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UAE Freezones Biz News Updates
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President issues federal law on commercial companies
President His Highness Sheikh Khalifa bin Zayed Al Nahyan has issued a
federal law on commercial companies which are considered a key element in
any successful economy.
The Commercial Companies Law No. 02 for the year 2015 contains 378
articles, and the provisions of the law, its rules and regulations, and
decisions issued in implementation of this law pertaining to commercial
companies formed in the country, as well as special provisions which shall
apply to foreign companies mentioned in this law, and the resolutions and
regulations issued in implementation on foreign companies which make the
country a centre for its activities, establish a branch or a representative
office.
The law authorises a natural person to establish and own a single-person
limited liability company whose owner shall only be liable for its
obligations as per the capital stated in the articles of association under
the limited liability company provisions.
The law also allows the juridical personality to set up a joint private or
limited liability company whose owner shall only be liable about its
obligations in view of the capital stated in the articles of association
under the limited liability company provisions of the law.
The law defines the holding company as a company that sets up companies
within the UAE or abroad, owns shares or stakes of other companies that
allow it to have an upper hand in management or influence its decisions.
As for evaluation of equity stakes, the law stipulates that founders in the
public joint stock company shall subscribe shares not less than 30 percent
and not more than 870 percent of the capital before the initial public
offering on the remaining shares.
On debt-to-equity conversion, the law says the company may, according to a
special resolution, increase its capital through converting cash debt into
equity after the Board of Directors presents a study to the General Assembly
on the urgency of taking this step.
Sultan bin Saeed Al Mansouri, Minister of Economy, has said that the new
Federal Law No. 02 for 2015 on commercial companies that was issued by
President His Highness Sheikh Khalifa bin Zayed Al Nahyan, is a quantum leap
for the national economy and will have a significant role in promoting
sustainable economic development in the country and strengthening its
competitiveness regionally and globally.
It will also support economic diversification and accelerate the steps the
country is taking towards a knowledge-based economy based on creativity and
innovation, the UAE Vision 2021, and its national agenda.
Sultan Al Mansouri said, "The law was a result of the vision of the wise
leadership of President His Highness Sheikh Khalifa bin Zayed Al Nahyan,
Vice President and Prime Minister and Ruler of Dubai His Highness Sheikh
Mohammed bin Rashid Al Maktoum, His Highness Sheikh Mohamed bin Zayed Al
Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE
Armed Forces, and Their Highnesses Supreme Council Members and Rulers of the
Emirates, to raise the level of competitiveness of the national economy, and
achieve one of the main objectives of the national agenda of reaching the
tenth position on the Global Competitiveness Index.
The Minister added, "We are before a modern law, which will lead economic
development to the set objectives in the UAE Vision2021, which is a vision
keen on diversifying and strengthening the economy, using an economic and
open mind, which realises that the success of the private sector is capable
of raising the capacity of the national economy and ensuring the optimal use
of production components of capital, administration, and employees with
results that reflect on the future of the social life of citizens and
residents of the UAE."
Al Mansouri also explained, "The law aims to contribute to the development
of the business environment and the country's capabilities and economic
status by organising companies based on global variables, especially those
which relate to the rules of governance, the protection of the rights of
shareholders and partners, the support of the flow of foreign investment and
promotion of corporate social responsibility. It will also contribute to
strengthening the role of businesses that hold high position in the UAE's
development strategy, as well as its vital and active role in the process of
sustainable development witnessed by the country and in support of the
economic diversification policy followed."
02 Apr,15
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Courtesy Emirates News Agency
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