The New UAE Commercial Companies Law

On July 1^st 2015 the new Commercial Companies Law (“New CCL”) in the UAE (Federal Law No. 2 of 2015) concerning Commercial Companies entered into force, replacing the existing Federal Law No.8 of 1984 for Commercial Companies (“Old CCL”).

As a result, all companies are now required to amend their existing memoranda and articles of association in order to reflect and comply with the newly introduced changes by 30 June 2016. Failing to do so will result to the companies being dissolved. The main objective of the New CLL is to develop the UAE’s global standard market and business environment, raise levels of corporate governance, protect shareholders and promote the social responsibility of the companies.

The most notable features of the New CLL is the recognition of the concept of holding companies, procedures for pledging shares, expert valuation of shares in kind and the requirement to rotate auditors for public companies every 3 years.

Below we outline the key changes applicable to most companies:

• The New CCL allows sole shareholder companies
   
• Investment Funds are now recognized as their own legal personality, legal form and financial position by the New CCL, unlike in the Old CCL
   
• The New CCL has more accounting requirements than the Old CCL
   
• Unlike the Old CCL, the New CCL invalidates any transfer of title to any share of a partner which may affect the minimum UAE national holding of 51%
   
• The New CCL will deal with Free Zone (FZ) companies as long as they operate outside of the FZ
   
• Increased penalties for existing offences and personal liability directors are also introduced
   
• The New CCL deals with mergers in more detail
   
• The New CCL will treat as void any provision in a company’s memorandum which authorizes a company to exempt an officer from personal liability

To access the full publication by Oneworld MidEast Ltd, with a comparison of the Old and New CLL please click here.
 

 

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