You are now in:

UAE Commercial Company Law 2021 Update

The Commercial Companies Law 2021 (CCL 2021) in the United Arab Emirates (UAE) applied to any economic entity engaged in commercial, financial, industrial, agricultural, real estate, or other economic activities on the mainland, encompassing similar company types as the 2015 regulation.

Also known as Federal Law No. 32 of 2021 on Commercial Companies, CCL 2021 replaced the prior law (Federal Law No. 2 of 2015) and incorporated amendments made in recent years. Effective from January 2, 2022, CCL 2021 introduced several notable changes:

1. A non-manager could serve as a proxy for a shareholder at a general assembly meeting.

2. The notice period for a general assembly meeting increased to a minimum of 21 days (previously 15 days).

3. Recognition of Special Purpose Vehicles (SPVs) as entities established to segregate obligations and assets for specific financing operations.

4. Introduction of Special Purpose Acquisition Companies (SPACs) for mergers and acquisitions, particularly attractive to foreign investors.

5. Streamlined debt capital market transactions through Dedicated Special Purpose Vehicles (SPVs), separating obligations and assets from parent companies.

Other key provisions included:

- Facilitation of spin-offs and demergers for Public Joint Stock Companies (PJSCs).

- Share value flexibility, with a minimum of AED 1 and a maximum of AED 100.

- PJSCs could issue discounted shares with SCA approval.

- Increased flexibility for founder share ownership and adjusted public subscription periods.

- Enhanced corporate governance with SCA approval required for general assembly meetings.

- New director provisions addressing vacancies and succession planning.

- Simplified conversion processes for PJSCs, including the removal of profit requirements and share sales restrictions.

Updates for Limited Liability Companies (LLCs) featured:

- Reduced statutory reserve allocation requirement from 10% to 5%.

- Extension of manager terms by up to six months in the absence of a replacement.

- Expansion of shareholder proxy options, allowing non-managers to participate.

- Relaxed quorum requirements for second meetings.

Furthermore:

- Foreigners could wholly own onshore companies across most sectors, eliminating mandatory local partnerships.

- Joint Stock Companies gained flexibility in choosing the nominal value of shares.

- Enhanced minority protection through improved voting rights and dispute resolution mechanisms.

- Simplified company registration and licensing processes, promoting efficiency.

In conclusion, the New Commercial Companies Law marked a significant advancement for M&A, financing, and overall company operations in the UAE. It facilitated smoother transactions, expanded investment opportunities, and provided greater flexibility for both PJSCs and LLCs.