The President of the State issues a decree-law amending the Companies Law

Amendments that allow foreigners to fully own companies and abolish the "citizen agent" requirement

• Decree-Law granting "Securities and Commodities" the power to set controls and procedures for evaluating in-kind shares.

  Photography: Patrick Castillo

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His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the State, issued a decree by law amending the Companies Law, in light of the government's continuous efforts to develop the legislative environment for the economic sectors in the UAE, and to enhance its position regionally and globally and an attractive destination for projects and companies.

Law Amendments

The amendments allow foreign entrepreneurs and investors to establish companies and fully own them, without the need for a specific nationality, and the requirement that a foreign company wishing to open a branch within the state has been abolished to have an agent of the state’s citizens.

The amendments included reorganizing some provisions and rules of limited liability and shareholding companies, and canceling Decree-Law No. (19) of 2018 regarding foreign direct investment.

Citizen Contribution

The Decree-Law grants the competent local authority powers that include determining a certain percentage of citizens ’participation in the capital or the boards of directors of all companies that are established within their jurisdiction, approving applications for establishing companies other than joint-stock companies, and determining fees in accordance with 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 activities of investing funds for the account of others, in the event that the laws regulating these activities or the decisions issued pursuant to this are approved.

Set controls

The Decree-Law granted the Securities and Commodities Authority the authority to set controls and procedures for evaluating in-kind shares, and to register the names of shareholders to attend the company's general assembly meeting.

And it is permissible to appoint members of the board of directors with experience 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 company's board of directors or any of its executive management from their positions, in the event of a court ruling proving that they committed acts of fraud or abuse of power or Entering into deals or transactions involving conflict of interest, in violation of the provisions of this law or the decisions implementing it.

lawsuit

The decree-law permits a shareholder or shareholders 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.

Voting and capital

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 permits the issuance of share certificates, their signature, and their electronic retention, in accordance with the controls issued by the authority in this regard Matter.

With regard to the provisions and controls of increasing or decreasing the capital of the joint-stock company, the Decree-Law permitted the company to approve the increase of 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 - one-person company”, and the provisions of the private shareholding 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 instead of the current 30% through public subscription, and to issue new shares according to a special decision to increase its capital and offer it for subscription The year.

Power of the Council of Ministers

The Decree-Law of the Council of Ministers granted the authority to form a committee that includes in its membership representatives of the competent authorities, to propose activities with a strategic impact, and the necessary controls to license companies that carry out any of these activities.

The decree-law also recognized that it is impermissible to amend the articles of association or establishment contracts for any of the existing companies "since the time of its enforcement", affecting the percentage of citizens' participation in those companies or their boards of directors, whenever the company is carrying out an activity of strategic impact, without the approval of the competent authority.

Adjustment

The decree-law allowed existing companies to adjust their positions, in accordance with its provisions, within a period not exceeding one year from the date of its implementation, and this period may be extended to other similar periods by a decision of the Council of Ministers, based on the proposal of the Minister of Economy.

This step reflects the forward-looking vision adopted by the UAE to develop the economic sector and provide it with factors of growth and progress, on top of which is the provision of a fertile legislative environment that keeps pace with the changes in the global economic arena, and provides various means of support for companies that are based in the country, and increase their competitiveness and their ability to reach To regional and global markets.

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