Dubai: The further continuation of Union Properties as a company will also be put to shareholders at the coming annual general assembly meeting. This follows the Dubai developer reporting a near Dh1 billion loss for 2021 and with accumulated losses in touching distance of Dh3 billion.
Union Properties’ ratio of accumulated losses to share capital stands at 68.3 per cent as of end December. Shareholders will have to decide on the continuity as part of the UAE laws.
Article No. (309) of the Federal Law No. 32 of 2021 on companies states: “If the accumulated losses of a joint stock (company) reach half of its issued capital, the Board of Directors shall within 30 days from the date of disclosure to Ministry or the Authority of the periodical or annual financial statements invite the general assembly to meet within 30 days from the date of the invitation.”
This assembly of shareholders will then ‘consider a decision regarding the continuity of the company’s activity or to resolve the company prior to the expiry of its term’.
Property market sources say that shareholders will vote for a continuation of operations. “Yes, the company has problems it is dealing with, but the liquidation option is unlikely to be pursued by shareholders,” said a source who has had a long association with the developer. “The current board has been transparent in outlining what the company should do to bring about a recovery. Shareholders will follow that advice.”
A recovery strategy
Earlier this week, Union Properties had issued a statement saying that a recovery plan was in the works and that it would be submitted to the regulator for approval. Simultaneously, it would pursue legal action against former board members and executives and bring back ‘misappropriated funds’.
On a parallel track, UP is pursuing negotiations with banks to restructure its outstandings. "Good progress has been made with one of the local Islamic banks and we remain in constructive discussions with other major creditor bank," said Amer Khansaheb, Member of the Board of Directors and Managing Director. "We will also continue to review our entire portfolio in order to assess which assets are core and where we could generate further value and liquidity through the disposals of non-core assets."