failing to comply with the decision to change the trade name, with a maximum annual amount of AED 5,000.
  • Sharia Controller: AED 7,000 fine on the Sharia Controller and every member of the Internal Sharia Control Committee of an LLC when not operating in accordance with the provisions of Islamic Sharia.
  • Data Access: LLCs may be fined AED 5,000 for refusing access to shareholders to minutes of meetings, books, and other related transaction documents.
  • Board Meetings: Any director, chairman of the LLC board, or their representative may face a fine of AED 3,000 for failing to invite a director or board member to a board meeting.
  • General Assembly: The director or chairman of the LLC board may be fined AED 5,000 for failing to call the annual general assembly meeting, with a fine of AED 10,000 for failing to call the meeting when requested by the Ministry.
  • Losses: A fine of AED 50,000 will be given to the director, chairman of the board, or their representative if a general assembly is called to disclose losses equal to 50% or more of its capital.
  • Memorandum of Association: Expect a fine of AED 1,000 on the director or chairman of the board for not having updated the MOA as per the UAE Companies Law.
  • Refusal of Information or Misleading Information: AED 5,000 fine on the director or chairman of the board of directors of the LLC, their representative, or the auditor upon refusal, concealment or providing misleading information to authority inspectors.
  • Penalties for Share Disposal: A fine of AED 20,000 may be imposed on any individual who disposes shares in violation of the UAE Companies Law.

How CBD Can Assist

It is yet to be determined what effect the implementation of the Penalties Law will have on UAE-based corporations, however, the implementation itself suggests that authorities may be considering a more stringent examination of companies’ adherence to the UAE Companies Law.

It is advisable to thoroughly assess your corporation’s practices to minimize the likelihood of fines due to non-compliance. CBD can do a thorough ‘health check’ for your business and assess areas of rectification. Find out how we can support you with UAE company formation and Dubai visas. To learn more, contact: or call/whatsapp +971 56 218 4695.

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