Abu Dhabi: The President His Highness Shaikh Khalifa Bin Zayed Al Nahyan has issued a federal law on commercial companies pertaining to regulating the terms and relations between all government institutions and commercial companies.
The Commercial Companies Law No. 02 for the year 2015 contains 378 articles, the official news agency WAM reported on Wednesday.
The law deals with commercial companies formed in the country and foreign companies that have a branch or a representative office here.
The law authorises a natural person to establish a single-owner 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. In the same manner a legal entity can also establish a joint private or limited liability company under the same provisions.
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 per cent and not more than 70 per cent 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 law 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 and national agenda based on creativity and innovation focused on the UAE Vision 2021.
Competitiveness
“The law was a result of the vision of the wise leadership of His Highness Shaikh Khalifa, His Highness Shaikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister [of the UAE] and Ruler of Dubai, and His Highness Shaikh Mohammad 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 in the Global Competitiveness Index.”
He added: “We are before a modern law, which will lead economic development to the set objectives in the UAE Vision 2021, a vision keen on diversifying and strengthening the economy, using an economic and open mind that realises that the success of the private sector is capable of raising the capacity of the national economy. This will ensure 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 standards, 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.”