NEWS · REGULATIONS & LAWS

The Minister of Commerce updates the penalty framework and repeals the previous Decision No. (239) of 1445H

By Motaded Limited · May 17, 2026

Ministerial Decision No. (236) dated 26 Dhu al-Qa'dah 1447H — Saudi Ministry of Commerce

His Excellency the Minister of Commerce Dr. Majid bin Abdullah Al-Qasabi has issued a new Ministerial Decision requiring companies to file their financial statements within the statutory deadline, and imposing direct penalties on any party that fails to fulfill this duty under the provisions of the Saudi Companies Law and its Executive Regulation. The Decision, numbered (236) and dated 26 Dhu al-Qa'dah 1447H, was published in the official Umm Al-Qura Gazette and supersedes the previous Ministerial Decision No. (239) of 1445H, which had been in force since July 2024.

The new Decision is part of the Ministry's broader effort to elevate transparency and compliance with the Saudi Companies Law, and forms part of the corporate governance reforms the Kingdom is advancing under the Vision 2030 framework. The updated drafting reflects the differences between company sizes and legal forms, opening the door to a more equitable application that prevents small enterprises from bearing the same burden as large corporations.

• Direct financial penalties applied without the need for protracted investigation procedures.
• Graduated fines based on company form, capital size, and number of persons responsible for management.
• Warning-only sanction for failure to file financial statements for fiscal year 2024.
• 50% penalty increase upon recurrence of the violation across two consecutive fiscal years.
• Repeal of the previous Ministerial Decision No. (239) of 1445H.
• Effective date: from the date of publication in the Official Gazette.

The Decision pays special attention to small and micro enterprises, recognizing the Ministry's awareness of the limited administrative resources of such entities. It accordingly establishes lower fines that align with their operational scale. The penalties are as follows:

In this graduation, the presence of a larger number of management officials reduces the individual penalty, reflecting a philosophy of distributing legal responsibility among managers rather than concentrating it on a single individual.

This category applies to limited liability companies, general partnerships, limited partnerships, and closed joint stock companies — that is, all legal forms except joint stock companies listed on the Saudi stock exchange (Tadawul), which are subject to an independent regulatory framework under the Capital Market Authority.

The complete penalty structure under the new Ministerial Decision based on company form and capital

This category applies to joint stock companies that are not listed on the Saudi Exchange (Tadawul). The penalties are structured as follows:

Notably, the sole criterion for graduation in this category is capital size, with no consideration given to the number of persons responsible for management. This reflects the structural reality of joint stock companies, which operate under a defined board structure as prescribed by the Companies Law.

In a measured move accommodating the transitional period following the repeal of the previous Decision, the new Decision stipulates a warning-only sanction for violations of non-filing of financial statements for fiscal year 2024. This provides companies a realistic window to regularize their position and avoid monetary penalties. However, this carve-out is limited to that specific fiscal year; subsequent years will be subject to the full penalty schedule as published.

One of the most notable features of the Decision is the escalation mechanism on recurrence. If the violation of non-filing of financial statements recurs across two consecutive fiscal years following the finality of the initial violation order, the penalty is increased by 50%. For example, a limited liability company with capital exceeding SAR 500,000 and a single manager would pay SAR 12,000 on the first occurrence, and SAR 18,000 if the violation recurs after the first order becomes final.

— Mukhalad Al-Qahtani, CEO of Motaded Limited

The Decision provides that notification of violators of the direct violation order shall be carried out in accordance with Article (94) of the Executive Regulation of the Companies Law, which sets out the formal procedures for notifying companies of violation decisions. Following notification, the violating company retains the right to exercise its statutory right to object through the established procedures of the Ministry.

The new Decision is not merely a numerical update; it carries a clear message to the Saudi business environment, with three core dimensions:

First: Embedding institutional accountability. Financial statements are not a formal document archived after submission, but a transparency instrument that allows partners, financiers, and regulators to monitor the financial state of the company on a recurring basis, and enables the State to monitor the actual economic activity of the private sector.

Second: Reinforcing foreign investor confidence. Foreign investors entering the Saudi market seek a clear and disciplined legal environment, and the enforcement of penalties on violators establishes a practical governance base that reassures them of the regulatory framework's seriousness.

Third: A catalyst for digital transformation. Companies obligated to file regular and accurate statements will be more motivated to adopt advanced digital accounting solutions, especially in synergy with the e-invoicing framework supervised by the Zakat, Tax and Customs Authority, which is expanding rapidly through successive waves.

The practical compliance roadmap for meeting financial statement filing requirements under the Companies Law

Avoiding violations does not require complexity, but rather a disciplined accounting system that operates year-round, not only during the weeks leading up to the deadline. Key preventive measures include:

• Precise tracking of statutory deadlines: The Saudi Companies Law sets specific filing deadlines that vary by company form (typically within 6 months of the fiscal year-end for limited liability companies).
• Early coordination with the certified auditor: Beginning the preparation of audited financial statements well before the deadline shields the company from last-minute pressure.
• Adoption of an integrated accounting system: ERP systems or cloud-based accounting solutions streamline the preparation of periodic statements and reduce the risk of errors.
• Adherence to adopted accounting standards: Financial statements must be prepared in accordance with International Financial Reporting Standards (IFRS) as adopted in the Kingdom, taking into account the requirements applicable to small and medium enterprises.
• Filing through official channels: The Ministry of Commerce's electronic platform enables companies to file their statements quickly and securely, with an official filing record retained.

Motaded Limited provides an integrated portfolio of accounting and advisory services to ensure company compliance with the provisions of the Companies Law and its Executive Regulation, and to avoid exposure to financial violations. Motaded's services in this area include:

• Preparation of periodic and annual financial statements in accordance with applicable standards.
• Pre-filing review to ensure data accuracy.
• Coordination with licensed certified auditors for statement review.
• Electronic filing through Ministry of Commerce platforms on behalf of the company.
• Retroactive accounting service for companies behind in preparing prior-year statements.
• Preparation of monthly administrative and financial reports for performance monitoring.
• Representation of the company before the Ministry of Commerce in cases of objection to violation orders.

Ministerial Decision No. (236) of 1447H represents an advanced step in entrenching a culture of accounting compliance in the Kingdom of Saudi Arabia, placing every operating company before a clear responsibility related to financial transparency. Companies that approach the matter seriously today — by building a disciplined accounting framework and engaging specialized expertise — will find themselves in a far better position at the end of the next fiscal year. Companies that defer the matter expose themselves to penalties starting at SAR 2,000 and reaching up to SAR 20,000 per violation, with the possibility of escalation upon recurrence.

Investing in accounting compliance is not a burden — it is a strategic protection of corporate assets and reputation in a market moving rapidly toward full governance.

• Saudi Ministry of Commerce — mc.gov.sa
• Ministerial Decision No. (236) dated 26 Dhu al-Qa'dah 1447H, published in the Umm Al-Qura Official Gazette.
• Saudi Press Agency (SPA) — official statements of the Ministry of Commerce.
• Saudi Companies Law and its Executive Regulation, Article (94).