ADGM audit and annual accounts

• Companies and LLPs — must file annual accounts[ADGM — Annual Accounts].
• Branches and Foundations — must maintain records, but are not required to file them annually[ADGM — Annual Accounts]. A meaningful reduction in ongoing burden, and worth weighing when choosing between a branch and a subsidiary.
• Restricted Scope Companies — ADGM's annual filing schedule applies the Annual Accounts and Reports requirement to companies except RSCs, and to LLPs[ADGM RA — Schedule of Fees]. An RSC files only if the Registrar gives notice.

In every case the obligation to keep proper accounting records is separate from the obligation to file them. Relief from filing is not relief from bookkeeping, and an entity that has not kept records cannot produce them when the Registrar asks.

The provision most likely to be relevant, and most likely to be missed.

Firms qualifying as small may file simplified unaudited balance sheets instead of audited accounts. Eligibility requires[ADGM — Annual Accounts]:

• turnover not exceeding USD 13.5 million, and
• no more than 35 employees.

Both limits apply together — a firm with modest turnover and 40 staff does not qualify.

And there is an absolute carve-out: public interest entities and firms providing financial services are not eligible[ADGM — Annual Accounts], however small. If you are FSRA-authorised, you are audited regardless of size.

For a great many ADGM businesses — holding structures, professional firms, early-stage companies — the thresholds are generous enough that the exemption applies. It is worth confirming before commissioning an audit nobody required.

Where an audit is required, it must be by an ADGM Recognised Auditor[ADGM — Annual Accounts] — not simply any qualified firm.

Auditor registration is a real ADGM regime with its own fees: audit firms pay USD 3,000 to register plus USD 750 per audit principal, with additional permits at USD 5,000 each to audit public interest entities and financial institutions. Renewal scales with audit volume, from USD 3,000 for up to ten audits to USD 20,000 plus USD 500 per audit above thirty[ADGM RA — Schedule of Fees].

You do not pay those fees — your auditor does — but they tell you something useful: the pool of firms permitted to audit ADGM entities is defined and supervised, so "our usual accountant will do it" may not hold.

The small-company exemption is real, but the Companies Regulations 2020 surround it with four qualifications. Any one of them can put you back into audit, and they are the reason a business that "qualifies as small" still gets an audit demand.

The exemption itself sits at section 449: a company that qualifies as small in relation to a financial year is exempt from the requirements relating to the audit of accounts for that year, with "small" determined under section 369[ADGM — Companies Regulations 2020].

1. Excluded companies — section 450

A company is not entitled to the exemption if at any time within the financial year it was[ADGM — Companies Regulations 2020]:

• a public interest entity, or
• a financial institution — other than a FinTech Participant.

Note the timing: at any time within the year. Being a financial institution for one month of a twelve-month year removes the exemption for the whole year. And note the FinTech Participant carve-out — a company in ADGM's regulatory sandbox is not pushed into audit merely by being a financial institution. See financial services licensing.

2. Group companies — section 451

A company that was a group company during any part of the financial year is not entitled to the exemption unless the group itself qualifies as a small group and was not at any time in that year an ineligible group[ADGM — Companies Regulations 2020].

This catches the common structure directly. A small ADGM subsidiary of a large international parent does not get the exemption on its own numbers — the test runs at group level. If you are budgeting on the assumption that your ADGM entity is small enough to skip audit, check the group first.

3. Members can demand one anyway — section 448

Even a company properly entitled to exemption can be required to obtain an audit by notice from its members[ADGM — Companies Regulations 2020]:

• given by members holding not less than 10% of the total number of shares, or of any class of shares, or — if there is no share capital — 10% in number of the members;
• not before the financial year to which it relates; and
• not later than one month before the end of that year.

A 10% minority holds this right. If you have outside investors, the exemption is theirs to switch off, and the one-month deadline is the only protection against it arriving late. Worth addressing in the shareholders' agreement rather than discovering in year three.

4. Two exemptions people miss entirely

Restricted scope companies. The audit Part does not apply to restricted scope companies, who are exempt from audit for the purposes of the Regulations[ADGM — Companies Regulations 2020]. That is a standing feature of the form, not a threshold test — see the RSC.

Dormant companies. A company is exempt if it has been dormant since its formation, or dormant since the end of the previous financial year and it is entitled to prepare accounts under the small companies regime and is not required to prepare group accounts[ADGM — Companies Regulations 2020].

The Regulations also provide a separate subsidiary companies exemption at sections 452 to 454, which turns on a parent undertaking declaration of guarantee[ADGM — Companies Regulations 2020]. If your ADGM entity is a subsidiary and audit cost matters, that route is worth taking advice on specifically.

If an ADGM audit quote seems high against what you paid elsewhere, part of the answer is in ADGM's own fee schedule — and it is worth understanding, because it tells you which parts of a quote are structural and which are negotiable.

These are fees the auditor pays ADGM, not fees you pay ADGM. But they are real costs in your auditor's business, and they are recovered through what they charge you.

What a registered auditor pays annually

Registered auditors pay an annual renewal fee scaled to volume. For auditors doing 31 or more audits, that is USD 20,000 plus USD 500 per audit above 30[ADGM RA — Schedule of Fees].

On top of that, and where applicable[ADGM RA — Schedule of Fees]:

• Auditors holding a Public Audit Permit — USD 5,000
• Auditors holding an FI Audit Permit — USD 5,000

One or both can apply. An auditor equipped to sign off both listed companies and financial institutions is carrying USD 10,000 of permit fees before doing any work.

The per-report fee, which is where it gets steep

Separately, any registered auditor must pay a fee per audit report issued, based on the type of entity audited, for reports issued in the previous calendar year[ADGM RA — Schedule of Fees]:

• Public Company Limited by Shares (unlisted) — USD 10,000
• Public interest entity — USD 15,000
• Public Company Limited by Shares, listed on an investment exchange — USD 20,000

Read what that implies. Before your auditor has costed a single hour of fieldwork, signing your listed public company's audit report costs them USD 20,000 payable to ADGM. No auditor absorbs that.

What this means for you

• If you are a private company limited by shares, none of the per-report fees above name your entity type — the fee table is directed at public and public-interest entities. Your audit cost is driven by the work, not by this schedule, so it is genuinely negotiable.
• If you are going public or are a public interest entity, treat a meaningful, non-negotiable slice of the audit fee as a pass-through. Comparing it to a private company's audit fee is comparing two different things.
• Ask for the split. A quote that separates ADGM pass-through charges from professional fees tells you what you are actually negotiating over.

See accounting and bookkeeping and formation cost.

• First accounts covering 12 months or less — within nine months of the accounting reference date[ADGM — Annual Accounts].
• First accounts covering more than 12 months — within nine months of the first anniversary of incorporation.
• Subsequent accounts — within nine months of the accounting reference date.
• Public companies — six months rather than nine[ADGM — Annual Accounts].

Accounts must be denominated in US dollars and comply with applicable ADGM legislation[ADGM — Annual Accounts].

The USD requirement is a small practical point with real consequences: if your operating currency is dirhams or anything else, the conversion approach needs to be settled with your accountant early rather than at filing.

Accounts are one of several annual obligations, and they run on different clocks:

• Commercial licence renewal, and the separate USD 300 data protection renewal — which ADGM requires to be submitted separately[ADGM RA — Schedule of Fees].
• Confirmation statement / annual return[ADGM — Ongoing obligations].
• Federal corporate tax registration and filing with the FTA — a different authority entirely. See ADGM corporate tax.
• Filings on change of directors, shareholders, address or share capital.

The full set of ongoing obligations is published by ADGM[ADGM — Ongoing obligations], and the operative requirements are in the Companies Regulations[ADGM Legislation]. See also accounting and bookkeeping.