Compliance Audit Guide in DMCC: Documentation Requirements

Most DMCC members discover the state of their compliance file at renewal, which is the worst moment to discover it. The share register was never updated after a partner left, the beneficial ownership record still shows the original incorporation position, the office the licence refers to was given up eighteen months ago, and the accounts have not been finalised. None of these are hard problems on their own. Together they hold up a renewal that the business assumed was routine.

This guide sets out the documents a DMCC company should be able to produce at any time, who asks for them, and the points where files most often turn out to be incomplete.

Who reviews a DMCC company, and what they look at

The DMCC Authority is both the registrar and the licensing body. It maintains the corporate record for every member company, issues and renews the licence, approves changes to shareholding, directors and activities, and inspects the premises the company is registered at. Because registration and licensing sit with the same body, an inconsistency in one part of the record surfaces quickly in the other.

Federal obligations apply on top. A DMCC company is a UAE company for the purposes of Federal Decree-Law No. 47 of 2022 on corporate tax, which applies to financial years starting on or after 1 June 2023, with 0% on taxable income up to AED 375,000 and 9% above. Being in a free zone does not remove the registration and filing obligation, and whether any free zone treatment applies to particular income should be settled with advice before the return is due. Where the company makes taxable supplies, VAT at 5% applies in the ordinary way, and the records supporting it must be retained.

Employment in DMCC is governed by Federal Decree-Law No. 33 of 2021, which replaced Federal Law No. 8 of 1980, administered through the free zone's own processes for permits and contract filing. Personal data is governed by Federal Decree-Law No. 45 of 2021.

The core document set

The following is what an inspection, a renewal query, a bank review or an incoming investor will ask for:

• the certificate of formation or registration, the current licence listing the approved activities, and the articles of association as most recently adopted;
• the share register and the register of directors and managers, reconciled to what the Authority holds;
• the ultimate beneficial ownership record, updated whenever control changes rather than only at incorporation;
• every resolution approving a share transfer, a change of manager, a change of activity or an amendment to the constitutional documents, with the Authority's corresponding approval;
• the lease or flexi-desk agreement for the registered premises, matching the address on the licence;
• financial statements, audited where an audit is required, together with the accounting records behind them;
• employment contracts, permits, payroll records and end-of-service calculations for each employee;
• for members trading precious metals, stones or other regulated commodities, the due diligence and responsible sourcing records the Authority requires for that activity;
• where the company falls within the anti-money-laundering framework, its risk assessment, customer due diligence files, screening records and reporting log.

Where the file usually breaks

Trading outside the licensed activity

DMCC licences list specific activities. Businesses grow into adjacent lines — a trading company starts advising, a commodities company begins holding stock for third parties — without adding the activity to the licence. The invoices then describe something the licence does not cover, which is visible to a bank, a counterparty and the Authority alike. Adding an activity is an administrative step; explaining two years of invoices that fall outside the licence is not.

Registers that lag behind reality

A change of shareholder, manager or beneficial owner requires both the internal register to be amended and the change to be approved and recorded by the Authority. Doing one without the other creates a conflict between the company's own record and the register. That conflict is what a due diligence exercise finds first, and it can stall a financing or a sale for weeks.

Premises that no longer match the licence

The registered address is inspected. A company that has moved, given up its unit, or is operating from somewhere other than the address on its licence has a defect that is easy to correct in advance and awkward to explain during an inspection.

Decisions with no paper behind them

Intra-group loans, guarantees given for an affiliate, related-party service agreements and manager appointments should each be traceable to a dated resolution recording who approved the matter and what was disclosed. These are also the transactions most closely examined for corporate tax purposes, so the commercial rationale and the pricing basis are worth recording at the time.

Substance records from earlier years

Economic substance obligations were cancelled for financial years ending after 31 December 2022 by Cabinet Decision No. 98 of 2024, but they still apply to the financial years from 2019 to 2022. Notifications, reports and supporting evidence for those years belong in the file and should not be cleared out because the regime no longer runs forward.

The overlap with commercial disputes

The documents an auditor asks for are the same ones a counterparty asks for when an agreement goes wrong. A buyer refusing delivery will test whether the person who signed the contract had authority. A supplier resisting a liability cap will test which version of the terms was executed. Keeping signed originals, authority schedules and the approvals behind them in one place is as useful in commercial dispute resolution as it is at renewal, and the absence of that file weakens both positions at once.

A routine that prevents renewal problems

Well before renewal, reconcile the share register, the register of managers and the beneficial ownership record against what the Authority holds, and file anything outstanding. Compare the licensed activities with what the company has actually invoiced for over the past year. Confirm the premises match the licence. Close the accounts early enough that an audit, where one is required, can be completed without pressure. Check that every employee's permit and contract are current and that payroll records support them. Confirm the tax and VAT registration position and that the filings due have been made.

Where a gap appears, correct it and record the date the correction was made. A file that shows an issue identified and resolved is a far stronger document than one where the issue is simply missing.

For help reviewing a DMCC company's corporate records before renewal, a transaction or an inspection, our corporate legal services team can work through the file with you.

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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

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