Common Annual Corporate Compliance and Maintenance Mistakes to Avoid in Dubai

Annual corporate maintenance is not difficult work. It is work that is easy to postpone, and the postponements only become visible together, usually at the moment the company needs something from a bank, a registrar or a buyer. The mistakes below are the ones that actually turn up in Dubai company files, onshore and in the financial free zones, and each has a straightforward correction.

Related: Our annual audit and financial compliance team reviews company files of exactly this kind.

Eight recurring errors

1. Writing the minutes to catch up

Decisions get taken in meetings and messages and never reduced to a signed resolution, and the gap is filled a year later when someone asks for the paperwork. A resolution dated to a meeting that produced no contemporaneous record is a document that will not survive being questioned. Sign at the time. Where a decision was genuinely taken and never recorded, the honest instrument is a present-dated ratification, not a backdated minute.

2. The company's register and the registrar's record disagree

A share transfer is agreed and paid for, the internal register is updated, and the filing with the licensing authority or the registrar never happens. Onshore, under Federal Decree-Law No. 32 of 2021 on Commercial Companies, which replaced Federal Law No. 2 of 2015, a transfer of shares in a limited liability company requires a notarised amendment to the memorandum of association and registration before it takes effect against the company. Until then the seller is still the shareholder on the record that matters, which is discovered at the worst possible moment.

3. Treating the beneficial ownership record as a one-off

The record of ultimate beneficial owners is created at incorporation and then never touched, although the ownership above it has changed twice. Every bank refresh, every registrar query and every counterparty compliance check goes to this document. It has to track reality, and someone has to be responsible for updating it when the group above the company moves.

4. Stale addresses and signatory details

A registered address that is no longer used, an authorised signatory who left the business, an email on file that nobody reads. Notices are validly served on the record the registrar holds, so a company in this position can be in default of something it was told about and never saw. This is the cheapest item on the list to fix and among the most damaging to leave.

5. Treating the licence expiry date as the compliance calendar

Renewal is one date among several. The company's financial year drives the accounts and the tax return; the registrar's filing cycle drives the annual return; the licence drives the renewal. These rarely coincide, and a company that works backwards from one of them will be late on the others. The correction is an inventory rather than a template: every recurring date written down next to the document or the authority it comes from, and next to the name of the person who has to act on it. A date nobody can trace back to a source is usually the one that turns out to be wrong.

6. Assuming that no tax payable means nothing to file

Corporate tax under Federal Decree-Law No. 47 of 2022 applies to financial years starting on or after 1 June 2023, at 0% on taxable income up to AED 375,000 and 9% above. The error is to read the lower band as permission to do nothing at all. Registration with the Federal Tax Authority and the return for each tax period have to be dealt with whether or not there is anything to pay, so a dormant company, a loss-making year and a profitable company sitting inside the lower band can each end up in default of an obligation nobody in the business knew it had. A free zone address does not settle the point; the entity's own facts do, and they are worth working through rather than assuming.

7. Reading the Economic Substance cancellation as retrospective

The Economic Substance Regulations were cancelled for financial years ending after 31 December 2022 by Cabinet Decision No. 98 of 2024. The cancellation looks forward, and it is read as though it looked back. The financial years 2019 to 2022 keep their obligations, and anything raised in respect of those years, an assessment, a penalty or a request for information, is untouched by the cancellation and does not lapse because the regime did. The correction is to close those years out on paper: establish what was filed for each of them, what if anything came back, and whether it was ever answered. Until that has been done the subject is open, however confidently the file says the regulations no longer apply.

8. Using an onshore playbook in DIFC or ADGM, or the reverse

DIFC and ADGM are common-law jurisdictions with their own companies statutes, their own registrars and their own filing requirements, which do not map onto the onshore regime. Groups that run a single process across all their entities tend to apply the onshore approach in the free zones and miss the annual filing and accounts requirements there. Regulated firms run a second version of the same problem inside their own organisation. Where the business also holds a licence from the Dubai Financial Services Authority or the Financial Services Regulatory Authority, the reporting owed to the regulator usually has a compliance officer attached to it, while the filings owed to the registrar belong to nobody in particular. The firm is then in good standing with the regulator and quietly in arrears with the registrar, and the arrears are the ones nobody is looking for.

If the file is already behind

Panic-filing is the wrong response, because the sequence matters. In practice the order is this.

1. Establish the position from the outside in. Obtain what the registrar, the licensing authority and the tax authority actually hold for the company. That is the baseline, not the internal file.
2. Separate what can be corrected from what can only be disclosed. Filings can be brought up to date. A year in which no general assembly was held cannot be made to have happened, and pretending otherwise creates a worse problem than the omission.
3. Get the accounts done, including for closed years. Almost everything else depends on them: the tax position, the licence renewal, the banking relationship.
4. Regularise the corporate record by present-dated resolutions ratifying what was decided, with the history stated accurately.
5. Deal with any penalty position directly rather than waiting for it to be raised, and take advice on whether relief is available before assuming it is not.

Companies that go through this once rarely fall behind again, because the exercise makes plain how little ongoing effort was actually required. The more useful output is knowing which of the errors above caught this particular company, because the same one tends to recur: a business tripped up once by an unregistered share transfer will be tripped up by it again unless the filing step is written into the way transfers are done in the first place. Building that into how decisions are taken and recorded is ordinary corporate governance framework work, and an occasional legal and financial review picks up whatever still slips past it.

Related Services: Explore our annual corporate compliance and maintenance and corporate compliance for tenants services for practical legal support in this area.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.

Nour Attorneys Team

Additional Resources

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