Monday, December 5, 2011

The draft Companies Law approved by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai

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.