The Crime of Concealing the Financial Position of a Company in UAE Law

Mohammed Emad Salama

The crime of concealing the financial position of a company under UAE law is a matter of significant concern for many business owners. Entrepreneurs seeking to launch an investment project primarily aim to establish a company with a group of individuals who share the common goal of achieving economic success. A company serves as the legal form and mechanism that unites individuals’ efforts to achieve their shared objectives within a legal framework that protects the rights of all parties and clarifies their obligations. These parties will not be able to feel secure if the company’s manager or any of the partners conceals the company’s financial position and fails to clarify its true nature to the other partners.

In this context, and with the UAE legislator’s commitment to protecting the rights of partners and encouraging investment, concealing the financial position of a company has been considered a serious financial crime subject to the following legal penalties:

Legal Penalties under UAE Law

According to Federal Decree-Law No. (32) of 2021 on Commercial Companies, Article (349) addresses the concealment of the company’s financial position.

Penalty: Anyone who intentionally provides false information in the company’s balance sheet, profit and loss account, or financial report, or omits material facts in these documents in an attempt to conceal the company’s financial position, shall be punished with imprisonment for a period of no less than six (6) months and no more than three (3) years. They will also be fined an amount not less than 100,000 AED and not exceeding 500,000 AED, or either of these penalties.

Actions Considered a Crime under the Above Article:

1. Concealing the company’s financial facts.
2. Providing false financial information.
3. Failing to disclose debts or losses.
4. Altering financial records.
5. Failing to submit financial reports on time.

Legal Procedures for Punishing Those Who Conceal the Company’s Financial Position:

1. Filing a complaint with the competent authorities.
2. Conducting an investigation by the Public Prosecution.
3. Submitting the case to the court.
4. Issuing a final judgment.

The provisions outlined above, along with other legal texts put in place by the UAE legislator to protect the rights of partners and the company’s assets, have created a fertile and secure investment environment in the United Arab Emirates. Investors are assured that their funds and rights will not be lost, which contributes to a thriving and secure business climate in the UAE.