Comparison of Key Changes Introduced to the CCL

What Has Changed?

Previous Position

The new  Article 10 eliminates the requirement to have a local shareholder and, instead,

calls for the formation of a committee by the Cabinet  of Ministers to determine activities of a strategic nature and the minimum local participation required (as shareholder and board members) for companies engaged in strategic activities.

Foreign participation was limited to 49%, as a minimum of 51% of the share capital of companies incorporated pursuant to the CCL had to be owned by local shareholders.

Requirement to have

a Local Shareholder

Article 10

The new Article 11 removes the restriction relating to the legal form a company must have in order to engage in activities relating to investment of money for the account of third parties

Engaging in activities relating to investment

of money for the account of third parties was

limited to joint stock companies.

Practice of Activity

)Article 11)

Limited Liability Companies

The nationality restriction was removed and a

“One Person Limited Liability Company” may

be owned by a foreign shareholder.

Limited liability companies with one shareholder were limited to UAE nationals or

companies wholly owned by UAE nationals.

Single Person Limited

Liability Company

(Article 71)

The new Article 73 states that the memorandum of association of any company

incorporated under the CCL must include a dispute mechanism provision for disputes:

(i) between the company and any of its managers/directors, or (ii) between the shareholders of the company.

There was no requirement to include a dispute resolution mechanism.

Memorandum of

Association (Article 73)

A general assembly meeting may be called by the manager of a company upon the request  of shareholders owning at least 10% of the share capital of the company.

A general assembly meeting may be called by

the manager of a company upon the request  of shareholders owning at least 25% of the share capital of the company.

Calling for a General

Assembly Meeting

(Article 92)

Invitations to a general assembly meeting may be given at least 21 days prior to the date of the meeting.

The invitations must be published in accordance with the guidelines issued by the

Minister of Economy.

The shareholders must be notified in writing or in accordance with modern technologies as set forth in the memorandum of association.

The relevant authority must be notified in advance of convening any general assembly meeting alongside a copy of the meeting invitation.

General assembly meetings may be conducted remotely, provided that this is stated in the company’s memorandum of

association.

Invitations to a general assembly meeting may be given at least 15 days prior to the date

of the meeting.

Notification of General Assembly Meetings

(Article 93)

Quorum of general assembly meetings is the presence of shareholders owning at least

50% of the share capital of the company.

If the quorum is not present, the meeting must be adjourned to another date at least

five days after the first meeting’s date and no later than 15 days, in which case there will be no quorum requirement unless the memorandum of association states otherwise.

Quorum of general assembly meetings is

the presence of shareholders owning at least 75% of the share capital of the company.

If the quorum is not present, the general

assembly meeting must be adjourned to another date within 14 days from the first meeting date provided that shareholders owning at least 50% of the share capital are present.

Quorum for General

Assembly Meetings

(Article 96)

The amendment introduces a mechanism for any shareholder to obtain a court judgment

to increase the share capital in specific circumstances.

The old article does not include a mechanism

to allow the shareholders to alter the share capital of the company in specific

circumstances.

Altering the Share

Capital of the Company (Article 101)

Public Joint Stock Companies

In-kind contributions are assessed in accordance with the guidelines and procedures issued by the Securities and Commodities Authority.

In-kind contributions are assessed by financial

consultants elected and approved by the Securities and Commodities  Authority.

In-Kind Contributions

(Article 118)

The amendment removes the maximum number of non-shareholder members of the board of directors.

The general assembly may appoint a number of experienced persons in the board of directors other than the shareholders of

the company, provided that such members shall not exceed one third of the number of members as determined in the bylaws of the company.

Election of the

Members of the Board

(Article 144)

The board must be formed in accordance with the guidelines set by the committee formed

as per Article 10.

The chairman and majority of the board must

be UAE nationals.

Nationality of the

Members of the Board

(Article 151)

The amendment removes the restriction and

such restriction now applies only to financial

institutions regulated by the Central Bank of

the UAE.

All joint stock companies are restricted from

providing loans to members of their boards.

Prohibition on

Providing Loans to

Members of the Board

(Article 153)

Conversion of Companies

The amendment allows for a company to convert to a public joint stock company, subject to obtaining the necessary approvals, by:

• Selling by way of public subscription a

maximum of 70% of its share capital

• Increasing its share capital and offering new

shares for sale by way of public subscription

A company proposing to convert into a public

joint stock company may sell by way of public

subscription a maximum of 30% of its share capital.

Sale of Shares Upon

Conversion (Article 279)

Foreign Companies

This article is repealed in its entirety and the requirement to have a national agent for foreign branches in the UAE is now eliminated.

A foreign company with a branch in the UAE is required to appoint a national agent. The national agent must be a UAE national or a company wholly owned by UAE nationals.

Branches of Foreign

Companies (Article 329)