NEW PROVISIONS IN CORPORATE COMPANIES LAW 2015
- Article 5 – Free Zone Companies –
New Law – Free zone companies are exempted from the application of the New Law. However the Cabinet shall issue a Decision determining the applicable conditions to enter and register companies operating in the free zones of the State and willing to conduct their activities in the State outside the free zones.
Earlier Law – was not at all applicable to Free Zone Companies.
- Article 8 – The Concept of “sole founder”
New Law – A company may be incorporated or held by a single person. This is application to LLCs and Private JSC.
Earlier Law – There was no provision of ownership by one person/company.
- Article 10 – Local Ownership
New Law – also the ownership pattern still continues to be same of 51% by the UAE nationals or 100% by GCC nationals. There is explicit provision invalidating any transfer of shares affecting minimum UAE national shareholding of 51%.
Earlier Law – There no explicit provision invalidating transfers which reduce the miniumum shareholding of UAE National.
- Article 24 – Exclusion of Liability
New Law – Any provision in the Memorandum of Association or Articles of Association of the company authorizing it or any of its subsidiaries to agree to exempt any person from any personal liability that such person bears in his capacity as a current or former officer of the company shall be void.
Earlier Law – The directors/managers duties were limited.
- Article 26 – Companies Accounting Books
New Law – Every company shall keep its accounting books in its head office for a period of at least 5 (five) years from the end of the financial year of the company.
The company may keep an electronic copy of the original of the documents and records kept and deposited therein in accordance with the controls issued by a Ministerial Decision.
Earlier Law – The time period for maintaining the accounting records was not stipulated.
- Article 27 – Accounts of the Company
New Law – The company shall apply the International Accounting Standards and Practices upon preparing its periodical and annual accounts, to give a clear and accurate view of the profits and losses of the company.
Earlier Law – There were no specific provision of maintaining accounts per International Accounting Standards.
- Article 266 – Holding Company
New Law – LLC and JSC’s permitted to setup Holding Company specifically to conduct activities throught subsidiaries.
Earlier Law – There was no concept/provision of Holding Company.
RULES GOVERNING LIMITED LIABILITY COMPANIES
New Law – A single natural or corporate person may incorporate and hold a Limited Liability
Earlier Law – there was no provision of ownership of Company by one shareholder.
- Article 79 – Pledge of Shares
New Law – A partner may Assign or pledge its share in the company to another partner or to a third party. Such assignment or pledge shall be made in accordance with the terms of the Memorandum of Association of the company under an official document, in accordance with the provisions of this Law. Such assignment or pledge shall not be valid against the company or third parties until the date of its entry in the Commercial Register withthe competent authority.
Earlier Law – there was no provision for pledge of shares.
- Article 83 – Managers of the Company
New Law – There is no limit to the number of Managers that could be appointed by the shareholders.
Earlier Law – the maximum number of managers was 5.
- Article 86 – Competition of the Company by the Manager
New Law – The Manager shall not, without the consent of the General Assembly of the company, undertake the management of a competing company or a company with objects similar to those of the company or make, for his own account or for the account of third parties, deals in a trade in competition or similar to the activity of the company, otherwise the Manager may be dismissed and required to pay compensation.
Earlier Law – Was not explicitly addressed .
- Article 93 – Notification of the Invitation to Hold the General Assembly
New Law – Invitation to convene the General Assembly may be given by registered letters or by any other means as provided by the Memorandum of Association, at least 15 (fifteen) days prior to the date as scheduled to hold the General Assembly, or within any shorter period as agreed by all the partners.
Earlier Law – notice period was 21 days.
- Article 96 – Quorum for Convene and Voting
New Law – Quorum at the General Assembly shall not be valid unless one or more partners holding at least 75% of the capital of the company are present. If such quorum is not present at the meeting, the partners shall be invited to another meeting, to be held within 14 days from the date of the first meeting, provided that at least 50% of the capital is present at the meeting. If again quorum is not present, the partners shall be invited to a third meeting to be held upon the expiry of 30 days from the date of the second meeting. Quorum at the third meeting shall be valid irrespective of the partners present at the meeting. The Decisions by the General Assembly shall not be valid unless passed by the majority of the partners present in person and those represented at the meeting, unless the MOA provides for a higher majority.
Earlier Law – , the General Meeting resolutions shall be valid only if adopted by a number of votes representing at least one half of the capital. If such majority is not achieved during the first meeting, a second meeting, within twenty one days from the first, shall convene. Unless otherwise stipulated in the Memorandum of Association, resolutions in the latter meeting shall be adopted by majority of the votes present.