UAE Amended Commercial Companies Law Overview

The "49-51 rule" in the UAE previously required a minimum 51% Emirati ownership in many businesses. This rule limited foreign investment opportunities.

The Amended Commercial Companies Law (Federal Decree Law No. 26 of 2020) abolished the general requirement for Emirati majority participation in companies and branches of foreign companies in the UAE.

The law introduces a committee that decides on activities considered strategically important for the UAE and sets requirements for those businesses, including possible Emirati participation.

This has been assigned to the local Department of Economic Development in each Emirate.

Federal Decree Law No. 19 of 2018 on Foreign Direct Investment has been abolished, meaning no longer a general requirement for an Emirati shareholder in an LLC.

The requirement for a local service agent for a branch of a foreign company has been removed through the abolishment of Art. 329 of the CCL.

Previously, only an Emirati national could incorporate an LLC without a second shareholder. Now, a foreign individual or legal entity can create a one-person LLC.

The minimum share ownership required to call for a general assembly meeting has been reduced from 25% to 10% of the LLC's share capital. This gives minority shareholders more power.

The invitation timeframe for a general assembly meeting has been extended from 15 days to 21 days. Invitations can now be sent via modern technology as stipulated in the company's MoA.

The quorum required for a general assembly meeting has been reduced from 75% to 50% at the first meeting, and the quorum at the adjourned meeting doesn't depend on the number of attendees anymore.

The timeframe for the adjourned meeting has been extended from within 14 days to 5 to 15 days after the first meeting.

The Decree Law now allows attendees to participate and vote in general assembly meetings through modern technological means, making virtual meetings possible.

Shareholders can now seek a court order to increase the LLC's share capital to prevent dissolution or pay debts. Once granted, any partner can pay the increased share capital on behalf of others.

Most changes come into effect on January 2, 2021, except for the abolishment of the general requirement for Emirati majority participation, which takes effect six months after publication in the official gazette.

Companies have a one-year transition period from January 2, 2021, to align their MoAs with the new provisions. This period could be extended by a cabinet decision.

The Decree Law is expected to boost the UAE economy and attract foreign investors by creating a more open and flexible business environment.

The new provisions related to the general assembly and capital increase demonstrate the UAE government's commitment to flexibility and adapting to new situations.

The decision about which activities will be considered of strategic importance and what requirements will be imposed on those businesses is still pending.

The delayed effective date of the 49-51 rule abolition gives both foreign and Emirati partners time to discuss the changes and prepare necessary adjustments.

The amended Commercial Companies Law (Federal Decree Law No. 26 of 2020) represents a significant step in the UAE's effort to liberalize its corporate landscape and attract foreign investment.

The Decree Law addresses several aspects of company administration in the UAE, including Emirati participation, LLCs, general assemblies, and capital increases .

The new law aims to create a more attractive business environment for foreign investors by removing barriers and granting greater flexibility to companies.

The law changes, especially regarding the abolishment of the '49-51 rule', are expected to have a significant impact on the UAE's business landscape.

The law encourages foreign participation in the UAE's economy, aiming to attract expertise and investment capital.

Some details regarding the implementation of the law, particularly how the 'strategic importance' criteria will be used, remain unclear.

The Decree Law reflects a shift in the UAE's business strategy, prioritizing a more open and competitive market.

The law is expected to stimulate economic growth and attract diverse investments to the UAE in the coming years.

The new provisions of the Commercial Companies Law offer businesses greater flexibility and opportunities to expand.

The Decree Law represents a crucial step in establishing a more modern and globally competitive business environment in the UAE.