Audit – FAQ
- Can a DAFZA (Dubai Airport Free Zone) registered Company list in the stock exchanges in UAE?
In the UAE, a DAFZ registered PLC may list its shares in any one of the following exchanges in UAE;
- Nasdaq Dubai
Dubai Financial Market (DFM) and Abu Dhabi Stock Exchange (ADX) are regulated by SCA, whereas the DFSA regulates Nasdaq.
There might be additional eligibility requirements for a DAFZA PLC to pursue the listings with any of the exchanges mentioned above; like in earlier 2021, the DFM issued its own listing rules for free zone companies in UAE.
SCA’s approval is mandatory for the companies pursuing listing in DFM and ADX; DFSA’s approval of the IPO is required if the Company chooses Nasdaq for the listing.
- For how many years the accounting records need to be kept for a DIFC registered company?
A DIFC registered company needs to keep its accounting records for at least six years from the date upon which the Company created the document, or for some other period as may be prescribed in the respective regulations (Clause 122(2)
- What is the period of the first financial statements for a newly company registered in DIFC?
Generally, the first financial statements period for a DIFC registered company as per Article 123 is a maximum of 18 months from the day the Company incorporated as determined by the Company’s directors.
- Is Audit of financial statements mandatory in UAE?
As per Article 27 of UAE Federal Law no 2 of 2015, every Joint Stock Company or Limited Liability Company shall appoint one or more auditors to audit the Company’s books of accounts yearly. All the other types of companies may appoint an auditor under the provisions of this Law.
- For how many years should a mainland company in UAE maintain the accounting records?
As per Article 26 of UAE Federal Law no 2 of 2015, every Company needs to maintain accounting records for at least 5 (five) years from the end of the Company’s financial year. Electronic copies are acceptable.
- What is the financial year followed in UAE for the Audit of the financial statements?
The UAE government prescribes no specific financial year. The financial year should be 12 months and acceptable up to 18 months for the first financial year (newly formed companies). Most of the entities follow January to December (Calendar year) except for subsidiary companies that match Parent Company’s financial year outside UAE.
- Is there a requirement to submit the audited financial statements to the regulators in UAE?
- Listed companies must submit the audited yearly financial statements to the respective stock exchanges in UAE before March 31st
- Central Bank regulated entities like banks, financial institutions, and exchange houses should submit audited yearly financial statements before March 31st.
- Insurance companies, brokers under the Central bank’s purview, must submit their audited financial statements within four months.
- As per their regulation, free zone authorities require entities to submit their yearly audited financial statements to the regulators, which is generally 3 months or six months at the end of the financial year.
- Hotels operating in UAE need to submit the yearly financial statements with Tourism Department within 6 months from the financial year.
- Branch of foreign companies needs to submit the yearly financial statements when renewing their commercial license.
- Are there any capital adequacy rules to be followed by the shareholders of a registered Establishment in Hamriyah Free Zone?
If the net assets of a Free Zone Establishment fall below 75% of its Legal share capital, the shareholder of that establishment should take such steps as appropriate to remedy the situation to restore at least 75% of its share capital soon as reasonably practicable. (Article 17(N) of implementing rules and regulations)
- Is Audit of financial statements mandatory in HFZA?
Yes, According to Article 17 of implementing rules and regulations concerning the establishment of free zone, establishments at Hamriyah Free Zone are required to appoint auditors from the approved list by the HFZ Authority and shall deliver a copy of the auditor’s report to the FZE Unit of HFZ Authority, together with the annual financial statements
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