Passing the new companies law,
Shaikh Mohammed said move shows the government’s approach to enhance the
flexibility and the strength of the national economy to keep pace with global
economic changes so as to maintain a steady and balanced growth pattern in all
economic sectors in the country.
The new companies’ law is
passed as part of the government’s strategic approach to give greater
flexibility to set up various types of companies and strengthen corporate
governance of joint stock companies. It lays down a general framework for the
governance of public companies to guarantee the rights of all shareholders and
to ensure transparency and disclosure of financial data as well as the
efficiency and integrity of the Board of Directors.
The cabinet also passed an
order restructuring the National Authority for Qualifications under the
chairmanship of Labour Minister Saqr bin Ghobash Saeed Ghobash and five
officials representing various government departments as its members.
The cabinet also passed a law
regulating the work of experts in the courts of law in the country. The cabinet
also ratified a number of international agreements and budgets of some federal
agencies.
The new companies law is
widely expected to allow foreigners or
foreign companies to own 100 per cent of their businesses in the UAE in some
sectors. It has been under consideration for several years now
Under the prevailing law,
foreign ownership of businesses in the UAE is limited to a maximum 49 per cent
as nationals own 51 per cent. The current 49-51-equity law is applicable to all
nationalities except those from within the GCC countries. At present,
foreigners are given full business ownership rights in free zones across the
UAE.
Also in the pipeline is legislation
aimed at protecting foreign investments in the UAE.
Analysts believe that such
bold reforms will help attract foreign direct investments and big
multinationals to the UAE mainland instead of to certain free zones where they
are currently confined.
The proposed law on foreign
investment will address a key investor concern about protection against
contract disputes and other legal issues.
It will further enhance the
UAE’s position in the global competitiveness ranking by the World Economic Forum,
analysts said.
Sultan Al Mansouri, Minister of Economy, said
the new companies' law issued by the cabinet today contributes to enhance the
competitiveness of the national economy at all local, regional and
international levels as well as enhance the performance of the business
environment and investment climate in the UAE.
The Minister pointed to the
importance of being a new law that keep pace with local and global economic
developments and supports the economic openness and diversification policies.
He also praised the remarkable cooperation of all federal agencies, local and
private sector that have had a major role in expressing opinions and
observations that enhanced it content and effectiveness to comply with
different needs and economic requirements of the UAE.
The new law provisions of the
law are stated as follow: Develop a general framework for corporate governance
that contributes to protecting the rights of shareholders and to achieve
transparency and disclosure of financial data and the efficiency and integrity
of the Board of Directors.
Entrusted to the Registrar of
Companies at the Ministry of Economy to the task of supervising the record of
brand names for different types of companies that are registered in any
emirate, in order to avoid repetition among them.
Did not identify minimum
capital for the companies with limited liability.
Allow the Cabinet to issue a
resolution specifying the forms of businesses, activities or groups that may
increase the share of foreign partner for 49% of the capital of the company and
so may not reduce the ratio after the issuance of that resolution.
Authorized the shares for
public subscription on the basis of the price of the security by one of the
companies specialized in this field.
Unify standards and accounting
principles, which the company must comply with when preparing interim and
annual accounts and when determining the distributable profits.
Authorized exception to the
priority right to subscribe into new shares to shareholders in the following
cases: A. Allocating a proportion of the company's shares to its employees.
B. Entering a strategic
partner in the company.
C. Capitalization of the debt.
12. Allows the co-founders of
the public shareholding company to the subscription in shares of not less than
(30%) and not more than (70%) of the capital of the company. The new law also
reduced the length of time spent in founding companies.