Commercial Books Law

Purpose and scope

• Requires traders to keep regular commercial books showing their financial position, rights and obligations, and sets how long they must be kept and their weight before the courts.
• It applies to every trader, individual or company, according to the nature and size of the business.

Key rules, rights and obligations

• A trader must keep the books his business requires, in good order and in Arabic, at least: the original journal, the inventory book and the general ledger (Article 1).
• Book entries may be kept by computer under the controls set by the regulation (Article 2).
• All financial transactions are entered in the journal day by day, and personal drawings in total month by month (Article 3); the inventory book records stock at the end of the financial year and the balance sheet (Article 4).
• The trader must keep copies of business correspondence and documents (Article 6), and the books must follow the Ministry's form with numbered pages (Article 7).
• Entries in a trader's books are presumed made with his knowledge and consent unless proven otherwise (Article 9), and the court may order the books produced when hearing a case (Article 10).

Violations, penalties and common problems

• Any breach of the law, its regulation or decisions: a fine of SAR 5,000 to 50,000 (Article 12).
• Irregular or missing books weaken the trader's evidence in court and in dealings with zakat and tax authorities.
• Common problems: relying on bank statements without accounting entries, and destroying documents before the retention period ends.

Procedures and key deadlines

• The trader and his heirs must keep the books, correspondence and documents for at least ten years (Article 8).
• Violations are detected by the authority set by the law, and penalties are imposed by the competent judicial body.
• It is advisable to have an accountant set up the books on the approved form from the start of the business.

An advisory summary prepared by Al-Bayan Al-Wadih Law Firm. It is not an official text and does not replace the law, its implementing regulations, or advice from a specialised lawyer. The official published text and its amendments prevail.