UAE President HH Sheikh Khalifa bin Zayed Al Nahyan has issued a decree overhauling foreign ownership rules of commercial companies, as part of the government’s ongoing efforts to ensure a conducive legislative environment and open up economy to all nationalities.
The decree, in addition, supersedes the UAE Federal Law No. 19 of 2018 on Foreign Direct Investment (FDI Law). It also includes certain provisions and regulations related to limited liability and joint stock companies aimed at attracting foreign capital and further boosting the local economy.
It also grants relevant local authorities a set of powers, including setting a specific percentage of Emiratis in the capital allocation and boards of directors of companies, approving requests to establish companies -except for joint stock companies- and identifying fees & charges according to the policies adopted by the UAE Cabinet.
Significant changes include that firms wishing to become joint stock companies can, after the approval of relevant authorities, sell no more than 70 pct of the company, instead of the current 30 pct, through IPOs.
The decree authorizes the cabinet to set up a committee that includes representatives of the relevant authorities with a view to proposing activities of "strategic impact" and the measures required to licence companies that operate in such areas. Upon the recommendation of the committee, the Cabinet will stipulate what activities shall be considered of strategic impact and the required measures for licensing such companies.
Electronic voting at general assembly meetings are now permitted under the new amendments, said the Wam report.
The decree empowers the Securities and Commodities Authority to establish the controls and procedures required for evaluating in-kind shares and the names of stakeholders attending the general assembly meetings of companies.
It also allows the appointment of board members who have the expertise and are not stakeholders, without stipulating a specific percentage, as well as the dismissal of a chairman or any other board members if a judicial judgement is issued against them for committing fraud or misuse of power.
The decree enables stakeholders to sue a company in civil court over any failure of duty that results in damages.
Concerning capital increases or decreases in public companies, the decree enables the company to approve its capital increase through issuing bonds and converting them into shares, stated the report.
The decree is reflective of the UAE’s forward-looking vision to open up its economy by creating a favourable legislative environment that will keep pace with the changes taking place across global economy and supporting companies operating in the country, it added.
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