A new Companies Law Federal Decree-Law Number 32 of 2021 on Commercial Companies (the New Law), which amends and replaces the Federal Law Number 2 of 2015 on Commercial Companies (the Old Law), became effective on 2 January 2022.
The New Law mandated that all the companies make their memorandum of association in line with the New Law before or by 2 January 2023. A significant area of changes that the New Law made is the Foreign ownership by a non-UAE shareholder that can now hold the entire issued share capital of A limited liability company (LLC) under certain relevant activities. Several other changes would require amendment of the companies articles of association.
The most critical legislative amendments include the following points:
- Creation texts for the company established for the purpose of acquisition or merger SPAC without other purposes،which will be limited to the form of a public joint-stock company and will be subject to the approval of the Securities and commodities authority to be classified as a company established for acquisition or merger.
- Creation provisions for a Special Purpose Company (SPV): which will be established with the aim of separating the obligations and the assets associated with a particular financing operation from the obligations and assets of the person who founded it, and are used in credit operations borrowing, securitization, bond issuance, and transfer of risks associated with insurance, reinsurance and derivative operations according to provisions of the decision issued by the securities and commodities authority regulating this activity.
- Creation materials related to the registrant،in terms of the obligation of the competent authorities to notify the registrant with the data of companies and any amendments to it،setting the necessary controls regarding the registration of trade names،and taking into account the non-similarity of trade names for companies to the degree that leads to confusion.
- Facilitating the procedures for establishing public joint-stock companies،starting from the start of the founders’ committee to submit the application for incorporation to the authority The competent authority and the formation of a joint committee between the securities and commodities authority and the competent authority، which was formed pursuant to a decision issued it for the authority to decide on the applications for incorporation.
- Creation of a legislative mechanism “legislative delegation” to the Council of Ministers based on the proposal of the Minister and after coordination with the local authority The minimum and maximum percentage that the founders must subscribe to issue a decision in the joint-stock companies، cancelling The obligation related to the mandatory percentage that the founders must subscribe to، “not less than (30%) and not more than (70%),”) With the commitment of the founders to subscribe to shares of the issued capital of the company within the limits of the percentage specified in the prospectus.
- Creation a text confirming that the membership of the Board of directors of a public joint-stock company is linked to the term of the Board’s formation, but it is true If there is a vacancy after the formation of the Board of directors is completed, and a new member has been appointed to the vacant position،he is the new member complete the term of his predecessor.
- Creation a provision regarding the fees of the members of the Board of directors of a public shareholding company،in the event that the company does not achieve profits or if The company made a profit The share of a board member of those profits was less than (200,000) two hundred thousand dirhams, and in this case،it is not permissible to combine the reward and the fees،and the fees are a lump sum that does not exceed (200,000) two hundred thousand dirhams at the end of the fiscal year،in accordance with the controls contained in the text.
- Cancellation of the minimum and maximum nominal value of a share in a public joint-stock company، and its nominal value According to the value specified in the company’s articles of association, “Previously not less than one dirham and not more than one hundred dirhams.”
- Cancellation of the restriction related to converting to a public joint-stock company،regarding the requirement that “the company has achieved operating profits.” Net distributable to shareholders or partners through the activity for which it was established،its average is not less than (10%) of the capital during the two fiscal years preceding the approval of the conversion request “with the cancellation of some related controls by selling a percentage of the company’s shares and increasing its capital upon its conversion.
- The development of texts dealing with the theory of the division of joint-stock companies and the types of division “vertical division and horizontal division”،which is what some joint-stock companies do in practice by dividing by separating the company’s assets and activities.
- Cancellation of some texts related to particular crimes،such as the crime of non-compliance with the decision of the registrar،and the crime of failure to list،the crime of refusing to inform the stakeholders, the crime of violating the invitation to the annual general assembly،and the crime of not keeping accounting records،the crime of non-compliance by the Sharia observer and members of the Sharia Internal Control Committee, and the violation of the percentage of the contribution of the citizens of the state.
- Cancel the registration of crimes that may lead to reform.
- Creation of a legislative framework for the Council of Ministers to issue a list of administrative penalties for violations committed the provisions of the decree-law and its executive regulations and the decisions issued in implementation – based on the proposal of the Minister – within (6) months from the day following its publication،in accordance with the following controls: (a) The value of the administrative fine shall not be less than (100) one hundred dirhams, and not exceed on (10,000,000) ten million dirhams. (B) The administrative fine is doubled when the same administrative violation is repeated, provided that it does not exceed (20,000,000) twenty million dirhams.
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