Administrative Penalties Regarding Acts Committed in Violation of the Provisions of Federal Decree by Law regarding Commercial Companies
The last update on this law was listed on 04 Nov 2022
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- Article (1) Definitions
- Article (2) Scope of Application
- Article (3) Administrative Penalties
- Article (4) Provisions Concerning Violations Falling within the Jurisdiction of the Authority
- Article (5) Grievances Against Administrative Penalties
- Article (6) Amendment of Fines
- Article (7) Repealing
- Article (8) Publication and Enforcement
Article (1) Definitions
In applying the provisions of this Resolution, the following words and expressions shall have the meanings assigned to each of them, unless the context requires otherwise:
State: United Arab Emirates.
Ministry: Ministry of Economy.
Minister: Minister of Economy.
Authority: Securities and Commodities Authority (SCA).
Competent Authority: The local authority concerned with corporate affairs in the concerned Emirate.
Decree-Law: Federal Decree-Law No. (32) of 2021 regarding Commercial Companies.
Working Day: The official working day of the ministries, government agencies and the relevant Competent Authority.
Article (2) Scope of Application
1. The provisions of this Resolution apply to: (i) commercial companies established in the State; (ii) foreign companies; (iii) branches of foreign companies; (iv) Representative Offices, and (v) Investment Funds that are subject to the provisions of the Decree-Law and the decisions and regulations issued in implementation thereof; and (vi) foreign companies based in the State and carries out any activity therein, or establishes a branch or Representative Office therein.
2. The provisions of this Resolution do not apply to: (i) companies exempted from the provisions of the Decree-Law; (ii) professional, civil and foreign companies; and (iii) companies operating in free zones.
Article (3) Administrative Penalties
Without prejudice to any harsher penalty or procedure provided for in the Decree-Law, the Ministry or the Competent Authority, each in accordance with its competence, may impose one or more of the following administrative penalties on whoever commits any of the acts that violate the provisions of the Decree-Law and the decisions and regulations issued for its implementation contained in the Schedule attached to this Resolution according to the following gradation:
a. In the event of a first-time violation, a written warning notice shall be sent to the violator, and they shall be given a period not exceeding (30) thirty days that starts on the date on which the written warning notice was sent, to correct the violation.
b. In the event of a second-time violation, the administrative fine shall be imposed in accordance with the Schedule attached to this Resolution.
c. In the event of a third-time violation, the administrative fine shall be doubled in accordance with the Schedule attached to this Resolution.
d. In the event of a fourth-time violation, the administrative fine shall be tripled in accordance with the Schedule attached to this Resolution, and the violating company shall be subjected to temporary administrative closure for a period not exceeding (6) six months. Such period is renewable for one time only.
e. Revocation of the licence and approval issued to the violator or those responsible for the violator, provided that the violator bears the expenses and costs of removing and treating the damage resulting from the violation in the event that such violation is not removed or treated.
2. Taking into account Clause (1) of this Article, the Ministry or the Competent Authority, each in accordance with its competence, may impose the most severe administrative penalty and not follow the gradation referred to in Clause (1) of this Article, in case of serious violations, and it is left to its discretion to estimate the appropriate administrative penalty in accordance with the nature of the violation.
3. The value of the administrative fines mentioned in the Schedule attached to this Resolution shall be collected in accordance with the mechanism determined by the Ministry of Finance after coordination with the Minister, the Chairman of the Authority, or the head of the Competent Authority.
4. The Ministry or the Competent Authority, each in accordance with its competence, may double the administrative fines for acts committed in violation of the provisions of the Decree-Law contained in the Schedule attached to this Resolution in the event of recidivism or recurrence of the violation.
5. For the purposes of collecting the value of the administrative fine mentioned in the Schedule attached to this Resolution, any part of the day is considered a full day and any part of the month is considered a full month.
Article (4) Provisions Concerning Violations Falling within the Jurisdiction of the Authority
1. Without prejudice to any harsher penalty or procedure provided for in the Decree-Law, the Authority may impose one or more of the following administrative penalties on whoever commits any of the acts that violate the provisions of the Decree-Law and the decisions and regulations issued for its implementation that fall within its jurisdiction and contained in the Schedule attached to this Resolution according to the following gradation:
a. In the event of a first-time violation, a written warning notice will be sent to the violator and they will be given a period not exceeding (30) thirty days, counted from the date the written warning notice was sent, to correct the violation.
b. In the event of a second-time violation, the administrative fine shall be imposed in accordance with the Schedule attached to this Resolution.
c. In the event of a third-time violation, the administrative fine imposed for the second-time violation shall be doubled.
d. In the event of a fourth-time violation, the administrative fine imposed for the second-time violation shall be tripled.
e. Revocation or suspension of the license and approval issued to the violator or those responsible for the violator, provided that the violator bears the expenses and costs of removing and treating the damage resulting from the violation in the event that such violation is not removed or treated.
2. As an exception to Clause (1) of this Article, if the incident subject of the violation relates to formal procedures or, is subject to its discretion, the Authority may warn the violating person and instruct them to correct and avoid a recurrence of the incident in the future.
3. The Authority is allowed not to follow the gradation referred to in Clause (1) of this Article in the case of serious violations, and it shall be left to its discretion to estimate the appropriate administrative penalty in accordance with the nature of the violation.
4. The fine imposed by the Authority on the violating person must be paid within the payment deadline specified by the Authority. It may impose a daily late payment fine of (1,000) one thousand dirhams for each day of late payment beyond the specified date, provided that the total of the delay fines does not exceed the imposed fine.
5. Without prejudice to the maximum limit of financial fines stipulated in the Decree-Law, the Authority may impose an administrative fine in an amount equal to or greater than the benefit or profits achieved by the violator, or the losses they avoided, or equal to the value of the damage incurred as a result of the violation.
The administrative penalties that fall within the competence of the Authority and are mentioned in this Resolution shall apply to the violations that occurred after its effective date, as well as the violations that occurred from the effective date of the provisions of the Decree-Law and were not decided upon by the Authority until the date on which this Resolution takes into force.
For the purposes of collecting the value of the administrative fine mentioned in this Article, any part of the day is considered a full day and any part of the month is considered a full month.
Article (5) Grievances Against Administrative Penalties
1. The Ministry, the Authority, or the Competent Authority, each in accordance with its competence, shall notify the violating company of the decision imposing the administrative penalty [on such company] within (15) fifteen days from the date of its issuance.
2. Each person with the capacity and interest may file a grievance against the administrative penalty with the Minister, the Chairman of the Board of Directors of the Authority, the head of the Competent Authority, or whomever authorized by them, within (30) thirty days from the date of being notified of the contested decision, provided that the grievance is reasoned and accompanied by all supporting documents. The grievance shall be decided on within (30) thirty days from the date of its submission and in accordance with the procedures in force at the Ministry, the Authority or the Competent Authority.
3. The decision issued regarding such grievances shall be final. Failure to respond to a given grievance within (30) thirty days from the date of its submission shall be deemed a rejection thereof.
4. After the expiration of the period stipulated in Clause (2) of this Article, no grievance against the decision imposing the administrative penalty may be accepted.
Article (6) Amendment of Fines
The Cabinet is responsible for making any amendments to the amount of fines contained in the Schedule attached to this Resolution, by way of addition, deletion or modification.
Article (7) Repealing
The Cabinet Resolution No. (78) of 2022 Promulgating the Administrative Penalties Regulations regarding Acts Committed in Violation of the Provisions of Federal Decree-Law No. (32) of 2021 regarding Commercial Companies is hereby repealed. Any provision that contradicts or conflicts with the provisions of this Resolution is also hereby repealed.
Article (8) Publication and Enforcement
This Resolution shall be published in the Official Gazette and shall come into force from the date of such publication.
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