Penalties to Include Imprisonment and Fines, according to the Companies Law
H.E. Minister of Commerce and Industry Dr. Tawfiq Bin Fawzan Al Rabiah has confirmed that no let-up in imposing the legal penalties on companies and institutions officials not complying with submitting their financial statements in “Qawaem" program before 19/1/1437 AH, corresponding to 01/11/2015 AD, indicating that the Commercial Registrations of those violating the regulations will be stopped without any exception. This is for all companies not complying with submitting their financial statements and for being late over six months from the end of the fiscal year of the company or institution, along with the imprisonment and a fine against the offenders, in accordance with Article 229 of the Companies Law.
His Excellency stressed that it is of great importance for all companies and institutions to comply with submitting their financial statements as soon as possible through the licensed accounting offices, so as to avoid stopping their CR and imposing the legal penalties against them.
Article 229 of the Companies Law stipulates the imprisonment for not less than three months and not exceeding a year, as well as a fine not less than SR five thousand and not exceeding SR twenty thousand, or either of these two penalties, on every company`s official not complying with MCI instructions, without reasonable reason, regarding the company`s obligations or in giving a chance for the Ministry`s delegates to review the documents and records or in providing the data and information needed by the Ministry.
It is noteworthy that “Qawaem” program is one of MCI initiatives to convert the paper financial statements to electronic and to be submitted automatically. This would support the credibility and transparency of the financial statements with the beneficiaries, in addition to the speed in providing the concerned authorities with the requested information with high accuracy, as well as providing financial and economic data base, supporting the National one, in addition to linking the financial statements of companies and institutions with (ISIC) International Standard Industrial Classifications, adopted by the United Nations, which will enable the financial analysis of economic sectors and activities of various kinds, as well as studying and monitoring their performance indicators and the distribution of investments as per the activities.