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UAE Companies Law

The United Arab Emirates abolished the requirement for foreign-owned companies to have Emirati shareholders and an Emirati majority on the board of directors. 

New UAE rules abolishing the requirement for local Emirati shareholders will benefit U.S. companies currently doing business in the UAE or interested in establishing operations in the country. 

Federal Decree-Law No. 12 of 2020, effective as of December 1, 2020, promulgated significant amendments to Federal Law No. 2 of 2015 on Commercial Companies.  

The Decree offers a major boost to attracting foreign direct investments into the UAE amid the challenges posed by the Covid-19 pandemic. It also encourages greater transparency and good corporate governance.  It will generate more high-skill and high-wage jobs and increase economic competition in the country.


IMMEDIATE IMPACT OF THE AMENDMENTS: 

•    The changes apply to limited liability companies and joint stock companies and supersede the Foreign Direct Investment Law (Federal Law by Decree No. 19 of 2018). 

•    The new law does not apply to some sectors such as oil and gas, utilities and transport.

•    Companies will no longer be required to have an Emirati citizen as a majority shareholder in onshore enterprises, nor to have a UAE national or a local entity as registered agents.  

•    Onshore businesses will be allowed to sell 70% of their shares in a public offering, instead of the previous limit of 30% limit. 

•    Local government authorities such as the Department for Economic Development will continue to regulate the participation levels of Emiratis in onshore companies. 

•    Shareholders will be permitted to vote electronically at general assembly meetings. 

•    The changes will allow the appointment of experienced board members regardless of their stockholdings as well as the discharge of a chairman or any other board members in cases of fraud or abuse of power.

•    Stakeholders will be able to sue a company in the civil courts over any failure of fiduciary duties and collect monetary damages. 

Link:  https://elaws.moj.gov.ae/engLEGI.aspx 

For more information about this new legal regime in the United Arab Emirates, please contact Office.AbuDhabi@trade.gov. 

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