Changes to the UAE Commercial Companies Law (CCL)
The new Commercial Companies Law (CCL) took effect on the 2nd of January 2022 (the “New CCL”), and all companies must update their Memorandums of Associations to comply with it by the 2nd of January 2023.
In addition, as stated in the New CCL, several substantial modifications confirm the notion of easing foreign ownership limitations. Additionally, the Abu Dhabi and Dubai Economic Departments have released a broad list of activities that are authorized for 100 percent foreign ownership.
Concerning the necessary actions under ‘strategic impact’, a limited liability company (LLC) may hold the full issued share capital of a single non-UAE shareholder. The requirement of 51 percent local sponsor could be removed from the ownership structure under this rule. However, this only applies to particular activities.
In connection with the LLC’s operations, the memorandum of association must include provisions addressing dispute resolution processes between the LLC and any of its directors/managers or between the shareholders.
At a general assembly meeting, an individual who is not a manager can now act as a proxy for a shareholder. A general assembly must be called at least twenty-one (21) days in advance (previously 15 days). In case the quorum requirements for a general assembly meeting are not met, a second meeting must be called together / convened, which must be valid regardless of the number of attendees.
The new CCL indicates the minimum and maximum subscription restrictions for Public Joint Stock Company (PJSC) founders. Furthermore, the New CCL eliminates the requirement that the public subscribe for shares for a minimum amount of time, instead requiring that the minimum duration be specified in the prospectus. The maximum term is still 30 days.
A joint-stock company’s nominal value of shares must be equal to the quantity indicated in the articles of association. There are no longer any restrictions on the amount, which can be as low as AED 1 and higher than AED 100.
A number of measures in the New CCL will benefit businesses and investors. These amendments have broaden the scope of public mergers and acquisitions transactions and financings, as well as other measures that will improve corporate governance and restructuring flexibility.