Introduction
Corporate criminal liability in the UAE is no longer a theoretical risk. It’s a present, prosecutable reality. Companies can be held accountable for criminal acts committed by those acting on their behalf, and the consequences are mounting. From Dubai to Abu Dhabi, and across free zones like DIFC and ADGM, courts and regulators are tightening the screws on corporate governance failures and compliance lapses.
Legal Foundation
Federal Decree-Law No. 31 of 2021 on Crimes and Penalties forms the backbone of corporate criminal liability in the UAE. Under this law, companies face criminal liability when directors, managers, or agents commit crimes that benefit the company. Personal misconduct? That’s on the individual. But when the business profits from the offense, the liability can quickly spread.
Consequences are severe varying between multimillion-dirham fines, confiscation, business suspension, and licence revocation. For the individuals behind the misconduct, they can face prison time. Supporting laws, such as the Federal Decree Law No. 20 of 2018 on Anti-Money Laundering and counter terrorism financing, and Federal Law No. 3 of 1987 on Anti-Bribery Provisions amplify this liability landscape across sectors.
DIFC and ADGM: Regulatory Fines Meet Federal Crimes
While DIFC and ADGM operate under their own financial regulatory frameworks, criminal matters fall under federal law. That said, enforcement in these zones often starts with the regulators, which are the Dubai Financial Services Authority (DFSA) and the Financial Services Regulatory Authority (FSRA), which issue hefty fines and revoke licences for breaches ranging from AML failures or insider trading.
But once lines are crossed into fraud or money laundering territory, the matter escalates. Federal prosecutors step in, Creating a hybrid enforcement system where robust regulatory scrutiny blends into federal criminal exposure. For Firms operating in these zones, the compliance stakes are high.
Piercing the Corporate Veil
In a landmark decision (Dubai Court of Cassation, Cassation Appeal No. 188 of 2021 a limited liability company and its managers were jointly ordered to pay over AED 28 million for failing to hold annual general meetings (AGMs) and distribute dividends. The Court invoked article 84 of Federal decree law No. 32 of 2021, ruling that directors who abuse corporate structures for personal gain, can face personal liability. This isn’t just a warning, it’s a precedent.
This precedent empowers courts to look beyond formal structures and assess actual control, intent, and benefit, exposing directors and shareholders to personal financial liability.
“Without Prejudice” Gets Formal Backing
In a 2024 decision, (Dubai Court of Cassation, Cassation Appeal No. 345 of 2023) the Court officially recognized “without prejudice” settlement communications as inadmissible, even in matters involving potential criminal exposure. This landmark affirmation empowers internal investigations and allows frank compliance dialogue without fear of future prosecution.
Governance Failures as a Liability Trigger
In May 2025, the Abu Dhabi Court of Cassation reinforced the judiciary’s authority to scrutinise governance failures, even where no criminal charges were filed. The ruling reflects a judiciary increasingly willing to link poor corporate management with potential liability, nudging companies towards a more robust compliance culture.
Risk and Mitigation: The Corporate Survival ToolKit
The message is clear: UAE courts are raising the bar on what counts as acceptable corporate conduct. To stay ahead, companies must incorporate these proactive compliance strategies
- Strengthen Governance Foundations
Hold regular annual general meetings, ensure accurate and transparent financial disclosures, and maintain meticulous record-keeping. Sound governance is the cornerstone of corporate integrity, and your first line of defence.
- Implement Risk-Based Compliance Systems
Move beyond off-the-shelf policies. Design anti-money laundering (AML), counter-terrorism financing (CFT), and anti-bribery frameworks tailored to your company’s actual risk exposure by sector, jurisdiction, and transaction type.
- Maintain Vigilant Internal Controls
Conduct routine internal audits, empower staff through targeted compliance training, and establish secure, anonymous whistleblowing channels that encourage early detection of misconduct.
- Exercise Strategic Oversight
Apply rigorous due diligence when engaging with third parties, particularly in high-risk jurisdictions or industries. The cost of oversight is far less than the risk of exposure.
- Safeguard Sensitive Communications
During internal investigations or settlement discussions, invoke “without prejudice” protections to ensure candid dialogue does not become admissible evidence down the line.
Conclusion: From Corporate Entity to Criminal Exposure
UAE regulators and courts are sending a strong clear message: poor governance is no longer just a compliance issue, it’s a liability magnet. From the mainland to the free zones, companies and their leaders face growing scrutiny, and the cost of failure is rising.
To survive, and thrive, companies must go beyond checkbox compliance. They must embed ethical culture, legal foresight, and governance accountability into the core of their operations. In today’s legal climate, a strong compliance framework isn’t just advisable. It is existential.