Wednesday, March 16, 2016

5 Years Jail and SR 5 million Fine for Involvement in Corporate Fraud

Establishing a business is probably one of the hardest things to do, as a lot of hard work, dedication and determination is needed to go through the initial rough patch or dry patch. Even though establishing a business on your own is difficult enough, some people tend to start partnerships with the help of other people. This is usually done when there is not enough starting capital or overall capital to establish and run the entire business by a single person. These partners can be as low as 2 people and can go up to 20 people per business. Although employing a large pool of expertise, resources and skills can seem like a good idea initially, there are several obstacles to running and maintaining a partnership.

Partners may have something else in mind in terms of use of resources or future plans of the business. Breach of trust or embezzlement by any company director, member of board of directors, officer or auditor is an offense which is punishable with a sentence of up to 5 years incarceration behind bars and / or a monetary fine of a sum of SAR 5 million, in accordance to the laws and regulations here in the Kingdom of Saudi Arabia. Quoting the regulations of the company, the local media in the Kingdom have also reported that these same penalties are also applicable only any of the persons which have been mentioned earlier on in the article, if they even as much as use the funds of the company for any purpose which is clearly against the best interest of the company, for a favor to any other person or company, for any personal benefits, or to even use the transaction or project for their own indirect or direct benefits.

In accordance to the rules and regulations provided to us, any one of these officials who are failing in drawing the attention of the partners and / or the company, failing to do under circumstances if it has come to their knowledge, the estimated fails or losses which are to be declared; such losses will also make the individual or individuals equally guilty and will make them eligible to receive the same amount of punishment.

The law which has been set in the Kingdom has clearly elaborated that each of the liquidators are responsible for any liquidation of the company which has been suing its assets or funds, and who are completely and fully aware that it is quite to the contrary of the best interest of the partners or the company as a whole.

It is even applicable if the actions done by any one or more partners which involve the use of company funds which are to be paid to the creditors; all those who choose preference for one of the creditors, over the other one without having any legitimate reason behind can and will also be held under the same classification or category of the criminal charge.

Source: Arab News

Other Laws of Saudi Arabia
  1. 9 Rules to follow while Celebrating Saudi National Day on your Car
  2. Is it legal to run home based Business in Saudi Arabia?
  3. SR 3,000 fine per Employee, if salary is not paid on time
  4. SR 2,000 for keeping worker’s passport and SR 50,000 fine for selling visas
  5. SR 25,000 fine if you are not wearing safety equipment in Saudi Arabia


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