The UAE President Sheikh Khalifa Bin Zayed Al Nahyan has issued a decree overhauling the 2015 commercial companies’ law, amending 51 articles and introducing three new ones.
Based on the changes, many sectors have been opened to foreign investment and onshore companies may not require a major Emirati shareholder.
According to the new changes, local authorities will determine the level of participation by Emiratis in any company. A stipulation that requires the company chair to be an Emirati and the board of directors to be majority Emiratis have also been removed.
However, the changes don’t apply to strategically important sectors such as state-owned entities, transport, oil and gas.
Most of the amendments are effective as of December 2020 and companies will have one year to align with the new law from the time the articles become effective.
However, the changes related to foreign ownership, agency and boards of directors shall be in effect six months after publication in the Official Gazette.
Many changes in the new law apply to provisions for joint stock companies and limited liability companies and cancelling Federal Decree Law No. 19 of 2018 regarding foreign direct investment.
Companies can remove chairman or any of the members of the company’s Board of Directors or any of its executive management from their positions, if they have committed acts of fraud or abuse of power.
Also, shareholders can collectively file a lawsuit in a court against any party related to the company for damages caused to the company.
The amendments have also allowed electronic voting in the general assembly meetings provided that the controls and conditions issued by the authority in this regard are adhered to.
The law stipulates that a company wishing to convert into a public joint stock company can sell no more than 70 percent of the company’s capital after evaluation, instead of the current 30 percent via an initial public offering.
(Reporting by Seban Scaria; editing by Anoop Menon)
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© ZAWYA 2020