Amendments to the Commercial Companies Law, 1984 (“CCL”) was signed by the Council of Ministers on 4th of December, 2011 (the “New CCL”). Although the new amendments have yet to be published in the UAE Official Gazette, they are expected to be put in force sometime in the first quarter of 2012.
If the New CCL is implemented, it is expected to make the UAE a preferred jurisdiction to establish business in the Middle East. Some of the features of the New CCL are as follows:
Establish an LLC with Only One Shareholder
The New CCL is expected to allow LLC to be set up within the UAE by one shareholder, very similar to the practice of UAE Free Zones.
Foreign Investors to Own More than 49% Shares
The New CCL may authorize companies that carry out certain activities to have a Foreign National hold more shares than 49 per cent in the company. So far, however, there is no indication as to what business activities will benefit from this change.
Abolition of Minimum Share Capital
Although the final version of New CCL has yet to be published, it has been indicated that it will unequivocally revoke the requirement for a minimum share capital. Although this requirement was virtually removed when the Federal Law No. 1 of 2009 was amended, it was still used in practice.
Exclusion of Right of First Refusal
The New CCL is to grant the right of first refusal in favour of existing shareholders over new issue of shares in particular circumstances:
1. Shares issued when debt is capitalized;
2. Shares issued as part of an employee share scheme;
3. Shares issued to a strategic partner.
Right of Founders of a Public Joint Stock Company to a Majority Stake
It is expected that founders of Public Joint Stock Companies will be allowed to subscribe for not less than 30 per cent and not more than 70 per cent of the capital of the company. Currently, founders are only permitted to subscribe for not less than 20 per cent and not more than 45 per cent of the company.
Corporate Governance and Accounting Standards
A general code of corporate governance comprising international standards as well as a set of unified accounting standards are said to be expected in the New CCL.