The flourishing economy of the UAE
His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE, “may God protect him”, issued a decree-law amending the Companies Law, in light of the government’s continuous efforts to develop the legislative environment for the flourishing economy in the UAE, and to enhance its leading position regionally and globally as an attractive destination for projects and companies.
UAE’s flourishing economy
The President of the State approves amendments to the Companies Law that allow full ownership of companies by foreigners
The amendments allow foreign entrepreneurs and investors to fully establish and own companies without the need for a specific nationality, and the condition requiring a foreign company that wishes to open a branch within the country has been cancelled to have an agent of the country’s citizens.
Local authority powers of the Decree-Law grants
The Decree-Law grants the competent local authority powers that include determining a certain percentage of citizens’ participation in the capital or boards of directors of all companies that are established within the scope of their jurisdiction, approving applications for establishing companies other than joint-stock companies and determining fees according to the controls approved by the Council of Ministers.
The decree-law stipulates to reorganize the governance of boards of directors and the general assembly in joint-stock companies and to allow non-joint-stock companies to practice fund investment activities for the account of others in the event that the laws regulating these activities or the decisions issued thereunder are approved.
It is permissible to appoint experienced members of the Board of Directors who are not shareholders without specifying a specific percentage, and it is also permissible to remove the Chairman or any of the members of the Board of Directors of the company or any of its executive management from their positions in the event of a court ruling proving that they have committed acts of fraud, abuse of power, or acts by concluding deals or transactions involving conflict of interest in violation of the provisions of this law or the decisions implementing it.
The decree-law permittance
The decree-law permits shareholder collectively to file a lawsuit before the competent court in their name and on behalf of the company against any party related to the company for damages caused to the company, resulting from his violation of the duties towards the company according to this law or any other law looking forward to flourishing economy in the UAE.
In order to meet the requirements of the current stage and the changes it has witnessed, the amendments allowed electronic voting in the general assembly meetings, provided that the controls and conditions issued by the authority in this regard are adhered to, and the law also permitted the issuance of share certificates, their signature and the electronic retention, in accordance with the controls issued by the authority in this regard.
Concerning the provisions and controls for increasing or decreasing the capital of the joint-stock company, the decree of the law permits the company to agree to increase its capital by issuing bonds or Sukuk and converting them into shares in its capital.
According to the decree-law, a legal person has the right to establish and own all shares in the private joint-stock company, provided that the name of the company follows the phrase “private shareholding – the one-person company”, and the provisions of the private joint-stock company apply to it.
The decree-law obliges the company wishing to convert into a public joint-stock company – after the approval of the Authority – to sell no more than 70% of the company’s capital after evaluation in place of the current 30% through public subscription and to issue new shares according to a special decision to increase its capital and put it for public subscription.